10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2010

OR

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

For the transition period of              to             

Commission File Number 000-53935

Harvard Illinois Bancorp, Inc.

(Exact name of Registrant as specified in its charter)

Maryland	27-2238553
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification Number)

58 N. Ayer Street Harvard, IL	60033
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code: (815) 943-5261

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Sections 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.    x  Yes    ¨  No

Indicate by check mark whether the Registrant has submitted electronic and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period the registrant was required to submit and post such filings).    ¨  Yes    ¨  No

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

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	x

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

As of May 12, 2010, 784,689 shares of the Registrant’s common stock, par value $0.01 per share, were issued and outstanding.

HARVARD SAVINGS, MHC

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to the Consolidated Financial Statements	7-18
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18-29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4T.	Controls and Procedures	29-30
PART II	OTHER INFORMATION	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Submission of Matters to a Vote of Security Holders	31
Item 5.	Other Information	31
Item 6.	Exhibits	31
	Signatures	32
EXHIBITS
	Section 302 Certifications
	Section 906 Certification

EXPLANATORY NOTE

On April 8, 2010, Harvard Illinois Bancorp, Inc., a Maryland corporation (the “Registrant”), became the stock holding company for Harvard Savings Bank as part of the mutual-to-stock conversion of Harvard Savings, MHC (the “MHC”). As of March 31, 2010, the conversion had not been completed, and, as of that date, the Registrant had no assets or liabilities, and had not conducted any business other than that of an organizational nature. Accordingly, the financial and other information presented in this quarterly report is for the MHC.

2

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

HARVARD SAVINGS, MHC

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	(Unaudited)
	March 31, 2010		December 31, 2009
Assets
Cash and due from banks	$	946	$	973
Interest-bearing demand deposits in banks		5,518		2,594
Securities purchased under agreements to resell		1,950		11,800
Cash and cash equivalents		8,414		15,367
Interest-bearing deposits with other financial institutions		9,701		8,110
Available-for-sale securities		4,263		3,225
Held-to-maturity securities, at amortized cost (estimated fair value of $3,670 and $3,939 at March 31, 2010 and December 31, 2009, respectively)		3,489		3,789
Loans, net of allowance for loan losses of $1,567 and $1,426 at March 31, 2010 and December 31, 2009, respectively		121,930		108,895
Premises and equipment, net		3,746		3,652
Federal Home Loan Bank stock, at cost		6,549		6,549
Foreclosed assets held for sale		719		506
Accrued interest receivable		639		515
Deferred income taxes		1,250		1,231
Bank-owned life insurance		4,031		3,992
Mortgage servicing rights		410		398
Other		1,337		1,380
Total assets	$	166,478	$	157,609
Liabilities and Equity
Liabilities
Deposits
Demand	$	10,220	$	3,939
Savings, NOW and money market		47,229		47,047
Certificates of deposit		74,380		70,564
Brokered certificates of deposit		2,812		2,811
Total deposits		134,641		124,361
Federal Home Loan Bank advances		16,529		18,128
Advances from borrowers for taxes and insurance		631		415
Deferred compensation		2,115		2,096
Accrued interest payable		74		79
Other		183		215
Total liabilities		154,173		145,294
Commitments and Contingencies		—		—
Equity
Retained earnings		12,251		12,250
Accumulated other comprehensive income, net of tax		54		65
Total equity		12,305		12,315
Total liabilities and equity	$	166,478	$	157,609

See accompanying notes to the unaudited consolidated financial statements.

3

HARVARD SAVINGS, MHC

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands)

	(Unaudited) Three Months  Ended March 31,
	2010			2009
Interest and Dividend Income
Interest and fees on loans	$	1,775		$	1,860
Securities
Taxable		76			69
Tax-exempt		8			10
Securities purchased under agreements to resell		25			56
Other		45			34
Total interest and dividend income		1,929			2,029
Interest Expense
Deposits		614			797
Federal Home Loan Bank advances		170			250
Total interest expense		784			1,047
Net Interest Income		1,145			982
Provision for Loan Losses		216			41
Net Interest Income After Provision for Loan Losses		929			941
Noninterest Income
Customer service fees		60			62
Brokerage commission income		6			19
Net realized gains on loan sales		34			5
Net realized losses on sales of available-for-sale securities		—			(7	)
Losses on other than temporary impairment of equity securities		(4	)		(35	)
Loan servicing fees		43			41
Bank-owned life insurance income, net		38			35
Other		4			3
Total noninterest income		181			123
Noninterest Expense
Compensation and benefits		603			671
Occupancy		135			145
Data processing		116			117
Professional fees		37			25
Marketing		24			35
Office supplies		15			20
Federal deposit insurance		54			29
Indirect automobile servicing fee		38			60
Foreclosed assets, net		37			57
Other		64			62
Total noninterest expense		1,123			1,221
Loss Before Income Taxes		(13	)		(157	)
Benefit for Income Taxes		(14	)		(64	)
Net Income (Loss)	$	1		$	(93	)

See accompanying notes to the unaudited consolidated financial statements.

4

HARVARD SAVINGS, MHC

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(Dollars in thousands)

	Retained Earnings			Accumulated Other Comprehensive Income, net of tax			Total Equity
For the three months ended March 31, 2010 (unaudited)
Balance, December 31, 2009	$	12,250		$	65		$	12,315
Comprehensive loss
Net income		1			—			1
Change in unrealized appreciation on available-for-sale securities, net of tax benefit of $5		—			(11	)		(11	)
Total comprehensive loss								(10	)
Balance, March 31, 2010	$	12,251		$	54		$	12,305
For the three months ended March 31, 2009 (unaudited)
Balance, December 31, 2008	$	12,512		$	15		$	12,527
Comprehensive loss
Net loss		(93	)		—			(93	)
Change in unrealized appreciation on available-for-sale securities, net of tax expense of $13		—			25			25
Total comprehensive loss								(68	)
Balance, March 31, 2009	$	12,419		$	40		$	12,459

See accompanying notes to unaudited consolidated financial statements.

5

HARVARD SAVINGS, MHC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	(Unaudited) Three Months  Ended March 31,
	2010			2009
Operating Activities
Net income (loss)	$	1		$	(93	)
Items not requiring (providing) cash
Depreciation		51			55
Provision for loan losses		216			41
Amortization of premiums and discounts on securities		(5	)		(4	)
Deferred income taxes		(14	)		(64	)
Net realized gains on loan sales		(34	)		(5	)
Net realized losses on sales of available-for-sale securities		—			7
Loss on other than temporary impairment of equity securities		4			35
Loss on foreclosed assets held for sale		21			45
Bank-owned life insurance income, net		(39	)		(35	)
Originations of loans held for sale		(2,973	)		(12,392	)
Proceeds from sales of loans held for sale		2,995			12,489
Changes in
Accrued interest receivable		(124	)		25
Other assets		43			(18	)
Accrued interest payable		(5	)		(19	)
Deferred compensation		19			106
Other liabilities		(32	)		815
Net cash provided by operating activities		124			988
Investing Activities
Net increase in interest-bearing deposits		(1,591	)		(6,953	)
Purchases of available-for-sale securities		(1,256	)		(5	)
Proceeds from the sales of available-for-sale securities		—			495
Proceeds from maturities and pay-downs of available-for-sale securities		200			40
Purchases of held-to-maturity securities		—			(2,477	)
Proceeds from maturities and pay-downs of held-to-maturity securities		303			831
Net change in loans		(13,523	)		5,654
Purchase of premises and equipment		(145	)		(109	)
Proceeds from sale of foreclosed assets		38			370
Net cash used in investing activities		(15,974	)		(2,154	)
Financing Activities
Net increase in demand deposits, money market, NOW and savings accounts		6,463			7,575
Net increase in certificates of deposit, including brokered certificates		3,817			1,136
Net increase in advances from borrowers for taxes and insurance		216			239
Proceeds from Federal Home Loan Bank advances		456			2,265
Repayments of Federal Home Loan Bank advances		(2,055	)		(5,348	)
Net cash provided by financing activities		8,897			5,867
Net Increase (Decrease) in Cash and Cash Equivalents		(6,953	)		4,701
Cash and Cash Equivalents, Beginning of Period		15,367			14,019
Cash and Cash Equivalents, End of Period	$	8,414		$	18,720
Supplemental Cash Flows Information
Interest paid	$	789		$	1,066
Income taxes paid		—			—
Foreclosed assets acquired in settlement of loans		272			52

See accompanying notes to unaudited consolidated financial statements.

6

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) (In thousands)

Note 1: Basis of Financial Statement Presentation

The consolidated financial statements include the accounts of Harvard Savings, MHC (Company) and its wholly-owned subsidiaries, Harvard Savings Bank and Harvard Illinois Financial Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and with instructions for Form 10–Q and Rule 10–01 of Regulation S–X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates. In the opinion of management, the preceding unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of March 31, 2010 and December 31, 2009, and the results of its operations for the three month periods ended March 31, 2010 and 2009. These consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2009 included as part of Harvard Illinois Bancorp, Inc.’s Form 10-K (File No. 000-53935) (2009 Form 10-K) filed with the Securities and Exchange Commission on May 12, 2010.

The results of operations for the three month period ended March 31, 2010 are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the consolidated financial statements and footnotes thereto included in the 2009 Form 10–K.

Note 2: New Accounting Pronouncements

Recent and Future Accounting Requirements

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” which was codified into ASC Topic 860. Topic 860 seeks to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. Topic 860 addresses (1) practices that have developed since the issuance of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (and related obligations) that have been derecognized should continue to be reported in the financial statements of transferors. This standard must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. We adopted ASC Topic 860 on January 1, 2010, and there was no impact to the Company’s financial statements.

7

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”, which was codified into ASC Topic 810. Topic 810 seeks to improve financial reporting by enterprises involved with variable interest entities by addressing (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities,” as a result of the elimination of the qualifying special-purpose entity concept in SFAS No. 166, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity. This Statement was effective as of the beginning of each reporting entity’s first annual reporting period that began after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. There has been no impact on the Company’s financial statements from adoption of ASC 810 on January 1, 2010.

In February 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2010-09 “Subsequent Events (Topic 855) – Amendments to Certain Recognition and Disclosure Requirements.” ASU 2010-09 amends the subsequent events disclosure guidance. The amendments include a definition of an SEC filer, requires an SEC filer to evaluate subsequent events through the date the financial statements are issued, and removes the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated. ASU 2010-09 was effective upon issuance. Adoption of this update did not have a material effect on the Company’s financial statements.

In January 2010, the FASB issued ASU No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends the fair value disclosure guidance. The amendments include new disclosures and changes to clarify existing disclosure requirements. ASU 2010-06 was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements of 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. Adoption of this update as of March 31, 2010 did not have a material effect on the Company’s financial statements.

Note 3: Securities Purchased Under Agreements to Resell

The Company enters into purchases of securities under agreements to resell. The amounts advanced under these agreements were $1,950 and $11,800 at March 31, 2010 and December 31, 2009, respectively, and represent short-term SBA loans. The securities underlying the agreements are book-entry securities. All securities are delivered by appropriate entry into the third-party custodian’s account designated by the Company under a written custodial agreement that explicitly recognizes the Company’s interest in the securities. These agreements mature by notice by the Company or 30 days by the custodian. The Company’s policy requires that all securities purchased under agreements to resell be fully collateralized.

At March 31, 2010 and December 31, 2009, agreements to resell securities purchased were outstanding with the following entities (in thousands):

	March 31, 2010		December 31, 2009
BCM High Income Fund, LP	$	—	$	5,350
Solomon Hess		1,000		—
Coastal Securities		950		6,450
Total	$	1,950	$	11,800

8

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Note 4: Securities

The amortized cost and approximate fair value of securities, together with gross unrealized gains and losses, of securities are as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale Securities:
March 31, 2010:
U.S. government agencies	$	2,186	$	28	$	(2	)	$	2,212
Mortgage-backed:
Government-sponsored enterprises (GSE) – residential		989		25		—			1,014
State and political subdivisions		540		—		(1	)		539
Equity securities		467		31		—			498
	$	4,182	$	84	$	(3	)	$	4,263
December 31, 2009:
U.S. Government and federal agency	$	976	$	32	$	—		$	1,008
Mortgage-backed:
Government-sponsored enterprises (GSE) – residential		1,105		29		—			1,134
State and political subdivisions		582		—		(2	)		580
Equity securities		465		38		—			503
	$	3,128	$	99	$	(2	)	$	3,225

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity Securities:
March 31, 2010:
U.S. government agencies	$	500	$	37	$	—	$	537
Mortgage-backed:
Government-sponsored enterprises (GSE) – residential		41		—		—		41
Private-label residential		2,848		142		—		2,990
State and political subdivisions		100		2		—		102
	$	3,489	$	181	$	—	$	3,670
December 31, 2009:
U.S. Government agencies	$	500	$	35	$	—	$	535
Mortgage-backed:
Government-sponsored enterprises (GSE) – residential		43		—		—		43
Private-label residential		3,146		113		—		3,259
State and political subdivisions		100		2		—		102
	$	3,789	$	150	$	—	$	3,939

9

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

The Company held no securities at March 31, 2010 with a book value that exceeded 10% of total equity, with the exception of obligations of U.S. Treasury and other U.S. government agencies and corporations, and a collateralized mortgage obligation with book value and fair value of $1.3 million.

Available for sale equity securities consist of shares in the Shay Asset Management mutual funds, shares of FHLMC and FNMA common stock, and shares in other financial institutions.

As of March 31, 2010 and December 31, 2009, the Company held investments in FNMA and FHLMC common stock with fair value of $24 as of each date. The investments in FNMA and FHLMC common stock are valued using available market prices. Management performed an analysis and deemed the remaining investment in FNMA and FHLMC common stock was not other than temporarily impaired as of March 31, 2010 and December 31, 2009.

The Company recorded an other-than-temporary impairment on the Shay Asset Management mutual funds included in equity securities in the amount of $29 for the three month period ended March 31, 2009. As of March 31, 2010 and December 31, 2009, the Company held investments in the mutual funds with an amortized cost of $424 and $418, respectively. The investments in mutual funds are valued using available market prices. Management performed an analysis and deemed the remaining investment in the mutual funds was not other than temporarily impaired as of March 31, 2010 and December 31, 2009.

The Company recorded an other-than-temporary impairment on other equity securities of $4 and $6 for the three month periods ended March 31, 2010 and 2009, respectively. As of March 31, 2010 and December 31, 2009, the Company held investments in other equity securities with an amortized cost of $19 and $23, respectively. Management performed an analysis and deemed the remaining investment in other equity securities was not other than temporarily impaired as of March 31, 2010 and December 31, 2009.

Other than temporary impairment recorded for the three month periods ended March 31, 2010 and 2009 totaled $4 and $35, respectively, as previously described.

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes was $2,514 and $2,729 as of March 31, 2010 and December 31, 2009, respectively.

Gross gains of $0 and $0, and gross losses of $0 and $7, resulting from sales of available-for-sale securities were realized for the three month periods ended March 31, 2010 and 2009, respectively.

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at March 31, 2010, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	960	$	987	$	—	$	—
One to five years		1,402		1,401		600		639
Five to ten years		186		186		—		—
After ten years		178		177		—		—
		2,726		2,751		600		639
Mortgage-backed securities		989		1,014		2,889		3,031
Equity securities		467		498		—		—
Totals	$	4,182	$	4,263	$	3,489	$	3,670

Certain investments in debt and marketable equity securities are reported in the financial statements at amounts less than their historical cost. Total fair value of these investments at March 31, 2010 was $1,176, which is approximately 15% of the Company’s available-for-sale and held-to-maturity investment portfolio. These declines primarily resulted from recent increases in market interest rates and failure of certain investments to maintain consistent credit quality ratings. Management believes the declines in fair value for these securities are not other-than-temporary.

10

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

The following table shows the Company’s securities’ gross unrealized losses and fair value of the Company’s securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2010 (in thousands):

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available-for-sale:
U.S. Government agencies	$	999	$	(2	)	$	—	$	—		$	999	$	(2	)
State and political subdivisions		—		—			177		(1	)		177		(1	)
Total temporarily impaired securities	$	999	$	(2	)	$	177	$	(1	)	$	1,176	$	(3	)

Note 5: Loan Portfolio Composition

The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated (in thousands).

	At March 31, 2010					At December 31, 2009
	Amount			Percent		Amount			Percent
Real estate loans:
One-to-four family	$	52,443		42.43	%	$	53,733		48.43	%
Home equity line of credit and other 2nd mortgage		12,594		10.19			12,315		11.10
Multifamily		171		0.14			175		0.16
Commercial		22,354		18.09			20,133		18.14
Farmland		2,597		2.10			459		0.41
Construction and land Development		3,711		3.00			5,323		4.80
Total real estate loans		93,870		75.95			92,138		83.04
Commercial and industrial		6,584		5.33			6,557		5.91
Agriculture		13,259		10.73			778		0.70
Consumer loans:
Purchased indirect automobile		9,412		7.62			11,018		9.93
Other		462		0.37			469		0.42
Total consumer loans		9,874		7.99			11,487		10.35
Total loans		123,587		100.00	%		110,960		100.00	%
Deferred loan costs (fees)		(14	)				(14	)
Loans in process		(76	)				(625	)
Allowance for loan losses		(1,567	)				(1,426	)
Loans, net	$	121,930				$	108,895

11

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Activity in the allowance for loan losses was as follows (in thousands):

	Three Months Ended March  31,
	2010			2009
Balance, beginning of period	$	1,426		$	1,000
Provision charged to expense		216			41
Losses charged off, net of recoveries of $23 and $13 for 2010 and 2009		(75	)		(41	)
Balance, end of period	$	1,567		$	1,000

Note 6: Federal Home Loan Bank Stock

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank system. The required investment in the common stock is based on a predetermined formula. The Company owned $6,549 of Federal Home Loan Bank stock as of March 31, 2010 and December 31, 2009. The Federal Home Loan Bank of Chicago (FHLB) is operating under a Cease and Desist Order from its regulator, the Federal Housing Finance Board. The order prohibits capital stock repurchases until a time to be determined by the Federal Housing Finance Board. The FHLB will continue to provide liquidity and funding through advances. With regard to dividends, the FHLB will continue to assess its dividend capacity each quarter and make appropriate request for approval. The FHLB has not declared any dividends on its common stock since the third quarter of 2007. Management performed an analysis as of March 31, 2010 and December 31, 2009 and deemed the cost method investment in FHLB stock was ultimately recoverable.

Note 7: Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss) components and related taxes were as follows (in thousands):

	Three Months Ended March  31,
	2010			2009
Net unrealized losses on securities available-for-sale	$	(20	)	$	(4	)
Less reclassification adjustment for realized losses on sales of securities included in income		—			(7	)
Less reclassification adjustment for loss on other than temporary impairment of equity securities		(4	)		(35	)
Other comprehensive income (loss), before tax effect		(16	)		38
Less tax expense (benefit)		(5	)		13
Other comprehensive income (loss)	$	(11	)	$	25

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows (in thousands):

	March 31, 2010			December 31, 2009
Net unrealized gain on securities available-for-sale	$	81		$	97
Tax effect		(27	)		(32	)
Net-of-tax amount	$	54		$	65

12

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Note 8: Income Taxes

A reconciliation of income tax benefit at the statutory rate to the Company’s actual income tax benefit is shown below (in thousands):

	Three Months Ended March  31,
	2010			2009
Computed at the statutory rate (34%)	$	(4	)	$	(53	)
Decrease resulting from
Tax exempt interest		(2	)		(3	)
Nondeductible expenses		1			—
State income taxes		—			—
Changes in deferred tax valuation allowance		4			4
Cash surrender value of life insurance		(13	)		(12	)
Actual benefit	$	(14	)	$	(64	)
Tax benefit as a percentage of pre-tax loss		(107.7	)%		(40.8	)%

Note 9: Disclosures About Fair Value of Assets and Liabilities

ASC Topic 820, Fair Value Measurements (FAS 157) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Available-for-sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include equity securities in FNMA and FHLMC common stock as well as shares in publicly traded financial institutions. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Government and federal agency, mortgage-backed securities (GSE - residential), municipal securities, and mutual funds. Municipal securities are generally priced using a matrix pricing model. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. These securities include municipal securities with no observable market inputs.

13

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2010 and December 31, 2009 (in thousands):

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2010:
Available-for-sale securities:
US Government and federal agency	$	2,212	$	—	$	2,212	$	—
Mortgage-backed securities – GSE residential		1,014		—		1,014		—
State and political subdivisions		539		—		177		362
Equity securities		498		24		474		—
Mortgage servicing rights		410		—		—		410
			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2009:
Available-for-sale securities:
US Government and federal agency	$	1,008	$	—	$	1,008	$	—
Mortgage-backed securities – GSE residential		1,134		—		1,134		—
State and political subdivisions		580		—		177		403
Equity securities		503		24		479		—
Mortgage servicing rights		398		—		—		398

14

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs (in thousands):

	Available-for-sale Securities			Mortgage Servicing Rights
Balance, January 1, 2010	$	403		$	398
Total realized and unrealized gains and losses
Included in net income		—			27
Included in other comprehensive income		—			—
Purchases, issuances and settlements		(41	)		(15	)
Transfers in and/or out of Level 3		—			—
Balance, March 31, 2010	$	362		$	410
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	0		$	0

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Impaired Loans (Collateral Dependent)

Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amounts of impairment include estimating fair value include using the fair value of the collateral for collateral dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2010 and December 31, 2009 (in thousands):

			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2010:
Impaired loans	$	2,100	$	—	$	—	$	2,100
December 31, 2009:
Impaired loans	$	1,915	$	—	$	—	$	1,915

15

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value.

Cash and Cash Equivalents, Interest-Bearing Deposits, Federal Home Loan Bank Stock, Interest Receivable, Interest Payable and Advances from Borrowers for Taxes and Insurance

The carrying amount approximates fair value.

Held-to-maturity Securities

Fair value is based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount of these types of deposits approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank Advances

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

16

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Commitments to Originate Loans, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements, or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

The following table presents estimated fair values of the Company’s financial instruments at March 31, 2010 and December 31, 2009 (in thousands).

	March 31, 2010				December 31, 2009
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Cash and cash equivalents	$	8,414	$	8,414	$	15,367	$	15,367
Interest-bearing deposits		9,701		9,701		8,110		8,110
Available-for-sale securities		4,263		4,263		3,225		3,225
Held-to-maturity securities		3,489		3,670		3,789		3,939
Loans, net of allowance for loan losses		121,930		123,641		108,895		110,838
Federal Home Loan Bank stock		6,549		6,549		6,549		6,549
Interest receivable		639		639		515		515
Financial liabilities
Deposits		134,641		133,615		124,361		123,574
Federal Home Loan Bank advances		16,529		17,052		18,128		18,683
Advances from borrowers for taxes and insurance		631		631		415		415
Interest payable		74		74		79		79
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—
Letters of credit		—		—		—		—
Lines of credit		—		—		—		—

Note 10: Commitments

Commitments to Originate Loans

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.

17

HARVARD SAVINGS, MHC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) (In thousands)

Standby Letters of Credit

Standby letters of credit are irrevocable conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. Should the Company be obligated to perform under the standby letters of credit, the Company may seek recourse from the customer for reimbursement of amounts paid.

Lines of Credit

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

Note 11: Subsequent Events

On April 8, 2010, the Company completed its plan of conversion and reorganization from a two-tier mutual holding company to a stock holding company. In accordance with the plan of conversion adopted by the Board of Directors of Harvard Savings, MHC on July 23, 2009, Harvard Savings, MHC (the mutual holding company) and Harvard Illinois Financial Corporation (the mid-tier stock holding company) ceased to exist as separate legal entities and a stock holding company, Harvard Illinois Bancorp, Inc. (of which Harvard Savings Bank became a wholly-owned subsidiary) issued and sold shares of common stock to eligible depositors of Harvard Savings Bank and to former borrowers of Morris Building & Loan, s.b. in a subscription offering, and to the general public in a community offering. A total of 784,689 shares, par value of $0.01 per share, were sold in the conversion at $10 per share, raising $7.8 million of gross proceeds. At March 31, 2010, $6.5 million was held in escrow and reflected in deposits on the balance sheet. The Company established an employee stock ownership plan that purchased 8% of the total shares, or a total of 62,775 shares in the offering, for a total of $627,750. Approximately $1 million of conversion expenses will be offset against the gross proceeds. Harvard Illinois Bancorp, Inc.’s common stock began trading on the over-the-counter market under the symbol “HARI” on April 9, 2010.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and accompanying notes thereto.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

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These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this Form 10-Q.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

• general economic conditions (including real estate values, loan demand and employment levels), either nationally or in our market areas, that are different than expected;

• competition among depository and other financial institutions;

• our ability to improve our asset quality even as we increase our non-residential lending;

• our success in increasing our commercial real estate and commercial business lending, including agricultural lending;

• changes in the interest rate environment that reduce our margins or reduce the fair value of our financial instruments and real estate;

• adverse changes in the securities markets;

• changes in laws or government regulations or policies affecting financial institutions, including changes in deposit insurance premiums, regulatory fees, capital requirements and consumer protection measures, which increase our compliance costs;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• our ability to successfully grow our Morris operations;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

• changes in our organization, compensation and benefit plans;

• loan delinquencies and changes in the underlying cash flows of our borrowers;

• changes in our financial condition or results of operations that reduce capital available to pay dividends; and

• changes in the financial condition or future prospects of issuers of securities that we own, including our stock in the FHLB of Chicago.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

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CRITICAL ACCOUNTING POLICIES AND USE OF SIGNIFICANT ESTIMATES

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in preparing our financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. Management believes the following discussion addresses our most critical accounting policies and significant estimates, which are those that are most important to the portrayal of our financial condition and results and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Allowance for Loan Losses. Our allowance for loan losses is the estimated amount considered necessary to reflect probable incurred credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of the most critical for the Company. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions utilized, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

Since a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the value of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions.

The analysis of the allowance for loan losses has two components: specific and general allocations. Specific allocations are made for loans that are determined to be impaired. Impairment loss is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocation is determined by segregating classified loans from the remaining loans, and then categorizing each group by type of loan. Loans within each type exhibit common characteristics including terms, collateral type, and other risk characteristics. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general allocations. The Illinois Department of Financial and Professional Regulation and the Federal Deposit Insurance Corporation require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations. Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results.

Other Real Estate Owned. Other real estate owned acquired through loan foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for loan losses. Due to the subjective nature of establishing the fair value when the property is acquired, the actual fair value of the other real estate owned or foreclosed asset could differ from the original estimate. If it is determined that fair value declines subsequent to foreclosure, a charge to operations through noninterest expense is recorded. Operating costs associated with the asset after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense.

20

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. These judgments and estimates are reviewed on a continual basis as regulatory and business factors change.

Additionally, we review our uncertain tax positions annually. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount actually recognized is the largest amount of tax benefit that is greater than 50% likely to be recognized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. A significant amount of judgment is applied to determine both whether the tax position meets the “more likely than not” test as well as to determine the largest amount of tax benefit that is greater than 50% likely to be recognized. Differences between the position taken by management and that of taxing authorities could result in a reduction of a tax benefit or increase to tax liability, which could adversely affect future income tax expense.

Investment in Debt and Equity Securities. We classify our investments in debt and equity securities as either held-to-maturity or available-for-sale. Securities classified as held-to-maturity are recorded at cost or amortized cost. Available-for-sale securities are carried at fair value. Fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations, and cash flows. If the estimated value of investments is less than the cost or amortized cost, we evaluate whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred and we determine that the impairment is other-than-temporary, a further determination is made as to the portion of impairment that is related to credit loss. The impairment of the investment that is related to credit is expensed in the period in which the event or change occurred. The remainder of the impairment is recorded in other comprehensive income.

Fair Value Measurements. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. The Company’s valuation methods consider factors such as liquidity and concentration concerns. Other factors such as model assumptions, market dislocations, and unexpected correlations can affect estimates of fair value. Imprecision in estimating these factors can impact the amount of revenue or loss recorded.

Accounting standards establish a framework for measuring the fair value of financial instruments that considers the attributes specific to particular assets or liabilities and establishes a three-level hierarchy for determining fair value based on the transparency of inputs to each valuation as of the fair value measurement date. The three levels are defined as follows:

• Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2: Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices or similar assets or liabilities in markets that are not active, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3: Inputs that are unobservable and significant to the fair value measurement.

At the end of each quarter, we assess the valuation hierarchy for each asset or liability measured. From time to time, assets or liabilities may be transferred within hierarchy levels due to changes in availability of observable market inputs to measure fair value at the measurement date. Transfers into or out of hierarchy levels are based upon the fair value at the beginning of the reporting period.

21

FINANCIAL CONDITION

Comparison of Financial Condition at March 31, 2010 and December 31, 2009

Total assets at March 31, 2010 increased $8.9 million or 5.6% to $166.5 million from $157.6 million at December 31, 2009. This increase was primarily the result of an increase in loans, of $13.0 million during the quarter ended March 31, 2010 from December 31, 2009 due to increases of $12.5 million, $2.1 million and $2.2 million in the agriculture, farmland and commercial real estate loan portfolios, respectively. These increases were offset by a decrease of $1.6 million in the purchased indirect automobile loan portfolio. This activity follows the Company’s strategy to reduce asset duration and loan concentration by expanding our commercial and agriculture lending activity to enhance yields and reduce concentrations in our residential mortgage and purchased indirect automobile loan portfolios. The Company hired an experienced agriculture lender in December 2009. Substantially all the commercial and agriculture loan activity during the quarter were loans in our market area.

Cash and cash equivalents decreased $7.0 million or 45.2% to $8.4 million at March 31, 2010 from $15.4 million at December 31, 2009 primarily due to a decrease of $9.9 million in securities purchased under agreements to resell. The liquidity from this decrease was used to fund the loan growth and increases to the available-for-sale securities of $1.0 million and $1.6 million in interest-bearing deposits with other financial institutions.

Deposits increased $10.2 million or 8.3% to $134.6 million at March 31, 2010 from $124.4 million at December 31, 2009, primarily due to $6.5 million in deposits received during the quarter and held in escrow in anticipation of the closing of the initial public offering of Harvard Illinois Bancorp, Inc. The remainder of the increase in deposits was due to our strategy to enhance our interest rate spread by lowering our cost of funds while generating liquidity to fund our loan growth and reduce our Federal Home Loan Bank advances by $1.6 million or 8.8% to $16.5 million at March 31, 2010 from $18.1 million at December 31, 2009. Total equity remained relatively unchanged at March 31, 2010 from December 31, 2009 at $12.3 million.

RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended March 31, 2010 and 2009

General. Net income for the three months ended March 31, 2010 was $1,000, compared to a net loss of $93,000 for the three months ended March 31, 2009, an increase of $94,000. The increase in net income was due to increases in net interest income of $163,000 and noninterest income of $58,000, and a decrease in noninterest expense of $98,000, partially offset by an increase in the provision for loan losses of $175,000 and a decrease in the benefit for income taxes of $50,000.

Interest and Dividend Income. Total interest and dividend income decreased $100,000 or 4.9% to $1.9 million for the three months ended March 31, 2010 from $2.0 million for the same period in 2009. This decrease was primarily due to decreases in interest and fees on loans of $85,000 and interest income on securities purchased under agreement to resell of $31,000. The average balance of loans decreased $2.8 million to $116.2 million primarily due to loan sales during the period of $3.0 million and the average yield on loans decreased 14 basis points to 6.11% from 6.25% for the three months ended March 31, 2010 from the comparable period in 2009. This decrease reflected a decline in the interest rate environment during the period. The average balance of securities purchased under agreements to resell decreased $4.6 million to $6.8 million for the quarter ended March 31, 2010 from $11.4 million for the comparable period in 2009 as the Company generated liquidity to fund loans and reduce advances from the Federal Home Loan Bank during the period. The average yield on securities purchased under agreements to resell declined 50 basis points to 1.46% for the three months ended March 31, 2010 from 1.96% for the same period in 2009, reflecting the lower interest rate environment.

Interest Expense. Total interest expense decreased $263,000 or 25.1% to $784,000 for the three months ended March 31, 2010 from $1.0 million for the same period in 2009. Interest expense on deposit accounts decreased $183,000 or 23.0% to $614,000 for the three months ended March 31, 2010 from $797,000 for the same period in 2009. This decrease was primarily due to a decrease in interest expense on certificates of deposit and brokered certificate accounts of $111,000 during the period while interest expense on savings, NOW and money market accounts decreased $72,000. Average savings, NOW and money market accounts increased $126,000 while the cost of these deposits decreased 62 basis points during the three months ended March 31, 2010 from the three months ended March 31, 2009. The movement in these accounts was the result of our competitive pricing and promotional events pricing to increase our liquidity while decreasing our utilization of Federal Home Loan Bank advances. The average balance in certificates of deposits and brokered certificates of deposit increased $4.0 million between the three months ended March 31, 2010 and 2009, respectively, with the cost of these deposits decreasing 79 basis points during the same periods. Interest expense on

22

Federal Home Loan Bank advances decreased $80,000 to $170,000 for the three months ended March 31, 2010 from $250,000 for the three months ended March 31, 2009. The average balance for advances decreased $6.7 million while the average cost of this funding decreased 24 basis points for the three months ended March 31, 2010 from the comparable period in 2009. The decrease in the average balance of advances was due to adhering to our capital and liquidity plans to lessen our reliance on advances. The decrease in the cost of these funds was a reflection of the interest rate environment at that time.

Net Interest Income. Net interest income increased $163,000 or 16.6% to $1.1 million for the three months ended March 31, 2010 from $982,000 for the three months ended March 31, 2009, primarily as a result of an increase in our net interest rate spread of 52 basis points to 3.00% from 2.48% during the comparable periods of 2010 and 2009, respectively. The increase in our net interest rate spread reflects the more rapid repricing of our interest-bearing liabilities in a decreasing interest rate environment compared to our interest-earning assets.

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

The following table shows the activity in the allowance for loan losses for the three months ended March 31, 2010 and 2009 (dollars in thousands):

	2010			2009
Allowance at beginning of period	$	1,426		$	1,000
Provision for loan losses		216			41
Charge-offs:
Real estate loans:
One-to four family		45			—
Total charge-offs, real estate loans		45			—
Consumer loans:
Purchased indirect automobile		52			54
Other		1			—
Total charge-offs, consumer loans		53			54
Total charge-offs		98			54
Recoveries:
Real estate loans:
One-to four family		5			—
Total recoveries, real estate loans		5			—
Commercial and industrial		4			—
Consumer loans:
Purchased indirect automobile		14			13
Total recoveries, consumer loans		14			13
Total recoveries		23			13
Net charge-offs		(75	)		(41	)
Allowance at end of period	$	1,567		$	1,000
Allowance to non-performing loans		81.57	%		43.14	%
Allowance to total loans outstanding at the end of the period		1.27	%		0.86	%
Net charge-offs to average total loans outstanding during the period		.06	%		.03	%

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

23

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. The factors we considered 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. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all 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 loans by either the present value of expected future cash flows discounted at the loans effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Groups of loans with similar loan characteristics, including individually evaluated loans not determined to be impaired, are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, we do not separately identify individual consumer and residential loans for impairment measurements.

Based upon our evaluation of these factors, a provision of $216,000 was recorded for the three months ended March 31, 2010, an increase of $175,000 or 426.8% from $41,000 for the three months ended March 31, 2009. The provision for loan losses reflected net charge offs of $75,000 for the three months ended March 31, 2010, compared to $41,000 for the three months ended March 31, 2009. The allowance for loan losses was $1.6 million, or 1.27% of total loans at March 31, 2010, compared to $1.4 million, or 1.29% of total loans at December 31, 2009. At March 31, 2010, we had identified substandard loans totaling $3.6 million, all of which were considered impaired, and established an allowance for loan losses of $397,000. At December 31, 2009, we considered all substandard loans totaling $3.8 million impaired and established an allowance for loan losses of $431,000. We used the same methodology in assessing the allowance for each period. We increased the impact of qualitative factors to reflect further deterioration in the economy during the first quarter of 2010, we also took into consideration the net increase of $13.0 million in the loan portfolio during the quarter and the higher level of charge offs during the period which resulted in an increase in the general allowance for loan losses for most loan categories and larger provision for loan losses for the quarter ended March 31, 2010 from March 31, 2009.

For real estate loans secured by farmland and other agricultural loans for which we had little or no specific experience, we utilized loss factors associated with our commercial real estate and other commercial loans, respectively, until specific loss experience is determined.

The following table sets forth the allowance for loan losses allocated by loan category, the percent of allowance in each loan category to the total allowance, and the percent of loans in each loan category to total loans as of March 31, 2010 and December 31, 2009 (dollars in thousands).

	March 31, 2010						December 31, 2009
	Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans		Amount		Percent of Allowance to Total Allowance		Percent of Loans in Category to Total Loans
Real estate loans:
One-to-four-family	$	506	32.29	%	42.43	%	$	504	35.34	%	48.43	%
Home equity line of credit and other 2nd mortgage		84	5.36		10.19			83	5.82		11.10
Multi-family		2	0.13		0.14			4	0.28		0.16
Commercial		460	29.36		18.09			437	30.65		18.14
Farmland		4	0.26		2.10			5	0.35		0.41
Construction and land development		35	2.23		3.00			74	5.19		4.80
Total real estate loans		1,091	69.63		75.95			1,107	77.63		83.04
Commercial and industrial		124	7.91		5.33			120	8.42		5.91
Agriculture		202	12.89		10.73			12	0.84		0.70
Consumer loans:
Purchased indirect automobile		144	9.19		7.62			183	12.83		9.93
Other		6	0.38		0.37			4	0.28		0.42
Total consumer loans		150	9.57		7.99			187	13.11		10.35
Unallocated		—	0.00		0.00			—	0.00		0.00
Total allowance for loan losses	$	1,567	100.00	%	100.00	%	$	1,426	100.00	%	100.00	%

24

The following table sets forth information regarding nonperforming assets at the dates indicated (dollars in thousands):

	At March  31, 2010			At December  31, 2009
Non-accrual loans:
Real estate loans:
One-to four-family	$	1,600		$	1,857
Home equity lines of credit and other 2nd mortgage		97			11
Commercial		172			171
Total real estate loans		1,869			2,039
Commercial and industrial		50			95
Consumer loans:
Purchased indirect automobile		—			27
Other		2			16
Total consumer loans		2			43
Total non-accrual loans		1,921			2,177
Accruing loans past due 90 days or more:
Real estate loans:
Home equity line of credit and other 2nd mortgage		—			50
Total real estate loans		—			50
Commercial and industrial		—			75
Consumer loans:
Purchased indirect automobile		—			18
Other		—			1
Total consumer loans		—			19
Total accruing loans past due 90 days or more		—			144
Total of nonaccrual and 90 days or more past due loans		1,921			2,321
Other real estate owned:
One-to four family		633			432
Total other real estate owned		633			432
Repossessed automobiles		86			74
Total non-performing assets		2,640			2,827
Troubled debt restructurings (not included in nonaccrual loans above)		943			947
Total non-performing assets and troubled debt restructurings	$	3,583		$	3,774
Total non-performing loans to total loans		1.55	%		2.09	%
Total non-performing assets to total assets		1.59	%		1.79	%
Total non-performing loans and troubled debt restructurings to total loans		2.32	%		2.95	%
Total non-performing assets and troubled debt restructurings to total assets		2.15	%		2.39	%

25

The decrease in nonaccrual one-to-four real estate loans is primarily due to the transfer of two loans to other real estate owned during the first quarter of 2010. The following table shows the aggregate principal amount of potential problem loans on the Company’s watch list at March 31, 2010 and December 31, 2009. Substantially all non-accruing loans, troubled debt restructurings and loans past due 60 days or more are placed on the watch list (in thousands).

	March 31, 2010		December 31, 2009
Watch loans	$	5,413	$	5,292
Special Mention loans		506		518
Substandard loans		3,630		3,755
Total watch list loans	$	9,549	$	9,565

Noninterest Income. Noninterest income increased $58,000 or 47.2% to $181,000 for the three months ended March 31, 2010 from $123,000 for the three months ended March 31, 2009. The increase was primarily related to losses on other than temporary impairment of equity securities which were $4,000 for the three months ended March 31, 2010, compared to $35,000 for the same period in 2009, a decrease in losses of $31,000 and a $29,000 increase in net realized gains on sales of loans in the first quarter of 2010 to $34,000, from $5,000 in the comparable quarter of 2009. The other than temporary impairment of equity securities in 2010 and 2009 were related to our investment in common stock of other community banks and the Shay Asset Management mutual funds. The loan sales were executed to generate additional liquidity for the Bank.

Noninterest Expense. Noninterest expense decreased $98,000 or 8.0% to $1.1 million for the three months ended March 31, 2010 from $1.2 million for the three months ended March 31, 2009. The decrease was primarily due to compensation and benefits which decreased $68,000 or 10.1% to $603,000 in 2010 compared to $671,000 in 2009. Compensation and benefits were higher in 2009, in part, due to costs associated with the early retirement of a senior executive. Indirect automobile servicing fee decreased $22,000 to $38,000 for the three months ended March 31, 2010 from $60,000 for the same period in 2009. The decrease in loan servicing fees in 2010 was due to the decrease in our purchased indirect automobile loan portfolio which resulted from normal amortization, payoffs and our strategy to reduce our concentration in that portfolio under current market conditions. Foreclosed assets, net expense decreased $20,000 to $37,000 for the three months ended March 31, 2010 from $57,000 for the quarter ended March 31, 2009. The higher losses on foreclosed assets in 2009 were primarily due to the disposition of one commercial real estate property. These decreases were primarily offset by an increase in FDIC insurance premiums of $25,000 due to higher assessment rates in 2010.

26

Provision for Income Taxes. The benefit for income taxes was $14,000 for the three months ended March 31, 2010 compared to a benefit of $64,000 for the same period in 2009. The lower income tax benefit for the first quarter of 2010 reflects a lower level of pre-tax loss, compared to 2009. The effective tax benefit as a percent of pre-tax loss was 107.7% and 40.8% for the three months ended March 31, 2010 and 2009, respectively.

Liquidity and Capital Resources

Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from maturities and calls of securities, and Federal Home Loan Bank advances. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including securities repurchase agreements. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities were $124,000 and $988,000 for the three months ended March 31, 2010 and 2009, respectively. Net cash used in investing activities consisted primarily of disbursements for loan originations and the purchase of securities, offset by net cash provided by principal collections on loans, and proceeds from maturing securities and pay downs on mortgage-backed securities. Net cash used in investing activities were $16.0 million and $2.2 million for the three months ended March 31, 2010 and 2009, respectively. Net cash provided by financing activities consisted primarily of the activity in deposit accounts and Federal Home Loan Bank borrowings. The net cash provided by financing activities was $8.9 million and $5.9 million for the three months ended March 31, 2010 and 2009, respectively.

The Bank is required to maintain regulatory capital requirements imposed by the Federal Deposit Insurance Corporation. The Bank’s actual ratios at March 31, 2010 and the required minimums to be considered adequately capitalized are shown in the table below. In order to be considered well-capitalized, the Bank must maintain: (i) Tier 1 Capital to Average Assets of 5.0%, (ii) Tier 1 Capital to Risk-Weighted Assets of 6.0%, and (iii) Total Capital to Risk-Weighted Assets of 10.0%. Accordingly, Harvard Savings Bank was categorized as well capitalized at March 31, 2010. Management is not aware of any conditions or events since the most recent notification that would change our category.

	March 31, 2010 Actual		December 31, 2009 Actual		Minimum Required
Tier 1 capital to average assets	7.10	%	7.17	%	4.00	%
Tier 1 capital to risk-weighted assets	9.21	%	10.29	%	4.00	%
Total capital to risk-weighted assets	10.50	%	11.56	%	8.00	%

The Company must also maintain adequate levels of liquidity to ensure the availability of funds to satisfy loan commitments. The Company anticipates that it will have sufficient funds available to meet its current commitments principally through the use of current liquid assets and through its borrowing capacity discussed above. The following table summarizes these commitments at March 31, 2010 and December 31, 2009 (in thousands).

	March 31, 2010		December 31, 2009
Commitments to fund loans	$	17,881	$	15,718
Standby letters of credit		119		388

Certificates of deposit that are scheduled to mature in less than one year from March 31, 2010 totaled $44.5 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

27

Analysis of Net Interest Income and Average Balance Sheet

The following table sets forth average balance sheets, average yields and costs, and certain other information at or for the periods indicated (dollars in thousands):

	Three Months Ended March 31,
	2010						2009
	Average Balance		Interest Income/ Expense		Yield/ Cost		Average Balance		Interest Income/ Expense		Yield/ Cost
Assets
Interest- earning assets:
Interest -earning deposits	$	10,098	$	45	1.78	%	$	5,976	$	34	2.28	%
Securities purchased under agreements to resell		6,839		25	1.46	%		11,443		56	1.96	%
Securities, tax-exempt		677		8	4.73	%		923		10	4.33	%
Securities, taxable		6,562		76	4.63	%		5,555		69	4.97	%
Loans		116,209		1,775	6.11	%		118,964		1,860	6.25	%
Federal Home Loan Bank stock		6,549		—	0.00	%		6,549		—	0.00	%
Total interest earning assets		146,934		1929	5.25	%		149,410		2,029	5.43	%
Non-interest earning assets		12,571						11,974
Total assets	$	159,505					$	161,384
Liabilities and equity
Interest-bearing liabilities:
Savings accounts	$	14,103		13	0.37	%	$	13,163		16	0.49	%
NOW and money market accounts		32,740		61	0.75	%		33,554		130	1.55	%
Certificates of deposit		72,255		508	2.81	%		67,987		615	3.62	%
Brokered certificates of deposit		2,811		32	4.55	%		3,127		36	4.61	%
Federal Home Loan Bank advances		17,525		170	3.88	%		24,271		250	4.12	%
Total interest-bearing Liabilities		139,434		784	2.25	%		142,102		1,047	2.95	%
Non-interest-bearing deposits		4,812						3,526
Other non-interest-bearing liabilities		2952						3,343
Total liabilities		147,198						148,971
Equity		12,307						12,413
Total liabilities and equity	$	159,505					$	161,384
Net interest income			$	1,145					$	982
Interest rate spread					3.00	%					2.48	%
Net interest margin					3.12	%					2.63	%
Average interest earning assets to average interest-bearing liabilities					105.38	%					105.14	%

28

The following table sets forth the changes in rate and changes in volume of the Company’s interest earning assets and liabilities (in thousands).

	Three Months Ended March 31, 2010 Compared to 2009 Increase (Decrease) Due to
	Rate			Volume			Net
Interest income:
Interest-earning deposits	$	(5	)	$	16		$	11
Securities purchased under agreements to resell		(12	)		(19	)		(31	)
Securities, tax-exempt		1			(3	)		(2	)
Securities, taxable		(4	)		11			7
Loans		(43	)		(42	)		(85	)
Total		(63	)		(37	)		(100	)
Interest Expense:
Savings accounts		(4	)		1			(3	)
NOW and money market accounts		(66	)		(3	)		(69	)
Certificates of deposit		(149	)		42			(107	)
Brokered certificates of deposit		0			(4	)		(4	)
Federal Home Loan Bank advances		(14	)		(66	)		(80	)
Total		(233	)		(30	)		(263	)
Increase (decrease) in net interest income		170		$	(7	)	$	163

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting companies.

ITEM 4T - CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

(a) An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2010. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended March 31, 2010, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

(b) Management’s annual report on internal control over financial reporting.

29

This Form 10-Q does not include management’s report on internal control over financial reporting or an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting due to a transition period established by rules of the Securities and Exchange Commission for newly public companies such as Harvard Illinois Bancorp, Inc.

CHANGES IN INTERNAL CONTROL

During the quarter ended March 31, 2010, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

30

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are subject to various legal actions that are considered ordinary routine litigation incidental to the business of the Company, and no claim for money damages exceeds ten percent of the Company’s consolidated assets. In the opinion of management, based on currently available information, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

Item 1.A. Risk Factors

Not required for smaller reporting companies

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

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1 – Certification of the Chief Executive Officer Pursuant to Rule 13a-15(e)/15d-15(e)

31.2 – Certification of the Chief Financial Officer Pursuant to Rule 13a-15(e)/15d-15(e)

32.1 – Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2003

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HARVARD ILLINOIS BANCORP, INC.
	Registrant
Date: May 12, 2010	/S/    DUFFIELD J. SEYLLER III
	Duffield Seyller III
	President and Chief Executive Officer
	/S/    DONN L. CLAUSSEN
	Donn L. Claussen
	Executive Vice President and Chief Financial Officer

32

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Duffield J. Seyller III, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Harvard Illinois Bancorp, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

May 12, 2010	/s/ Duffield J. Seyller III
Date	Duffield Seyller III
	President and Chief Executive Officer

33

EX-31.2

Exhibit 31.2

Certification of Executive Vice President and Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Donn L. Claussen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Harvard Illinois Bancorp, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

May 12, 2010	/s/ Donn L. Claussen
Date	Donn L. Claussen
	Executive Vice President and Chief Financial Officer

34

EX-32.1

Exhibit 32.1

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Harvard Illinois Bancorp, Inc. (“Company”) on Form 10-Q for the period ended March 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Duffield J. Seyller III, President and Chief Executive Officer and I, Donn L. Claussen, Chief Financial Officer of the Company certify pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002:

(1) the Report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and

(2) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 12, 2010	/s/ Duffield J. Seyller III
Date	Duffield Seyller III
	President and Chief Executive Officer
May 12, 2010	/s/ Donn L. Claussen
Date	Donn L. Claussen
	Executive Vice President and Chief Financial Officer

35