UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

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

For the fiscal year ended December 31, ~~2010~~2011

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-153486-99

RIVERVIEW FINANCIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Pennsylvania		26-3853402
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
3rd and Market Streets Halifax, Pennsylvania		17032
(Address of Principal Executive Offices)		(Zip Code)

3rd and Market Streets

Halifax, Pennsylvania

17032

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code 717.896.3433

Securities registered pursuant to Section 12(b) of the Act: None.

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 Act. Yes o No x

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 x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x 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 (§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 x 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. x

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 definition 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 x

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

The aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates, on June 30, ~~2010~~2011, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1321,~~898~~001,000.

As of March 2315, ~~2011~~2012, the registrant had 1,~~744~~721,~~716~~641 shares of common stock outstanding.

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RIVERVIEW FINANCIAL CORPORATION

FORM 10-K

TABLE OF CONTENTS

		PAGE	~~PAGE~~
PART I
Item 1-	Business	1	1
Item 1A-	Risk Factors	13	14
Item 1B-	Unresolved Staff Comments	13	14
Item 2 -	Properties	13	14
Item 3 -	Legal Proceedings	14	15
Item 4 -	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures	14	15
PART II
Item 5 -	Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases of Equity Securities	14	15
Item 6 -	Selected Financial Data	16	16
Item 7 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17	17
Item 7A -	Quantitative and Qualitative Disclosure About Market Risk	39	39
Item 8 -	Financial Statements and Supplementary Data	40	40
Item 9 -	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	93	87
Item 9A(T)	Controls and Procedures		87
Item 9A	Controls and Procedures	93
Item 9B-	Other Information	94	88
PART III
Item 10 -	Directors, Executive Officers and Corporate Governance	94	88
Item 11 -	Executive Compensation	98	92
Item 12 -	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	105	97
Item 13 -	Certain Relationships and Related Transactions, and Director Independence	107	98
Item 14 -	Principal Accountant Fees and Services	108	99
PART IV
Item 15 -	Exhibits and Financial Statement Schedules	108	~~101~~
Signatures		112	~~103~~
EXHIBIT INDEX		114	~~105~~

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PART I

ITEM 1. BUSINESS.

The disclosures set forth in this Item are qualified by the section captioned “Special Cautionary Notice Regarding Forward-Looking Statements” contained in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements are set forth elsewhere in this report.

Riverview Financial Corporation

Riverview Financial Corporation (“Riverview”) is a one bank holding company, incorporated in the Commonwealth of Pennsylvania on December 31, 2008 and is headquartered in Halifax, Pennsylvania. Riverview was formed upon the consolidation of First Perry Bancorp, Inc., Marysville, Pennsylvania, and HNB Bancorp, Inc., Halifax, Pennsylvania. Riverview is a registered bank holding company and currently its sole business is to act as a holding company for Riverview Bank (“the Bank”).

Riverview was formed upon the consolidation of First Perry Bancorp, Inc., Marysville, Pennsylvania, and HNB Bancorp, Inc., Halifax, Pennsylvania. Riverview is a registered bank holding company and currently its sole business is to act as a holding company for Riverview National Bank ~~(“the Bank”).~~

Riverview Bank is a state-chartered bank and successor to Riverview National Bank, which was formed upon the consolidation of the charters of The First National Bank of Marysville and Halifax National Bank on December 31, 2008 and is headquartered in Marysville, Pennsylvania. After the consolidation, the branches of The First National Bank of Marysville and Halifax National Bank continued to operate under their current names as divisions of Riverview National Bank.

On March 14, 2011, Riverview National Bank ~~was~~filed ~~formed~~an ~~upon~~application with the ~~consolidation~~Pennsylvania Department of ~~the~~Banking ~~charters~~to ofconvert ~~The~~from ~~First~~a ~~National~~national ~~Bank~~banking ofassociation ~~Marysville~~to ~~and~~a ~~Halifax~~Pennsylvania ~~National~~state-chartered ~~Bank~~bank. The onpurpose ~~December 31,~~of ~~2008~~the ~~and~~charter ischange ~~headquartered~~was into ~~Marysville,~~provide ~~Pennsylvania. After~~ the ~~consolidation,~~Bank ~~the~~with ~~branches~~greater offlexibility ~~The~~in ~~First~~executing ~~National~~its ~~Bank~~strategy of ~~Marysville~~profitability and ~~Halifax~~growth. The ~~National~~conversion ~~Bank~~was ~~continue~~effective toNovember 19, ~~operate~~2011 ~~under~~at ~~their~~which ~~current~~time ~~names~~the Bank became known as Riverview Bank and its operating divisions ofMarysville ~~Riverview~~Bank ~~National~~and Halifax Bank.

The Bank is a full service commercial bank providing a wide range of services to individuals and small to medium sized businesses in its Central Pennsylvania market area of Perry, Cumberland, Dauphin and Schuylkill counties. The Bank’s commercial banking activities include accepting time, demand, and savings deposits and making secured and unsecured commercial, real estate and consumer loans.

On March 14, 2011, Riverview National Bank filed an application with the Pennsylvania Department of Banking to convert from a national banking association to a Pennsylvania state-chartered bank. The purpose of the charter change is to provide the Bank with greater flexibility in executing its strategy of profitability and growth. The conversion is expected to take place during the second or third quarter of 2011, pending regulatory approval.

Supervision and Regulation of Riverview

The Bank Holding Company Act of 1956. Riverview is subject to the provisions of the Bank Holding Company Act of 1956, as amended, and to supervision by the Federal Reserve Board. The following restrictions apply:

· General Supervision by the Federal Reserve Board. As a bank holding company, Riverview’s activities are limited to the business of banking and activities closely related or incidental to banking. Bank holding companies are required to file periodic reports with and are subject to examination by the Federal Reserve Board. The Federal Reserve Board has adopted a risk-focused supervision program for small shell bank holding companies that is tied to the examination results of the subsidiary bank. The Federal Reserve Board has issued regulations under the Holding Company Act that require a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks. As a result, the Federal Reserve Board may require that Riverview stand ready to provide adequate capital funds to the Bank during periods of financial stress or adversity.

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· Restrictions on Acquiring Control of other Banks and Companies. A bank holding company may not:

· acquire direct or indirect control of more than 5% of the outstanding shares of any class of voting stock, or substantially all of the assets of, any bank, or

· merge or consolidate with another bank holding company,

without the prior approval of the Federal Reserve Board.

In addition, a bank holding company may not:

· engage in a non-banking business, or

· acquire ownership or control of more than 5% of the outstanding shares of any class of voting stock of any company engaged in a non-banking business,

unless the business is determined by the Federal Reserve Board to be so closely related to banking as to be a proper incident to banking. In making this determination, the Federal Reserve Board considers whether these activities offer benefits to the public that outweigh any possible adverse effects.

· Anti-Tie-In Provisions. A bank holding company and its subsidiaries may not engage in tie-in arrangements in connection with any extension of credit or provision of any property or services. ~~These anti-tie-in provisions state that a bank may not:~~

· extend credit,

· lease or sell property, or

· furnish any service to a customer

on the condition that the customer provides additional credit or service to a bank or its affiliates, or on the condition that the customer does not obtain other credit or service from a competitor of the bank.

· Restrictions on Extensions of Credit by Banks to their Holding Companies. Subsidiary banks of a bank holding company are also subject to restrictions imposed by the Federal Reserve Act on:

· any extensions of credit to the bank holding company or any of its subsidiaries,

· investments in the stock or other securities of the corporation, and

· taking these stock or securities as collateral for loans to any borrower.

· Risk-Based Capital Guidelines. Generally, bank holding companies must comply with the Federal Reserve Board’s risk-based capital guidelines. However, small bank holding companies are sometimes eligible for certain exemptions. The required minimum ratio of total capital to risk-weighted assets, including some off-balance sheet activities, such as standby letters of credit, is 8%. At least half of the total capital is required to be Tier I Capital, consisting principally of common stockholders’ equity, less certain intangible assets. The remainder, Tier II Capital, may consist of:

· some types of preferred stock,

· a limited amount of subordinated debt,

· some hybrid capital instruments,

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· other debt securities, and

· a limited amount of the general loan loss allowance.

· Capital Leverage Ratio Requirements. The Federal Reserve Board requires a bank holding company to maintain a leverage ratio of a minimum level of Tier I capital, as determined under the risk-based capital guidelines, equal to 3% of average total consolidated assets for those bank holding companies that have the highest regulatory examination rating and are not contemplating or experiencing significant growth or expansion. All other bank holding companies are required to ~~take~~maintain ~~adequate~~a ~~account~~ratio of ~~interest~~at ~~rate~~least ~~risk,~~1% ~~concentration~~to of2% ~~credit~~above ~~risk,~~the ~~and~~stated ~~risks~~minimum. Riverview ofBank ~~nontraditional~~is ~~activities~~subject to similar capital requirements pursuant to the Federal Deposit Insurance Act.

· ~~Capital~~ Restrictions ~~Leverage~~on ~~Ratio~~Control ~~Requirements~~Changes. The ~~Federal~~Change ~~Reserve~~in ~~Board~~Bank ~~requires~~Control aAct ~~bank~~of ~~holding~~1978 ~~company~~requires topersons ~~maintain~~seeking acontrol ~~leverage ratio~~ of a ~~minimum level of Tier I capital, as determined under the risk-based capital guidelines, equal to 3% of average total consolidated assets for those~~ bank ~~holding companies that have the highest regulatory examination rating and are not contemplating~~ or ~~experiencing significant growth or expansion. All other~~ bank holding ~~companies~~company ~~are required~~ to ~~maintain~~obtain aapproval ~~ratio~~from ofthe atappropriate ~~least~~federal 1%banking toagency 2%before ~~above~~completing the ~~stated minimum~~transaction. ~~Riverview~~The ~~National~~law ~~Bank~~contains isa ~~subject~~presumption tothat ~~similar capital requirements pursuant to~~ the ~~Federal Deposit Insurance Act.~~power

· Restrictions on Control Changes. The Change in Bank Control Act of 1978 requires persons seeking control of a bank or bank holding company to obtain approval from the appropriate federal banking agency before completing the transaction. The law contains a presumption that the power to vote 10% or more of voting stock confers control of a bank or bank holding company. The Federal Reserve Board is responsible for reviewing changes in control of bank holding companies. In doing so, the Federal Reserve Board reviews the financial position, experience and integrity of the acquiring person and the effect on the financial condition of the corporation, relevant markets and federal deposit insurance funds.2

~~Sarbanes-Oxley~~Table ~~Act~~ of 2002. The Sarbanes-Oxley Act represents a comprehensive revision of laws affecting corporate governance, accounting obligations and corporate reporting. The Sarbanes-Oxley Act is applicable to all companies with equity or debt securities registered or that file reports under the Securities Exchange Act of 1934. In particular, the Sarbanes-Oxley Act establishes: (i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional responsibilities regarding financial statements for the Principal Executive Officer and Principal Financial Officer of the reporting company; (iii) standards for auditors and regulation of audits; (iv) increased disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v) increased civil and criminal penalties for violations of the securities laws. Many of the provisions were effective immediately while other provisions become effective over a period of time and are subject to rulemaking by the SEC. Because neither First Perry’s nor HNB’s common stock was registered with the SEC, they were not subject to the 1934 Act. However, Riverview is subject to the 1934 Act.Contents

to vote 10% or more of voting stock confers control of a bank or bank holding company. The Federal Reserve Board is responsible for reviewing changes in control of bank holding companies. In doing so, the Federal Reserve Board reviews the financial position, experience and integrity of the acquiring person and the effect on the financial condition of the corporation, relevant markets and federal deposit insurance funds.

Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act represents a comprehensive revision of laws affecting corporate governance, accounting obligations and corporate reporting. The Sarbanes-Oxley Act is applicable to all companies with equity or debt securities registered or that file reports under the Securities Exchange Act of 1934. In particular, the Sarbanes-Oxley Act establishes: (i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional responsibilities regarding financial statements for the Principal Executive Officer and Principal Financial Officer of the reporting company; (iii) standards for auditors and regulation of audits; (iv) increased disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v) increased civil and criminal penalties for violations of the securities laws. Many of the provisions were effective immediately while other provisions became effective over a period of time and are subject to rulemaking by the SEC. Because neither First Perry’s nor HNB’s common stock was registered with the SEC, they were not subject to the 1934 Act. However, Riverview is subject to the 1934 Act.

Permitted Activities for Bank Holding Companies

The Federal Reserve Board permits bank holding companies to engage in activities so closely related to banking or managing or controlling banks as to be a proper incident of banking. In 1997, the Federal Reserve Board significantly expanded its list of permissible non-banking activities to improve the competitiveness of bank holding companies. The following list includes activities that a holding company may engage in, subject to change by the Federal Reserve Board:

· Making, acquiring or servicing loans and other extensions of credit for its own account or for the account of others.

· Any activity used in connection with making, acquiring, brokering, or servicing loans or other extensions of credit, as determined by the Federal Reserve Board. The Federal Reserve Board has determined that the following activities are permissible:

· real estate and personal property appraising;

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· arranging commercial real estate equity financing;

· check-guaranty services;

· collection agency services;

· credit bureau services;

· asset management, servicing, and collection activities;

· acquiring debt in default, if a holding company divests shares or assets securing debt in default that are not permissible investments for bank holding companies within prescribed time periods, and meets various other conditions; and

· real estate settlement services.

· Leasing personal and real property or acting as agent, broker, or advisor in leasing property, provided that:

· the lease is a non-operating lease;

· the initial term of the lease is at least 90 days;

· if real property is being leased, the transaction will compensate the lessor for at least the lessor’s full investment in the property and costs, with various other conditions.

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· Operating nonbank depository institutions, including an industrial bank or savings association.

· Performing functions or activities that may be performed by a trust company, including activities of a fiduciary, agency or custodial nature, in the manner authorized by federal or state law, so long as the holding company is not a bank.

· Acting as investment or financial advisor to any person, including:

· serving as investment advisor to an investment company registered under the Investment Company Act of 1940;

· furnishing general economic information and advice, general economic statistical forecasting services, and industry studies;

· providing advice in connection with mergers, acquisitions, divestitures, investments, joint ventures, capital structuring, financing transactions, and conducting financial feasibility studies;

· providing general information, statistical forecasting, and advice concerning any transaction in foreign exchange, swaps and similar transactions, commodities, and options, futures and similar instruments;

· providing educational courses and instructional materials to consumers on individual financial management matters; and

· providing tax planning and tax preparation services to any person.

· Agency transactional services for customer investments, including:

· Securities brokerage—Providing securities brokerage services, whether alone or in combination with investment advisory services, and incidental activities, including related securities credit activities compliant with Federal Reserve Board Regulation T and custodial services, if the securities brokerage services are restricted to buying and selling securities solely as agent for the account of customers and do not include securities underwriting or dealing;

· Riskless-principal transactions—Buying and selling all types of securities in the secondary market on the order of customers as “‘‘riskless principal”’’;

· Private-placement services—Acting as agent for the private placement of securities in accordance with the requirements of the Securities Act of 1933 and the rules of the SEC; and

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· Futures commission merchant—Acting as a futures commission merchant for unaffiliated persons in the execution and clearance of any futures contract and option on a futures contract traded on an exchange in the United States or abroad, if the activity is conducted through a separately incorporated subsidiary of the holding company and the company satisfies various other conditions.

· Investment transactions as principal:

· Underwriting and dealing in government obligations and money market instruments, including bankers’ acceptances and certificates of deposit, under the same limitations applicable if the activity were performed by a holding company’s subsidiary member banks.

· Engaging as principal in:

· foreign exchanges, and

· forward contracts, options, futures, options on futures, swaps, and similar contracts, with various conditions.

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· Buying and selling bullion, and related activities.

· Management consulting and counseling activities:

· Subject to various limitations, management consulting on any matter to unaffiliated depository institutions, or on any financial, economic, accounting, or audit matter to any other company; and

· Providing consulting services to employee benefit, compensation, and insurance plans, including designing plans, assisting in the implementation of plans, providing administrative services to plans, and developing employee communication programs for plans.

· Providing career counseling services to:

· a financial organization and individuals currently employed by, or recently displaced from, a financial organization;

· individuals who are seeking employment at a financial organization; and

· individuals who are currently employed in or who seek positions in the finance, accounting, and audit departments of any company.

· Support services:

· providing limited courier services; and

· printing and selling checks and related items requiring magnetic ink character recognition.

· Insurance agency and underwriting:

· Subject to various limitations, acting as principal, agent, or broker for credit life, accident health and unemployment insurance that is directly related to an extension of credit to a holding company or any of its subsidiaries;

· Engaging in any insurance agency activity in a place where Riverview or a subsidiary of Riverview has a lending office and that has a population not exceeding 5,000 or has inadequate insurance agency facilities, as determined by the Federal Reserve Board;

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· Supervising, on behalf of insurance underwriters, the activities of retail insurance agents who sell fidelity insurance and property and casualty insurance on the real and personal property used in Riverview’s operations or its subsidiaries, and group insurance that protects the employees of Riverview or its subsidiaries;

· Engaging in any insurance agency activities if Riverview has total consolidated assets of $50 million or less, with the sale of life insurance and annuities being limited to sales in small towns or as credit insurance.

· Making equity and debt investments in corporations or projects designed primarily to promote community welfare, and providing advisory services to these programs.

· Subject to various limitations, providing others financially oriented data processing or bookkeeping services.

· Issuing and selling money orders, travelers’ checks and United States savings bonds.

· Providing consumer financial counseling that involves counseling, educational courses and distribution of instructional materials to individuals on consumer-oriented financial management matters, including debt consolidation, mortgage applications, bankruptcy, budget management, real ~~estate tax shelters, tax planning, retirement and estate planning, insurance and general investment management, so long as this activity does not include the sale of specific products or investments.~~

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estate tax shelters, tax planning, retirement and estate planning, insurance and general investment management, so long as this activity does not include the sale of specific products or investments.

· Providing tax planning and preparation advice.

Permitted Activities for Financial Holding Companies

The Gramm-Leach-Bliley Financial Services Modernization Act, became law in November 1999, and amends the Holding Company Act of 1956 to create a new category of holding company—the financial holding company. To be designated as a financial holding company, a bank holding company must file an application with the Federal Reserve Board. In order to become a financial holding company, ~~Riverview~~a bank holding company must be and remain well capitalized and well managed, as determined by Federal Reserve Board regulations and maintain at least a “‘‘satisfactory”’’ examination rating under the Community Reinvestment Act. Once a bank holding company becomes a financial holding company, the holding company or its affiliates may engage in any financial activities that are financial in nature or incidental to financial activities. Furthermore, the Federal Reserve may approve a proposed activity if it is complementary to financial activities and does not threaten the safety and soundness of banking. The Act provides an initial list of activities that constitute activities that are financial in nature, including:

· lending and deposit activities,

· insurance activities, including underwriting, agency and brokerage,

· providing financial investment advisory services,

· underwriting in, and acting as a broker or dealer in, securities,

· merchant banking, and

· insurance company portfolio investment.

Riverview has not chosen to become a financial holding company at this time.

6Supervision and Regulation of Riverview Bank

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Supervision and Regulation of Riverview National Bank

General Overview

Banks operate in a highly regulated environment and are regularly examined by federal and state regulatory authorities. The following discussion concerns various federal and state laws and regulations and the potential impact of such laws and regulations on the Bank.

To the extent that the following information describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statutory or regulatory provisions themselves. Proposals to change laws and regulations are frequently introduced in Congress, the state legislatures, and before the various bank regulatory agencies. We cannot determine the likelihood or timing of any such proposals or legislation, or the impact they may have on the Bank. A change in law, regulations or regulatory policy may have a material effect on the Bank’s business.

The operations of the Bank are subject to federal and state statutes applicable to banks chartered under the banking laws of the United States, ~~to members of the Federal Reserve System,~~ and to banks whose deposits are insured by the FDIC. ~~The Bank’s operations are subject to regulations of the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System and the FDIC.~~

Safety and Soundness

~~The~~As ~~primary~~a ~~regulator~~Pennsylvania ~~for~~state-chartered bank, the Bank is subject to extensive regulation and examination by the ~~OCC~~Pennsylvania Department of Banking and by the FDIC, which insures its deposits to the maximum extent permitted by law. ~~The~~Both ~~OCC~~agencies ~~has~~have the authority under the Financial Institutions Supervisory Act and the Federal Deposit Insurance Act to prevent a ~~national~~ bank from engaging in any unsafe or unsound practice in conducting business or from otherwise conducting activities in violation of the law.

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Federal and state banking laws and regulations govern, but are not limited to, the following:

· Scope of a bank’s business

· Investments a bank may make

· Reserves that must be maintained against certain deposits

· Loans a bank makes and collateral it takes

· Merger and consolidation activities

· Establishment of branches

~~The~~Although the Bank is not a member of the Federal Reserve System ~~and, therefore,~~ the policies and regulations of the Federal Reserve Board have a significant impact on many elements of the Bank’s operations including:

· Loan and deposit growth

· Rate of interest earned and paid

· Levels of liquidity

· Levels of required capital

Management cannot predict the effect of changes to such policies and regulations upon the Bank’s business model and the corresponding impact they may have on future earnings.

FDIC Insurance Legislation

The Federal Deposit Insurance Corporation (“FDIC”) has adopted a risk-based premium system that provides for quarterly assessments based on an insured institution’s ranking in one of four risk categories based upon their examination ratings, regulatory capital ratios and certain other factors, with less risky institutions paying lower assessments. For purposes of calculating the insurance assessment, the Bank is considered to be well capitalized. Currently, most banks are in the best risk category and pay anywhere from 12 to 14 cents per $100 of deposits for insurance. Under the final rule, banks in this category pay initial base rates ranging from 12 to 16 cents per $100 of deposits on an annual basis beginning April 1, 2009.

On June 30, 2009, the FDIC took action to further strengthen the Deposit Insurance Fund (“DIF”) by imposing a 5 basis point emergency special assessment on the banking industry, where this special assessment was required to be accrued during the second quarter of 2009 and paid on September 30, 2009. All FDIC insured financial institutions were required to pay this special assessment.

The FDIC determined that it needed more liquidity to protect depositors. On November 12, 2009, the FDIC amended its assessment regulations to require all institutions to prepay, on December 30, 2009, their estimated risk-based quarterly assessments for the fourth quarter of 2009, and for all of 2010, 2011 and 2012. The assessment rate that was used for the entire period was the Bank’s base assessment rate that was in effect as of September 30, 2009. Each institution was required to record the entire amount of its prepaid assessment as a prepaid expense (asset) as of December 31, 2009. As of December 31, 2009, and each quarter thereafter, each institution then records an expense (charge to earnings) for its regular quarterly assessment for the quarter and an offsetting credit to the prepaid assessment until the asset is exhausted. Once the asset is exhausted, the institution will record an accrued expense payable each quarter for the assessment payment, which will be paid in arrears to the FDIC at the end of the following quarter. If the prepaid assessment is not exhausted by December 31, 2014, any remaining amount will be returned to the depository institution.

Beginning with the second quarter of 2011, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the assessment base that the FDIC uses to calculate premiums are based on a bank’s average consolidated total assets minus average tangible equity. As the asset base of the banking industry is larger than the deposit base, the range assessment rates have changes from a low of 2.5 basis points on the broader base for banks in the lower risk category to a high of 45 basis points, per $100 of assets, in the highest risk category. Separately, the FDIC Board also issued a revised proposal

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~~FDIC~~that ~~Insurance~~created ~~Legislation~~a scorecard-based assessment rate for banks with more than $10 billion in assets and for large, highly complex institutions.

~~The~~On ~~Federal~~December ~~Deposit~~14, ~~Insurance~~2010, ~~Corporation~~the ~~(“FDIC”)~~Board ~~imposes~~of anDirectors ~~assessment~~of ~~against~~the ~~financial~~FDIC ~~institutions~~adopted ~~for~~a ~~deposit~~final ~~insurance. This~~rule to ~~assessment~~set isthe ~~based~~DIF’s onlong-term adesignated ~~risk-related~~reserve ~~premium~~ratio ~~schedule~~(“DRR”) ~~for~~at ~~all~~two ~~insured~~percent ~~depository~~of ~~institutions~~estimated ~~that~~insured ~~results~~deposits, ina ~~the~~target ~~assessment~~ratio ofthat, ~~premiums~~until ~~based~~it onis aachieved, ~~bank’s~~will ~~capital~~not ~~and~~likely ~~supervisory~~result ~~measures. Under~~in the FDIC’s ~~risk-based~~reducing ~~system,~~assessment ~~insured~~rates. The ~~institutions~~decision ~~are~~to ~~assigned~~set tothe ~~one~~DRR ofat ~~four~~two ~~risk~~percent ~~categories~~was based on ~~supervisory~~an ~~evaluations,~~historical ~~regulatory~~analysis ~~capital~~of ~~levels~~losses ~~and~~to ~~certain~~the ~~other~~insurance ~~factors,~~fund. The ~~with~~analysis ~~less~~showed ~~risky~~in ~~institutions~~order ~~paying~~to ~~lower~~maintain ~~assessments~~a onpositive ~~their~~fund ~~deposits. For~~balance ~~purposes~~and ofsteady, ~~calculating~~predictable ~~the insurance~~ assessment rates, the ~~Bank~~reserve isratio ~~considered~~must to be ~~well~~at ~~capitalized~~least two percent as a long-term minimum goal. ~~Currently,~~The ~~most~~FDIC ~~banks~~set ~~are~~the inDRR according to the ~~best~~following factors: risk ~~category~~of ~~and~~loss ~~pay~~to ~~anywhere~~the ~~from~~insurance 12fund; toeconomic 14conditions ~~cents~~affecting ~~per~~the ~~$100~~banking ofindustry; ~~deposits~~preventing ~~for~~sharp ~~insurance. Under~~swings in the ~~final~~assessment ~~rule,~~rates; ~~banks~~and inany ~~this~~other ~~category~~factors ~~pay~~it ~~initial~~deemed ~~base~~important. Previously, ~~rates~~federal ~~ranging~~law ~~from~~required 12that tothe 16designated ~~cents~~reserve ~~per~~ratio ~~$100~~for ofthe ~~deposits~~deposit oninsurance anfund ~~annual~~should ~~basis~~be ~~beginning~~at ~~April~~ 1,.15% ~~2009~~to 1.50% of estimated insured deposits.

OnIn ~~June 30~~addition, ~~2009,~~all ~~the~~ FDIC-insured ~~imposed~~depository ainstitutions 5are ~~basis~~required ~~point~~to ~~emergency~~pay ~~special~~assessments ~~assessment~~to the FDIC to fund interest payments on bonds issued by the ~~banking~~Financing ~~industry~~Corporation (“FICO”), ~~where~~an ~~this~~agency ~~special~~of ~~assessment~~the ~~was~~federal ~~required~~government established to berecapitalize ~~accrued~~the ~~during~~Federal ~~the~~Savings ~~second~~and ~~quarter~~Loan ofInsurance ~~2009~~Corporation. The ~~and~~FICO ~~paid~~assessment onrates, ~~September 30~~which are determined quarterly, averaged 0.0108%of insured deposits on an annualized basis in fiscal year 2009. ~~All~~These ~~FDIC~~assessments ~~insured~~will ~~financial~~continue ~~institutions~~until ~~were~~the ~~required~~FICO tobonds ~~pay~~mature ~~this~~in ~~special assessment~~2017.

On November 12, 2009 the FDIC approved a final rule requiring banks to prepay on December 30, 2009 their estimated quarterly assessments for the fourth quarter of 2009, as well as all of 2010, 2011 and 2012. The assessment rate that was used for the entire period was the Bank’s base assessment rate that was in effect as of September 30, 2009. The rate will be increased by 3 basis points for all of 2011 and 2012 based on the FDIC’s expectation that industry earnings will be stronger. Each institution recorded the entire amount of its prepaid assessment as a prepaid expense (asset) as of December 31, 2009. As of December 31, 2009, and each quarter thereafter, each institution records an expense (charge to earnings) for its regular quarterly assessment for the quarter and an offsetting credit to the prepaid assessment until the asset is exhausted. Once the asset is exhausted, the institution will record an accrued expense payable each quarter for the assessment payment, which will be paid in arrears to the FDIC at the end of the following quarter. If the prepaid assessment is not exhausted by December 31, 2014, any remaining amount will be returned to the depository institution.

In November 2010, the FDIC Board issued a proposed rule that would change the assessment base from adjusted domestic deposits to a bank’s average consolidated total assets minus average tangible equity (defined as Tier 1 capital), as required by the Dodd-Frank Act. In addition, the FDIC proposal also would lower assessment rates to between 2.5 and 9 basis points on the broader base for banks in the lower risk category, and 30 to 45 basis points in the highest risk category. Separately, the FDIC Board also issued a revised proposal that would create a scorecard-based assessment rate for banks with more than $10 billion in assets and for large, highly complex institutions. None of these proposals have been finalized but continue to be under consideration.

On December 14, 2010, the Board of Directors of the FDIC adopted a final rule to set the Deposit Insurance Fund’s long-term designated reserve ratio (“DRR”) at two percent of estimated insured deposits. The decision to set the DRR at two percent was based on an historical analysis of losses to the insurance fund. The analysis showed in order to maintain a positive fund balance and steady, predictable assessment rates, the reserve ratio must be at least two percent as a long-term minimum goal. The FDIC set the DRR according to the following factors: risk of loss to the insurance fund; economic conditions affecting the banking industry; preventing sharp swings in the assessment rates; and any other factors it deemed important. Previously, federal law required that the designated reserve ratio for the deposit insurance fund should be at 1.15% to 1.50% of estimated insured deposits.

FDIC Insurance

AsThe aBank’s ~~member~~deposit ~~institution~~accounts ofare insured to the ~~FDIC,~~applicable ~~deposit~~limits ~~accounts~~as atdetermined by the ~~bank~~FDIC, ~~were~~which ~~insured~~is ~~generally~~currently up$250,000 toper adepositor, ~~maximum~~with ofthe ~~$100,000~~exception ~~for~~of ~~each~~non-interest ~~separately~~bearing ~~insured~~transaction ~~depositor,~~accounts ~~and~~which uphave tounlimited acoverage ~~maximum~~through ofDecember ~~$250~~31,~~000~~ ~~for self-~~2013.

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directed retirement accounts. In 2009, the FDIC increased the deposit insurance available on all deposit accounts to $250,000, effective until December 31, 2013. On November 9, 2010, the FDIC Board approved a final rule that will implement unlimited deposit insurance coverage on non-interest bearing transaction accounts beginning on December 31, 2010 and ending December 31, 2012, as mandated by the Dodd-Frank Act. This is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.

Community Reinvestment Act

All FDIC insured institutions have a responsibility under the Community Reinvestment Act (“‘‘CRA”’’) and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. The ~~OCC~~FDIC and state banking department, which isare a governmental ~~agency~~agencies that ~~overviews~~overview ~~national~~state-chartered banks, isare required to assess all financial institutions that itthey ~~regulates~~regulate to determine whether these institutions are meeting the credit needs of the community that they serve. The Act focuses specifically on low and moderate-income neighborhoods. The ~~OCC~~FDIC ~~takes~~and the state banking department take an institution’s CRA record into account in its evaluation of any application made by any of such institutions. A financial institution’s failure to comply with the CRA provisions could, at a minimum, result in regulatory restrictions on its activities including:

· Approval of a new branch or other deposit facility

· Closing of a branch or other deposit facility

· An office relocation or a merger

· Any acquisition of bank shares

The CRA, as amended, also requires that the ~~OCC~~FDIC and the state banking department make publicly available the evaluation of a bank’s record of meeting the credit needs of its entire community, including low-and-moderate-income neighborhoods. This evaluation includes a descriptive rating of either outstanding, satisfactory, needs to improve, or substantial noncompliance, and a statement describing the basis for the rating. These ratings are publicly disclosed.

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Payment of Dividends and Other Restrictions

Dividends are paid by Riverview from its earnings, which are mainly provided by dividends from the Bank. However, ~~certain~~the ~~regulatory~~regulations ~~restrictions~~of ~~exist~~the ~~regarding~~state banking department restrict the ~~ability~~amount of dividends that can be paid to Riverview by the Bank. The payment of dividends to ~~transfer~~Riverview ~~funds~~is restricted to the ~~Corporation~~amount inof the ~~form~~Bank’s ofnet ~~cash~~profits ~~dividends,~~for ~~loans~~the orcurrent ~~advances~~year plus its net retained earnings for the previous two years. ~~The~~Approval ~~approval~~from of the ~~OCC~~state banking department is required if the total of all dividends declared by a ~~national~~ bank in any calendar year exceeds the ~~Bank~~bank’s net profits for that year combined with its retained net profits for the preceding two calendar years. Under this restriction, at December 31, ~~2010~~2011, the Bank could declare additional dividends of $~~747~~1,493,000 to Riverview without prior regulatory approval.

Capital Adequacy

Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“‘‘FDICIA”’’) institutions are classified in one of five defined categories as illustrated below.

Capital Category	Total Risk-Based Ratio	Tier 1 Risk-Based Ratio	Tier 1 Leverage Ratio
Well capitalized	>10.0	>6.0	>5.0
Adequately capitalized	>8.0	>4.0	>4.0*
Undercapitalized	<8.0	<4.0	<4.0*
Significantly undercapitalized	<6.0	<3.0	<3.0
Critically undercapitalized			<2.0

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* 3.0 for those banks having the highest available regulatory rating.

The Bank’s capital ratios exceed the regulatory requirements to be considered well capitalized for Total Risk-Based Capital, Tier 1 Risk-Based Capital, and Tier 1 Leverage Capital.

Prompt Corrective Action

In the event an institution’s capital deteriorates to the undercapitalized category or below, FDICIA prescribes an increasing amount of regulatory intervention, including:

· Implementation of a capital restoration plan and a guarantee of the plan by a parent institution;

· Placement of a hold on increases in assets, number of branches, or lines of business

If capital reaches the significantly or critically undercapitalized level, further material restrictions can be imposed, including restrictions on interest payable on accounts, dismissal of management and (in critically undercapitalized situations) appointment of a receiver. For well-capitalized institutions, FDICIA provides authority for regulatory intervention where they deem the institution to be engaging in unsafe or unsound practices, or if the institution receives a less than satisfactory examination report rating for asset quality, management, earnings, liquidity, or sensitivity to market risk.

Legislation and Regulatory Changes

From time to time, legislation is enacted that has the effect of increasing the cost of doing business, limiting or expanding permissible activities, or affecting the competitive balance between banks and other financial institutions. Proposals to change the laws and regulations governing the operations and taxation of banks, bank holding companies and other financial institutions are frequently made in Congress, and before various regulatory agencies. No prediction can be made as to the likelihood of any major changes or the impact such changes might have on the Bank’s operations. Certain changes of potential significance to the Bank that have been enacted recently and others, which are currently under consideration by Congress or various regulatory or professional agencies, are discussed ~~below~~as follows.

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Legislation and Regulations

USA Patriot Act

The USA PATRIOT Improvement and Reauthorization Act of 2005 became law on March 9, 2006. This enactment extended the requirements of the original act signed into law in October 2001 and was renewed in March 2006. The USA PATRIOT Act gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements. By way of amendments to the Bank Secrecy Act, Title III of the USA PATRIOT Act included measures intended to encourage information sharing among bank regulatory agencies and law enforcement bodies. Further, certain provisions of Title III imposed affirmative obligations on a broad range of financial institutions, including banks, thrifts, brokers, dealers, credit unions, money transfer agents and parties registered under the Commodity Exchange Act.

The rules, developed by the Secretary of the Treasury, require that banks have procedures in place to:

· Verify the identity of persons applying to open an account,

· Ensure adequate maintenance of the records used to verify a person’s identity, and

· Determine whether a person is on any US governmental agency list of known or suspected terrorists or a terrorist organization.

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The bank regulatory agencies have increased the regulatory scrutiny of the Bank Secrecy Act and anti-money laundering programs maintained by financial institutions. Significant penalties and fines, as well as other supervisory orders may be imposed on a financial institution for non-compliance with these requirements. In addition, federal bank regulatory agencies must consider the effectiveness of financial institutions engaging in a merger transaction in combating money laundering activities. The Bank has adopted policies and procedures which are in compliance with these requirements

Multifactor Authentification

The bank regulatory agencies jointly published the “‘‘Interagency Guidance on Authentification in an Internet Banking Environment”’’. This guidance requires banks to implement enhanced security measures to authenticate customers using internet based services to process transactions that either access customer information or transfer funds to third parties. The principles of this guidance apply to telephone banking systems and call centers if the same level of access is available through these services.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

The Bankruptcy Abuse and Consumer Protection Act of 2005 was passed by Congress on April 14, 2005 and signed into law by the President on April 20, 2005.

This Act amends both the Bankruptcy Code and the Truth in Lending Act. The Bankruptcy Code revisions became effective October 15, 2005. The Bankruptcy Code was amended, adding requirements to the process for filing for bankruptcy. The provisions related to the Truth in Lending did not become effective until October of 2006. It requires lenders to:

· Warn customers about the impact of making only the minimum payment under an open-end consumer credit plan

· Provide a toll free number for consumers to call for information regarding the consequences of making only minimum required payments

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· Inform customers that interest attributed to the portion of a home secured loan that exceeds the property’s fair market value is not tax deductible

· Provide new disclosures on solicitations and applications for open-end credit plans containing an introductory rate

Ongoing Legislation

As a consequence of the extensive regulation of commercial banking activities in the United States, the Bank’s business is particularly susceptible to changes in the federal and state legislation and regulations. Over the course of time, various federal and state proposals for legislation could result in additional regulatory and legal requirements for the Bank. The Bank can neither predict if any such legislation will be adopted nor if adopted how it would affect its business. Past history has demonstrated that new legislation or changes to existing legislation usually results in a heavier compliance burden and, therefore, generally increases the cost of doing business.

Recent Developments

Dodd-Frank Wall Street Reform and Consumer Protection Act.

On July 21, 2010, the Dodd-Frank ~~Wall Street Reform and Consumer Protection~~ Act ~~(“Dodd-Frank”)~~ was signed into law. The Dodd-Frank Act is intended to effect a fundamental restructuring of federal banking regulation. Among other things, the Dodd-Frank Act creates a new Financial Stability Oversight Council to identify systemic risks in the financial system and gives federal regulators new authority to take control of and liquidate financial firms. The Dodd-Frank Act additionally creates a new independent federal regulator to administer federal consumer protection laws. The Dodd-Frank Act is expected to have a significant impact on our business operations as its provisions take effect. It is difficult to predict at this time what specific impact the Dodd-Frank Act and the yet to be written implementing rules and regulations will have on community banks. However, it is expected that at a minimum they will increase our operating and compliance costs and could increase our interest expense. Among the provisions that are likely to affect us are the following:

Holding Company Capital Requirements. The Dodd-Frank Act requires the Federal Reserve to apply consolidated capital requirements to bank holding companies that are no less stringent than those currently applied to depository institutions. Under these standards, trust preferred securities will be excluded from Tier 1 capital unless such securities were issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets. The Dodd-Frank Act additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, consistent with safety and soundness.

Deposit Insurance. The Dodd-Frank Act permanently increases the maximum deposit insurance amount for banks, savings institutions and credit unions to $250,000 per depositor, and extends unlimited deposit insurance to non-interest bearing transaction accounts through December 31, 2013. The Dodd-Frank Act also broadens the base for FDIC insurance assessments. Assessments will now be based on the average consolidated total assets less tangible equity capital of a financial institution. The Dodd-Frank Act requires the FDIC to increase the reserve ratio of the DIF from 1.15% to 1.35% of insured deposits by 2020 and eliminates the requirement that the FDIC pay dividends to insured depository institutions when the reserve ratio exceeds certain thresholds. Effective July 2011, the Dodd-Frank Act eliminated the federal statutory prohibition against the payment of interest on business checking accounts.

Corporate Governance. The Dodd-Frank Act requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years, a non-binding vote regarding the frequency of the vote on executive compensation at least every six years, and a non-binding vote on “golden parachute” payments in connection with approvals of mergers and acquisitions unless previously voted on by shareholders. The SEC has finalized the rules implementing these requirements which took effect on January

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~~regulation~~21, 2011. ~~Among other things~~Additionally, the Dodd-Frank ~~creates~~Act adirects ~~new~~the ~~Financial~~federal ~~Stability~~banking ~~Oversight~~regulators ~~Council~~ to ~~identify~~promulgate ~~systemic~~rules ~~risks~~prohibiting inexcessive ~~the~~compensation ~~financial~~paid ~~system and gives federal regulators new authority~~ to ~~take~~executives ~~control~~ of ~~and~~depository ~~liquidate~~institutions ~~financial~~and ~~firms. Dodd-Frank~~their ~~additionally~~holding ~~creates~~companies awith ~~new~~assets ~~independent~~in ~~federal~~excess ~~regulator~~of ~~to administer federal consumer protection laws~~$1. ~~Dodd-Frank~~0 isbillion, ~~expected~~regardless toof ~~have~~whether athe ~~significant~~company ~~impact~~is onpublicly ~~our business operations as its provisions take effect~~traded. ItThe ~~is difficult to predict at this time what specific impact~~ Dodd-Frank ~~and~~Act ~~the~~also ~~yet~~gives tothe beSEC ~~written~~authority ~~implementing~~to ~~rules and~~prohibit ~~regulations~~broker ~~will~~discretionary ~~have~~voting on ~~community~~elections ~~banks. However,~~of itdirectors ~~is expected that at a minimum they will increase our operating~~ and ~~compliance~~executive ~~costs~~compensation ~~and could increase our interest expense~~matters. ~~Among the provisions that are likely to affect us are the following:~~

~~Holding~~Prohibition ~~Company~~Against ~~Capital~~Charter ~~Requirements~~Conversions of Troubled Institutions. Effective one year after enactment, the Dodd-Frank ~~requires~~Act ~~the~~prohibits ~~Federal~~a ~~Reserve~~depository toinstitution ~~apply~~from ~~consolidated~~converting ~~capital~~from ~~requirements~~a state to ~~bank~~federal ~~holding~~charter ~~companies~~or ~~that~~vice ~~are~~versa nowhile ~~less~~it ~~stringent~~is ~~than~~the ~~those~~subject ~~currently~~of ~~applied~~a tocease ~~depository~~and ~~institutions. Under~~desist ~~these~~order ~~standards,~~or ~~trust~~other ~~preferred~~formal ~~securities~~enforcement ~~will~~action beor ~~excluded~~a ~~from~~memorandum ~~Tier~~of 1understanding ~~capital~~with respect to a significant supervisory matter unless ~~such~~the ~~securities~~appropriate ~~were~~federal ~~issued~~banking ~~prior~~agency gives notice of the conversion to ~~May 19,~~the ~~2010~~federal byor astate ~~bank~~authority ~~holding~~that ~~company~~issued ~~with~~the ~~less~~enforcement ~~than~~action ~~$15 billion~~and inthat ~~assets~~agency does not object within 30 days. ~~Dodd-Frank~~The ~~additionally~~notice ~~requires~~must ~~that~~include ~~bank~~a ~~regulators~~plan ~~issue~~to ~~countercyclical~~address ~~capital~~the ~~requirements~~significant sosupervisory ~~that~~matter. The ~~the~~converting ~~required~~institution ~~amount~~must also file a copy of ~~capital~~the ~~increases~~conversion inapplication ~~times~~with its current federal regulator which must notify the resulting federal regulator of ~~economic~~any ~~expansion~~ongoing ~~and~~supervisory ~~decreases~~or investigative proceedings that are likely to result in ~~times~~an ofenforcement ~~economic~~action ~~contraction,~~and ~~consistent~~provide ~~with~~access ~~safety~~to all supervisory and ~~soundness~~investigative information relating thereto.

~~Deposit~~Interstate ~~Insurance~~Branching. The Dodd-Frank ~~permanently~~Act ~~increases~~authorizes ~~the~~national ~~maximum~~and ~~deposit~~state ~~insurance amount for~~ banks, ~~savings institutions and credit unions~~ to ~~$250,000~~establish ~~per~~branches ~~depositor,~~in ~~and~~other ~~extends~~states ~~unlimited deposit insurance~~ to ~~non-interest~~the ~~bearing~~same ~~transaction~~extent ~~accounts~~as ~~through~~a ~~December 31,~~bank ~~2012. Dodd-Frank~~chartered ~~also~~by ~~broadens~~that ~~the~~state ~~base~~would ~~for~~be ~~FDIC insurance assessments~~permitted. ~~Assessments~~Previously, ~~will~~banks ~~now~~could beonly ~~based~~establish onbranches ~~the~~in ~~average~~other ~~consolidated~~states ~~total~~if ~~assets~~the ~~less~~host ~~tangible~~state ~~equity~~expressly ~~capital~~permitted out-of ~~a financial institution. Dodd~~-~~Frank~~state ~~requires~~banks ~~the FDIC~~ to ~~increase~~establish ~~the~~branches ~~reserve~~in ~~ratio of the Deposit Insurance Fund from 1.15% to 1.35% of insured deposits by 2020 and eliminates the requirement~~ that ~~the FDIC pay dividends to insured depository institutions when the reserve ratio exceeds certain thresholds~~state. ~~Effective one year from the date of enactment~~Accordingly, ~~Dodd-Frank~~banks ~~eliminates~~will ~~the~~be ~~federal~~able ~~statutory~~to ~~prohibition~~enter ~~against~~new ~~the~~markets ~~payment~~more ~~of interest on business checking accounts~~freely.

~~Corporate~~Limits ~~Governance~~on Interstate Acquisitions and Mergers. The Dodd-Frank ~~requires~~Act ~~publicly~~precludes ~~traded companies to give stockholders~~ a ~~non-binding~~bank ~~vote~~holding oncompany ~~executive~~from ~~compensation~~engaging atin ~~least~~an ~~every~~interstate ~~three~~acquisition ~~years,~~— ~~a non-binding vote regarding~~ the ~~frequency~~acquisition of ~~the vote on executive compensation at least every six years, and~~ a ~~non-binding~~bank ~~vote~~outside onits ~~“golden~~home ~~parachute”~~state ~~payments~~— ~~in connection with approvals of mergers and acquisitions~~ unless ~~previously voted on by shareholders. The SEC has finalized~~ the ~~rules implementing~~bank ~~these~~holding ~~requirements~~company ~~which~~is ~~took~~both ~~effect~~well oncapitalized ~~January 21,~~and ~~2011~~well managed. ~~Additionally~~Furthermore, ~~Dodd-Frank~~a ~~directs~~bank ~~the~~may ~~federal~~not ~~banking~~engage ~~regulators~~in toan ~~promulgate~~interstate ~~rules prohibiting~~merger ~~excessive~~with ~~compensation~~another ~~paid~~bank toheadquartered ~~executives~~in ofanother ~~depository~~state ~~institutions~~unless ~~and~~the ~~their~~surviving ~~holding~~institution ~~companies~~will ~~with~~be ~~assets~~well incapitalized ~~excess~~and ofwell $1managed.~~0 billion, regardless of whether the company is publicly traded.~~ ~~Dodd-Frank~~The ~~also~~previous ~~gives~~standard ~~the~~in ~~SEC~~both ~~authority~~cases towas ~~prohibit~~adequately ~~broker~~capitalized ~~discretionary voting on elections of directors~~ and ~~executive~~adequately ~~compensation matters~~managed.

~~Prohibition~~Limits ~~Against~~on ~~Charter~~Interchange ~~Conversions of Troubled Institutions~~Fees. ~~Effective~~The ~~one year after enactment,~~ Dodd-Frank ~~prohibits~~Act aamends ~~depository~~the ~~institution~~Electronic ~~from~~Fund ~~converting~~Transfer ~~from~~Act ~~a state~~ to, ~~federal~~among ~~charter or vice versa while it is the subject of a cease and desist order or~~ other ~~formal~~things, ~~enforcement~~give ~~action or a memorandum of understanding with respect to a significant supervisory matter unless~~ the ~~appropriate~~Federal ~~federal~~Reserve ~~banking agency gives notice of~~ the ~~conversion~~authority to ~~the~~establish ~~federal~~rules orregarding ~~state~~interchange ~~authority~~fees ~~that~~charged ~~issued~~for ~~the~~electronic ~~enforcement~~debit ~~action~~transactions ~~and~~by ~~that~~payment ~~agency~~card ~~does~~issuers ~~not~~having ~~object~~assets ~~within~~over 30$10 ~~days. The~~billion ~~notice~~and ~~must include a plan~~ to ~~address~~enforce ~~the significant supervisory matter. The converting institution must also file~~ a ~~copy~~new ofstatutory ~~the~~requirement ~~conversion~~that ~~application~~such ~~with~~fees ~~its~~be ~~current~~reasonable ~~federal~~and ~~regulator~~proportional ~~which~~to ~~must notify~~ the ~~resulting~~actual ~~federal~~cost ~~regulator~~ of ~~any~~a ~~ongoing~~transaction ~~supervisory or investigative proceedings that are likely~~ to ~~result~~the ~~in an enforcement action and provide access to all supervisory and investigative information relating thereto~~issuer.

~~Interstate~~Consumer ~~Branching~~Financial Protection Bureau. The Dodd-Frank ~~authorizes~~Act ~~national~~creates a new, independent federal agency called the Consumer Financial Protection Bureau (“CFPB”), which is granted broad rulemaking, supervisory and ~~state~~enforcement ~~banks~~powers tounder ~~establish~~various ~~branches~~federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other ~~states~~statutes. The CFPB will have examination and primary enforcement authority with respect to ~~the~~depository ~~same~~institutions ~~extent~~with as$10 abillion ~~bank~~or ~~chartered~~more in assets. Smaller institutions will be subject to rules promulgated by ~~that~~the ~~state~~CFPB ~~would~~but will continue to be ~~permitted~~examined and supervised by federal banking regulators for consumer compliance purposes. ~~Previously,~~The ~~banks~~CFPB ~~could~~will ~~only~~have ~~establish~~authority ~~branches~~to inprevent ~~other~~unfair, ~~states~~deceptive ifor abusive practices in connection with the ~~host~~offering ~~state~~of ~~expressly~~consumer ~~permitted~~financial ~~out~~products. The Dodd-~~of-state~~Frank ~~banks~~Act authorizes the CFPB to establish ~~branches~~certain inminimum ~~that~~standards ~~state~~for the origination of residential mortgages including a determination of the borrower’s ability to repay. ~~Accordingly~~In addition, ~~banks~~the Dodd-Frank Act will beallow ~~able~~borrowers to ~~enter~~raise ~~new~~certain ~~markets~~defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB. The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more ~~freely~~stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

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~~Limits~~Possible onFuture Interstate Acquisitions and Mergers. Dodd-Frank precludes a bank holding company from engaging in an interstate acquisition — the acquisition of a bank outside its home state — unless the bank holding company is both well capitalized and well managed. Furthermore, a bank may not engage in an interstate merger with another bank headquartered in another state unless the surviving institution will be well capitalized and well managed. The previous standard in both cases was adequately capitalized and adequately managed.Legislation

~~Limits~~Congress onis ~~Interchange~~often ~~Fees~~considering some financial industry legislation, and the federal banking agencies routinely propose new regulations. ~~Dodd-Frank~~Riverview ~~amends~~cannot predict the ~~Electronic~~future ~~Fund~~effect ~~Transfer~~any ~~Act~~new tolegislation, ~~among~~or ~~other~~new ~~things,~~rules ~~give~~adopted ~~the~~by ~~Federal~~federal ~~Reserve~~or state banking agencies will have on the ~~authority~~business toof ~~establish~~Riverview ~~rules regarding~~and ~~interchange~~its ~~fees~~subsidiary. Given ~~charged~~that ~~for~~the ~~electronic~~financial ~~debit~~industry ~~transactions~~remains byunder ~~payment~~scrutiny, ~~card~~and ~~issuers~~given ~~having~~that ~~assets~~the ~~over~~U.S. ~~$10~~economy ~~billion~~has ~~and~~not yet fully recovered to ~~enforce~~pre-crisis alevels ~~new~~of ~~statutory~~activity, ~~requirement~~Riverview expects that ~~such~~there ~~fees~~will be ~~reasonable~~legislation and ~~proportional~~regulatory toactions ~~the~~that ~~actual~~may ~~cost~~materially ofaffect athe ~~transaction~~banking toindustry in the ~~issuer~~future.

Consumer Financial Protection Bureau. Dodd-Frank creates a new, independent federal agency called the Consumer Financial Protection Bureau (“CFPB”), which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes. The CFPB will have examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions will be subject to rules promulgated by the CFPB but will continue to be examined and supervised by federal banking regulators for consumer compliance purposes. The CFPB will have authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products. Dodd-Frank authorizes the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower’s ability to repay. In addition, Dodd-Frank will allow borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB. Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

Small Business Jobs Act

The Small Business Jobs Act was signed into law on September 27, 2010, which creates a $30 billion Small Business Lending Fund (the “Fund”) to provide community banks with capital to increase small business lending. Generally, bank holding companies with assets equal to or less than $10 billion are eligible to apply for and receive a capital investment from the Fund in an amount equal to 3-5% of its risk-weighted assets.

The capital investment will take the form of preferred stock carrying a 5% dividend which has the potential to decrease to as low as 1% if the participant sufficiently increases its small business lending within the first two and one-half years. If the participant does not increase its small business lending at least 2.5% in the first two and one-half years, the dividend rate will increase to 7%. After four and one-half years, the dividend will increase to 9% regardless of the participant’s small business lending. The deadline to apply to receive capital under the fund is March 31, 2011. Whether the Fund will help spur the economy by increasing small business lending or strengthening the capital position of community banks is uncertain.

Available Information

Riverview is subject to the informational requirements of Section 15(d) of the Exchange Act, and, accordingly, files reports, and other information with the Securities and Exchange Commission. The reports and other information filed with the SEC are available for inspection and copying at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, and Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Riverview is an electronic filer with the SEC. The SEC maintains an internet site that contains reports and information statements, and other information regarding issuers that file electronically with the SEC. The SEC’s internet site address is http://www.sec.gov.

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information statements, and other information regarding issuers that file electronically with the SEC. The SEC’s internet site address is http://www.sec.gov.

Riverview’s headquarters are located at 3rd and Market Streets, Halifax, Pennsylvania 17032, and its telephone number is (717) 896-3433.

At December 31, ~~2010~~2011, Riverview had 5568 full time employees and 119 part time employees. In the opinion of management, Riverview enjoys a satisfactory relationship with its employees and is not a party to any collective bargaining agreement.

ITEM 1A. RISK FACTORS.

Not required for smaller reporting companies.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Riverview owns a parking lot located at 110 Verbeke Street, Marysville, Pennsylvania 17053, which is adjacent to the Bank owned main office ofbuilding ~~the~~located ~~Bank~~at 200 Front Street, Marysville, Pennsylvania 17053. The table below sets forth the locations of the properties that are owned and leased in the name of the Bank, which include its main office, branch offices and certain parking facilities related to its banking offices. As for those properties that are owned, all are owned free and clear of any lien. The Bank’s main office and all branch offices are located in Pennsylvania.

The following locations operate under the name ~~“The First National Bank~~ of “Marysville Bank, a division of Riverview ~~National~~ Bank”:

Office and Address 2040 Good Hope Road, Enola, Pennsylvania 17025 (leased) ~~1288 North Mountain Road, Harrisburg, Pennsylvania 17112 (leased)~~ 55 South Main Street, Duncannon, Pennsylvania 17020 (leased) ~~200 Front Street, Marysville, Pennsylvania 17053 (owned)~~ 500 South State Road, Marysville, Pennsylvania 17053 (owned)

~~The following locations operate under the name “Halifax National Bank, a division of Riverview National Bank”:~~13

Office and Address Third and Market Streets, Halifax, Pennsylvania 17032 (owned) 311 South Market Street, Millersburg, Pennsylvania 17061 (owned) Drive-through facility on 16 N. 3rd Street, Halifax, Pennsylvania 17032 (owned) 15 N. 3rd Street, Halifax, Pennsylvania 17032 (owned) Parking Lot on N. 3rd Street, Halifax, Pennsylvania 17032 (owned) Market Street Main Building (owned) 34 South Market Street, Elizabethville, Pennsylvania 17023 (leased) 920 East Wiconisco Avenue, Tower City, Pennsylvania 17980 (leased)

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The following locations operate under the name of “Halifax Bank, a division of Riverview Bank”:

Office and Address

Third and Market Streets, Halifax, Pennsylvania 17032 (owned)

311 South Market Street, Millersburg, Pennsylvania 17061 (owned)

Drive-through facility on 16 N. 3rd Street, Halifax, Pennsylvania 17032 (owned)

15 N. 3rd Street, Halifax, Pennsylvania 17032 (owned)

Parking Lot on N. 3rd Street, Halifax, Pennsylvania 17032 (owned)

Market Street Main Building (owned)

34 South Market Street, Elizabethville, Pennsylvania 17023 (leased)

920 East Wiconisco Avenue, Tower City, Pennsylvania 17980 (leased)

The following locations operate under the name of “Riverview Bank”:

Office and Address

57 S. Sillyman Street, Cressona, Pennsylvania 17929 (leased)

1021 Centre Turnpike, Orwigsburg, Pennsylvania 17961 (leased)(1)

121 Progress Avenue, Pottsville, Pennsylvania 17901 (leased)

(1) This location is expected to open during the second quarter of 2012.

All of these properties are in good condition and are deemed by management to be adequate for Riverview’s purposes.

ITEM 3. LEGAL PROCEEDINGS.

Management is not aware of any litigation that would have a materially adverse effect on the consolidated financial position or results of operations of Riverview. There are no proceedings pending other than ordinary routine litigation incident to the business of Riverview and the Bank. In addition, management does not know of any material proceedings contemplated by governmental authorities against Riverview or the Bank or any of its properties.

ITEM 4. ~~(REMOVED~~MINE ~~AND~~SAFETY ~~RESERVED)~~DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The authorized common stock of Riverview consists of 5,000,000 shares of common stock with a par value of $0.50 per share of which 1,750,003 shares were issued and 1,~~745~~722,~~916~~041 shares were outstanding as of December 31, ~~2010~~2011 and held by approximately ~~370~~340 holders of record. ~~The number of shareholders does not reflect the number of individuals or institutional investors holding stock in nominee name through banks, brokerage firms, and others.~~ Riverview common stock is listed on the OTC Markets Group Inc. (~~formerly known as the Pink OTC Markets) (~~www.otcmarkets.com) under the OTCQB tier. The stock is traded in the over-the-counter market and privately negotiated transactions under the symbol “RIVE” and is traded at irregular intervals.

Riverview pays dividends on the outstanding shares of common stock on a quarterly basis at the discretion of the Board of Directors which bases its decision on Riverview’s earnings, cash requirements and ~~overall financial position. The following table presents the per share cash dividends declared by the Board of Directors and paid for the years presented.~~

	Per Share Cash Dividends Paid
2010 First quarter	$	0.125
Second quarter	0.125
Third quarter	0.125
Fourth quarter	0.125
	$	0.500
2009 First quarter	$	0.100
Second quarter	0.100
Third quarter	0.100
Fourth quarter	0.120
	$	0.420

OnTable ~~February 21, 2011, the Board~~ of Directors declared a quarterly cash dividend of $0.125 per common share, payable on March 31, 2011 to all common shareholders of record as of March 15, 2011. The cash dividend is comprised of a regular dividend of $0.08 per share and a special dividend of $0.045 per share for a total dividend of $0.125 per share.Contents

overall financial position. The following table presents the per share cash dividends declared by the Board of Directors and paid for the years presented.

		Per Share Cash Dividends Paid
2011	First quarter	$	0.125
	Second quarter	0.125
	Third quarter	0.125
	Fourth quarter	0.150
		$	0.525

2010	First quarter	$	0.125
	Second quarter	0.125
	Third quarter	0.125
	Fourth quarter	0.125
		$	0.500

On February 15, 2012, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable on March 30, 2012 to all common shareholders of record as of March 7, 2012. The cash dividend is comprised of a regular dividend of $0.08 per share and a special dividend of $0.045 per share for a total dividend of $0.125 per share.

Additional information relating to dividend restrictions can be found in Note 13 — Regulatory Matters and Shareholders’ Equity — in Part II, Item 8 — Financial Statements and Supplementary Data - incorporated in this Form 10-K.

The following table provides information on repurchases by Riverview of its common stock in each month of the quarter ended December 31, 2011:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publically Announced Plans or Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)

October 1-31, 2011	—	$	—	—	78,263
November 1-30, 2011	20,475	9.25		20,475	57,788
December 1-31, 2011	—	—		—	57,788
Total	20,475	$	9.25	20,475	57,788

(1) On March 7, 2012, Riverview reaffirmed its Stock Repurchase program, which it originally authorized April 9, 2010, approving the purchase of up to 4.9% of its outstanding common stock, which amounts to approximately 85,500 shares. These shares are purchased in open market or privately negotiated transactions at prevailing market prices from time to time over a twelve-month period depending upon market conditions and other factors including any blackout periods during which Riverview and its insiders may be prohibited from trading in Riverview’s common stock. As of December 31, 2011, 23,875 shares were purchased under this program during 2011 and recorded as treasury stock at cost.

Information about Riverview’s Equity Compensation Plans can be found in Part III, Item 12 under the caption “Securities Authorized for Issuance Under Equity Compensation Plans” and is incorporated herein by reference.

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Information about Riverview’s Equity Compensation Plans can be found in Part II, Item 7 under the caption “Securities Authorized for Issuance Under Equity Compensation Plans” and is incorporated herein by reference.

The following table provides information on repurchases by Riverview of its common stock in each month of the quarter ended December 31, 2010:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publically Announced Plans or Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
October 1-31, 2010	—	$	—	—	82,763
November 1-30, 2010	1,000	10.64		1,000	81,763
December 1-31, 2010	100	10.90		100	81,663
Total	1,100	$	10.66	1,000

(1) On March 9, 2011, Riverview reaffirmed its Stock Repurchase program, which it originally authorized April 9, 2010, approving the purchase of up to 4.9% of its outstanding common stock, which amounts to approximately 85,500 shares. These shares are purchased in open market or privately negotiated transactions at prevailing market prices from time to time over a twelve-month period depending upon market conditions and other factors including any blackout periods during which the Corporation and its insiders may be prohibited from trading in the Corporation’s common stock. As of December 31, 2010, 4,087 shares were purchased under this program during 2010 and recorded as treasury stock at cost.

ITEM 6. SELECTED FINANCIAL DATA.

Not Required.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF RIVERVIEW FINANCIAL CORPORATION.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this document and in documents incorporated by reference herein, including matters discussed below, may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Riverview to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” and similar expressions are intended to identify such forward-looking statements.

Riverview’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:

· anticipated cost savings and synergies from the consolidation may not be realized;

· the effects of future economic conditions on Riverview and the ~~Riverview National~~ Bank’s customers;

· the costs and effects of litigation and of unexpected or adverse outcomes in such litigation;

· governmental monetary and fiscal policies, as well as legislative and regulatory change;

· the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters;

· the risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks;

· the impact of new laws and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations promulgated there under;

· the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in Riverview’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet;

· technological changes;

· acquisitions and integration of acquired businesses;

· the failure of assumptions underlying the establishment of reserves for loan and lease losses and estimations of values of collateral and various financial assets and liabilities;

· acts of war or terrorism;

· volatilities in the securities market; and

· deteriorating economic conditions.

All written or oral forward-looking statements attributable to Riverview are expressly qualified in their entirety by these cautionary statements.

We caution readers not to place undue reliance on these forward-looking statements. They only reflect management’s analysis as of this date. Riverview does not revise or update these forward-looking statements to reflect events or changed circumstances. Please carefully review the risk factors described in this Annual Report on Form 10-K and other documents Riverview files from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q and any other Current Reports on Form 8-K.

Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of Riverview’s consolidated financial statements and should be read in conjunction with

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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes~~ the ~~major elements of Riverview’s consolidated financial statements and should be read in conjunction with the~~ Consolidated Financial Statements of Riverview and Notes thereto and other detailed information appearing elsewhere in this Annual Report.

Critical Accounting Policies and Estimates

The consolidated financial statements include Riverview and its wholly-owned subsidiary, Riverview ~~National~~ Bank. All significant intercompany accounts and transactions have been eliminated.

The accounting and reporting policies followed by Riverview conform, in all material respects, to accounting principles generally accepted in the United States of America. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and results of operations for the periods indicated. Actual results could differ significantly from those estimates.

Riverview’s accounting policies are fundamental to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations. The most significant accounting policies followed by Riverview are presented in Note 1 of the consolidated financial statements. Note 1 presents significant accounting policies used in the development and presentation of its financial statements. This discussion and analysis, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of Riverview and its results of operations. Riverview has identified several policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the allowance for loan losses, valuation of its securities, goodwill and other intangible assets and accounting for income taxes.

Riverview performs periodic and systematic detailed reviews of its loan portfolio to assess overall collectability. The level of the allowance for loan losses reflects the estimate of the losses inherent in the loan portfolio at any point in time. While these estimates are based on substantiated methods for determining allowance requirements, actual outcomes may differ significantly from estimated results, especially when determining allowances for business, construction, and commercial real estate loans. These loans are normally larger and more complex, and their collection rates are harder to predict. Personal loans, including personal mortgage and other consumer loans, are individually smaller and perform in a more homogenous manner, making loss estimates more predictable.

Riverview records its available -for -sale securities at fair value. Fair value of these securities is determined based on methodologies in accordance with generally accepted accounting principles. Fair values are volatile and may be influenced by a number of factors, including market conditions, discount rates, credit ratings and yield curves. Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values used are based on the quoted prices of similar instruments or an estimate of fair value by using a range of fair value estimates in the marketplace as a result of the illiquid market specific to the type of security.

When the fair value of a security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair value is below amortized cost, additional analysis is performed to determine whether an other -than -temporary impairment condition exists. Available -for -sale securities are analyzed quarterly for possible other -than -temporary impairment. The analysis considers (i) whether the bank has the intent to sell the securities prior to recovery and/or maturity and (ii) whether it is more likely than not that the bank will have to sell the securities prior to recovery and/or maturity. Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on Riverview’s results of operations and financial condition.

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~~results~~Goodwill and other intangible assets are reviewed for potential impairment on an annual basis, or more often if events or circumstances indicate that there may be impairment in accordance with generally accepted accounting principles relating to Goodwill and Other Intangible Assets, and Accounting for Impairment or Disposal of ~~operations~~Long-Lived Assets. Goodwill is tested for impairment annually and ~~financial~~an ~~condition~~impairment loss would be recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. Riverview employs general industry practices in evaluating the fair value of its goodwill and other intangible assets. No assurance can be given that future impairment tests will not result in a charge to earnings.

~~Goodwill~~Deferred ~~and~~income ~~other~~tax ~~intangible~~ assets ~~are~~and ~~reviewed~~liabilities ~~for~~are ~~potential~~determined ~~impairment~~using onthe anliability ~~annual~~method. Under ~~basis~~this method, orthe ~~more~~net ~~often~~deferred iftax ~~events~~asset or ~~circumstances~~liability ~~indicate~~is ~~that~~recognized ~~there~~for ~~may~~the befuture ~~impairment~~tax inconsequences ~~accordance~~attributable ~~with~~to ~~generally~~differences ~~accepted~~between ~~accounting~~the ~~principles~~financial ~~relating~~statement tocarrying ~~Goodwill~~amounts of existing assets and ~~Other~~liabilities ~~Intangible~~and ~~Assets,~~their respective tax bases. Deferred tax assets and ~~Accounting~~liabilities ~~for~~are ~~Impairment~~measured orusing ~~Disposal~~enacted oftax ~~Long-Lived~~rates ~~Assets~~applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. ~~Goodwill~~The iseffect ~~tested~~on ~~for~~deferred ~~impairment~~tax assets and anliabilities ~~impairment~~of ~~loss~~a change in tax rates is ~~recorded~~recognized toin income tax expense in the period that includes the enactment date. To the extent that current available evidence about the ~~carrying~~future ~~amount~~raises doubt about the likelihood of ~~goodwill~~a ~~exceeds~~deferred ~~its~~tax ~~implied~~asset ~~fair~~being ~~value~~realized, a valuation allowance would be established. ~~Riverview~~The ~~employs~~judgment ~~general~~about ~~industry~~the ~~practices~~level inof ~~evaluating~~future ~~the~~taxable ~~fair~~income, ~~value~~including ofthat ~~its~~which ~~goodwill~~is considered capital, is inherently subjective and ~~other~~is ~~intangible~~reviewed ~~assets. No~~on ~~assurance~~a ~~can~~continual bebasis ~~given~~as regulatory and business factors change. Riverview has deemed that ~~future~~its ~~impairment~~deferred ~~tests~~tax assets will more likely than not ~~result~~be inrealized, and accordingly, has not established a ~~charge~~valuation toallowance ~~earnings~~on them.

Deferred income tax assets and liabilities are determined using the liability method. Under this method, the net deferred tax asset or liability is recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. To the extent that current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established. The judgment about the level of future taxable income, including that which is considered capital, is inherently subjective and is reviewed on a continual basis as regulatory and business factors change. Riverview has deemed that its deferred tax assets will more likely than not be realized, and accordingly, has not established a valuation allowance on them.

OVERVIEW

Business Combination

On December 31, 2008 and pursuant to the Agreement and Plan of Consolidation (the “Agreement”), dated, June 18, 2008, as amended, by and between First Perry Bancorp, Inc. (“First Perry”) and HNB Bancorp, Inc. (“HNB”), Riverview Financial Corporation, a Pennsylvania Corporation, was formed upon the completion of the consolidation of First Perry and HNB under Pennsylvania law. Riverview issued 1,750,003 shares of common stock. Each outstanding share of common stock of First Perry and HNB was converted into 2.435 and 2.520 shares of Riverview’s common stock, respectively. Further, The First National Bank of Marysville, the wholly owned subsidiary of First Perry, and Halifax National Bank, the wholly owned subsidiary of HNB, consolidated to form Riverview National Bank, which isbecame the wholly owned subsidiary of Riverview. The primary reason for the combination was to pool resources to provide greater products and services to customers in the contiguous counties, and to provide better efficiencies and cost savings through the consolidation of operations. On March 14, 2011, Riverview National Bank filed an application with the Pennsylvania Department of Banking to convert from a national banking association to a Pennsylvania state-chartered bank. The conversion was effective November 19, 2011 at which time the Bank became known as Riverview Bank and its operating divisions Marysville Bank and Halifax Bank.

Riverview’s results of operations are primarily derived from the management of spread income generated between the interest received on its interest-earning assets and the interest paid on its interest-bearing liabilities. Changes in net interest income are not only affected by changes in interest rates, but are also impacted by changes in the make-up and volume of the balance sheet as well as the level of yield generated from interest-earning assets versus the costs associated with interest-bearing liabilities. Riverview also generates non-interest income from fees associated with various products and services offered to customers, mortgage banking activities, bank owned life insurance (“BOLI”) and from the sale of assets, such as loans or investments. Offsetting these revenues are provisions for potential losses on loans, administrative expenses and income taxes.

As of the ~~2010~~2011 year end, Riverview achieved net income of $1,~~287~~561,000, an increase of 1521.83% from net income of $1,~~111~~287,000 for the ~~2009~~2010 year end. Basic ~~and diluted~~ earnings per share inof ~~2010 were~~ $0.7490 per share, anin ~~increase~~2011 ofincreased 1721.56% ~~from~~over basic earnings per share of $0.6374 per share in ~~2009~~2010. ~~The~~Diluted ~~increase~~earnings isper ~~primarily~~share ~~attributable to an increase in net interest income as a result~~ of ~~lower cost of funds~~$0. ~~The~~89 ~~return~~per onshare ~~average~~in ~~assets~~2011 ~~was~~increased 020.493% asfrom ofdiluted ~~the~~earnings ~~2010~~per ~~year~~share ~~end~~of ~~compared with~~ $0.~~46%~~74 asper ofshare ~~the~~in ~~2009 year end~~2010. ~~Return~~The onincrease ~~average~~in ~~equity~~the ~~was~~earning ~~5.01%~~per inshare ~~2010~~is ~~compared~~attributable to ~~4.45%~~an ~~in 2009. The~~ increase in ~~both~~net ~~ratios~~income isyear ~~due~~over toyear ~~the~~as ~~increase~~well inas ~~net~~a ~~income~~decrease ~~during 2010.~~in

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outstanding common shares as a result of the common shares repurchased by Riverview under its Stock Repurchase program. The return on average assets was 0.56% as of the 2011 year end compared with 0.49% as of the 2010 year end. Return on average equity was 6.02% in 2011 compared to 5.01% in 2010. The increase in both ratios is principally due to the increase in net income during 2011.

RESULTS OF OPERATIONS

Net Interest Income and Net Interest Margin

~~Net interest income is the most significant component of~~ Riverview’s ~~net~~profitability ~~income~~is aslargely a ~~result~~function of ~~its focus on traditional banking activities. It is~~ the ~~difference~~spread between interest ~~income~~rates earned on ~~interest-~~earning assets and the interest ~~expense~~rates paid on deposits and other interest- bearing liabilities. ~~The~~Like ~~change~~most infinancial ~~net interest income from year to year may be due to changes in interest rates~~institutions, ~~changes in volumes of interest-earning assets and liabilities as well as changes in the mix of such assets and liabilities.~~ Riverview’s ~~principal~~net interest~~-earning~~ ~~assets~~income ~~are loans to individuals~~ and ~~small~~margin ~~businesses,~~are ~~with~~affected aby ~~secondary~~general ~~source~~economic ofconditions ~~income earned from the investment securities portfolio~~ and other ~~interest-earning~~factors, ~~deposits~~including ~~with~~fiscal ~~banks. Interest-bearing~~and ~~liabilities~~monetary ~~consist~~policies ~~primarily~~ of ~~demand~~the ~~deposit~~federal ~~accounts,~~government ~~time~~that ~~deposits,~~influence ~~money~~ market ~~accounts,~~interest ~~savings~~rates ~~deposits,~~and ~~securities~~Riverview’s ~~sold~~ability ~~under~~to ~~agreements~~respond to ~~repurchase and borrowings. Generally,~~ changes in ~~net~~such ~~interest income are portrayed by net interest rate spread and net interest margin~~rates. ~~Net~~At ~~interest~~any ~~rate~~given ~~spread~~time, isRiverview’s ~~equal to the difference between the average rate earned on interest-earning~~ assets and ~~the average rate incurred on interest-bearing~~ liabilities~~. Net~~ ~~interest~~may ~~margin~~be issuch ~~the~~that ~~average~~they ~~yield~~are onaffected ~~interest-earning~~differently ~~assets~~by ~~minus~~a ~~the~~change ~~average~~in interest ~~rate paid on interest-bearing deposits~~rates. ~~Net~~The ~~interest~~change ~~income~~in ~~growth is generally dependent upon balance sheet growth and maintaining or growing the~~ net interest ~~margin. For analysis purposes, net interest~~ income isfrom ~~evaluated~~year onto ayear ~~fully~~may ~~tax-equivalent~~be ~~(“FTE”)~~due ~~basis. The~~to ~~FTE~~changes ~~basis~~in isinterest ~~calculated~~rates, bychanges ~~grossing~~in upvolumes ~~the~~of ~~yield on tax~~interest-~~exempt~~earning ~~securities~~assets and ~~loans~~interest bybearing ~~the~~liabilities ~~Federal~~as ~~tax~~well ~~rate~~as ofchanges ~~34%~~ in ~~order that~~ the ~~yield~~mix onof ~~tax-exempt~~such assets ~~may~~and ~~be comparable to interest earned on taxable assets~~liabilities.

Riverview’s principal interest-earning assets are loans to individuals and small businesses, with a secondary source of income earned from the investment securities portfolio and other interest-earning deposits with banks. Interest-bearing liabilities consist primarily of demand deposit accounts, time deposits, money market accounts, savings deposits, securities sold under agreements to repurchase and borrowings. Generally, changes in net interest income are portrayed by net interest rate spread and net interest margin. Net interest rate spread is equal to the difference between the average rate earned on interest-earning assets and the average rate incurred on interest-bearing liabilities. Net interest margin is the average yield on interest-earning assets minus the average interest rate paid on interest-bearing deposits. Net interest income growth is generally dependent upon balance sheet growth and maintaining or growing the net interest margin. For analysis purposes, net interest income is evaluated on a fully tax-equivalent (“FTE”) basis. The FTE basis is calculated by grossing up the yield on tax-exempt securities and loans by the Federal tax rate of 34% in order that the yield on tax-exempt assets may be comparable to interest earned on taxable assets.

2011 Compared to 2010

Total interest income decreased on a FTE basis by $62,000, or 0.5%, to $12,856,000 for 2011 from $12,918,000 for 2010. This decrease was due to the decline in the yield from total interest-earning assets to 4.99% for 2011 from 5.35% for 2011. Although total interest-earning assets increased on average by $16,246,000 or 6.7% to $257,701,000 for 2011 from $241,455 for 2010, the yield related to loans, which makes up the largest component of total interest-earning assets, decreased to 5.88% for 2011 from 6.15% for 2010. In addition, the volume of other interest-earning assets, which generates the lowest yield of all interest-earning assets, increased by $12,700,000 in 2010. The increase in the yield from total securities to 4.20% for 2011 from 3.94% for 2010 helped to somewhat minimize the impact from the decline in the loan yield.

Total interest expense decreased $397,000, or 9.7% to $3,681,000 for the year ended December 31, 2011 from $4,078,000 for the year ended December 31, 2010. Cost of funds decreased to 1.59% at the end of 2011 from 1.89% at the end of 2010. The decline in the cost of funds offset the 7.1% increase in the volume of average interest-bearing liabilities year over year.

Net interest income calculated on a FTE basis increased $335,000, or 3.8%, to $9,175,000 for the year ended December 31, 2011 from $8,840,000 for the year ended December 31, 2010. Riverview’s net interest spread decreased to 3.40% at December 31, 2011 from 3.46% at December 31, 2010, while its net interest margin decreased to 3.56% at December 31, 2011 from 3.66% at December 31, 2010. In consideration of the increased volume of interest-earning assets and interest-bearing liabilities and a declining interest rate environment, management proactively managed the cost associated with interest-bearing liabilities to offset the decline in yields from interest earning assets.

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2010 Compared to 2009

Total interest income increased on a FTE basis (as adjusted for the tax benefit derived from tax exempt assets — see Table 1 for calculation), by $461,000, or 3.7%, to $12,918,000 for the year ended December 31, 2010 from $12,457,000 for the year ended December 31, 2009. Total interest income increased as a result of 9% growth in total average interest earning assets, even though the yield associated with interest earning assets declined to 5.35% at December 31, 2010 from 5.62% at December 31, 2009.

Total interest expense decreased $782,000, or 16.1%, to $4,078,000 in 2010 from $4,860,000 in 2009, even though average interest bearing liabilities increased $19,632,000 or 10%. The decrease in total interest expense was attributable to a decline in cost of funds to 1.89% at December 31, 2010 from 2.48% at December 31, 2009. Further contributing to the decrease was a change in the composition of deposits, where time deposits, which generally carry the highest cost to fund, declined 11% from the 2009 year end to the 2010 year end, while average interest-bearing demand deposit volume, which generally have a lower funding cost, increased 88.8% year over year.

Net interest income calculated on a FTE basis increased $1,243,000, or 16.4%, to $8,840,000 for the year ended December 31, 2010 from $7,597,000 for the year ended December 31, 2009. Riverview’s net interest spread (on a fully tax equivalent basis) increased to 3.46% for 2010 from 3.14% for 2009, while net interest margin (on a fully tax equivalent basis) increased to 3.66% for 2010 from 3.43% for 2009. InManagement ~~consideration of the increased volume of interest earning assets and interest bearing liabilities, management proactively~~ managed the cost associated with interest bearing liabilities and was able to improve its net interest spread and margin even though the yields from interest earning assets declined. ~~Riverview’s ability to manage net interest income over a variety of interest rate and economic environments is important to its financial success.~~

2009 Compared to 2008

Total interest income increased on a FTE basis by $5,135,000, or 70.1 %, to $12,457,000 for 2009 from $7,322,000 for 2008. This increase was due to the consolidation and organic growth of the Bank, which contributed to the 85.8% increase in average interest-earning assets to $221,605,000 in 2009 from $119,246,000 in 2008. The growth in average interest-earning assets was attributable to a 43.6 % increase in investment securities, 77.2% increase in loans and a 1651.3% increase in other interest-earning assets, mostly

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comprised of deposits with banks. The increased volume offset the decline in yields (calculated on a fully tax-equivalent basis) to 5.62% for 2009 from 6.14% in 2008. The decline in the yield on earning assets was attributable to changes in market interest rates.

Total interest expense increased $1,816,000, or 59.7% to $4,860,000 for the year ended December 31, 2009 from $3,044,000 for the year ended December 31, 2008. Cost of funds decreased to 2.48% at the end of 2009 from 2.87% at the end of 2008. The decline in the cost of funds offset the increase in the volume of average interest-bearing liabilities, which increased as a result of the consolidation.

Net interest income calculated on a FTE basis increased $3,319,000, or 77.6%, to $7,597,000 for the year ended December 31, 2009 from $4,278,000 for the year ended December 31, 2008. Riverview’s net interest spread decreased to 3.14% at December 31, 2009 from 3.27% at December 31, 2008, while its net interest margin decreased to 3.43% at December 31, 2009 from 3.58% at December 31, 2008. In consideration of the increased volume of interest-earning assets and interest-bearing liabilities and a declining interest rate environment, management proactively managed the cost associated with interest-bearing liabilities to offset the decline in yields from interest earning assets.

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Table 1 presents a summary of Riverview’s average balances, interest rates, interest income and expense, the interest rate spread and the net interest margin, adjusted to a fully tax-equivalent basis, for the years ended December 31, ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009.

TABLE 1

AVERAGE BALANCES, RATES AND INTEREST INCOME AND EXPENSE

	2010						2009						2008
Year Ended December 31,	2011						2010						2009
Year Ended December 31,	Average						Average						Average
	Average						Average						Average
(Dollars in thousands)	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
Assets
Interest-earning Assets
Securities:
Taxable securities (2)	$	3428,~~261~~115	$	~~1,043~~944	3.0436	%	$	1534,~~731~~261	$	~~514~~1,043	3.2704	%	$	15,~~917~~731	$	~~, 596~~514	3.7427	%
Tax-exempt securities (1)(2)	1316,~~909~~825		~~855~~942		65.1560	%	1113,~~516~~909		~~686~~855		56.9615	%	311,~~061~~516		~~208~~686		65.8096	%
Total securities	4844,~~170~~940		1,~~898~~886		34.9420	%	2748,~~247~~170		1,~~200~~898		43.4094	%	1827,~~978~~247		~~804~~1,200		4.2440	%
Loans (1)(3)
Consumer	21,~~409~~921		~~176~~139		7.3124	%	42,~~959~~409		~~281~~176		57.6731	%	34,~~622~~959		~~276~~281		75.6267	%
Commercial	1214,~~723~~454		~~749~~793		5.8949	%	1112,~~647~~723		749		65.4389	%	911,~~030~~647		~~626~~749		6.9343	%
Real estate	~~163~~168,~~070~~583		109,~~026~~951		65.1590	%	~~159~~163,~~136~~070		10,~~065~~026		6.3215	%	86159,~~553~~136		510,~~585~~065		6.4532	%
Total loans	~~178~~184,~~202~~958		10,~~951~~883		65.1588	%	~~175~~178,~~742~~202		1110,~~095~~951		6.3115	%	99175,~~205~~742		611,~~487~~095		6.5431	%
Other interest-earning assets	1527,~~083~~803		6987		0.4631	%	1815,~~616~~083		~~162~~69		0.8746	%	118,~~063~~616		31162		20.9287	%
Total interest-earning assets	~~241~~257,~~455~~701		12,~~918~~856		54.3599	%	~~221~~241,~~605~~455		12,~~457~~918		5.6235	%	~~119~~221,~~246~~605		712,~~322~~457		65.1462	%
Non-interest earning assets	21,~~195~~772						21,~~217~~195						1021,~~007~~217
Total Assets	$	~~262~~279,~~650~~473					$	~~242~~262,~~822~~650					$	~~129~~242,~~253~~822
Liabilities and Shareholders’ Equity
Interest-bearing Liabilities
Deposits:
Interest-bearing demand deposits	$	7687,~~147~~976	$	1,~~130~~126	1.4828	%	$	4076,~~337~~147	$	~~602~~1,130	1.4948	%	$	1740,~~020~~337	$	~~216~~602	1.2749	%
Savings deposits	3132,~~071~~814		~~304~~145		0.9844	%	2831,~~709~~071		~~302~~304		10.0598	%	1528,~~067~~709		~~137~~302		01.9105	%
Time deposits	9697,~~376~~940		2,~~362~~099		2.4514	%	~~108~~96,~~321~~376		32,~~569~~362		32.2945	%	51108,~~059~~321		13,~~942~~569		3.8029	%
Total deposits	~~203~~218,~~594~~730		3,~~796~~370		1.8654	%	~~177~~203,~~367~~594		43,~~473~~796		21.5286	%	83177,~~146~~367		24,~~295~~473		2.7652	%
Borrowings:
Short-term borrowings	1,~~217~~002		73		0.5830	%	81,~~111~~217		497		0.6058	%	98,~~743~~111		~~152~~49		10.5660	%
Long-term borrowings	1011,~~690~~108		~~275~~308		2.5777	%	10,~~391~~690		~~338~~275		32.2557	%	1310,~~180~~391		~~597~~338		43.5325	%
Total borrowings	1112,~~907~~110		~~282~~311		2.3757	%	1811,~~502~~907		~~387~~282		2.0937	%	2218,~~923~~502		~~749~~387		32.2709	%
Total interest-bearing liabilities	~~215~~230,~~501~~840		43,~~078~~681		1.8959	%	~~195~~215,~~869~~501		4,~~860~~078		21.4889	%	~~106~~195,~~069~~869		34,~~044~~860		2.8748	%
Non-interest bearing liabilities:
Demand deposits	1921,~~950~~319						2019,~~338~~950						920,~~684~~338
Other liabilities	1,~~520~~393						1,~~652~~520						~~692~~1,652
Shareholders’ equity	25,~~679~~921						2425,~~963~~679						1224,~~808~~963
Total Liabilities and Shareholders’ Equity	$	~~262~~279,~~650~~473					$	~~242~~262,~~822~~650					$	~~129~~242,~~253~~822
Net Interest Income			$	89,~~840~~175					$	78,~~597~~840					$	47,~~278~~597
Net Interest Spread					3.4640	%					3.1446	%					3.2714	%
Net Interest Margin					3.6656	%					3.4366	%					3.5843	%

(1) Yields on tax-exempt assets have been calculated on a fully tax equivalent basis assuming a tax rate of 34%.

(2) Available-for-sale securities are reported at amortized cost for purposes of calculating yields.

(3) For yield calculation purposes, non-accruing loans are included in the average loan balances, and any income recognized on these loans is included in interest income.

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Table 2 ~~presents~~highlights athe ~~summary~~impact of ~~changes~~changing in interest ~~income~~rates and ~~interest expense resulting from changes in~~ volumes ~~(average~~on ~~balances)~~interest income and ~~changes~~interest inexpense ~~rates~~ for the periods indicated.

TABLE 2

RATE VOLUME ANALYSIS OF NET INTEREST INCOME

FOR THE YEARS ENDED DECEMBER 31,

	2010 vs. 2009									2009 vs. 2008
	2011 vs. 2010									2010 vs. 2009
	Increase/(Decrease)									Increase/(Decrease)
(In thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest-Earning Assets:
Interest-bearing due from banks and federal funds sold	$	~~(17~~41	)	$	(7623	)	$	~~(93~~18	)	$	~~151~~(17	)	$	(2076	)	$	~~131~~(93	)
Securities, taxable (1)	~~565~~(209		)	~~(36~~110		)	~~529~~(99		)	(7565		)	(7536		)	~~(82~~529		)
Securities, tax-exempt (1)	~~148~~162			21(75		)	~~169~~87			~~503~~148			~~(25~~21		)	~~478~~169
Loans (1)	~~137~~413			(~~281~~481		)	(~~144~~68		)	~~4,836~~137			(~~228~~281		)	~~4,608~~(144		)
Net Change in Interest Income	~~833~~407			(~~372~~469		)	~~461~~(62		)	~~5,483~~833			(~~348~~372		)	~~5,135~~461
Interest-Bearing Liabilities:
Interest-bearing demand deposits	~~532~~148			(4152		)	~~528~~(4		)	~~349~~532			37(4		)	~~386~~528
Savings deposits	229			(20168		)	2(159		)	~~144~~22			21(20		)	~~165~~2
Time deposits	~~(297~~36		)	(~~910~~299		)	(~~1,207~~263		)	~~1,887~~(297		)	(~~260~~910		)	(1,~~627~~207		)
Borrowings:
Short-term borrowings	(401		)	(23		)	(424		)	(840		)	(952		)	(~~103~~42		)
Long-term borrowings	812			~~(71~~21		)	~~(63~~33		)	~~(90~~8		)	(~~169~~71		)	(~~259~~63		)
Net Change in Interest Expense	~~225~~204			(~~1,007~~601		)	(~~782~~397		)	~~2,282~~225			(~~466~~1,007		)	~~1,816~~(782		)
CHANGE IN NET INTEREST INCOME	$	~~608~~203		$	~~635~~132		$	~~1,243~~335		$	~~3,201~~608		$	~~118~~635		$	31,~~319~~243

(1) Yields on tax-exempt assets have been computed on a fully tax-equivalent basis assuming a tax rate of 34%.

Provision for Loan Losses

Provisions for loan losses ~~are~~represent management’s determination of the amount necessary to be charged to operations in order to maintain the allowance for loan losses at a level that represents management’s ~~considers~~best ~~adequate~~estimate toof ~~absorb~~the ~~credit~~known ~~losses~~and inherent losses in the existing loan portfolio. Credit exposures deemed uncollectible are charged against the allowance for loan losses. Recoveries of previously charged-off loans are credited to the allowance for loan losses. The Bank performs periodic evaluations of the allowance for loan losses with consideration given to historical, internal and external factors. In evaluating the adequacy of the allowance for loan losses, management considers historical loss experience, delinquency trends and charge-off activity, status of past due and non-performing loans, growth within the portfolio, the amount and types of loans comprising the loan portfolio, adverse situations that may affect a borrower’s ability to pay, the estimated value of underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are caused to undergo interpretation and possible revision as events occur or as more information becomes available. Loans are also reviewed for impairment based on discounted cash flows using the loans’ initial effective interest rates or the fair value of the collateral for certain collateral dependent loans as provided under the accounting standard relating to Accounting by Creditors for Impairment of a Loan. After an evaluation of these factors, ~~the~~Riverview recorded a provision ~~recorded~~of $946,000 for the year ended December 31, ~~2010~~2011 ~~was $1,506,000~~ as compared with $1,~~125~~506,000 recorded for the ~~2009~~2010 year end. The provision ~~passed~~ for ~~2010~~2011 was driven ~~primarily~~ by specific allocations to the reserve for loans measured for impairment during the year, an increase in the qualitative factors applied to ~~all~~ unimpaired loan pools, warranted by an increase in past due, non-performing and criticized/classified assets year over year, along with ~~the~~an ~~continued~~unallocated ~~slow~~provision ~~economic~~generally ~~recovery. In~~reflecting ~~determining~~significant ~~the~~loan ~~allowance~~growth ~~for~~stemming ~~loan~~from ~~losses,~~ the ~~Bank~~opening ~~identified~~of ~~separate~~new ~~pools~~branch ~~with higher loss factors to segregate unimpaired criticized~~ and ~~classified~~commercial ~~loans~~office ~~from~~in ~~all~~Schuylkill ~~other unimpaired loans~~County. ~~This~~The ~~more~~allowance ~~clearly~~for ~~details~~loan ~~the~~losses ~~risk~~was ~~inherent~~$3,423,000 inor ~~the portfolio by refining the pools of assets with similar risk characteristics~~1. ~~The~~ 72%

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~~allowance for loan losses was $2,973,000 or 1.67%~~ of total loans outstanding at December 31, ~~2010~~2011 as compared to $2,~~560~~973,000, or 1.4867% of total loans at December 31, ~~2009~~2010.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses, if necessary, in order to maintain the adequacy of the allowance. Management believes the allowance for loan losses at December 31, ~~2010~~2011 is maintained at a level that is adequate to absorb probable and potential losses inherent in the loan portfolio. At the same time, management continues to allocate dedicated resources to continue to manage at-risk credits.

Non-Interest Income

Non-interest income is an important component of net income for Riverview, representing 1315.52% of the total revenues (comprised of net interest income and non-interest income) as of the ~~2010~~2011 year end as compared with 1813.35% as of the ~~2009~~2010 year end. Non-interest income consists primarily of customer service fees and charges derived from deposit accounts, mortgage banking activities, the investment in bank owned life insurance (“BOLI”) and gains from the sale of loans and available-for-sale securities.

The following table presents the components of non-interest income and related fluctuations for the years ended December 31, ~~2010~~2011 and ~~2009~~2010.

	Years Ended December 31,
	(Dollars in thousands)
Non-Interest Income	2010		Increase (Decrease) Amount			%		2009
Service charges on deposit accounts	$	318	$	30		10.4	%	$	288
Other service charges and fees	345		(13		)	(3.6	)%	358
Earnings on cash value of life insurance	249		(13		)	(5.0	)%	262
Gain on sale of available-for-sale securities	6		(281		)	(97.9	)%	287
Gain on sale of other real estate owned	13		13			100.0	%	—
Gain from sale of held for sale mortgage loans	389		(54		)	(12.2	)%	443
	$	1,320	$	(318	)	(19.4	)%	$	1,638

Non-Interest Income

Total non-interest income decreased 19.4% as of December 31, 2010 as compared with December 31, 2009 and is attributable to the following:

	Years Ended December 31,
	(Dollars in thousands)
	2011		Increase (Decrease) Amount			%		2010
Service charges on deposit accounts	$	280	$	(38	)	(11.9	)%	$	318
Other service charges and fees	357		12			3.5	%	345
Earnings on cash value of life insurance	405		156			62.7	%	249
Gain on sale of available-for-sale securities	274		268			4466.7	%	6
Gain on sale of other real estate owned	9		(4		)	(30.8	)%	13
Gain from sale of held for sale mortgage loans	258		(131		)	(33.7	)%	389
	$	1,583	$	263		19.9	%	$	1,320

~~· The~~Total ~~increase~~non-interest inincome ~~service~~increased ~~charges~~19.9% isas ~~due~~of toDecember 31, ~~increased~~2011 ~~deposit~~as ~~accounts~~compared with December 31, 2010 and ~~transaction~~is ~~activity.~~attributable to the following:

· The decrease in ~~other~~ service charges is due to a decrease in overdraft and NSF fees ~~reflects~~which the ~~impact~~Bank ofcould ~~recording~~no ~~less~~longer ~~ATM~~charge ~~and~~deposit ~~interchange~~customers ~~fees~~in accordance with regulatory changes unless customers “opted in” to utilize the overdraft protection service.

· ~~Earnings~~The ~~from~~increase ~~the cash value of life insurance were lower~~ in ~~2010~~other asservice ~~compared~~charges ~~with~~and ~~2009~~fees ~~because~~reflects of the ~~receipt~~impact of ~~additional~~recording ~~income~~more ofATM ~~$26,000~~and ~~during~~interchange ~~2009~~fees ~~from~~associated ~~the~~with ~~death~~increased ~~benefit~~transactional ~~paid for a former director~~volume.

· ~~The~~Earnings ~~gain~~from on the ~~sale~~cash value of ~~available~~life ~~for~~insurance ~~sale~~were ~~securities~~higher ~~was~~in ~~lower~~2011 as compared with 2010 because of the ~~Bank~~receipt ~~sold~~of ~~less~~additional ~~investment~~income ~~securities~~of $170,000 from ~~its~~the ~~portfolio~~proceeds inof ~~2010~~bank asowned ~~compared~~life ~~with~~insurance ~~2009~~due to the unexpected passing of a director during the third quarter of 2011.

· ~~During~~The ~~2010 the Bank realized a $13,000~~ gain ~~from~~on the sale of anavailable-for-sale ~~other~~securities ~~real~~was ~~estate~~higher ~~owned~~for ~~property. However,~~2011 because the Bank ~~recorded~~sold ~~less~~more ofinvestment asecurities ~~gain~~ from ~~the~~its ~~sale~~portfolio ~~of mortgage loans during 2010~~ as ~~a result of a decrease in the volume of loans available for sale servicing released to Freddie Mac as~~ compared with ~~2009~~2010.

· During 2011 the Bank realized a gain of $9,000 from the sale of other real estate owned. This gain was $4,000 less than the amount of the gain that was recorded in 2010 from the sale of another real estate property that was owned.

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· The Bank recorded less of a gain from the sale of mortgage loans during 2011 as a result of a decrease in the volume of loans available-for-sale servicing released to Freddie Mac as compared with 2010.

Non-Interest Expenses

The following table presents the components of non-interest expenses and the related changes for the years ended ~~2010~~2011 and ~~2009~~2010:

	Years Ended December 31,
	(Dollars in thousands)
Non-Interest Expenses	2010		Increase (Decrease) Amount			%		2009
Salaries and employee benefits	$	3,396	$	348		11.4	%	$	3,048
Occupancy expense	706		31			4.6	%	675
Equipment expense	403		(22		)	(5.2	)%	425
Telecommunications and processing charges	509		29			6.0	%	480
Postage and office supplies	205		(20		)	(8.9	)%	225
FDIC premium	360		(73		)	(16.9	)%	433
Bank shares tax expense	268		11			4.3	%	257
Directors’ compensation	256		37			16.9	%	219
Professional services	151		(115		)	(43.2	)%	266
Other expenses	536		25			4.9	%	511
Total non-interest expenses	$	6,790	$	251		3.8	%	$	6,539

Non-Interest Expenses

The increase of $251,000 or 3.8% in non-interest expenses is primarily attributable to the Bank’s overall growth. Specific expenses that had the greatest impact on increasing non-interest expenses included higher salary expense due to staff additions, increased medical benefit premiums, increased occupancy expenses due to weather related utility costs and the opening of a new branch during the latter part of 2010, and greater transaction volumes resulting in higher data processing and deposit related costs.

	Years Ended December 31,
	(Dollars in thousands)
	2011		Increase (Decrease) Amount			%		2010
Salaries and employee benefits	$	3,948	$	552		16.3	%	$	3,396
Occupancy expense	794		88			12.5	%	706
Equipment expense	465		62			15.4	%	403
Telecommunications and processing charges	601		92			18.1	%	509
Postage and office supplies	201		(4		)	(2.0	)%	205
FDIC premium	285		(75		)	(20.8	)%	360
Bank shares tax expense	246		(22		)	(8.2	)%	268
Directors’ compensation	249		(7		)	(2.7	)%	256
Professional services	177		26			17.2	%	151
Other expenses	654		118			22.0	%	536
Total non-interest expenses	$	7,620	$	830		12.2	%	$	6,790

~~Offsetting~~The ~~the~~ increase in non-interest expenses were declines in certain other expense categories which included lower professional fees, postage and FDIC premium. With regard to the FDIC premium, on November 12, 2009, the Board of ~~Directors of the FDIC adopted a final rulemaking requiring insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010~~$830,000 ~~2011~~or ~~and 2012~~12. ~~The~~2% ~~FDIC~~in ~~also voted to adopt a uniform three~~non-~~basis~~interest ~~point~~expenses increase in assessment rates effective on January 1, 2011. Each institution recorded the entire amount of its prepaid assessment as a prepaid expense (asset) as of December 31, 2009. As of December 31, 2009, and each quarter thereafter, each institution will record an expense (charge to earnings) for its regular quarterly assessment for the quarter and an offsetting credit to the prepaid assessment until the asset is ~~exhausted. Once~~primarily ~~the~~attributable ~~asset is exhausted, the institution will record an accrued expense payable each quarter for the assessment payment, which will be paid in arrears~~ to the ~~FDIC~~Bank’s atoverall ~~the end of the following quarter~~growth. ~~All~~Specific ~~FDIC~~expenses insured financial institutions were required to pay this special assessment. If the prepaid assessment is not exhausted by December 31, 2014, any remaining amount will be returned to the depository institution. This expense for 2010 is lower than that ofhad ~~2009 because~~ the ~~2010~~greatest ~~costs~~impact ~~reflect~~in aincreasing ~~more~~non-interest ~~normalized~~expenses ~~assessment even though assessment rates and the Bank’s deposits increased.~~included:

~~Income~~· Higher ~~Taxes~~salary and benefit expenses were due to staff additions as a result of opening a new branch and a commercial office in Schuylkill County. Further contributing to the increase in these costs was the impact of increased executive management bonus compensation.

~~The~~· Increased ~~provision~~occupancy ~~for~~and ~~federal~~equipment ~~income~~expenses ~~tax~~are ~~expense~~attributable ~~was $229,000 for the year ended December 31, 2010 as compared~~ to ~~$153,000 for~~ the ~~year~~opening ~~ended~~of ~~December 31, 2009. The tax provision increased $76,000, or 49.7%, as~~ a ~~result~~new ofbranch ~~the increased level of net income achieved in 2010. The tax provision reflects an effective tax rate of approximately 15.1% for 2010~~ and ~~12.1% for 2009. The increase in the effective tax rate for 2010 was due to~~ a ~~$252,000,~~commercial oroffice ~~19.9% increase~~ in ~~net~~Schuylkill ~~income before taxes~~County. The impact from the increased level of net income was somewhat mitigated by tax free income generated from certain investment securities, loans and bank owned life insurance. Riverview’s effective tax rate differs from the statutory rate of 34% due to tax-exempt interest income and non-taxable income from bank owned life insurance.

· Higher telecommunications costs were associated with the conversion to a new telephone system, where additional expense was incurred as a result of early termination fees and charges associated with the need to maintain certain system redundancies. Further adding to the increase in this expense were the data processing charges associated with establishing a new branch and commercial office.

· The lower FDIC premium expense was attributable to the FDIC’s ruling to change the base assessment rate in the calculation of the premium from domestic deposits to average assets.

· Bank shares tax expense for 2011 was lower as a result of receiving tax credits under the Pennsylvania sponsored educational improvement tax credit program associated with contributions the Bank made to educational improvement organizations.

· Increased professional service expenses were associated with higher legal costs relating to various special projects that occurred in 2011, which included the implementation of a dividend reinvestment plan and the conversion of the Bank’s charter.

· Other expenses increased as a result of the Bank’s growth and its need to utilize outside service

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providers, as was the case in contracting an independent stock transfer agent.

Income Taxes

The provision for federal income tax expense was $265,000 for the year ended December 31, 2011 as compared to $229,000 for the year ended December 31, 2010. The tax provision increased $36,000, or 15.7%, as a result of the increased level of net income achieved in 2011. The tax provision reflects an effective tax rate of approximately 15% for 2011 and 15.1% for 2010. The fact that there was no material change in the effective tax rate, considering that net income before taxes increased $310,000, or 20.4% year over year, is attributable to the tax free income generated from certain investment securities, loans and bank owned life insurance, which offset the increased level of net income. Riverview’s effective tax rate differs from the statutory rate of 34% due to tax-exempt interest income and non-taxable income from bank owned life insurance.

FINANCIAL CONDITION

Securities

Riverview’s securities portfolio is comprised of securities, which not only provide interest income, including tax-exempt income, but also provide a source of liquidity, diversify the earning assets portfolio, allow for the management of risk and tax liability, and provide collateral for repurchase agreements and public fund deposits. Policies are in place to address various aspects of managing the portfolio, including but not limited to, concentrations, liquidity, credit quality, interest rate sensitivity and regulatory guidelines. Adherence to these policies is monitored by Riverview’s Asset/Liability Committee (“ALCO”) which meets on a quarterly basis.

Because of the changing nature of the banking environment and the need to position assets, all investment securities are characterized as available-for-sale and carried at fair value with net unrealized gains and losses, net of taxes, reported as a separate component of comprehensive income.

Table 3 illustrates the composition of the securities portfolio for the periods presented.

TABLE 3

SECURITIES

	December 31,
	2010		2009		2008
	2011		2010		2009
	(In thousands)
Available-for-sale securities:
U.S. Government agencies	$	1,326	$	2,375	$	7,264
U.S. Government agencies securities	$	—	$	1,326	$	2,375
State and municipal	1617,~~832~~103		1416,~~950~~832		914,~~373~~950
Mortgage-backed securities	30,538		17,258		11,181
U.S. Government agencies and sponsored enterprises (GSEs) - residential:
Corporate debt securities	—		—		302
Mortgage-backed securities	17,826		18,909		15,637
	$	48,696	$	34,583	$	28,120
Collateralized mortgage obligations (CMOs)	7,636		11,629		1,621
	$	42,565	$	48,696	$	34,583

During ~~2010~~2011 the outstanding ~~balance~~balances of U.S. Government ~~agencies~~agency, ~~declined~~mortgage-backed ~~because~~and ofCMO ~~payments~~securities ~~from~~declined ~~the~~because ~~maturities~~ of ~~certain~~scheduled ~~agency~~payments, ~~securities. The~~maturities ~~balance of state~~ and ~~municipal~~unexpected ~~bonds increased due to the Bank’s need to generate more tax~~pre-~~exempt~~payments ~~income~~associated towith ~~complement~~each ~~the~~type ~~increase~~of ~~in its net income~~security. ~~Mortgage-backed~~The ~~securities increased as well. Management’s decision to~~ increase ~~its~~in ~~holdings~~the balance of ~~mortgage-backed~~state ~~securities~~and ~~was~~municipal abonds ~~way~~is attributable to ~~re-invest~~the increased ~~liquidity~~market ~~that~~value ~~resulted~~of ~~primarily~~the ~~from~~municipal ~~deposit~~bonds ~~growth,~~in ~~into~~the a government sponsored or government guaranteed investments with relatively short durations, generate a consistent cash flow and produce yields higher than overnight federal funds or Treasury investments with comparable maturitiesportfolio.

Included in the carrying values of investment securities at December 31, 2010 is a net unrealized loss of ($44,000), compared to a net unrealized gain of $245,000 at December 31, 2009. At December 31, 2010, the unrealized loss on securities available-for-sale, net of tax, included in shareholders’ equity totaled ($29,000), compared to $161,000 at December 31, 2009. The net decrease in the carrying value of securities in the portfolio is reflective of pressure on investment security prices as a result of an increase in interest rates on the long end of the Treasury yield curve which occurred during the latter part of the fourth quarter of 2010. As the yield curve steepened on the long end of the curve, the market value decreased particularly for those securities in the portfolio that have longer maturities. Investments with longer maturities have started to lose their allure to investors as a result of their higher duration risk and investors’ perception that newly issued investments will generate higher yields.

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~~Riverview~~Included ~~conducts a periodic review and evaluation of the securities portfolio to determine if any declines~~ in the ~~fair~~carrying values of investment securities ~~are~~at ~~other-than-temporary. If~~December 31, ~~such~~2011 is a ~~decline~~net ~~were~~unrealized ~~deemed~~gain toof ~~be other-than-temporary~~$1,525,000, ~~Riverview~~compared ~~would~~to ~~measure~~a ~~the~~net ~~total credit-related component of the~~ unrealized loss ~~and recognize that portion~~ of ~~the~~($44,000) ~~loss~~at asDecember 31, ~~a charge to current period earnings~~2010. ~~The~~At ~~remaining~~December 31, ~~portion~~2011, of the unrealized ~~loss~~gain ~~would~~on besecurities ~~recognized~~available-for-sale, asnet ~~an adjustment to accumulated other comprehensive income. The market value~~ of ~~the~~tax, ~~securities~~included ~~portfolio is significantly affected by changes~~ in ~~interest~~shareholders’ ~~rates. In~~equity ~~general~~totaled $1,006,000, as ~~interest~~compared ~~rates~~to ~~rise~~($29,000) ~~the~~at ~~market value of fixed-rate securities decreases and as interest rates fall~~December 31, ~~the market value of fixed rate securities increases~~2010. NoThe ~~securities~~net ~~are~~increase ~~considered~~in ~~other-than-temporarily-impaired~~the ~~based~~carrying onvalue ~~management’s evaluation~~ of ~~the individual~~ securities, ~~including~~in the ~~extent~~portfolio ~~and~~is ~~length~~reflective of ~~the~~pressure ~~unrealized~~on ~~loss,~~investment ~~Riverview’s ability to hold the~~ security ~~until~~prices ~~maturity~~as ora ~~until~~result ~~the~~of ~~fair~~a ~~value~~decrease ~~recovers,~~in ~~and~~interest ~~management’s~~rates ~~opinion~~on ~~that it will not have to sell~~ the ~~securities~~long ~~prior~~end ~~to recovery~~ of ~~value. Riverview invests in securities for~~ the ~~cash~~Treasury ~~flow~~yield ~~and yields they produce and not to profit from trading~~curve. ~~Riverview~~As ~~holds~~the noyield ~~trading~~curve ~~securities~~declined inon ~~its portfolio and~~ the ~~portfolio~~long ~~does~~end ~~not~~of ~~contain~~the ~~high~~curve, ~~risk~~the ~~securities~~market orvalue ~~derivatives as of December 31, 2010~~increased.

Riverview’s ~~investment~~conducts ina ~~the~~periodic ~~stock~~review and evaluation of the ~~FHLB~~securities isportfolio ~~required~~to ~~for~~determine ~~membership~~if any declines in the ~~organization~~fair ~~and~~values isof ~~carried~~securities atare ~~cost since there is no market value available~~other-than-temporary. ~~The~~If ~~amount~~such ~~that~~declines ~~Riverview~~were isdeemed ~~required~~ to ~~invest~~be isother-than-temporary, ~~based~~Riverview ~~upon~~would ameasure ~~formula~~the ~~which~~total ~~weighs~~credit-related acomponent ~~dependence~~of ~~upon~~ the ~~relative~~unrealized ~~size~~loss ofand ~~outstanding~~recognize ~~borrowings~~ that itportion ~~has~~of ~~with~~ the ~~FHLB. Excess~~loss ~~stock~~as ~~was~~a ~~typically~~charge ~~repurchased at par by the FHLB from Riverview if borrowings declined~~ to acurrent ~~predetermined~~period ~~level~~earnings. InThe ~~late~~remaining ~~December~~portion ~~2008,~~of the ~~FHLB~~unrealized ~~announced~~loss ~~that~~would itbe ~~suspended~~recognized ~~the~~as ~~payment~~an ofadjustment ~~dividends and the repurchase of excess capital stock~~ to ~~preserve~~accumulated ~~its~~other ~~capital~~comprehensive ~~level~~income. ~~That~~The ~~decision~~market ~~was~~value ~~based on FHLB’s analysis and consideration~~ of ~~certain~~the ~~negative~~securities ~~market~~portfolio ~~trends~~is ~~and~~significantly ~~the~~affected ~~impact~~by ~~those~~changes ~~trends~~in ~~had~~interest ~~on its financial condition~~rates. ~~Based~~In ~~upon~~general, ~~its~~as ~~agreement~~interest ~~with~~rates ~~its member banks~~rise, the ~~FHLB~~market isvalue ~~not~~of ~~generally~~fixed-rate ~~required~~securities todecreases ~~redeem~~and ~~membership~~as ~~stock~~interest ~~until~~rates ~~five~~fall, ~~years after~~ the ~~membership~~market ~~has~~value ~~terminated. However,~~of infixed ~~October~~rate ~~2010,~~securities asincreases. No asecurities ~~good~~are ~~faith~~considered ~~gesture,~~other-than-temporarily-impaired ~~the~~based ~~FHLB~~on ~~redeemed~~management’s ~~approximately~~evaluation 5% of ~~current~~the ~~outstanding~~individual ~~stock. As~~securities, aincluding ~~result~~the ~~Riverview’s~~extent ~~FHLB~~and ~~stock~~length ~~holdings~~of ~~were~~the ~~reduced~~unrealized ~~to 18~~loss,~~808~~ ~~shares,~~Riverview’s ~~equivalent~~ability to ~~$1,880,800. Based~~hold on the ~~financial~~security ~~results~~until ofmaturity ~~the~~or ~~FHLB~~until ~~for~~ the ~~years~~fair ~~ended~~value ~~December 31~~recovers, ~~2010~~ and ~~2009,~~ management’s ~~believes~~opinion that ~~the~~it ~~suspension~~will ofnot ~~the~~have ~~dividend~~to ~~payment~~sell ~~is temporary in nature. Management further believes that~~ the ~~FHLB~~securities ~~will~~prior ~~continue~~ to berecovery aof ~~primary~~value. Riverview ~~source~~invests ofin ~~wholesale~~securities ~~liquidity~~ for ~~both~~the ~~short-~~cash ~~and~~flow ~~long-term funding~~ and ~~has~~yields ~~concluded~~they ~~that~~produce ~~its~~and ~~investment~~not into ~~FHLB~~profit ~~stock~~from ~~is not other-than-temporarily impaired~~trading. Riverview ~~will~~holds ~~continue~~no totrading ~~monitor~~securities ~~the~~in ~~financial~~its ~~condition~~portfolio ofand the ~~FHLB~~portfolio ~~quarterly~~does tonot ~~assess~~contain ~~its~~high ~~ability~~risk tosecurities ~~resume~~or ~~these~~derivatives ~~activities~~as inof ~~the~~December 31, ~~future~~2011.

~~Table~~Riverview’s 4investment ~~presents~~in the ~~maturities~~stock of the FHLB is required for membership in the organization and ~~average~~is ~~weighted~~carried ~~yields~~at cost since there is no market value available. The amount that Riverview is required to invest is based upon a formula which weighs a dependence upon the relative size of outstanding borrowings that it has with the ~~securities~~FHLB. Excess ~~portfolio~~stock was typically repurchased at ~~fair~~par ~~value~~by the FHLB from Riverview if borrowings declined to a predetermined level. In late December 2008, the FHLB announced that it suspended the payment of dividends and the repurchase of excess capital stock to preserve its capital level. That decision was based on FHLB’s analysis and consideration of certain negative market trends and the impact those trends had on its financial condition. Based upon its agreement with its member banks, the FHLB is not generally required to redeem membership stock until five years after the membership has terminated. However, in October 2010 the FHLB redeemed approximately 5% of excess outstanding stock. Since that time the FHLB has continued to periodically redeem its stock. Riverview’s FHLB stock holdings were reduced by 4,481 shares to 15,317 shares, equivalent to $1,531,700 as of December 31, ~~2010~~2011. ~~Yields~~On ~~are~~February 22, 2012, the FHLB announced the payment of a dividend to its member banks at an annualized rate of 0.10% based on ~~amortized~~the ~~cost~~bank’s average FHLB stock holding for the fourth quarter of 2011. On February 23, 2012, the Bank received a dividend of $392 from the FHLB. Management believes that the FHLB will continue to be a primary source of wholesale liquidity for both short- and long-term funding and has concluded that its investment in FHLB stock is not other-than-temporarily impaired. Riverview continues to monitor and assess the financial condition of the FHLB on a quarterly basis.

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Table 4 presents the maturities and average weighted yields of the securities portfolio at fair value as of December 31, 2011. Yields are based on amortized cost.

TABLE 4

MATURITIES AND WEIGHTED AVERAGE YIELDS OF SECURITIES

(Dollars in thousands)	1 Year or Less				1 to 5 Years				5 to 10 Years				Over 10 Years or No Maturity				Total
Due In:	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
U.S. Government agencies	$	1,326	2.82	%	$	—	—		$	—	—		$	—	—		$	1,326	2.82	%
State and municipal	$	446	6.05	%	$	513	2.42	%	$	7,447	5.47	%	$	8,697	5.72	%	$	17,103	5.52	%
State and municipal	200		6.24	%	949		4.32	%	6,794		5.58	%	8,889		5.80	%	16,832		5.64	%
Mortgage-backed securities	2		1.64	%	—		—		—		—		17,824		3.53	%	17,826		3.53	%
Mortgage-backed securities	—		—		—		—		1,450		1.75	%	29,088		3.16	%	30,538		3.09	%
CMOs	—		—		—		—		—		—		7,636		2.70	%	7,636		2.70	%
	$	~~1,526~~448	36.2803	%	$	~~949~~513	42.3242	%	$	87,~~244~~447	45.9147	%	$	3734,~~977~~157	3.8190	%	$	4842,~~696~~565	34.9918	%

All securities are available-for-sale and accounted for at fair value.

Weighted average yields are calculated on a fully taxable equivalent basis assuming a tax rate of 34%.

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Loans

The loan portfolio comprises the major component of Riverview’s earning assets and is the highest yielding asset category. At December 31, ~~2010~~2011, total loans receivable (net of the allowance for loan losses, unearned fees and origination costs) amounted to $~~175~~196,~~064~~026,000, an increase of $420,~~680~~962,000, or ~~2.7~~12%, as compared with $~~170~~175,~~384~~064,000 as of December 31, ~~2009~~2010. Loans receivable, net of the allowance for loan losses, represent 6368.62% of total assets and 7379.86% of total deposits as of December 31, ~~2010~~2011, as compared to 6763.46% and 7973.38%, respectively, at December 31, ~~2009~~2010. All of Riverview’s loans are to domestic borrowers.

Table 5 presents the composition of the total loan portfolio for the periods presented:

TABLE 5

TOTAL LOANS OUTSTANDING

	December 31,
				% of					% of					% of					% of					% of
(Dollars in thousands)	~~2010~~2011			Total		~~2009~~2010			Total		~~2008~~2009			Total		~~2007~~2008			Total		~~2006~~2007			Total
Commercial, financial, agricultural	$	1217,~~616~~357		78.17	%	$	1312,~~614~~616		7.91	%	$	1213,~~967~~614		7.39	%	$	812,~~845~~967		107.53	%	$	58,~~722~~845		710.45	%
Real Estate:
Construction	1817,~~399~~673			108.49	%	1718,~~372~~399			10.14	%	1817,~~173~~372			10.21	%	918,~~059~~173			10.82	%	39,~~936~~059			510.18	%
Mortgage	9394,~~582~~961			5247.67	%	9293,~~206~~582			5352.36	%	9492,~~322~~206			5253.83	%	4794,~~324~~322			5652.38	%	47,~~082~~324			6056.63	%
Commercial	5167,~~052~~269			2833.78	%	4651,~~728~~052			2728.07	%	4846,~~773~~728			27.30	%	1548,~~352~~773			1827.23	%	1615,~~061~~352			2018.72	%
Consumer installment	21,~~162~~787			10.29	%	2,~~988~~162			1.72	%	42,~~210~~988			21.47	%	34,~~558~~210			4.2.4	%	43,~~795~~558			64.2	%
Total loans	~~177,811~~$	199,047		100.0	%	~~172~~177,~~908~~811			100.0	%	~~178~~172,~~445~~908			100.0	%	84178,~~138~~445			100.0	%	7784,~~596~~138			100.0	%
Deferred loan fees	~~226~~402					36226					~~(266~~36		)			(~~234~~266		)			(~~248~~234		)
Total loans, net of fees	~~178~~199,~~037~~449					~~172~~178,~~944~~037					~~178~~172,~~179~~944					83178,~~904~~179					7783,~~348~~904
Allowance for loan losses	(23,~~973~~423		)			(2,~~560~~973		)			(12,~~710~~560		)			(~~970~~1,710		)			(~~867~~970		)
Total loans, net	$	~~175~~196,~~064~~026				$	~~170~~175,~~384~~064				$	~~176~~170,~~469~~384				$	82176,~~934~~469				$	7682,~~481~~934

Loan growth for the ~~2010~~2011 year end as compared with the ~~2009~~2010 year end is attributable to a 37.6% increase in commercial loans as well as increases in real estate loans, where commercial real estate loans increased 931.38%, ~~construction loans increased 5.9%~~ and residential mortgages increased 1.5%. The ~~lower~~limited percentage growth in residential mortgage loans was due to the fact that ~~during 2010~~ the Bank sold mortgage loans servicing rights released to Freddie Mac so that not all of the mortgage loans originated remain on the records of the Bank. The benefit of selling mortgage loans versus keeping them in the portfolio resulted in generating fee income while eliminating interest rate risk associated with those loans. Going forward, the Bank will continue to evaluate its options regarding residential mortgage loans in consideration of its relationship with its customers, the interest rate environment and overall economic conditions. In general, management projects continued growth in the loan portfolio as additional staff has been hired, and as the economy improves and opportunities are identified in Riverview’s market area.

The Bank takes a balanced approach to its lending activities and manages risk associated with its loan portfolio by maintaining diversification within the portfolio, consistently applying prudent underwriting standards, ongoing monitoring efforts with attention to portfolio dynamics and mix, and procedures that are consistently applied and updated on an annual basis. Riverview conducts an annual independent credit review of the loan portfolio to provide continual assessment of asset quality through an evaluation of the established underwriting criteria used in originating credits. Separately, every loan booked and loan turndown undergoes an internal audit review for conformity with established policies and a review for compliance with current regulatory lending laws. Riverview has not lessened its loan underwriting criteria during this time, and management believes its standards continue to remain conservative.

Other than as described herein, management does not believe there are any trends, events, or uncertainties that are reasonably expected to have a materially adverse impact on future results of operations, liquidity, or capital resources.

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environment and overall economic conditions. In general, management projects continued growth in the loan portfolio as the Bank has expanded its footprint in the Schuylkill County area and as the economy improves and opportunities are identified in Riverview’s market area.

The Bank takes a balanced approach to its lending activities and manages risk associated with its loan portfolio by maintaining diversification within the portfolio, consistently applying prudent underwriting standards, ongoing monitoring efforts with attention to portfolio dynamics and mix, and procedures that are consistently applied and updated on an annual basis. Riverview contracts an independent third party each year to conduct a credit review of the loan portfolio to provide an independent assessment of asset quality through an evaluation of the established underwriting criteria used in originating credits. Separately, every loan booked and loan turndown undergoes an audit review for conformity with established policies and compliance with current regulatory lending laws. Riverview has not lessened its loan underwriting criteria during this time, and management believes its standards continue to remain conservative.

Table 6 summarizes the loan maturities and interest sensitivity for a segment of the loan portfolio.

TABLE 6

LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES

COMMERCIAL AND CONSTRUCTION LOANS

December 31, ~~2010~~2011

(In thousands)

Due Within 1 Year

Due 1 - 5 Years

Due Over 5 Years

Total

Commercial, financial, agricultural

79,~~581~~152

37,~~061~~347

~~1,974~~858

1217,~~616~~357

Real estate, construction

126,~~580~~725

510,~~401~~322

~~418~~626

1817,~~399~~673

Total

2015,~~161~~877

817,~~462~~669

21,~~392~~484

3135,~~015~~030

By interest rate structure:

Fixed rate

93,~~541~~826

211,~~405~~032

1,~~447~~484

1316,~~393~~342

Variable rate

1012,~~620~~051

6,~~057~~637

~~945~~—

1718,~~622~~688

Total

2015,~~161~~877

817,~~462~~669

21,~~392~~484

3135,~~015~~030

Credit Risk and Loan Quality

One of Riverview’s key objectives has been and continues to be to maintain a high level of asset quality. Riverview strives to proactively monitor credit risk and exposure to ensure and protect the ~~high~~ quality of its loan portfolio. Credit policy requires that underwriting, loan documentation and credit analysis standards be met prior to the approval and funding of any loan. These practices have contributed to the strength and credit quality of Riverview’s loan portfolio and have protected the portfolio during economic periods of uncertainty.

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Table 7 presents information about Riverview’s nonperforming loans and nonperforming assets for the periods presented.

TABLE 7

RISK ELEMENTS AND ASSET QUALITY RATIO

	December 31,
(Dollars in thousands)	~~2010~~2011			~~2009~~2010			~~2008~~2009			~~2007~~2008			~~2006~~2007
Non-accruing loans	$	24,~~779~~709		$	32,~~123~~779		$	~~128~~3,123		$	~~210~~128		$	~~765~~210
Accruing loans past due 90 days or more	1,~~535~~073			~~219~~1,535			~~152~~219			~~932~~152			~~515~~932
Total nonperforming loans	45,~~314~~782			34,~~342~~314			~~280~~3,342			~~1,142~~280			1,~~280~~142
Foreclosed real estate	~~230~~1,298			~~312~~230			~~144~~312			~~327~~144			—327
Total nonperforming assets	$	47,~~544~~080		$	34,~~654~~544		$	~~424~~3,654		$	~~1,469~~424		$	1,~~280~~469
Restructured loans performing in accordance with modified terms	$	~~529~~4,262		$	~~1,992~~529		$	—1,992		$	—		$	—
Non-accrual loans:
Interest income that would have been recorded on non-accruing loans	$	~~138~~216		$	~~193~~138		$	10193		$	6410		$	5564
Interest income for above loans included in net income for the period	$	2653		$	8926		$	889		$	518		$	3451
Ratios:
Nonperforming loans to total loans	2.4290		%	12.9342		%	01.1693		%	10.3816		%	1.6738		%
Nonperforming assets to total assets	12.6546		%	1.4465		%	01.1844		%	10.2018		%	1.1220		%
Allowance for loan losses to nonperforming loans	6859.9220		%	7668.6092		%	~~610~~76.7160		%	84610.9471		%	6784.7394		%
Commitments to lend additional funds to nonperforming loan customers	$	0—		$	0—		$	0—		$	0—		$	0—

Non-performing assets include accruing loans past due 90 days or more, non-accruing loans and foreclosed real estate. The non-performing assets to total assets ratio presented in the table for the ~~2010~~2011 year end reflects deterioration in the credit quality of the loan portfolio since the ~~2009~~2010 year end. During the twelve months of ~~2010~~2011, the Bank experienced an increase in total non-performing loans due to an increase of $1,~~316~~930,000 in ~~accruing~~non-accrual loans ~~past due 90 days~~ and offset by a decline of $~~344~~462,000 in ~~non-accrual loans. The increase in~~ accruing loans past due 90 days. The increase in non-accrual loans as of December 31, ~~2010~~2011 as compared with the ~~2009~~2010 year end is attributable toprimarily ~~four loans~~ to ~~one~~two ~~customer~~unrelated ~~totaling~~customers ~~$1,535,000~~who ~~secured~~are byexperiencing ~~personal~~financial ~~residential~~difficulties ~~real~~- ~~estate. It~~one iscustomer ~~anticipated~~has ~~that~~four ~~this~~residential ~~delinquency~~real ~~will~~estate beloans ~~cured~~totaling ~~in the first quarter of 2011. Management continues to be vigilant in its efforts to minimize~~$1,557,000, ~~identify~~ and ~~evaluate~~the ~~credit~~other ~~risk and potential losses. Management~~ is ~~proactive~~a incommercial/farm ~~addressing~~relationship ~~and~~with ~~managing~~five ~~risk~~loans ~~appropriate~~totaling to$1,603,000, ~~the increasing level~~ of ~~loan~~which ~~volume~~$983,000 ~~and~~is ~~delinquencies~~guaranteed inby the loan portfolio through its implementation of an enhanced credit administration process - including a more structured loan collection process and close monitoring of compliance with underwriting and loan to value guidelinesUSDA.

Riverview had $~~230~~1,298,000 in real estate acquired through foreclosure as of December 31, ~~2010~~2011 as compared with $~~312~~230,000 as of December 31, ~~2009~~2010. The foreclosed real estate as of the 2011 year end consists of one ~~residential~~single ~~property~~family home located in one of the communities serviced by Riverview and one residential development loan totaling $1,066,000, representing Riverview’s purchased participation in a loan made by another financial institution to a now defunct developer. The ~~decrease~~increase at December 31, ~~2010~~2011 from December 31, ~~2009~~2010 is due to the ~~sale~~transfer of ~~one~~the ofresidential ~~the~~development ~~properties~~loan ~~during~~to ~~the~~other ~~third~~real ~~quarter~~estate, ofwhich ~~2010. Riverview~~had ~~expects~~been tocarried bethe ~~able~~prior toyear ~~sell~~as ~~the~~a ~~outstanding~~non-accruing ~~property~~impaired ~~during~~loan. Each ~~2011~~of ~~with~~the noforeclosed ~~additional~~loans ~~loss. Riverview’s~~has ~~residential~~been ~~loan~~marked ~~portfolio~~to isthe ~~centered~~appropriate inrealizable ~~properties~~value, and at ~~price~~this ~~points~~time, ~~which~~no ~~have~~material ~~held~~loss upis ~~well~~anticipated ~~locally~~upon asthe ~~evidenced~~ultimate sale of these assets.

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byA ~~appraisals. Loan-~~loan concentration is considered to~~-value~~ ~~ratios~~exist inwhen ~~this~~the ~~portfolio~~total ~~generally~~amount ~~continue~~of loans to ~~provide~~any ~~adequate~~one ~~collateral~~or ~~support~~multiple ~~and~~number ~~management~~of ~~does~~borrowers ~~not~~engaged ~~anticipate~~in ~~any~~similar ~~material~~activities ~~decline~~or have similar economic characteristics, exceed 10% of loans outstanding in ~~the~~any ~~Bank’s~~one ~~ability~~category. The tofollowing ~~collect~~table onpresents ~~these~~loan ~~loans~~concentrations as of December 31, 2011 and December 31, 2010.

A loan concentration is considered to exist when the total amount of loans to any one or multiple number of borrowers engaged in similar activities or have similar economic characteristics, exceed 10% of loans outstanding in any one category. The following table presents loan concentrations as of December 31, 2010 and December 31, 2009.

(Dollars in thousands)	December 31, 2011		December 31, 2010
Loans to Lessors of:
Residential buildings and dwellings	$	37,599	$	35,232
Nonresidential buildings	25,022		21,838

(Dollars in thousands)	December 31, 2010		December 31, 2009
Loans to Lessors of:
Residential buildings and dwellings	$	35,232	$	31,934
Nonresidential buildings	21,838		19,321

Although such loans were not made to any one particular borrower or industry, the quality of these loans could be affected by the region’s economy and overall real estate market. Although delinquency and non-performing loans have increased during the year in these portfolios, the performance of these portfolios continues to be acceptable with no losses for the year.

~~Although~~Demand ~~such~~for ~~loans~~office ~~were~~space ~~not~~was ~~made~~solid toin ~~any~~2011 ~~one~~in ~~particular~~Riverview’s ~~borrower~~market orarea ~~industry,~~with ~~the~~absorption ~~quality~~reaching ofthe ~~these~~highest ~~loans~~level ~~could~~since be2006. The ~~affected~~marketplace byshowed ~~the~~continuing ~~region’s~~signs ~~economy~~of ~~and~~improvement ~~overall~~with ~~real~~positive ~~estate~~absorption ~~market. Management~~and ~~stress~~stable ~~tested~~to ~~significant~~improving ~~exposures~~vacancy rates in ~~these~~all ~~portfolios~~classes inof ~~2010~~space byduring ~~applying~~2011. Riverview’s anon-residential ~~10%~~market ~~reduction~~has innot ~~rents~~suffered ~~and~~the ~~determined~~serious ~~that~~deterioration ~~the~~evident ~~loans~~in ~~can~~certain ~~still~~other ~~generally~~areas ~~perform~~in asthe ~~agreed~~country. ToAs ~~date~~such, ~~the~~management ~~performance~~does ofnot ~~these~~believe ~~portfolios~~that ~~continues~~this toconcentration beis ~~good,~~an ~~with~~adverse ~~nominal~~trend ~~delinquency~~to ~~and~~Riverview ~~$19,000~~at inthis ~~losses for the year~~time.

Demand for office space was solid in 2010 in Riverview’s market area with absorption reaching the highest level since 2006. The marketplace showed continuing signs of improvement with positive absorption and stable to improving vacancy rates in all classes of space during 2010. Riverview’s non-residential market has not suffered the serious deterioration evident in certain other areas in the country. As such, management does not believe that this concentration is an adverse trend to Riverview at this time.

Riverview’s lending policy is executed through the assignment of tiered loan limit authorities to individual officers of Riverview and the Board of Directors. Although Riverview maintains sound credit policies, certain loans may deteriorate for a variety of reasons. Riverview’s policy is to place all loans in a non-accrual status upon becoming 90 days delinquent in their payments, unless the loan is well secured and there is documented, reasonable expectation of the collection of the delinquent amount. Loans are reviewed daily as to their status. Management is not aware of any potential loan problems that have not been disclosed in this report.

Allowance for Loan Losses

The allowance for loan losses isrepresents amanagement’s ~~reserve~~best ~~established~~estimate inof the ~~form~~known ofand ainherent ~~provision~~losses ~~expense~~in ~~for~~the existing loan ~~losses~~portfolio. Management ~~and~~believes isthat ~~reduced~~it byuses ~~loan~~the ~~charge-offs~~best ~~net~~information ofavailable ~~recoveries. When~~to ~~loans~~make ~~are~~determinations ~~deemed~~about tothe beadequacy ~~uncollectible,~~of ~~they~~the ~~are~~allowance ~~charged~~and ~~off. Management~~that it has established aits ~~reserve~~existing ~~that~~allowance itfor ~~believes~~loan islosses ~~adequate~~in ~~for~~accordance ~~estimated~~with ~~losses~~U.S ingenerally ~~the~~accepted ~~loan~~accounting ~~portfolio~~principles (“GAAP”). InThe ~~conjunction~~determination ~~with~~of an ~~external~~appropriate level of the allowance for loan ~~review~~losses ~~function~~is ~~that~~based ~~operates~~upon ~~independent~~an analysis of the ~~lending~~risks ~~function,~~inherent ~~management~~in ~~monitors~~ the Bank’s loan portfolio. Management tomakes ~~identify~~significant ~~risks~~estimates onand aassumptions ~~timely~~in ~~basis~~determining sothe ~~that~~allowance anfor ~~appropriate~~loan losses. Since the allowance for loan losses is ~~maintained. Based~~dependent on anconditions ~~evaluation~~that ofmay be beyond the ~~loan~~Bank’s ~~portfolio~~control, ~~management~~it ~~presents~~is aat ~~quarterly~~least ~~review~~reasonably possible that management’s estimates of the allowance for loan losses toand ~~Riverview’s~~actual ~~Board~~results ofcould ~~Directors~~differ. In ~~detailing~~conjunction ~~significant~~with ~~events~~an external loan review function that ~~have~~operates ~~occurred~~independent ~~since~~of the ~~last~~lending ~~review~~function, management monitors the loan portfolio to identify risks on a timely basis so that an appropriate allowance is maintained.

~~The~~Management ~~allowance~~closely ~~for~~monitors ~~loan~~the ~~losses~~quality isof ~~evaluated~~the onloan aportfolio ~~regular basis by management~~ and isperforms ~~based~~a ~~upon~~quarterly ~~management’s~~analysis ~~review~~ of the ~~collectability~~appropriateness of the ~~loans~~allowance infor ~~light~~loan oflosses. This ~~historical~~analysis ~~experience,~~considers ~~the~~a ~~nature~~number ~~and~~of ~~volume~~relevant offactors ~~the~~including: historical loan ~~portfolio~~loss experience, ~~trends~~general ineconomic ~~credit~~conditions, ~~risk~~levels ~~ratings,~~of ~~adverse~~and ~~situations~~trends ~~that~~in ~~may~~delinquent ~~affect~~and ~~the~~non-performing ~~borrower’s~~loans, ~~ability~~levels toof ~~repay~~classified loans, ~~estimated~~trends ~~value~~in ofthe ~~any~~growth ~~underlying~~rate ~~collateral,~~of loans and ~~prevailing~~concentrations ~~economic~~of ~~conditions~~credit. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available. Based on an evaluation of the loan portfolio, management presents a quarterly review of the allowance for loan losses to Riverview’s Board of Directors detailing significant events that have occurred since the last review.

The allowance consists of specific and general components. The specific component relates to loans that are classified as substandard or doubtful and deemed to be impaired. For such loans, an allowance is

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The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as substandard or doubtful and deemed to be impaired. For such loans, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan ~~are~~is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. Management determines the unallocated portion, which represents the difference between the reported allowance for loan losses and the calculated allowance for loan losses, based generally on the following criteria:

· risk of imprecision in the specific and general reserve allocations;

· other potential exposure in the loan portfolio, including covering the risks in the growing book of loans in the Schuylkill County region;

· variances in management’s assessment of national and local economic conditions; and

· other internal or external factors that management believes appropriate at the time.

A loan is considered impaired when, based on current information and events, it is probable that Riverview 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, Riverview does not separately identify individual consumer and residential loans for impairment disclosures, unless the loans are the subject of a restructuring agreement.

As a result of management’s ongoing assessment as to the adequacy of the allowance for loan losses in consideration of the risks and trends associated with the loan portfolio, a provision of $1946,~~506,~~000 was made to the allowance for loan losses for the twelve months ended December 31, 2011 as compared with the $1,506,000 provision made for the twelve months ended December 31, 2010. Management determined that the total of the allocated and unallocated allowance for loan losses was adequate to absorb any losses inherent in the portfolio. Although management believes that it uses the best information available to make such determinations, future adjustments to the allowance for loan losses may be necessary, and the results of operations could be significantly and adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that material increases will not be necessary should the quality of the loans deteriorate as a result of factors previously discussed.

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~~The following~~ Table 8 sets forth information as to the analysis of the allowance for loan losses and the allocation of the loan losses as of the dates indicated:

TABLE 8

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

	December 31,
(Dollars in thousands)	~~2010~~2011			~~2009~~2010			~~2008~~2009			~~2007~~2008			~~2006~~2007
Allowance, beginning of year	$	2,~~560~~973		$	12,~~710~~560		$	~~970~~1,710		$	~~867~~970		$	~~591~~867
Provision for loan losses	~~1,506~~946			1,~~125~~506			~~380~~1,125			~~120~~380			~~295~~120
Allowance acquired from HNB	—			—			~~496~~—			—496			—
Loans charged off:
Commercial, financial, agricultural	~~580~~398			~~217~~580			32217			—32			—
Real estate mortgage	~~522~~114			59522			~~125~~59			14125			—14
Installment	52			—5			2—			152			2615
Total charged-off	~~1,107~~514			~~276~~1,107			~~159~~276			29159			2629
Loan recoveries:
Commercial, financial, agricultural	1118			—11			—			—			—
Real estate mortgage	3—			—3			23—			423			24
Installment	—			1—			—1			8—			58
Total recoveries	1418			114			231			1223			712
Net loans charged off	~~1,093~~496			~~275~~1,093			~~136~~275			17136			1917
Allowance, end of year	$	23,~~973~~423		$	2,~~560~~973		$	12,~~710~~560		$	~~970~~1,710		$	~~867~~970
Net charge-offs to average loans	0.6127		%	0.1661		%	0.1416		%	0.0214		%	0.0302		%
Allowance for loan losses to total loans	1.6772		%	1.4867		%	01.9648		%	10.1696		%	1.1216		%

The increase in the allowance for loan losses as a percentage of total loans as of December 31, ~~2010~~2011 as compared with December 31, ~~2009~~2010 is reflective ~~primarily~~ of specific allocations to the reserve for loans measured for impairment during the year, an increase in the qualitative factors applied to unimpaired loan pools warranted by an increase in past due, non-performing and criticized/classified assets year over year, along with ~~the~~an ~~continued~~unallocated ~~slow~~provision ~~economic~~generally ~~recovery. Also~~reflecting insignificant ~~determining~~loan ~~the~~growth ~~allowance~~stemming ~~for~~from ~~loan losses~~ the ~~Bank~~opening ~~identified~~of ~~separate~~a ~~pools~~new ~~with~~branch ~~higher loss factors to segregate unimpaired criticized~~ and ~~classified~~a ~~loans~~commercial ~~from~~office ~~all other unimpaired loans. This more clearly details the risk inherent~~ in ~~the~~Schuylkill ~~portfolio by refining the pools of assets with similar risk characteristics~~County. Management continues to be attentive to potential deterioration in credit quality due to economic pressures, economic conditions and the softness in real estate prices in the markets served by Riverview. Although management is proactive in identifying and dealing with credit issues that it can control, it anticipates that going forward, additional provisions to its allowance for loan losses may be warranted as a result of economic factors it cannot control.

The following Table 9 details the allocation of the allowance for loan losses to the various loan categories at December 31, 2010, 2009, 2008, 2007 and 2006. The allocation is made for analytical purposes and is not necessarily indicative of the loan categories in which future credit losses may occur. The total allowance is available to absorb losses from any segment of loans.

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Table 9 details the allocation of the allowance for loan losses to the various loan categories at December 31, 2011, 2010, 2009, 2008 and 2007. The allocation is made for analytical purposes and is not necessarily indicative of the loan categories in which future credit losses may occur. The total allowance is available to absorb losses from any segment of loans.

TABLE 9

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

	2010				2009				2008				2007				2006
	2011				2010				2009				2008				2007
			% Gross				% Gross				% Gross				% Gross				% Gross
(Dollars in thousands)	Amount		Loans		Amount		Loans		Amount		Loans		Amount		Loans		Amount		Loans
Commercial, financial and agricultural	$	~~612~~693	78.17	%	$	~~819~~612	7.91	%	$	~~124~~819	7.39	%	$	~~165~~124	107.53	%	$	~~114~~165	710.45	%
Real estate loans:
Construction	~~353~~147		108.49	%	18353		10.14	%	7718		10.21	%	4777		10.82	%	5047		510.08	%
Mortgage	~~719~~1,108		5247.67	%	~~356~~719		5352.36	%	~~403~~356		5253.83	%	~~419~~403		5652.28	%	~~427~~419		6056.73	%
Commercial	1,~~264~~118		2833.78	%	1,~~293~~264		2728.07	%	~~928~~1,293		27.30	%	~~216~~928		1827.3	%	~~226~~216		2018.72	%
Consumer loans	2524		10.29	%	7425		1.72	%	~~116~~74		21.47	%	43116		4.2.4	%	3643		64.2	%
Unallocated	—333		n/a		—		n/a		62—		n/a		8062		n/a		1480		n/a
Total	$	23,~~973~~423	100.0	%	$	2,~~560~~973	100.0	%	$	12,~~710~~560	100.0	%	$	~~970~~1,710	100.0	%	$	~~867~~970	100.0	%

ASince the total amount of mortgage loans increased 54.2% year over year, a significantly larger percentage of the allowance for loan losses shifted towards the mortgage segment of the portfolio as of December 31, ~~2010~~2011 versus December 31, ~~2009~~2010. This is due to specific allocations on loans measured for impairment, as well as higher qualitative risk factors applied to this segment reflecting increased delinquency and non-performing assets. In addition, an unallocated allowance for loan losses was made during 2011. Management determines the unallocated portion, which represents the difference between the reported allowance for loan losses and the calculated allowance for loan losses, based generally on the following criteria:

~~Management~~· risk currently believes the allowance for loan losses at December 31, 2010 is adequate to absorb losses inherent in the loan portfolio. Although management believes that it uses the best information available to make such determinations, future adjustments to the allowance for loan losses may be necessary, and the results of ~~operations~~imprecision ~~could be significantly and adversely affected if circumstances differ substantially from the assumptions used~~ in ~~making~~ the ~~determinations. In~~specific ~~addition, because future events affecting borrowers~~ and ~~collateral~~general ~~cannot~~reserve be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that material increases will not be necessary should the quality of the loans deteriorate as a result of factors previously discussed.allocations;

· other potential exposure in the loan portfolio, including covering the risks in the growing book of loans in the Schuylkill County region;

· variances in management’s assessment of national and local economic conditions; and

· other internal or external factors that management believes appropriate at the time.

Management currently believes the allowance for loan losses at December 31, 2011 is adequate in relation to the estimate of known inherent losses in the portfolio. Although management believes that it uses the best information available to make such determinations, future adjustments to the allowance for loan losses may be necessary, and the results of operations could be significantly and adversely affected if circumstances differ substantially from the assumptions used in making the determinations. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that material increases will not be necessary should the quality of the loans deteriorate as a result of factors previously discussed.

Deposits

Riverview generates and services deposits through the Bank’s traditional branch banking delivery system. Deposits are Riverview’s major source of funds available for lending and other investment purposes. Total deposits at December 31, ~~2010~~2011, were $~~237~~246,~~272~~ 342,000, an increase of $229,~~336~~070,000, or 103.48%, over total deposits of $~~214~~237,~~936~~272,000 as of December 31, ~~2009~~2010. ~~While~~Noninterest ~~noninterest~~ bearing deposits ~~decreased~~increased (421.56%) at December 31, ~~2010~~2011 since the ~~2009~~2010 year end, and interest bearing deposits increased $235,~~195~~080,000 or 112.93%. In particular, interest bearing demand deposit accounts, which include the Bank’s Hometown NOW deposit product, experienced the highest growth of 18.5% during ~~2010~~2011 since the ~~2009~~2010 year end, while the other interest bearing deposit categories, which include savings and time deposits, respectively declined.

Table 10 sets forth the average balance of the Bank’s deposits and the average rates paid on those deposits for the years ended December 31, 2010, 2009 and 2008. All deposits are domestic deposits.

TABLE 10

AVERAGE DEPOSITS BY MAJOR CLASSIFICATION

	December 31,
	2010				2009				2008
(Dollars in thousands)	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
Non-interest bearing demand	$	19,950	0.00	%	$	20,338	0.00	%	$	9,684	0.00	%
Interest-bearing demand	76,147		1.48	%	40,337		1.49	%	17,020		1.27	%
Savings	31,071		0.98	%	28,709		1.05	%	15,067		0.91	%
Time	96,376		2.45	%	108,321		3.29	%	51,059		3.80	%
Total deposits	$	223,544			$	197,705			$	92,830

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Table 1110 ~~displays~~sets forth the ~~remaining~~average ~~maturities~~balance ~~and~~of ~~amounts~~the ofBank’s ~~time~~deposits ~~certificates~~and ~~issued~~the inaverage ~~denominations~~rates ofpaid ~~$100,000~~on orthose ~~more~~deposits atfor the years ended December 31, 2011, 2010 and 2009. All deposits are domestic deposits.

TABLE 10

AVERAGE DEPOSITS BY MAJOR CLASSIFICATION

	December 31,
	2011				2010				2009
(Dollars in thousands)	Average Balance		Average Rate		Average Balance		Average Rate		Average Balance		Average Rate
Non-interest bearing demand	$	21,319	0.00	%	$	19,950	0.00	%	$	20,338	0.00	%
Interest-bearing demand	87,976		1.28	%	76,147		1.48	%	40,337		1.49	%
Savings	32,814		0.44	%	31,071		0.98	%	28,709		1.05	%
Time	97,940		2.14	%	96,376		2.45	%	108,321		3.29	%

Total deposits	$	240,049			$	223,544			$	197,705

Table 11 displays the remaining maturities and amounts of time certificates issued in denominations of $100,000 or more at December 31, 2011.

TABLE 11

DEPOSIT MATURITIES

(In thousands)	Time Certificates
Three months or less	$	75,~~042~~310
Over three months but within six months	32,~~424~~032
Over six months but within twelve months	37,~~389~~139
Over twelve months	2114,~~703~~182
Total	$	3528,~~558~~663

Borrowings

Short-term borrowings are generally used to meet temporary funding needs and consist of federal funds purchased, securities sold under agreements to repurchase, and overnight and short-term borrowings from the Federal Home Loan Bank of Pittsburgh. Short-term borrowings at December 31, ~~2010~~2011 and ~~2009~~2010 were comprised of securities sold under agreements to repurchase and ~~increased~~decreased $~~161~~75,000 to $~~968~~893,000 at December 31, ~~2010~~2011 as compared with $~~807~~968,000 as of December 31, ~~2009~~2010.

Long-term borrowings are generally utilized as a resource to fund growth. Riverview also considers the use of long-term borrowings as a means of managing its cost of funds. Long-term borrowings are also utilized as a tool to control interest rate positions within the overall asset-liability management function. All borrowings of this nature have been provided through the FHLB. Long-term borrowings as of December 31, ~~2010~~2011 ~~decreased~~increased $141,495,000 from the prior year end to $1012,~~683~~178,000 as compared to $10,~~697~~683,000 as of December 31, ~~2009~~2010. ~~The~~During ~~actual~~the ~~principal~~third ~~amount~~quarter of ~~the~~2011, ~~borrowings~~Riverview ~~did~~borrowed ~~not~~$1,500,000 ~~change~~from ~~year~~a ~~over~~local ~~year~~community bank. ~~Rather~~Offsetting the ~~decreases~~additional inamount ~~the~~borrowed ~~respective~~was ~~year-end balances were attributable to~~ the amortization of a premium on borrowings associated with purchase adjustment entries resulting from the consolidation and formation of the Bank as of December 31, 2008.

Additional information relating borrowings can be found in Note 10 — Borrowings — in Part II, Item 8 — Financial Statements and Supplementary Data — incorporated in this Form 10-K.

Shareholders’ Equity and Capital Requirements/Ratios

The net result of activity that affected shareholders’ equity during the year resulted in an increase of $210,000 in total shareholders’ equity to $24,927,000, at December 31, 2010, from $24,717,000, at December 31, 2009. A summary of the transactions include:

· Net income of $1,287,000 generated in 2010;

· An decrease of $190,000 in the change of accumulated other comprehensive income associated with the net unrealized gains on securities available-for-sale;

· The payment of quarterly cash dividends to shareholders totaling $875,000 in 2010 reduced shareholders’ equity.

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~~· The~~Shareholders’ ~~recording~~Equity ofand ~~$28,000~~Capital ~~in compensation cost associated with the granting of options.~~Requirements/Ratios

~~· Repurchase~~A strong capital position is fundamental to support continued growth. The net result of activity that affected shareholders’ equity during the year resulted in an increase of $401,479,000 in ~~common~~total ~~stock~~shareholders’ ~~under~~equity ~~the~~to ~~Stock~~$26,406,000, ~~Repurchase~~at ~~program~~December 31, 2011, from $24,927,000, at December 31, 2010. A summary of the transactions include:

· Net income of $1,561,000 generated in 2011;

· An increase of $1,035,000 in the change of accumulated other comprehensive income associated with the net unrealized gains on securities available-for-sale;

· The payment of quarterly cash dividends to shareholders totaling $912,000 in 2011 reduced shareholders’ equity.

· The recording of $27,000 in compensation cost associated with the granting of options.

· Repurchase of $232,000 in common stock under the Stock Repurchase program.

Riverview places significant emphasis on maintaining strong capital levels. The goals for capital planning are to build a strong capital base to fund future growth, to support risks inherent in the banking industry, to retain earnings to meet regulatory requirements and to provide an adequate return to shareholders.

Riverview meets the eligibility criteria of a small bank holding company in accordance with the Federal Reserve Board’s Small Bank Holding Company Policy Statement. Accordingly, Riverview is exempt from regulatory requirements administered by the federal banking agencies. However, the Bank is subject to various regulatory capital adequacy requirements administered by the Federal Reserve Board. Current capital guidelines issued by federal regulatory authorities require the Bank to meet minimum risk-based capital ratios in an effort to make regulatory capital more responsive to possible risk exposure related to a corporation’s on and off-balance sheet items.

Risk-based capital provides the basis for which all companies are evaluated in terms of capital adequacy. Risk-based capital guidelines redefine the components of capital and establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet items. The components of risk-based capital are segregated as Tier I and Tier II capital. Tier I capital is composed of total stockholders’ equity reduced by goodwill and other intangible assets. Tier II capital is comprised of the allowance for loan losses and any qualifying debt obligations. The minimum risk-based capital standards require all banks to have Tier I capital of at least 4% and total capital (which includes Tier I capital) of at least 8% of risk-weighted assets.

The Bank is also subject to leverage capital requirements. This requirement compares capital (using the definition of Tier I capital) to quarterly average balance sheet assets and is intended to supplement the risk-based capital ratio in measuring capital adequacy. The guidelines set a minimum leverage ratio of 3% for institutions that are highly rated in terms of safety and soundness, and which are not experiencing or anticipating any significant growth. Other institutions are expected to maintain capital levels of at least 1% or 2% above that minimum. As of December 31, ~~2010~~2011, the Bank had a Tier I leverage ratio of 8.47%.

~~Table 13 provides a comparison of the Bank’s risk-based capital ratios and leverage ratios at December 31, 2010 and 2009:~~36

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Table 13 provides a comparison of the Bank’s risk-based capital ratios and leverage ratios at December 31, 2011 and 2010:

TABLE 13

CAPITAL RATIOS

	December 31,
(Dollars in thousands)	~~2010~~2011			~~2009~~2010
Tier 1 capital	$	2224,~~896~~851		$	22,~~532~~896
Tier II, allowable portion of:
Allowance for loan losses	2,~~088~~382			12,~~981~~088
Total capital	$	2427,~~984~~233		$	24,~~513~~984
Tier I risk-based capital ratio	13.81		%	1413.38		%
Total risk-based capital ratio	1514.04		%	15.60		%
Tier I leverage ratio	8.47		%	98.04		%

Note: Unrealized gains or losses on securities available-for-sale and goodwill and intangible assets are excluded from regulatory capital components of risk-based capital and leverage ratios.

36At December 31, 2011 and 2010, the Bank exceeded the minimum regulatory capital requirements and was considered to be “well capitalized” under applicable federal regulations. Additional information relating to regulatory capital ratios can be found in Note 13 — Regulatory Matters and Shareholders’ Equity — in Part II, Item 8 — Financial Statements and Supplementary Data incorporated in this Form 10-K. The Bank’s total capital increased $2,249,000 to $27,233,000 at December 31, 2011 from $24,984,000 at December 31, 2010. The increase was attributable to the Bank’s 2011 earnings and a capital contribution of $1,500,000 made by Riverview. Although total capital increased 9% year over year, there was little change in the respective capital ratios because average assets, which grew to $284,780,000 for the 2011 year end from $272,739,000 for the 2010 year end, outpaced capital growth.

~~Table~~The maintenance of ~~Contents~~a solid capital foundation continues to be a primary goal for Riverview. An objective of the capital planning process is to effectively balance the retention of capital to support future growth, while at the same time, provide shareholders with an attractive long-term return on their investment. Management believes that Riverview’s capital position is adequate to support current operations and growth, and anticipates earnings to grow in tandem with asset growth. However, management is conscious of the impact that either rapid expansion or lower than projected earnings may potentially have on deteriorating Riverview’s capital position. Management proactively monitors the capital levels to ensure that they remain well in line with regulatory requirements, and is positioned to enact appropriate measures to ensure the strength of Riverview’s capital position. While Riverview continues to look for growth opportunities, there are no other known events, trends or circumstances that would adversely impact capital.

At December 31, 2010 and 2009, the Bank exceeded the minimum regulatory capital requirements and was considered to be “well capitalized” under applicable federal regulations. Additional information relating to regulatory capital ratios can be found in Note 13 — Regulatory Matters and Shareholders’ Equity — in Part II, Item 8 — Financial Statements and Supplementary Data incorporated in this Form 10-K.

The maintenance of a solid capital foundation continues to be a primary goal for Riverview. An objective of the capital planning process is to balance effectively the retention of capital to support future growth, while at the same time, providing shareholders with an attractive long-term return on their investment. Management believes that Riverview’s capital position is adequate to support current operations and growth, and anticipates earnings to grow in tandem with asset growth. However, management is conscious of the impact that either rapid expansion or lower than projected earnings may potentially have on deteriorating Riverview’s capital position. Management proactively monitors the capital levels to ensure that they remain well in line with regulatory requirements, and is positioned to enact appropriate measures to ensure the strength of Riverview’s capital position. While Riverview continues to look for growth opportunities, there are no other known events, trends or circumstances that would adversely impact capital.

Prompt Corrective Action

In the event an institution’s capital deteriorates to the Undercapitalized category or below, FDICIA prescribes an increasing amount of regulatory intervention, including:

· Implementation of a capital restoration plan and a guarantee of the plan by a parent institution

· Placement of a hold on increases in assets, number of branches, or lines of business

If capital reaches the significantly or critically undercapitalized level, further material restrictions can be imposed, including restrictions on interest payable on accounts, dismissal of management, and (in critically undercapitalized situations) appointment of a receiver. For well-capitalized institutions, FDICIA provides authority for regulatory intervention where they deem the institution to be engaging in unsafe or unsound practices, or if the institution receives a less than satisfactory examination report rating for asset quality, management, earnings, liquidity, or sensitivity to market risk.

Securities Authorized for Issuance Under Equity Compensation Plans

In January 2009, Riverview implemented a nonqualified stock option plan. The purpose of the 2009 Stock Option Plan was to advance the development, growth and financial condition of the Corporation by providing incentives through participation in the appreciation of the common stock of the Corporation to secure, retain and motivate the Corporation’s directors, officers and key employees and to align such person’s interests with those of the Corporation’s shareholders. The following table discloses the number of outstanding options granted by Riverview to participants in equity compensation plans not approved by shareholders, as well as the number of securities remaining available for future issuance under the plans.

		Number of Securities to be Issued Upon Exercise of Outstanding Options		Weighted Average Exercise Price of Outstanding Options			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
2009 Non-Qualified Stock Option Plan		170,000		$	13.00		-0-

The vesting schedule is a seven year cliff, which means that the options are 100% vested in 2016, which is the seventh year following the grant date and expire in 2019, which is ten years following the grant date. Additional information relating to the 2009 Stock Option Plan can be found in Note 8 — Pension and Other Benefit Plans — in Part II, Item 8 — Financial Statements and Supplementary Data — incorporated in this Form 10-K.

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undercapitalized situations) appointment of a receiver. For well-capitalized institutions, FDICIA provides authority for regulatory intervention where they deem the institution to be engaging in unsafe or unsound practices, or if the institution receives a less than satisfactory examination report rating for asset quality, management, earnings, liquidity, or sensitivity to market risk.

Off-Balance Sheet Arrangements

Riverview’s financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk. These commitments consist mainly of loans approved but not yet funded, unused lines of credit and letters of credit made under the same standards as on-balance sheet instruments. ~~Unused~~At ~~commitments at~~ December 31, ~~2010~~2011, ~~were~~Riverview had unfunded outstanding commitments to extend credit of $2231,~~370~~461,000 and outstanding letter of credit of $ 1,936,000. Because these ~~instruments~~commitments have fixed ~~maturity~~expiration dates, and ~~because~~ many ~~of them~~ will expire without being drawn upon, ~~they~~the dototal commitment level does not ~~generally~~necessarily present ~~any~~ significant liquidity risk to Riverview. Refer to Note 11 of the consolidated financial statements for a discussion of the nature, business purpose and importance of Riverview’s off-balance sheet arrangements.

Management believes that any amounts actually drawn upon can be funded in the normal course of operations. Riverview has no investment in or financial relationship with any unconsolidated entities that are reasonably likely to have a material effect on liquidity or the availability of capital resources.

Liquidity

Liquidity refers to Riverview’s ability to generate adequate amounts of cash to meet financial obligations to its customers in order to fund loans, to respond to deposit outflows and to cover operating expenses. Maintaining a level of liquid funds through asset/liability management seeks to ensure that these needs are met at a reasonable cost. Liquidity is essential to compensate for fluctuations in the balance sheet and provide funds for growth and normal operating expenditures. Sources of liquidity are provided on a continuous basis through scheduled and unscheduled principal reductions and interest payments on outstanding loans and investment securities. Liquidity needs may also be met by converting assets into cash or obtaining sources of additional funding, whether through deposit growth, securities sold under agreements to repurchase or borrowings under lines of credit with correspondent banks.

Liquidity from the asset category is provided through cash, amounts due from banks, interest-bearing deposits with banks and federal funds sold, which totaled $3028,~~471~~155,000 at December 31, ~~2010~~2011 as compared to $2730,~~533~~471,000 at December 31, ~~2009~~2010. While liquidity sources generated from assets include scheduled and prepayments of principal and interest from securities and loans in Riverview’s portfolios, longer-term liquidity needs may be met by selling securities available-for-sale, selling loans or raising additional capital. At December 31, ~~2010~~2011, unpledged available-for-sale securities with a carrying value of $2117,~~298~~055,000 were readily available for liquidity purposes, as compared with $1321,~~203~~298,000 at December 31, ~~2009~~2010. The ~~increase~~decrease of $84,~~095~~243,000 in unpledged available-for-sale securities was attributable to the ~~growth~~decline in the total investment portfolio.

On the liability side, the primary source of funds available to meet liquidity needs is to attract deposits at competitive rates. The ~~bank~~Bank’s core deposits, which exclude certificates of deposit $~~100~~250,000 and over, were $~~201~~241,~~714~~980,000 at December 31, ~~2010~~2011 as compared to $~~184~~226,~~805~~608,000 at December 31, ~~2009~~2010. The increase in core deposits is the result of deposit growth attributable to the Bank’s Hometown NOW deposit product. Core deposits have historically provided a source of relatively stable and low cost liquidity, as has also been the case for securities sold under agreements to repurchase. Short-term and long-term borrowings utilizing the federal funds line and credit facility established with a correspondent financial institution and the FHLB are also considered to be reliable sources for funding. As of December 31, ~~2010~~2011, Riverview had access to two formal borrowing lines totaling $~~104~~87,~~711~~806,000 with the aggregate amount outstanding on these lines totaling $10,678,000.

There are a number of factors that may impact Riverview’s liquidity position. Changes in interest rates, local economic conditions and the competitive marketplace can influence prepayments on investment securities, loan fundings and payments, and deposit flows. Management is of the opinion that its liquidity position at December 31, 2010 is adequate to respond to fluctuations “on” and “off” the balance sheet since it manages liquidity on a daily basis and expects to have sufficient funds to meet all of its funding requirements.

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There are a number of factors that may impact Riverview’s liquidity position. Changes in interest rates, local economic conditions and the competitive marketplace can influence prepayments on investment securities, loan fundings and payments, and deposit flows. Management is of the opinion that its liquidity position at December 31, 2011 is adequate to respond to fluctuations “on” and “off” the balance sheet since it manages liquidity on a daily basis and expects to have sufficient funds to meet all of its funding requirements.

Except as discussed above, there are no known demands, trends, commitments, events or uncertainties that may result in, or that are reasonably likely to result in Riverview’s inability to meet anticipated or unexpected needs.

Effects of Inflation

The impact of inflation upon financial institutions can affect assets and liabilities through the movement of interest rates. The exact impact of inflation on Riverview is difficult to measure. Inflation may cause operating expenses to change at a rate not matched by the change in earnings. Inflation may affect the borrowing needs and desires of consumer and commercial customers, in turn affecting the growth of Riverview’s assets. Inflation may also affect the level of interest rates in the general market, which in turn can affect Riverview’s profitability and the market value of assets held. Riverview actively manages its interest rate sensitive assets and liabilities countering the effects of inflation.

Return on ~~Equity~~Assets and ~~Assets~~Equity

The following table presents ratios as of the dates presented:

	December 31,
	2010		2009		2008
	2011		2010		2009
Return on average assets	0.4956	%	0.4649	%	0.2946	%
Return on average equity	56.0102	%	45.4501	%	24.9045	%
Dividend payout ratio	6758.9942	%	6667.2599	%	7966.4925	%
Average equity to average assets ratio	9.7827	%	109.2878	%	910.9128	%

New Financial Accounting Standards

Note 1 to the consolidated financial statements discusses the expected impact on Riverview’s financial condition and results of operations for recently issued or proposed accounting standards that have not been adopted. To the extent we anticipate a significant impact to Riverview’s financial condition or results of operations, appropriate discussion takes place in the applicable note to the consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Required.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

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December 31, ~~2010~~2011 and ~~2009~~2010

		Page

Report of Independent Registered Public Accounting Firm		41

Consolidated Financial Statements

Consolidated Balance Sheets		42
Consolidated Statements of Income		43
Consolidated Statements of Changes in Shareholders’ Equity		44
Consolidated Statements of Cash Flows		45
Notes to Consolidated Financial Statements		46

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Riverview Financial Corporation

Halifax, Pennsylvania

We have audited the accompanying consolidated balance sheets of Riverview Financial Corporation and subsidiary as of December 31, ~~2010~~2011 and ~~2009~~2010, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the years then ended. Riverview Financial Corporation’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. The corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the corporation’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Riverview Financial Corporation and subsidiary as of December 31, ~~2010~~2011 and ~~2009~~2010, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

	/s/ Smith Elliott Kearns & Company, LLC
	~~Smith Elliott Kearns & Company, LLC~~	Smith Elliott Kearns & Company, LLC
Chambersburg, Pennsylvania
March 29, 2011
March 28, 2012

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CONSOLIDATED BALANCE SHEETS

December 31, ~~2010~~2011 and ~~2009~~2010

	2010			2009
	2011			2010
	(In thousands, except share data)
Assets
Cash and due from banks	$	57,~~514~~474		$	65,~~339~~514
Interest-bearing deposits	24,607			18,494
Federal funds sold	1,283			—
Cash and Cash Equivalents	30,121			24,833
Interest-bearing deposits	19,148			24,607
Interest-bearing time deposits with banks	350			2,700
Cash and Cash Equivalents	27,905			30,121
Investment securities available-for-sale	48,696			34,583
Interest-bearing time deposits with banks	250			350
Mortgage loans held for sale	322			—
Investment securities available-for-sale	42,565			48,696
Loans, net of allowance for loan losses of $2,973 and $2,560	175,064			170,384
Mortgage loans held for sale	384			322
Premises and equipment	7,607			7,238
Loans, net of allowance for loan losses of $3,423 and $2,973	196,026			175,064
Accrued interest receivable	896			782
Premises and equipment	7,352			7,607
Restricted investments in bank stocks	2,311			2,410
Accrued interest receivable	915			896
Cash value of life insurance	5,823			5,574
Restricted investments in bank stocks	1,597			2,311
Foreclosed assets	230			312
Cash value of life insurance	5,891			5,823
Foreclosed assets	1,298			230
Goodwill	1,796			1,796
Intangible assets	~~150~~111			~~141~~150
Other assets	1,~~992~~430			21,~~185~~992
Total Assets	$	~~275~~287,~~358~~520		$	~~252~~275,~~938~~358
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Demand, non-interest bearing	$	1822,~~440~~430		$	1918,~~299~~440
Demand, interest-bearing	8197,~~990~~145			6981,~~833~~990
Savings and money market	32,~~652~~297			2732,~~999~~652
Time	~~104~~94,~~190~~470			97104,~~805~~190
Total Deposits	~~237~~246,~~272~~342			~~214~~237,~~936~~272
Short-term borrowings	~~968~~893			~~807~~968
Long-term borrowings	1012,~~683~~178			10,~~697~~683
Accrued interest payable	~~271~~256			~~389~~271
Other liabilities	1,~~237~~445			1,~~392~~237
Total Liabilities	~~250~~261,~~431~~114			~~228~~250,~~221~~431
Shareholders’ Equity
Common stock, par value $0.50 per share; authorized 5,000,000 shares; issued 2010 and 2009 1,750,003 shares; outstanding 2010 1,745,916 shares; 2009 1,750,003 shares	875			875
Common stock, par value $0.50 per share; authorized 5,000,000 shares; issued 2011 and 2010 1,750,003 shares; outstanding 2011 1,722,041 shares; 2010 1,745,916 shares	875			875
Surplus	11,~~280~~307			11,~~252~~280
Retained earnings	1213,~~841~~490			12,~~429~~841
Accumulated other comprehensive income	~~(29~~1,006		)	~~161~~(29		)
Treasury stock, at cost 2010 4,087 shares	(40		)	—
Treasury stock, at cost 2011 27,962 shares; 2010 4,087 shares	(272		)	(40		)
Total Shareholders’ Equity	2426,~~927~~406			24,~~717~~927
Total Liabilities and Shareholders’ Equity	$	~~275~~287,~~358~~520		$	~~252~~275,~~938~~358

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF INCOME

Years Ended December 31, ~~2010~~2011 and ~~2009~~2010

	2010		2009
	2011		2010
	(In thousands, except per share data)
Interest and Dividend Income
Loans, including fees	$	10,~~894~~837	$	1110,~~021~~894
Investment securities - taxable	~~1,043~~944		~~514~~1,043
Investment securities - tax exempt	~~564~~622		~~453~~564
Federal funds sold	—		4
Interest-bearing deposits	67		46
Interest-bearing deposits	46		140
Dividends	20		23
Dividends	23		18
Total Interest Income	12,490		12,570
Total Interest Income	12,570		12,150
Interest Expense
Deposits	3,~~796~~370		43,~~473~~796
Short-term borrowings	73		497
Long-term debt	~~275~~308		~~338~~275
Total Interest Expense	43,~~078~~681		4,~~860~~078
Net Interest Income	8,~~492~~809		78,~~290~~492
Provision for Loan Losses	~~1,506~~946		1,~~125~~506
Net Interest Income after Provision for Loan Losses	67,~~986~~863		6,~~165~~986
Noninterest Income
Service charges on deposit accounts	~~318~~280		~~288~~318
Other service charges and fees	~~345~~357		~~358~~345
Earnings on cash value of life insurance	~~249~~405		~~262~~249
Gain on sale of available-for-sale securities	6274		~~287~~6
Gain on sale of other real estate owned	139		—13
Gain on sale of mortgage loans	~~389~~258		~~443~~389
Total Noninterest Income	1,~~320~~583		1,~~638~~320
Noninterest Expenses
Salaries and employee benefits	3,~~396~~948		3,~~048~~396
Occupancy expenses	~~706~~794		~~675~~706
Equipment expenses	~~403~~465		~~425~~403
Telecommunication and processing charges	~~509~~601		~~480~~509
Postage and office supplies	~~205~~201		~~225~~205
FDIC premium	~~360~~285		~~433~~360
Bank shares tax expense	~~268~~246		~~257~~268
Directors’ compensation	~~256~~249		~~219~~256
Professional services	~~151~~177		~~266~~151
Other expenses	~~536~~654		~~511~~536
Total Noninterest Expenses	67,~~790~~620		6,~~539~~790
Income before Income Taxes	1,~~516~~826		1,~~264~~516
Applicable Federal Income Taxes	~~229~~265		~~153~~229
Net Income	$	1,~~287~~561	$	1,~~111~~287
Earnings Per Share - Basic and Diluted	$	0.74	$	0.63
Basic Earnings Per Share	$	0.90	$	0.74
Diluted Earnings Per Share	$	0.89	$	0.74

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Years Ended December 31, ~~2010~~2011 and ~~2009~~2010

(In thousands, except per share data)	Common Stock		Surplus		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Shareholders’ Equity
Balance - January 1, 2009	$	875	$	11,239	$	12,054		$	37		$	—		$	24,205
Balance - January 1, 2010	$	875	$	11,252	$	12,429		$	161		$	—		$	24,717
Comprehensive income:
Net income	—		—		1,111			—			—			1,111
Other comprehensive income	—		—		—			124			—			124
Total Comprehensive Income														1,235
Compensation cost of option grants	—		13		—			—			—			13
Cash dividends, $0.42 per share	—		—		(736		)	—			—			(736		)
Balance — December 31, 2009	875		11,252		12,429			161			$	—		24,717
Comprehensive income:
Net income	—		—		1,287			—			—			1,287
Other comprehensive income/(loss)	—		—		—			(190		)	—			(190		)
Other comprehensive income	—		—		—			(190		)	—			(190		)
Total Comprehensive Income														1,097
Compensation cost of option grants	—		28		—			—			—			28
Cash dividends, $0.50 per share	—		—		(875		)	—			—			(875		)
Repurchase common stock	—		—		—			—			(40		)	(40		)
Balance - December 31, 2010	$	875	$	11,280	$	12,841		$	(29	)	$	(40	)	$	24,927
Balance — December 31, 2010	875		11,280		12,841			(29		)	(40		)	24,927
Comprehensive income:
Net income	—		—		1,561			—			—			1,561
Other comprehensive income/(loss)	—		—		—			1,035			—			1,035
Total Comprehensive Income														2,596
Compensation cost of option grants	—		27		—			—			—			27
Cash dividends, $0.525 per share	—		—		(912		)	—			—			(912		)
Repurchase common stock	—		—		—			—			(232		)	(232		)
Balance - December 31, 2011	$	875	$	11,307	$	13,490		$	1,006		$	(272	)	$	26,406

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, ~~2010~~2011 and ~~2009~~2010

	2010			2009
	2011			2010
	(In thousands)
Cash Flows from Operating Activities
Net income	$	1,~~287~~561		$	1,~~111~~287
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	~~539~~621			~~567~~539
Provision for loan losses	~~1,506~~946			1,~~125~~506
Granting of stock options	2827			1328
Net amortization of premiums on securities available-for-sale	~~208~~185			~~150~~208
Net realized gain on sale of foreclosed real estate	(139		)	—(13		)
Net realized gain on sale of securities available-for-sale	(6274		)	(~~287~~6		)
Acquisition of mortgage servicing rights	~~(49~~—		)	—(49		)
Amortization (accretion) of intangible assets	40			32
Amortization of intangible assets	39			40
Deferred income taxes	(15234		)	(~~115~~15		)
Proceeds from sale of mortgage loans	2218,~~370~~385			3022,~~862~~370
Net gain on sale of mortgage loans	(~~389~~258		)	(~~443~~389		)
Mortgage loans originated for sale	(2218,~~303~~189		)	(2922,~~295~~303		)
Earnings on cash value of life insurance	(~~249~~235		)	(~~236~~249		)
(Increase) decrease in accrued interest receivable and other assets	192			(593		)
Decrease in accrued interest receivable and other assets	244			192
Decrease in accrued interest payable and other liabilities	(273		)	(216		)
Increase (decrease) in accrued interest payable and other liabilities	193			(273		)
Net Cash Provided by (Used in) Operating Activities	2,873			2,675
Net Cash Provided by Operating Activities	3,002			2,873
Cash Flows from Investing Activities
Net maturities (purchases) of interest-bearing time deposits	2,350			(1,750		)
Net maturities of interest-bearing time deposits	100			2,350
Securities available-for-sale:
Proceeds from maturities, calls and principal repayments	128,~~841~~371			1312,~~515~~841
Proceeds from sales	619,~~350~~989			6,~~942~~350
Purchases	(3320,~~794~~571		)	(2633,~~595~~794		)
Net (increase) decrease in restricted stock	99			(335		)
Net decrease in restricted stock	714			99
Net (increase) decrease in loans	(6,343		)	4,648
Net increase in loans	(23,044		)	(6,343		)
Purchases of premises and equipment	(~~908~~366		)	(~~333~~908		)
Proceeds from sale of foreclosed assets	~~252~~76			~~144~~252
Capitalized business combination transaction costs	—			(11		)
Proceeds from life insurance	167			—
Purchase of life insurance	—			(249		)
Net Cash (Used in) Investing Activities	(14,564		)	(19,153		)
Proceeds from life insurance	—			169
Net Cash Used in Investing Activities	(19,153		)	(3,855		)
Cash Flows from Financing Activities
Net increase in deposits	229,~~336~~070			4022,~~583~~336
Net increase in securities sold under agreements to repurchase	161			280
Net increase (decrease) in securities sold under agreements to repurchase	(75		)	161
Net decrease in short-term borrowings	—			(20,796		)
Proceeds from long-term borrowings	1,500			—
Proceeds from long-term borrowings	—			5,678
Amortization for long-term borrowings	(5		)	(14		)
Payments on long-term borrowings	(14		)	(5,014		)
Purchase of treasury stock	(232		)	(40		)
Purchase of treasury stock	(40		)	—
Dividends paid	(912		)	(875		)
Dividends paid	(875		)	(736		)
Net Cash Provided by Financing Activities	9,346			21,568
Net Cash Provided by Financing Activities	21,568			19,995
Net Increase (Decrease) in Cash and Cash Equivalents	(2,216		)	5,288
Net Increase (Decrease) in Cash and Cash Equivalents	5,288			18,815
Cash and Cash Equivalents - Beginning	30,121			24,833
Cash and Cash Equivalents - Beginning	24,833			6,018
Cash and Cash Equivalents - Ending	$	27,905		$	30,121
Cash and Cash Equivalents - Ending	$	30,121		$	24,833
Supplementary Cash Flows Information
Interest paid	$	43,~~198~~735		$	4,~~928~~198
Income taxes paid	$	~~237~~375		$	~~255~~237
Transfer of loans to foreclosed assets	$	~~157~~1,135		$	~~312~~157

The accompanying notes are an integral part of these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, ~~2010~~2011 and ~~2009~~2010

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

The Corporation and its wholly-owned bank subsidiary provide loan, deposit and other commercial banking services through ~~four~~three full service offices in Marysville, Duncannon and Enola, Perry County, Pennsylvania, ~~one~~two full service ~~office~~offices in ~~Hampden~~Tower ~~Township,~~City ~~Cumberland~~and ~~County,~~Cressona ~~Pennsylvania,~~and one ~~full~~commercial ~~service~~ office in ~~Tower City~~Pottsville, Schuylkill County, Pennsylvania, and three full service and one drive-up office in Halifax, Millersburg and Elizabethville, Dauphin County, Pennsylvania. The Corporation competes with several other financial institutions to provide its services to individuals, businesses, municipalities and other organizations. The Corporation is subject to regulation and supervision by the Federal Reserve Board while the Bank is currently subject to regulation and supervision by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. On March 14, 2011, the Bank filed an application with the Pennsylvania Department of Banking to covert from a national banking association to a state-chartered bank. The conversion is expected to take place during the second or third quarter of 2011, pending regulatory approval.

The Bank is a Pennsylvania chartered state bank. The Corporation and the Bank are subject to regulations of certain state and Federal agencies. These regulatory agencies periodically examine the Corporation and the Bank for adherence to laws and regulations.

On March 14, 2011, the Bank filed an application with the Pennsylvania Department of Banking to covert from a national banking association to a state-chartered bank. The conversion was effective November 19, 2011 at which time the Bank became known as Riverview Bank.

The accounting and reporting policies followed by the Corporation conform to generally accepted accounting principles and to general practices within the banking industry. The following paragraphs briefly describe the more significant accounting policies.

Principles of Consolidation and Basis of Accounting

The accompanying consolidated financial statements include the accounts of Riverview Financial Corporation and its wholly-owned subsidiary, Riverview ~~National~~ Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. The Corporation uses the accrual basis of accounting.

Use of Estimates

~~The~~These ~~preparation of~~ financial statements are prepared in ~~conformity~~accordance with U.S. generally accepted accounting principles ~~generally~~(“GAAP”) ~~accepted~~and inpredominant practices within the ~~United~~banking ~~States~~industry. The preparation of ~~America~~these consolidated financial statements requires ~~management~~Riverview to make estimates and ~~assumptions~~judgments that affect the reported amounts of assets, liabilities, revenues and ~~liabilities~~expenses, and related disclosure of contingent assets and liabilities. Riverview atevaluates estimates on an on-going basis. Material estimates that are particularly susceptible to significant change in the ~~date~~near term relate to the determination of the ~~financial~~allowance ~~statements~~for ~~and~~loan losses, the ~~reported~~potential ~~amounts~~impairment of ~~income~~goodwill and ~~expenses~~restricted ~~during~~stock, the ~~reporting~~valuation ~~period~~of deferred tax assets, the determination of other-than-temporary impairment on securities and the valuation of real estate acquired by foreclosure or in satisfaction of loans. ~~Actual~~The ~~results~~determination ~~could~~of ~~differ~~the ~~significantly~~adequacy ~~from~~of ~~those~~the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans and foreclosed real estate, management obtains independent appraisals for significant collateral.

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the potential impairment of goodwill and restricted stock, the valuation of deferred tax assets, the determination of other-than-temporary impairment on securities and the valuation of real estate acquired by foreclosure or in satisfaction of loans. The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans and foreclosed real estate, management obtains independent appraisals for significant collateral.

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions.

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~~Note~~While 1management -uses ~~Summary~~available information to recognize losses on loans, further reductions in the carrying amounts of ~~Significant~~loans ~~Accounting~~may ~~Policies~~be ~~(Continued)~~necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Cash and Cash Equivalents

~~Cash~~For ~~and cash equivalents, for~~ purposes of the statements of cash flows, cash and cash equivalents consist of cash and due from banks, federal funds sold and interest-bearing deposits in the Federal Reserve Bank and other banks. Generally, federal funds are purchased and sold for one day periods.

Investment Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates the classifications as of each balance sheet date. At December 31, ~~2010~~2011 and ~~2009~~2010, all of the Corporation’s investment securities were classified as available-for-sale.

Investment securities available-for-sale are those securities that the Corporation intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available-for-sale would be based on various factors, including movements in interest rates, changes in the maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory considerations and other similar factors. Investment securities available-for-sale are carried at fair value. Unrealized gains or losses are reported as changes in other comprehensive income, net of the related deferred tax effect. Any realized gains or losses, based on the amortized cost of specific securities sold, are included in current operations. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities.

Unrealized holding gains and losses, net of tax, on investment securities available-for-sale are reported as a net amount in a separate component (“accumulated other comprehensive income”) of shareholders’ equity until realized. InEffective April 1, 2009, the ~~Financial~~Corporation ~~Accounting~~adopted ~~Standards~~new ~~Board (FASB) issued an~~ accounting ~~pronouncement~~guidance ~~(ASC~~related ~~320, Investments-Debt~~to recognition and ~~Equity~~presentation ~~Securities)~~of ~~that amends~~ other-than-temporary impairment. This ~~(OTTI)~~accounting guidance ~~for~~amends ~~debt~~the ~~securities. The~~recognition ~~pronouncement changes existing~~ guidance for ~~determining whether an impairment is~~ other-than-temporary toimpairments of debt securities and ~~replaces~~expands the ~~existing~~financial ~~requirement~~statement ~~that~~disclosure ~~the~~for ~~Corporation’s~~other-than-temporary ~~management~~impairment ~~assert~~(OTTI) itlosses ~~has~~on ~~both~~debt securities. This guidance replaced the “intent and ability” toindication ~~hold~~in anprevious ~~impaired~~guidance ~~security~~by ~~until~~specifying ~~recovery with the requirement~~ that ~~management assert:~~ (a) itif a company does not have the intent to sell ~~the~~a debt security; prior to recovery and (b) ~~whether~~ it is more likely than not that it will not have to sell the debt security ~~before~~prior ~~recovery~~to ofrecover, ~~its~~the ~~cost~~security ~~basis~~would not be considered other than temporarily impaired unless there is a credit loss. ~~Declines~~When inan ~~the~~entity ~~fair~~does ~~value~~not ofintend ~~held-~~to~~-maturity~~ sell the security, and ~~available-for-sale~~it ~~securities~~is ~~below~~more ~~their~~likely ~~cost~~than ~~that~~not, ~~are~~the ~~considered~~entity will not have to besell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary ~~are~~impairment ~~reflected~~of ina ~~earnings~~debt assecurity ~~realized~~in ~~losses~~earnings toand the ~~extent~~remaining ~~the~~portion ~~impairment~~in isother ~~related~~comprehensive ~~to credit losses~~income. ~~The~~For ~~amount~~held ofto maturity debt securities, the ~~impairment~~amount ~~related~~of toan other-than-temporary ~~factors~~impairment isrecorded ~~recognized~~ in other comprehensive income~~. The~~ ~~pronouncement~~for ~~does~~the ~~not~~noncredit ~~amend~~portion ~~existing~~of ~~recognition~~a ~~and~~previous ~~measurement~~other-than-temporary ~~guidance~~impairment ~~related~~should tobe ~~OTTI~~amortized ofprospectively ~~equity~~over ~~securities. The~~the ~~pronouncement~~remaining ~~was~~life ~~effective~~of ~~for~~ the ~~years~~security ~~ended~~on ~~December 31,~~the ~~2010~~basis ~~and~~of ~~2009~~the ~~and~~timing ~~had~~of nofuture ~~significant~~estimated ~~impact~~cash toflows of the ~~Corporation’s financial statements~~security.

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~~Note~~Securities 1are evaluated periodically to determine whether a decline in their value is other-than-temporary. Management ~~Summary~~utilizes criteria such as the magnitude and duration of ~~Significant~~the ~~Accounting~~decline, ~~Policies~~in ~~(Continued)~~addition to the reasons underlying the decline to determine whether the loss in value is other-than-temporary. The term “other-than-temporary” is not intended to indicate that the decline in value is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support realizable value equal to or greater than the carrying value of the investment.

Mortgage Loans Held for Sale

Mortgage loans originated and held for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. During 2009, the Bank entered into an agreement with the Federal Home Loan Mortgage Corporation (“Freddie Mac”) to sell loans servicing released. This was in addition to the agreement that the Bank entered into in 2008 to sell loans servicing released under the Federal Home Loan Bank of Pittsburgh’s (“FHLB”) Mortgage Partnership Finance program (“MPF”). Premiums and discounts and origination fees and costs on loans held for sale are deferred and recognized as a component of the gain or loss on sale. Residential loan sales under the Freddie Mac and MPF programs have been made without recourse. Both programs require details of the residential loan in advance of the sale and both have the ability to perform post closing quality control reviews. If the results of these reviews discover any documentation errors, Freddie Mac and MPF can require the Bank to repurchase the loan.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at ~~unpaid~~the principal ~~balances~~amount outstanding, net of unearned income, deferred loan fees, and the allowance for loan losses. Interest is ~~computed~~accrued ~~based~~ on the principal balances outstanding and is credited to income as earned. Loan fees collected net of the costs of originating the loans are deferred and recognized as an adjustment ofto the yield over the contractual life of the related loan.

The accrual of interest on loans in all loan segments (nonaccrual loans) is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is well secured and in the process of collection. When a loan is placed on nonaccrual status, all unpaid interest credited to income in the current calendar year is reversed and all unpaid interest accrued in prior calendar years is charged against the allowance for loan losses. Interest payments received on nonaccrual loans are either applied against principal or reported as interest income according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Loans are considered past due when they are not paid in accordance with contractual terms.

Purchased loans with evidence of credit quality deterioration for which it is probable at purchase that all contractually required payments will not be collected are accounted for under an accounting standard relating to Accounting for Certain Loans or Debt Securities Acquired at Transfer. This standard addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans acquired in a transfer if those differences are attributable, at least in part, to credit quality. This standard requires impaired loans to be recorded at fair value and prohibits carrying over valuation allowances in the initial accounting for loans acquired in a transfer, including loans acquired in a purchase business combination. Under this standard, the excess of cash flows expected at

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~~Note~~accounting 1standard -relating ~~Summary~~to Accounting for Certain Loans or Debt Securities Acquired at Transfer. This standard addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans acquired in a transfer if those differences are attributable, at least in part, to credit quality. This standard requires impaired loans to be recorded at fair value and prohibits carrying over valuation allowances in the initial accounting for loans acquired in a transfer, including loans acquired in a purchase business combination. Under this standard, the excess of ~~Significant~~cash ~~Accounting~~flows ~~Policies~~expected ~~(Continued)~~at purchase over the purchase price is recognized as interest income over the life of the loans. Subsequent increases in cash flows expected to be collected are recognized prospectively through an adjustment of the loan’s yield over its remaining life. Decreases in expected cash flows are recognized as impairments.

purchase over the purchase price is recognized as interest income over the life of the loans. Subsequent increases in cash flows expected to be collected are recognized prospectively through an adjustment of the loan’s yield over its remaining life. Decreases in expected cash flows are recognized as impairments.

Allowance for Loan Losses

The Bank maintains an allowance for loan losses, which is ~~established~~intended asto ~~losses~~absorb ~~are~~probable ~~estimated~~known toand ~~have~~inherent ~~occurred~~losses ~~through~~in athe ~~provision~~outstanding loan portfolio. The allowance for loan losses ~~charged~~is toreduced ~~earnings. Loan~~by actual credit losses ~~are~~and ~~charged~~is ~~against~~increased by the ~~allowance~~provision ~~when~~for ~~management~~loan ~~believes~~losses ~~the~~and ~~uncollectability~~recoveries of aprevious ~~loan balance is confirmed~~losses. ~~Subsequent~~The ~~recoveries,~~provisions iffor ~~any,~~loan losses are ~~credited~~charged to earnings to bring the total allowance for loan losses to a level considered necessary and appropriate by management.

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~~loan portfolio 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 specific, general and ~~general~~unallocated components. The specific component relates to loans that are classified as substandard or doubtful and deemed to be impaired. For such loans, 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 non-impaired loans and is based on historical loss experience adjusted for qualitative factors. Management determines the unallocated portion, which represents the difference between the reported allowance for loan losses and the calculated allowance for loan losses, based generally on the following criteria:

A· risk ~~loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments~~ of ~~principal~~imprecision ~~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~~specific ~~of collecting scheduled principal~~ and ~~interest~~general ~~payments~~reserve 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.allocations;

~~Large~~· other ~~groups~~potential ofexposure ~~smaller~~in ~~balance~~the ~~homogeneous~~loan ~~loans~~portfolio, ~~are~~including ~~collectively~~covering ~~evaluated~~the ~~for~~risks ~~impairment. Accordingly,~~in the ~~Corporation~~growing ~~does~~book ~~not~~of ~~separately identify individual consumer and residential~~ loans ~~for~~in ~~impairment disclosures, unless such loans are~~ the ~~subject~~Schuylkill ofCounty ~~a restructuring agreement.~~region;

In· variances ~~determining~~in ~~the~~management’s ~~allowance~~assessment ~~for~~of ~~loan~~national ~~losses, the Bank identified separate pools with higher loss factors to segregate unimpaired criticized~~ and ~~classified~~local ~~loans~~economic ~~from~~conditions; ~~all other unimpaired loans. This more clearly details the risk inherent in the portfolio by refining the pools of assets with similar characteristics.~~and

· other internal or external factors that management believes appropriate at the time.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on

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~~Note~~a 1 case-by-case ~~Summary~~basis taking into consideration all of ~~Significant~~the ~~Accounting~~circumstances ~~Policies~~surrounding ~~(Continued)~~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, the Corporation does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement.

In determining the allowance for loan losses, the Bank identifies separate pools with higher loss factors to segregate unimpaired criticized and classified loans from all other unimpaired loans. This more clearly details the risk inherent in the portfolio by refining the pools of assets with similar characteristics.

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation isand ~~computed~~amortization are calculated principally using the straight-line method for financial reporting and the straight-line and accelerated methods for income tax purposes. When property is retired or disposed, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operations. Major additions or replacements are capitalized, while repairs and maintenance are charged to expense as incurred. Interest costs incurred during construction of bank premises are capitalized unless they are determined to be insignificant.

Accrued Interest

Accrued interest is interest that has accumulated over a period of time and has been recognized even though the obligation to receive or pay has not occurred. Accrued interest can either be income, such as the receipt of interest from loans or securities, or it can be an expense, such as the payment of interest on deposits and borrowings.

Restricted Investments in Bank Stocks

Restricted stock, which represents required investments in the common stock of correspondent banks, is carried at cost and ~~as of December 31, 2010 and 2009,~~ consists of the common stock of the Federal ~~Reserve Bank, Federal~~ Home Loan Bank of Pittsburgh (FHLB) and Atlantic Central Bankers Bank~~. These~~ ~~stocks~~at ~~are not actively traded and therefore have no readily determinable market value. In~~ December ~~2008~~31, ~~the~~2011 ~~FHLB~~as ofcompared ~~Pittsburgh~~with ~~notified~~common ~~member~~stock ~~banks~~of ~~that~~the itFederal ~~was~~Reserve ~~suspending~~Bank, ~~dividend~~FHLB ~~payments~~ and ~~the~~Atlantic ~~repurchase~~Central ofBankers ~~capital~~Bank ~~stock~~at December 31, 2010. ~~However,~~These ~~during~~stocks ~~the~~are ~~fourth~~not ~~quarter~~actively oftraded ~~2010~~and ~~the~~therefore ~~FHLB~~have ~~repurchased~~no inreadily ~~good~~determinable ~~faith~~market 5%value ofand ~~its~~are ~~capital~~carried ~~stock~~at cost.

~~Management~~In ~~evaluates~~December 2008, the ~~restricted~~FHLB ~~stock for impairment in accordance with the accounting standard relating to Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities~~ of ~~Others. Management’s~~Pittsburgh ~~determination~~notified ofmember ~~whether~~banks ~~these~~that ~~investments~~it ~~are~~was ~~impaired~~suspending isdividend ~~based~~payments onand ~~its assessment of~~ the ~~ultimate~~repurchase ~~recoverability~~ of ~~the~~capital ~~cost~~stock ~~rather~~to ~~than~~preserve ~~by recognizing temporary declines in value~~capital. ~~The~~However, ~~determination~~beginning ofin ~~whether a decline affects~~ the ~~ultimate~~fourth ~~recoverability~~quarter of ~~the~~2010 ~~cost is influenced by criteria such as (1)~~ the ~~significance~~FHLB of ~~the~~Pittsburgh ~~decline~~announced inits ~~net~~decision ~~assets of the FHLB as compared~~ to ~~the~~repurchase excess capital stock. As ~~amount~~a ~~for~~result ~~the FHLB and the length~~ of ~~time~~ this ~~situation~~periodic ~~has~~repurchase ~~persisted~~program, ~~(2) commitments by~~ the ~~FHLB~~Bank tohas ~~make~~received ~~payments~~$448,100 ~~required~~representing ~~by law or regulation and~~ the ~~level~~repurchase of ~~such~~4,481 ~~payments~~shares infrom ~~relation to~~ the ~~operating~~FHLB ~~performance~~ of ~~the FHLB~~Pittsburgh, ~~and (3) the impact~~ of ~~legislative~~which ~~and regulatory changes on institutions and~~$349,000 ~~accordingly, on the customer base of the FHLB.~~was

Management believes no impairment charge is necessary related to the restricted stock as of December 31, 2010.

Transfers of Financial Assets

Transfers of financial assets, including loans and loan participation sales, are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Corporation, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Corporation does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

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~~Note~~received 1in -2011. In ~~Summary~~addition, on February 22, 2012, the FHLB announced the payment of ~~Significant~~a ~~Accounting~~dividend ~~Policies~~to ~~(Continued)~~its member banks at an annualized rate of 0.10% based on the bank’s average FHLB stock holding for the fourth quarter of 2011. On February 23, 2012, the Bank received a dividend of $392 from the FHLB.

Management evaluates restricted stock for impairment in accordance with the accounting standard relating to Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others. Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of the cost rather than by recognizing temporary declines in value.

Management believes no impairment charge is necessary related to the restricted stock as of December 31, 2011.

Transfers of Financial Assets

Cash Value of Life Insurance

The Corporation invests in bank owned life insurance (“BOLI”) as a source of funding employee benefit expenses. BOLI involves the purchase of life insurance by the Corporation on a chosen group of directors and select management of the Bank. The Corporation is the owner and beneficiary of the policies. The life insurance investment is carried at the cash surrender value of the underlying policies. These amounts are immediately available to the Corporation upon surrender of the policies. Income generated from the increase in the cash surrender value of the policies is included in other income on the income statement.

Foreclosed Assets

Real estate and other foreclosed assets acquired in settlement of loans are carried at fair value of the property less estimated cost to sell at the date of acquisition. Subsequent to acquisition, foreclosed assets are carried at the lower of cost or estimated fair value of the property less selling costs. Any write-down, at or prior to the dates the assets are foreclosed on, is charged to the allowance for loan losses. Subsequent write-downs and expenses incurred in connection with holding such assets are reported in other expenses. Any gains or losses resulting from the sale of foreclosed assets are recorded in other income.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the tangible and identifiable intangible assets acquired. As a result of the adoption of the accounting standard relating to Goodwill and Other Intangible Assets, business acquisition goodwill is no longer amortized into the income statement over an estimated life, but rather is tested at least annually for impairment. Based upon the goodwill analysis performed by an independent third party, there was no goodwill impairment for the 2010 year end.

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amortized into the income statement over an estimated life, but rather is tested at least annually for impairment. Based upon the goodwill analysis performed by an independent third party, there was no goodwill impairment for the 2011 year end.

Intangible Assets

Intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights. The Corporation’s intangible assets consist of a core deposit intangible, which has a finite life and is amortized over its estimated useful life. Mortgage servicing rights are also included in intangible assets where the Bank recognized a servicing fee at the time of the sale for the right to service mortgages and other loans sold. The servicing asset is amortized as an expense over the life of the loan for which the Bank retains the servicing rights. Intangible assets are also subject to impairment testing when an indication of impairment exists.

Federal Income Taxes

The provision for income taxes is based on income as reported in the financial statements. Certain items of income and expense are recognized in different periods for financial reporting purposes than for federal income tax purposes. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between book and tax basis of the various balance sheet assets and liabilities given current recognition to changes in tax rates and laws. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for applicable income taxes.

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Note 1 - Summary of Significant Accounting Policies (Continued)

Treasury Stock

Repurchases of common stock are recorded as treasury stock at cost.

Advertising

Advertising costs are expensed as incurred and totaled $6441,000 and $4364,000 for the years ending December 31, ~~2010~~2011 and ~~2009~~2010, respectively.

Earnings Per Common Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. For diluted earnings per share, net income is divided by the weighted average number of shares outstanding plus the incremental number of shares added as a result of converting common stock equivalents. The Corporation’s common stock equivalents consist of outstanding common stock options, which amounted to 170,000 options as of the ~~2010~~2011 and ~~2009~~2010 year ends. There was no intrinsic value associated with the outstanding stock options at December 31, ~~2010~~2011 because the exercise price for each of the options was ~~higher~~lower than the trading price of the stock~~. The~~ ~~following~~as ~~table~~compared ~~presents~~with ~~the~~there ~~amounts~~being ~~used~~no inintrinsic ~~computing~~value ~~earnings~~at ~~per share for the years ended~~ December 31, 2010 ~~and 2009~~.

		Income Numerator		Common Shares Denominator	EPS
		(In thousands, except per share data)
2010:
	Basic EPS	$	1,287	1,749	$	0.74
	Dilutive effect of potential common stock options	—		—	—
	Diluted EPS	$	1,287	1,749	$	0.74
2009:
	Basic EPS	$	1,111	1,750	$	0.63
	Dilutive effect of potential common stock options	—		—	—
	Diluted EPS	$	1,111	1,750	$	0.63

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The following table presents the amounts used in computing earnings per share for the years ended December 31, 2011 and 2010.

	Income Numerator		Common Shares Denominator	EPS
	(In thousands, except share data)
2011:
Basic EPS	$	1,561	1,741,785	$	0.90
Dilutive effect of potential common stock options			2,796
Diluted EPS	$	1,561	1,744,581	$	0.89

2010:
Basic EPS	$	1,287	1,748,848	$	0.74
Dilutive effect of potential common stock options	—		—	—
Diluted EPS	$	1,287	1,748,848	$	0.74

Off Balance Sheet Financial Instruments

In the ordinary course of business, the Corporation has entered into off balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

Segment Reporting

The Corporation operates in a single business segment consisting of traditional banking activities.

Comprehensive Income

Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains, and losses be included in net income. Changes in certain assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Accumulated other comprehensive income (loss), which represents a component of shareholders’ equity, represents the net unrealized gain (loss) on securities available-for-sale, net of taxes.

52The components of other comprehensive income and related tax effects for the years ended December 31, 2011and 2010 are as follows:

	2011		2010
	(In thousands)
Unrealized holding gains/(losses) on available-for-sale securities	$	1,295	$	(283	)
Less reclassification adjustment for gains realized in net income	274		(6		)
Net Unrealized Gains/(Losses)	1,569		(289		)
Tax effect	534		(99		)
Net of Tax Amount	$	1,035	$	(190	)

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Note 1 - Summary of Significant Accounting Policies (Continued)

separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Accumulated other comprehensive income (loss), which represents a component of shareholders’ equity, represents the net unrealized gain (loss) on securities available-for-sale, net of taxes.

The components of other comprehensive income and related tax effects for the years ended December 31, 2010 and 2009 are as follows:

	2010			2009
	(In thousands)
Unrealized holding gains/(losses) on available-for-sale securities	$	(283	)	$	475
Less reclassification adjustment for gains realized in net income	(6		)	(287		)
Net Unrealized Gains/(Losses)	(289		)	188
Tax effect	(99		)	64
Net of Tax Amount	$	(190	)	$	124

Reclassifications

For purposes of comparability, certain prior period amounts may have been reclassified to conform with the ~~2010~~2011 presentation. Such reclassifications had no impact on net income.

New Accounting Standards

In ~~June~~January ~~2009~~2010, the FASB issued ~~new~~ASU ~~guidance~~2010-06, ~~relating~~Fair toValue ~~the~~Measurements ~~accounting~~and ~~for~~Disclosures ~~transfers~~(Topic of820): ~~financial~~Improving ~~assets. The~~Disclosures ~~new~~about ~~guidance,~~Fair ~~which~~Value ~~was~~Measurements. ASU ~~issued~~2010-06 asamends ~~SFAS~~Subtopic ~~No. 166,~~820-10 ~~Accounting~~to ~~for~~clarify ~~Transfers~~existing ~~of Financial Assets~~disclosures, anrequire ~~amendment~~new ~~to SFAS No. 140~~disclosures, ~~was~~and ~~adopted~~includes ~~into~~conforming ~~the~~amendments ~~Accounting~~to ~~Standards~~guidance ~~Codification~~on ~~(“Codification”)~~employers’ indisclosures ~~December 2009~~about ~~through~~postretirement ~~the~~benefit ~~issuance~~plan ~~of Accounting Standards Updated (“~~assets. ASU”) ~~2009~~2010-~~16. The~~06 ~~new~~was ~~standard~~effective ~~provides~~for ~~guidance~~interim toand ~~improve~~annual ~~the~~periods ~~relevance,~~beginning ~~representational~~after ~~faithfulness~~December 15, ~~and~~2009, ~~comparability~~except offor ~~the~~disclosures ~~information that an entity provides in its financial statements~~ about apurchases, ~~transfer of financial assets; the effects of a transfer on its financial position~~sales, ~~financial performance~~issuances, and ~~cash~~settlements ~~flows;~~in ~~and~~the aroll ~~transferor’s~~forward ~~continuing~~of ~~involvement,~~activity ifin ~~any,~~Level in3 ~~transferred~~fair ~~financial~~value ~~assets~~measurements. ~~ASU~~Those ~~2009-16~~disclosures ~~was~~were effective for ~~transfers~~fiscal onyears orbeginning after ~~January~~December 115, 2010 and for interim periods within those fiscal years. The adoption of the new guidance did not have a material impact on Riverview’s consolidated financial statements.

~~The~~In July 2010, the FASB issued ~~Accounting Standards Update No. 2010-6 (~~ASU 2010-6)20, ~~Fair~~Disclosures ~~Value~~about ~~Measurements~~the ~~and~~Credit ~~Disclosures~~Quality ~~about~~of ~~Fair~~Financing ~~Value~~Receivables ~~Measurements. The~~and ~~ASU~~the ~~amends~~Allowance ~~Subtopic~~for ~~820-10~~Credit ~~with~~Losses. The new disclosure ~~requirements~~guidance ~~and~~significantly ~~clarification~~expanded ofthe existing ~~disclosure~~ requirements~~. New~~ ~~disclosures~~leading ~~required~~to ~~include~~greater ~~the~~transparency ~~amount~~into ofa ~~significant~~company’s ~~transfers~~exposure into ~~and~~credit ~~out~~losses offrom ~~levels~~lending 1arrangements. The ~~and~~extensive 2new ~~fair~~disclosures ~~value~~of ~~measurements~~information ~~and~~as of the ~~reasons~~end ~~for~~of ~~the~~a ~~transfers. In~~reporting ~~addition,~~period ~~the~~was ~~reconciliation~~effective for ~~level~~annual 3reporting ~~activity~~periods ~~will~~ending ~~be required~~ on aor ~~gross~~after ~~rather~~December 15, ~~than~~2010 ~~net~~and ~~basis. The~~has ~~ASU~~been ~~provides~~presented ~~additional~~in ~~guidance~~Note ~~related~~4 to the ~~level~~Consolidated ofFinancial ~~disaggregation in determining classes of assets and liabilities and disclosures about inputs and valuation techniques~~Statements. ~~The~~Specific ~~amendments~~disclosures ~~were~~regarding ~~effective~~activity ~~for~~that ~~annual~~occurred orbefore ~~interim~~the ~~reporting~~issuance ~~periods~~of ~~beginning~~the ~~after December 15~~ASU, ~~2009,~~such ~~except~~as ~~for~~ the ~~requirement~~allowance toroll ~~provide~~forward ~~the~~and ~~reconciliation~~modification ~~for~~disclosures ~~Level~~was 3required ~~activity~~to ~~on a gross basis which will~~ be ~~effective~~adopted for ~~fiscal~~periods ~~years~~ beginning on or after December 15, 2010~~. The~~, ~~adoption~~and ofhas ~~this~~also ~~new~~incorporated ~~guidance~~in ~~did~~Note ~~not have a material impact on Riverview’s consolidated financial statements~~4.

53In December 2010, the FASB issued ASU 2010-28, Intangibles—Goodwill and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. ASU 2010-28 affects all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. ASU 2010-28 modifies Step 1 so that for those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This guidance was effective for Riverview for fiscal years, and interim periods within those years, beginning after December 15, 2010. Adoption of ASU 2010-28 did not have a material impact on the Riverview’s consolidated financial statements.

~~Table~~In April 2011, the FASB issued ASU 2011-2, A Creditor’s Determination of ~~Contents~~Whether a Restructuring is a Troubled Debt Restructuring. This guidance clarifies which loan modifications constitute troubled debt restructurings and is intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for the purpose of recording an impairment charge and for disclosure of troubled debt restructurings. In evaluating whether a restructuring

Note 1 - Summary of Significant Accounting Policies (Continued)

In January 2010, the FASB issued ASU 2010-04, Accounting for Various Topics — Technical Corrections to SEC Paragraphs. ASU 2010-04 makes technical corrections to existing SEC guidance including the following topics: accounting for subsequent investments, termination of an interest rate swap, issuance of financial statements - subsequent events, use of residential method to value acquired assets other than goodwill, adjustments in assets and liabilities for holding gains and losses, and selections of discount rate used for measuring defined benefit obligation. The adoption of the new guidance did not have a material impact on Riverview’s consolidated financial statements.

In January 2010, the FASB issued Accounting Standards Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends Subtopic 820-10 to clarify existing disclosures, require new disclosures, and includes conforming amendments to guidance on employers’ disclosures about postretirement benefit plan assets. ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of the new guidance did not have a material impact on Riverview’s consolidated financial statements.

In February 2010, the FASB issued Accounting Standards Update No. 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 addresses both the interaction of the requirements of Topic 855 with the SEC’s reporting requirements and the intended breadth of the reissuance disclosures provisions related to subsequent events. An entity that is an SEC filer is not required to disclose the date through which subsequent events have been evaluated. ASU 2010-09 is effective immediately. The adoption of the new guidance did not have a material impact on Riverview’s consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The new disclosure guidance will significantly expand the existing requirements and will lead to greater transparency into a company’s exposure to credit losses from lending arrangements. The extensive new disclosures of information as of the end of a reporting period will become effective for both interim and annual reporting periods ending on or after December 15, 2010. Specific disclosures regarding activity that occurred before the issuance of the ASU, such as the allowance roll-forward and modification disclosures, will be required for periods beginning on or after December 15, 2010. The Corporation has included the required disclosures in its consolidated financial statements.

On September 15, 2010, the SEC issued Release No. 33-9142, Internal Control Over Financial Reporting In Exchange Act Periodic Reports of Non-Accelerated Filers. This release issued a final rule adopting amendments to its rules and forms to conform them to Section 404(c) of the Sarbanes-Oxley Act of 2002 (SOX), as added by Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act. SOX Section 404(c) provides that Section 404(b) shall not apply with respect to any audit report prepared for an issuer that is neither an accelerated filer nor a large accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of 1934. Release No. 33-9142 was effective September 21, 2010. The adoption of the new guidance did not have a material impact on Riverview’s consolidated financial statements.

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~~Note~~constitutes 1a troubled debt restructuring, a creditor must separately conclude, under the guidance clarified by ASU 2011-2, ~~Summary~~that both of ~~Significant~~the ~~Accounting~~following ~~Policies~~exist: (~~Continued~~a) the restructuring constitutes a concession; and (b) the debtor is experiencing financial difficulties. As allowed by the guidance, Riverview adopted the provisions of ASU 2011-2 in the year ending December 31, 2011. See presentation of the disclosure in Note 4 to the Consolidated Financial Statements.

OnIn ~~September 17,~~April ~~2010~~2011, the ~~SEC~~FASB issued ~~Release~~ASU ~~No. 33~~2011-~~9144~~03, ~~Commission~~Transfers ~~Guidance~~and onServicing ~~Presentation~~(Topic 860) — Reconsideration of ~~Liquidity~~Effective ~~and~~Control ~~Capital~~for ~~Resources~~Repurchase ~~Disclosures~~Agreements. The amendments in ~~Management’s~~this ~~Discussion~~ASU ~~and~~remove ~~Analysis. This~~from ~~interpretive~~the ~~release~~assessment isof ~~intended~~effective tocontrol ~~improve~~(1) ~~discussion~~the ofcriterion ~~liquidity~~requiring ~~and~~the ~~capital~~transferor ~~resources~~to inhave ~~Management’s~~the ~~Discussion~~ability ~~and~~to ~~Analysis~~repurchase ofor ~~Financial~~redeem ~~Condition~~the ~~and~~financial ~~Results~~assets ofon ~~Operations~~substantially inthe ~~order~~agreed toterms, ~~facilitate~~even ~~understanding~~in bythe ~~investors~~event of default by the ~~liquidity~~transferee and ~~funding~~(2) ~~risks~~the ~~facing~~collateral ~~the~~maintenance ~~registrant~~implementation guidance related to that criterion. ~~This~~The ~~release~~amendments ~~was~~in ~~issued~~this inASU ~~conjunction~~are ~~with~~effective afor ~~proposed~~the ~~rule,~~first ~~Short-Term~~interim ~~Borrowings~~or ~~Disclosures,~~annual ~~that~~period ~~would~~beginning ~~require~~on ~~public~~or ~~companies~~after toDecember ~~disclose~~15, ~~additional~~2011. The ~~information~~guidance toshould ~~investors~~be ~~about~~applied ~~their~~prospectively ~~short-term~~to ~~borrowing~~transactions ~~arrangements. Release~~or ~~No. 33-9144~~modifications ~~was~~of ~~effective~~existing transactions that occur on ~~September 28,~~or ~~2010~~after the effective date. ~~The~~Early adoption ofis ~~the~~not ~~new~~permitted. Riverview ~~guidance~~is ~~did~~currently ~~not~~assessing ~~have~~the aimpact ~~material~~that ~~impact~~ASU 2011-03 will have on ~~Riverview’s~~its consolidated financial statements.

In ~~December 2010~~May 2011, the FASB issued ASU ~~2010~~2011-2804, ~~When~~Fair toValue ~~Perform~~Measurement ~~Step~~(Topic 2820) of— ~~the~~Amendments ~~Goodwill~~to ~~Impairment~~Achieve ~~Test~~Common ~~for~~Fair ~~Reporting~~Value ~~Units~~Measurement ~~with~~and ~~Zero~~Disclosure orRequirements ~~Negative~~in ~~Carrying Amounts~~U. ~~The~~S. ~~amendments~~GAAP inand ~~this~~IFRSs. This ASU ~~modify~~is ~~Step~~the 1result of ~~the~~joint ~~goodwill~~efforts ~~impairment~~by ~~test~~the ~~for~~FASB ~~reporting~~and ~~units~~IASB ~~with~~to ~~zero~~develop ora ~~negative~~single, ~~carrying~~converged ~~amounts. For~~fair ~~those~~value ~~reporting~~framework ~~units,~~on anhow ~~entity~~(not iswhen) ~~required~~ to ~~perform~~measure ~~Step~~fair 2value ofand ~~the~~what ~~goodwill~~disclosures ~~impairment~~to ~~test~~provide ifabout itfair value measurements. The ASU is ~~more~~largely ~~likely~~consistent ~~than~~with ~~not~~existing ~~that~~fair avalue ~~goodwill~~measurement ~~impairment~~principles ~~exits~~in U. ~~For~~S. ~~public~~GAAP ~~entities~~(Topic 820), with many of the amendments inmade ~~this~~to ~~Update~~eliminate unnecessary wording differences between U.S. GAAP and IFRSs. The amendments are effective for ~~fiscal~~public ~~years~~companies ~~and~~during the interim and annual periods ~~within~~beginning ~~those~~after ~~years~~December 15, 2011 with prospective application. For nonpublic entities, the amendments are effective for annual periods beginning after December 15, ~~2010~~2011. Early ~~adoption~~application is not permitted. ~~The~~Riverview ~~adoption~~is ofcurrently assessing the ~~new~~impact ~~guidance~~that isASU ~~not~~2011-04 ~~expected~~will to have ~~a material impact~~ on ~~Riverview’s~~its consolidated financial statements.

In ~~December 2010~~June 2011, the FASB issued ASU ~~2010~~2011-2905, ~~Disclosure~~Comprehensive ofIncome ~~Supplementary~~(Topic ~~Pro~~220) ~~Forma~~— ~~Information~~Presentation ~~for~~of ~~Business~~Comprehensive ~~Combinations~~Income. The ~~guidance~~objective ~~requires~~of ~~pro~~this ~~forma~~ASU ~~disclosure~~is ~~for~~to ~~business~~improve ~~combinations~~the ~~that~~comparability, ~~occurred~~consistency inand ~~the~~transparency ~~current~~of financial reporting ~~period~~and asto ~~though~~increase the ~~acquisition~~prominence ~~date~~of ~~for~~items ~~all~~reported ~~business~~in ~~combinations~~other ~~that~~comprehensive ~~occurred~~income ~~during~~by eliminating the ~~year~~option ~~had~~to ~~been~~present components of other comprehensive income as part of the ~~beginning~~statement of ~~the~~changes ~~annual~~in ~~reporting~~stockholders’ ~~period~~equity. IfThe ~~comparative~~amendments ~~financial~~require ~~statements~~that ~~are~~all ~~presented,~~non-owner ~~the~~changes ~~pro~~in ~~forma~~stockholders’ ~~information~~equity ~~should~~ be ~~reported~~presented aseither ~~though~~in ~~the~~a ~~acquisition~~single ~~date~~continuous ~~for~~statement ~~all~~of ~~business~~comprehensive ~~combinations~~income ~~that~~or ~~occurred~~in ~~during~~two ~~the~~separate ~~current~~but ~~year~~consecutive ~~had~~statements. The ~~been~~single asstatement of comprehensive income should include the ~~beginning~~components of net income, a total for net income, the ~~comparable~~components ~~prior~~of ~~annual~~other ~~reporting~~comprehensive ~~period~~income, a total for other comprehensive income, and a total for comprehensive income. ~~ASU~~In ~~2010~~the two-29statement isapproach, ~~effective~~the first statement should present total net income and its components followed consecutively by a second statement that should present all the components of other comprehensive income, a total for ~~business~~other ~~combinations~~comprehensive income, and a total for ~~which~~comprehensive income. The amendments do not change the ~~acquisition~~items ~~date~~that ismust onbe orreported ~~after~~in other comprehensive income, the ~~beginning~~option for an entity to present components of ~~the~~other ~~first~~comprehensive ~~annual~~income ~~reporting~~either ~~period~~net ~~beginning~~of onrelated tax effects or ~~after~~before ~~December 15~~related tax effects, ~~2010~~or the calculation or reporting of earnings per share. ~~Early~~The ~~adoption~~amendments isin ~~permitted~~this ASU should be applied retrospectively. ~~The~~For ~~adoption~~public ofcompanies, the ~~new~~amendments ~~guidance~~are iseffective ~~not~~for ~~expected~~fiscal toyears ~~have~~and ainterim ~~material~~periods ~~impact~~within onthose ~~Riverview’s~~years ~~consolidated~~beginning ~~financial~~after ~~statements~~December 15, 2011. For non-public companies, the amendments are effective for fiscal years and interim periods within those

In January 2011, the FASB issued ASU 2011-01, Deferral of the Effective Date of Disclosure about Troubled Debt Restructurings in Update No. 2010-20. The amendments in this ASU temporarily delay the effective date of the disclosures about troubled debt restructurings in ASU 2010-20 for public entities. The delay is intended to allow the FASB time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. It is not expected that this guidance will have a material impact on Riverview’s consolidated financial statements.

The SEC has issued Final Rule No. 33-9002, Interactive Data to Improve Financial Reporting, which requires companies to submit financial statements in XBRL (extensible business reporting language) format with their SEC filings on a phased-in schedule. Large accelerated filers using

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~~Note~~years 1ending after December 15, 2012. Early adoption is permitted because compliance with the amendments is already permitted. The amendments do not require transition disclosures. Riverview is currently assessing the impact that ASU 2011-05 ~~Summary~~will ofhave ~~Significant~~on ~~Accounting~~its ~~Policies~~consolidated ~~(Continued)~~financial statements.

~~U.S.~~In ~~GAAP~~December ~~were~~2011, ~~required~~the toFASB ~~provide~~issued ~~interactive~~ASU ~~data~~2011-12, ~~reports~~Comprehensive ~~starting~~Income ~~with~~(Topic ~~their~~220): ~~first~~Deferral ~~quarterly~~of ~~report~~the Effective Date for Amendments to the ~~fiscal~~Presentation ~~periods~~of ~~ending~~Reclassifications onof orItems ~~after~~Out ~~June 15~~of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, ~~2010~~which defers certain provisions of ASU 2011-05, Presentation of Comprehensive Income. ~~All~~One ~~remaining~~of ~~filers~~ASU ~~are~~2011-05’s ~~required~~provisions requires entities to ~~provide~~present ~~interactive~~reclassification ~~data~~adjustments ~~reports~~out ~~starting~~of ~~with~~accumulated ~~their~~other ~~first~~comprehensive ~~quarterly~~income ~~report~~by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented (for both interim and annual financial statements). Accordingly, this requirement is indefinitely deferred by ASU 2011-12 and will be further deliberated by the FASB at a future date. ASUs 2011-05 and 2011-12 are effective for fiscal years, and interim periods ~~ending~~within onthose oryears, beginning after ~~June~~ December 15, 2011~~. It~~, isand ~~not~~should ~~expected~~be ~~that~~applied ~~this~~retrospectively ~~guidance~~for ~~will~~all ~~have~~periods apresented ~~material~~in ~~impact~~the onfinancial statements. Riverview’s ~~consolidated~~has ~~financial~~not ~~statements~~yet decided which statement format it will adopt.

In September 2011, the FASB issued ASU 2011-08, Intangibles — Goodwill and Other (Topic 350) — Testing Goodwill for Impairment. ASU 2011-08 allows companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This guidance is effective for fiscal years beginning after December 15, 2011, and early adoption is permitted. Riverview is currently evaluating this guidance, but does not expect the adoption will have a material effect on its consolidated financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The ASU requires new disclosures regarding the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are designed to make GAAP financial statements more comparable to those prepared under International Financial Reporting Standards. The new disclosures entail presenting information about both gross and net exposures. The new disclosure requirements are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods therein; retrospective application is required. Riverview has not yet completed its evaluation of this ASU. However, since the provisions of ASU 2011-11 are disclosure-related, Riverview’s adoption of this ASU is not expected to have an impact to its financial condition or results of operations.

Note 2 - Restriction on Cash and Due from Banks

The Bank is required to maintain average reserve balances in cash or on deposit with the Federal Reserve Bank. The required reserve at December 31, 2011and 2010 ~~and 2009~~ approximated $36,~~257~~958,000 and $3,~~055~~257,000, respectively. In addition, the Bank’s other correspondents may require average compensating balances as part of their agreements to provide services.

Note 3 - Investment Securities Available-for-Sale

The amortized cost and estimated fair values of investment securities available-for-sale are reflected in the following schedules at December 31, 2010 and 2009:

	2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. Government agencies	$	1,316	$	10	$	—	$	1,326
State and municipal	17,350		50		568		16,832
Mortgaged-backed securities	30,074		487		23		30,538
	$	48,740	$	547	$	591	$	48,696

	2009
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. Government agencies	$	2,354	$	21	$	—	$	2,375
State and municipal	14,746		220		16		14,950
Mortgaged-backed securities	17,238		82		62		17,258
	$	34,338	$	323	$	78	$	34,583

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Note 3 - Investment Securities Available-for-Sale ~~(Continued)~~

The amortized cost and estimated fair ~~value~~values of ~~debt~~investment securities available-for-sale ~~at December 31, 2010, by contractual maturity,~~ are ~~shown~~reflected ~~below. Expected~~in ~~maturities will differ from contractual maturities because issuers may have~~ the ~~right~~following toschedules ~~prepay~~at ~~obligations~~December ~~with~~31, or2011 ~~without~~and ~~call or prepayment penalties~~2010:

	Amortized Cost		Fair Value
	2011
	(In thousands)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Due in one year or less	$	1,516	$	1,526
	(In thousands)
Due after one year through five years	950		949
State and municipal	$	16,426	$	677	$	—	$	17,103
Due after five years through ten years	6,754		6,794
U.S. Government agencies and sponsored enterprises (GSEs) - residential:
Due after ten years	9,446		8,889
Mortgage-backed securities	17,169		657		—		17,826
	17,766		18,158
Collateralized mortgage obligations (CMOs)	7,446		212		22		7,636
Mortgage-backed securities	30,074		30,538
	$	41,041	$	1,546	$	22	$	42,565
	$	48,740	$	48,696

Securities with an amortized cost of $27,165,000 and $21,157,000 and a fair value of $27,398,000 and $21,380,000 at December 31, 2010 and 2009, respectively, were pledged as collateral for public deposits and for other purposes as required or permitted by law.

	2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
U.S. Government agencies securities	$	1,316	$	10	$	—	$	1,326
State and municipal	17,350		50		568		16,832
U.S. Government agencies and sponsored enterprises (GSEs) - residential:
Mortgage-backed securities	18,599		310		—		18,909
Collateralized mortgage obligations (CMOs)	11,475		177		23		11,629

	$	48,740	$	547	$	591	$	48,696

Information pertaining to securities with gross unrealized losses at December 31, 2010 and 2009 aggregated by investment category and length of time that individual securities have been in a continuous loss position are as follows:

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
December 31, 2010:
Available-for-sale:
State and municipal	$	9,640	$	568	$	—	$	—	$	9,640	$	568
Mortgage-backed securities	2,582		23		—		—		2,582		23
	$	12,222	$	591	$	—	$	—	$	12,222	$	591

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
December 31, 2009:
Available-for-sale:
State and municipal	$	1,448	$	16	$	—	$	—	$	1,448	$	16
Mortgage-backed securities	6,138		46		1,386		16		7,524		62
	$	7,586	$	62	$	1,386	$	16	$	8,972	$	78

Management evaluates securities for other-than-temporary impairment, at least on a quarterly basis. It is management’s intent to hold all investments until maturity unless market, economic, credit quality or specific investment concerns warrant a sale of securities. Consideration is given

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~~Note~~The 3amortized -cost ~~Investment~~and ~~Securities~~fair ~~Available~~value of debt securities available-for-~~Sale~~sale ~~(Continued)~~at December 31, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to prepay obligations with or without call or prepayment penalties:

to (1) the length of time and the extent to which the fair value has been less than cost, (2) the credit quality or financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	445	$	446
Due after one year through five years	504		513
Due after five years through ten years	7,076		7,447
Due after ten years	8,401		8,697
	16,426		17,103
Mortgage-backed securities	17,169		17,826
CMOs	7,446		7,636
	24,615		25,462
	$	41,041	$	42,565

AtSecurities ~~December 31,~~with ~~2010,~~an ~~nineteen~~amortized ~~securities,~~cost of ~~which~~$24,577,000 ~~eighteen~~and ~~were~~$27,165,000 ~~municipal bonds~~ and ~~one~~a ~~was~~fair avalue ~~mortgage-backed~~of ~~security~~$25,510,000 ~~had unrealized losses as compared with three mortgage-backed securities~~ and ~~four~~$27,398,000 ~~municipal bonds~~ at December 31, ~~2009. Management~~2011 ~~believes~~and ~~the~~2010, ~~unrealized~~respectively, ~~losses relate to changes in interest rates since the individual securities~~ were ~~purchased~~pledged as ~~opposed~~collateral tofor ~~underlying~~public ~~credit~~deposits ~~issues. As management does not intend to sell any debt securities,~~ and itfor isother ~~more~~purposes ~~likely~~as ~~than not that management will not be~~ required toor ~~sell~~permitted ~~any~~by ~~debt securities before the cost bases are recovered, no declines are deemed to be other-than-temporary~~law.

AsInformation ~~part~~pertaining ~~of its strategy~~ to ~~reduce potential risk inherent within the investment portfolio, the Bank sold two available-for-sale~~ securities ~~during 2010 totaling $6,350,000 as compared~~ with ~~2009 when it sold 21 available for sale securities totaling $6,942,000. Gross realized gains for 2010 amounted to $6,000, while there were no~~ gross ~~realized~~unrealized losses, ~~resulting~~at inDecember ~~a $6~~31,~~000~~ ~~net~~2011 ~~gain~~and ~~from~~2010 ~~the~~aggregated ~~sale. Gross~~by ~~realized~~investment ~~gains~~category ~~from the 2009 sales amounted to $294,000~~ and ~~gross~~length ~~realized~~of ~~losses~~time ~~amounted~~that toindividual ~~$7,000,~~securities ~~resulting~~have been in a ~~net~~continuous ~~gain~~loss ofposition ~~$287,000.~~are as follows:

Note 4 — Credit Quality for Loans and the Allowance for Loan Losses

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
December 31, 2011:
Available-for-sale:
CMOs	$	3,079	$	22	$	—	$	—	$	3,079	$	22
	$	3,079	$	22	$	—	$	—	$	3,079	$	22

The Bank monitors its loan portfolio on a regular basis with consideration given to detailed analysis of loans by portfolio segment. Portfolio segments represent pools of loans with similar risk characteristics. There are eight portfolio segments — commercial loans; non-owner occupied commercial real estate loans; owner occupied commercial real estate loans; one-to-four family investment property loans; commercial land/land development/construction loans; residential real estate loans; home equity lines of credit; and consumer loans. Internal policy requires that the Chief Credit Officer report to the Board of Directors on a quarterly basis as to the status of the loan portfolio and any related credit quality issues. These reports include information on past due and nonaccrual loans, impaired loans, the allowance for loan losses and changes in the allowance for loan losses, credit quality indicators and foreclosed assets.

	Less Than 12 Months				More Than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
December 31, 2010:
Available-for-sale:
State and municipal	$	9,640	$	568	$	—	$	—	$	9,640	$	568
CMOs	2,582		23		—		—		2,582		23
	$	12,222	$	591	$	—	$	—	$	12,222	$	591

~~Past~~Management ~~Due~~evaluates ~~Loans~~securities ~~and~~for ~~Nonaccrual~~other-than-temporary ~~Loans~~impairment, at least on a quarterly basis. It is management’s intent to hold all investments until maturity unless market, economic,

Loans are considered past due when they are not paid in accordance with contractual terms. Past due loans are monitored by portfolio segment and by severity of delinquency — 30-59 days past due; 60-89 days past due; and 90 days and greater past due. The accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it can be documented that it is well secured and in the process of collection. When a loan is placed on nonaccrual status, all unpaid interest credited to income in the current calendar year is reversed and all unpaid interest accrued in prior calendar years is charged against the allowance for loan losses. Interest payments received on nonaccrual loans are either applied against principal or reported as interest income according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Table of Contents

~~Note~~credit 4quality —or ~~Credit~~specific ~~Quality~~investment ~~for~~concerns ~~Loans~~warrant a sale of securities. Consideration is given to (1) the length of time and the ~~Allowance~~extent ~~for~~to ~~Loan~~which ~~Losses~~the fair value has been less than cost, (~~Continued~~2) the credit quality or financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

~~The~~At ~~following~~December ~~presents~~31, an2011, ~~aging~~two ~~analysis~~CMO bysecurities ~~loan~~had ~~portfolio~~unrealized ~~segments~~losses as ofcompared with nineteen securities at December 31, 2010, of ~~past~~which ~~due~~eighteen ~~loans,~~were ~~which~~municipal ~~include~~bonds ~~nonaccrual~~and ~~loans~~one ~~and~~was ~~loans~~a ~~past~~mortgage-backed ~~due~~security. Management 90believes ~~days~~the orunrealized ~~more~~losses relate to changes in interest rates since the individual securities were purchased as opposed to underlying credit issues. As management does not intend to sell any debt securities, and ~~still~~it ~~accruing:~~is more likely than not that management will not be required to sell any debt securities before the cost bases are recovered, no declines are deemed to be other-than-temporary.

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total		Recorded Investment Greater Than 90 Days & Accruing
Commercial	$	—	$	81	$	269	$	350	$	12,214	$	12,564	$	—
Commercial real estate:
Non-owner occupied	—		—		—		—		32,898		32,898		—
Owner occupied	348		—		384		732		31,208		31,940		—
1-4 family investment	112		95		67		274		28,937		29,211		—
Commercial land and land development	229		—		1,010		1,239		10,508		11,747		—
Residential real estate	250		98		1,230		1,578		44,904		46,482		1,111
Home equity lines of credit	—		—		527		527		9,738		10,265		424
Consumer	62		—		—		62		2,868		2,930		—
Total	$	1,001	$	274	$	3,487	$	4,762	$	173,275	$	178,037	$	1,535

As part of its strategy to reduce some of the prepayment risk inherent within the investment portfolio, the Bank sold ten available-for-sale mortgage-backed securities during 2011 totaling $19,989,000 as compared with 2010 when it sold two available-for-sale securities totaling $6,350,000. On a year to date basis, gross realized gains for 2011 amounted to $274,000 and gross realized losses were zero, resulting in a $274,000 net gain from the sale. The Bank reinvested the proceeds from the sale by purchasing fixed rate mortgage-backed securities which not only provide interest income but also provide a more stable cash flow during future periods. Gross realized gains from the 2010 sale of investment securities amounted to $6,000, while there were no gross realized losses, resulting in a $6,000 net gain from the sale.

~~The~~Note ~~recorded~~4 ~~investment~~— inCredit ~~loans~~Quality ~~greater~~for ~~than~~Loans ~~90 days~~ and ~~still~~the ~~accruing~~Allowance ~~approximated~~for ~~$219,000~~Loan ~~at December 31, 2009.~~Losses

~~Included~~The ~~within~~Bank ~~the~~monitors its loan portfolio on a regular basis with consideration given to detailed analysis of loans by portfolio segment. Portfolio segments represent pools of loans with similar risk characteristics. There are eight portfolio segments — commercial loans; innon-owner ~~which~~occupied ~~the~~commercial ~~Bank~~real ~~discontinued~~estate ~~the~~loans; ~~accrual~~owner ofoccupied ~~interest~~commercial ~~due~~real estate loans; one-to-four family investment property loans; commercial land/land development/construction loans; residential real estate loans; home equity lines of credit; and consumer loans. For the ~~deterioration~~purpose inof estimating the ~~financial~~allowance ~~condition~~for loan losses, each of the ~~borrower. Such~~segments for commercial loans, ~~approximated~~non-owner $2occupied commercial real estate loans,~~779~~ owner occupied commercial real estate loans,~~000~~ ~~and~~one-to-four $3family investment property loans,~~123,000~~ atand ~~December 31~~commercial land/land development/construction loans have sub-segments for loan participations bought, ~~2010~~and loans generated by Riverview’s newly opened branch in Cressona and ~~2009~~commercial office in Pottsville, ~~respectively~~Schuylkill County, Pennsylvania. IfThe loans in these sub-segments have risk characteristics that differ from the ~~nonaccrual~~general ~~loans~~segments ~~had~~and ~~performed~~merit separate analysis in ~~accordance~~order ~~with~~to ~~their~~afford ~~original~~additional ~~terms,~~granularity ~~interest~~and ~~income~~accuracy ~~would~~in ~~have~~management’s ~~increased~~estimate byfor ~~$138,000~~the allowance for loan losses. Internal policy requires that the Chief Credit Officer report to the Board of Directors on a quarterly basis as to the status of the loan portfolio and ~~$193~~any related credit quality issues. These reports include information on past due and nonaccrual loans,~~000~~ impaired loans, the allowance for loan losses and changes in the ~~years~~allowance ~~ended~~for ~~December 31~~loan losses, ~~2010~~credit quality indicators and ~~2009,~~foreclosed ~~respectively~~assets.

The following presents loans by loan portfolio segments that were on a nonaccrual status as of December 31, 2010:

(In thousands)	2010
Commercial	$	1,010
Commercial real estate:
Non-owner occupied	—
Owner occupied	384
1-4 family investment	144
Commercial land and land development	1,010
Residential real estate	128
Home equity lines of credit	103
Consumer	—
Total	$	2,779

Impaired Loans

Table of Contents

~~Note~~Past 4Due ~~— Credit Quality for~~ Loans and ~~the~~Nonaccrual ~~Allowance for Loan Losses (Continued)~~Loans

~~determining~~Loans ~~impairment~~are ~~include~~considered ~~payment~~to ~~status,~~be ~~collateral~~past ~~value,~~due ~~and~~when ~~the~~they ~~probability~~are ofnot ~~collecting~~paid ~~scheduled~~in ~~principal~~accordance ~~and~~with ~~interest~~contractual ~~payments when due~~terms. ~~Loans~~Past ~~that~~due ~~experience~~loans ~~insignificant~~are ~~payment~~monitored ~~delays~~by ~~and~~portfolio ~~payment~~segment ~~shortfalls~~and ~~generally~~by ~~are~~severity ~~not~~of ~~classified~~delinquency as— ~~impaired. Management~~30-59 ~~determines~~days ~~the~~past ~~significance~~due; of60-89 ~~payment~~days ~~delays~~past due; and ~~payment~~90 ~~shortfalls~~days onand agreater ~~case-by-case~~past ~~basis,~~due. The ~~taking~~accrual ~~into consideration all~~ of ~~the~~interest ~~circumstances~~is ~~surrounding~~discontinued ~~the~~when ~~loan and~~ the ~~borrower,~~contractual ~~including~~payment ~~the~~of ~~length~~principal ofor ~~the~~interest ~~delay,~~has ~~the~~become ~~reasons~~90 ~~for~~days ~~the~~past ~~delay,~~due ~~the~~or ~~borrower’s~~management ~~prior~~has ~~payment~~serious ~~record,~~doubts ~~and~~about ~~the~~further ~~amount~~collectability of ~~the~~principal ~~shortfall~~or ininterest, ~~relation~~even tothough the ~~principal~~loan ~~and~~is ~~interest~~currently ~~owed~~performing. ~~The~~ A ~~Bank~~loan ~~further~~may ~~identifies~~remain ~~all~~on ~~loans~~accrual ~~in nonaccrual~~ status ~~and~~if ~~troubled~~it ~~debt~~can ~~restructured~~be ~~loans~~documented asthat ~~impaired~~it ~~loans,~~is ~~except~~well ~~large~~secured ~~groups~~and ofin ~~smaller~~the ~~balance~~process ~~homogeneous~~of ~~loans~~collection. When ~~that~~a ~~are~~loan ~~collectively~~is ~~evaluated~~placed ~~for~~on ~~impairment. Accordingly~~nonaccrual status, ~~the~~all ~~Bank~~unpaid ~~does~~interest ~~not~~credited ~~separately~~to ~~identify~~income ~~individual~~in ~~consumer~~the ~~and~~current ~~residential~~calendar ~~loans~~year ~~for~~is ~~impairment~~reversed ~~disclosures,~~and ~~unless~~all ~~the~~unpaid ~~loans~~interest ~~are~~accrued ~~the~~in ~~subject~~prior ofcalendar ayears ~~restructuring agreement. Impairment~~ is ~~measured~~charged onagainst athe ~~loan~~allowance byfor loan ~~basis~~losses. Interest ~~for~~payments ~~commercial~~received ~~and~~on ~~construction~~nonaccrual loans byare either ~~the~~applied ~~present~~against ~~value~~principal ofor ~~expected~~reported ~~future~~as ~~cash~~interest ~~flows~~income ~~discounted~~according atto ~~the loan~~management’s ~~effective~~judgment ~~interest~~as ~~rate,~~to the ~~loan’s~~collectability ~~obtainable market price, or the fair value~~ of ~~the collateral if the loan is collateral dependent~~principal. ~~When~~Generally, ~~the~~loans ~~measure~~are ofrestored anto ~~impaired~~accrual ~~loan~~status ~~results~~when inthe aobligation ~~realizable value that~~ is ~~less~~brought ~~than~~current, ~~the~~has ~~recorded~~performed ~~investment~~ in ~~the~~accordance ~~loan,~~with ~~the~~contractual ~~difference~~terms isfor ~~recorded as~~ a ~~specific~~reasonable ~~valuation~~period ~~allowance~~of ~~against~~time ~~that loan~~ and the ~~bank~~ultimate ~~will~~collectability ~~make~~of the ~~appropriate~~total ~~adjustment~~contractual toprincipal ~~the~~and ~~allowance~~interest ~~for~~is ~~loan~~no ~~losses~~longer in doubt.

AtThe ~~December 31,~~following ~~2010~~table ~~and~~presents ~~2009,~~an ~~the~~aging ~~total~~of ~~recorded investment in impaired~~ loans ~~was~~receivable ~~approximately~~by ~~$4,637,000~~loan ~~and~~portfolio ~~$4,328,000,~~segments ~~respectively,~~as of ~~which~~December $131,~~372,000~~ 2011 and ~~$3,550,000~~December ~~required a valuation allowance~~31, ~~which approximated $491~~2010,~~000~~ and ~~$1,047,000,~~includes ~~respectively. The~~nonaccrual ~~average investment in impaired~~ loans ~~for 2010~~ and ~~2009 was approximately $4,939,000 and $4,963,000, respectively. Interest income recognized on impaired~~ loans ~~was~~past ~~approximately~~due ~~$113,000~~90 indays ~~2010~~or more and ~~$185,000~~still ~~in 2009.~~accruing:

(In thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total		Recorded Investment Greater Than 90 Days & Accruing

December 31, 2011:
Commercial	$	607	$	300	$	322	$	1,229	$	16,229	$	17,458	$	—
Commercial real estate:
Non-owner occupied	—		—		2,282		2,282		42,682		44,964		702
Owner occupied	98		554		1,181		1,833		36,898		38,731		117
1-4 family investment	68		71		41		180		27,807		27,987		—
Commercial land and land development	60		220		—		280		11,191		11,471		—
Residential real estate	817		—		1,354		2,171		42,864		45,035		254
Home equity lines of credit	—		—		424		424		10,810		11,234		—
Consumer	41		41		—		82		2,487		2,569		—
Total	$	1,691	$	1,186	$	5,604	$	8,481	$	190,968	$	199,449	$	1,073

December 31, 2010:
Commercial	$	—	$	81	$	269	$	350	$	12,214	$	12,564	$	—
Commercial real estate:
Non-owner occupied	—		—		—		—		32,898		32,898		—
Owner occupied	348		—		384		732		31,208		31,940		—
1-4 family investment	112		95		67		274		28,937		29,211		—
Commercial land and land development	229		—		1,010		1,239		10,508		11,747		—
Residential real estate	250		98		1,230		1,578		44,904		46,482		1,111
Home equity lines of credit	—		—		527		527		9,738		10,265		424
Consumer	62		—		—		62		2,868		2,930		—
Total	$	1,001	$	274	$	3,487	$	4,762	$	173,275	$	178,037	$	1,535

Table of Contents

~~Note~~The 4recorded —investment ~~Credit~~in ~~Quality~~loans ~~for~~greater ~~Loans~~than 90 days and ~~the~~still ~~Allowance~~accruing ~~for~~was ~~Loan~~$1,073,000 ~~Losses~~at ~~(Continued)~~December 31, 2011 as compared with $1,535,000 at December 31, 2010.

~~The~~Included ~~following~~within ~~presents~~the ~~impaired~~loan portfolio are loans byin ~~loan~~which ~~portfolio~~the ~~segments~~Bank asdiscontinued the accrual of interest due to the deterioration in the financial condition of the borrower. Such loans approximated $4,709,000 and $2,779,000 at December 31, 2011 and December 31, 2010:, respectively. If the nonaccrual loans had performed in accordance with their original terms, interest income would have increased by $216,000 for the twelve months ended December 31, 2011 and $138,000 for the twelve months ended December 31, 2010, respectively.

(In thousands)	Recorded Investment in Impaired Loans		Unpaid Principal Balance of Impaired Loans		Related Allowance		Average Recorded Investment in Impaired Loans		Interest Income Recognized
With no related allowance recorded:
Commercial	$	741	$	741	$	—	$	759	$	—
Commercial real estate:
Non-owner occupied	—		—		—		—		—
Owner occupied	—		—		—		—		—
1-4 family investment	—		—		—		—		—
Commercial land and land development	1,010		1,010		—		1,255		—
Residential real estate	1,090		1,090		—		1,095		64
Home equity lines of credit	424		424		—		424		14
Consumer	—		—		—		—		—
With an allowance recorded:
Commercial	245		245		97		274		—
Commercial real estate:
Non-owner occupied	—		—		—		—		—
Owner occupied	499		499		170		501		7
1-4 family investment	77		77		9		79		—
Commercial land and land development	—		—		—		—		—
Residential real estate	551		551		215		552		28
Home equity lines of credit	—		—		—		—		—
Consumer	—		—		—		—		—
Total
Commercial	$	986	$	986	$	97	$	1,033	$	—
Commercial real estate:
Non-owner occupied	—		—		—		—		—
Owner occupied	499		499		170		501		7
1-4 family investment	77		77		9		79		—
Commercial land and land development	1,010		1,010		—		1,255		—
Residential real estate	1,641		1,641		215		1,647		92
Home equity lines of credit	424		424		—		424		14
Consumer	—		—		—		—		—
	$	4,637	$	4,637	$	491	$	4,939	$	113

The following presents loans by loan portfolio segments that were on a nonaccrual status as of December 31, 2011 and December 31, 2010:

Impaired loans include three restructured residential real estate loans for two borrowers who were experiencing financial difficulty. These three loans total $1,504,000. One loan was modified to reduce the interest rate and extend the maturity date. The second loan was modified to reduce the interest rate and allow for interest-only payments for six months. The third loan was modified to allow for interest-only payments for six months. There are no commitments to extend additional funds to any impaired loans.

(In thousands)	December 31, 2011		December 31, 2010
Commercial	$	322	$	1,010
Commercial real estate:
Non-owner occupied	1,580		—
Owner occupied	1,063		384
1-4 family investment	40		144
Commercial land and land development	—		1,010
Residential real estate	1,199		128
Home equity lines of credit	505		103
Total	$	4,709	$	2,779

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Bank 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. The Bank further identifies all loans in nonaccrual status and troubled debt restructured loans as impaired loans, except large groups of smaller balance homogeneous loans that are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures, unless the loans are the subject of a restructuring agreement. 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, or the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. When the measure of an impaired loan results in a realizable value that is less than the recorded investment in the loan, the difference is recorded as a specific valuation allowance against that loan and the Bank will make the appropriate adjustment to the allowance for loan losses.

Table of Contents

~~Note~~The 4following —presents ~~Credit~~impaired ~~Quality~~loans ~~for~~by ~~Loans~~loan ~~and~~portfolio ~~the~~segments ~~Allowance~~as ~~for~~of ~~Loan~~December ~~Losses~~31, ~~(Continued)~~2011 and December 31, 2010:

(In thousands)	Recorded Investment in Impaired Loans		Unpaid Principal Balance of Impaired Loans		Related Allowance		Average Recorded Investment in Impaired Loans		Interest Income Recognized
December 31, 2011:
Loans with no related allowance recorded:
Commercial	$	35	$	35	$	—	$	77	$	1
Commercial real estate:
Non-owner occupied	3,213		3,213		—		2,919		63
Owner occupied	591		591		—		593		1
1-4 family investment	460		460		—		460		22
Commercial land and land development	—		—		—		—		—
Residential real estate	1,351		1,351		—		1,360		59
Home equity lines of credit	805		805		—		811		16
Consumer	10		10		—		13		1

Loans with an allowance recorded:

Filing Compare · Riverview Financial Corp