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First Century Bancorp. 10-K

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| Report of Independent Registered Public Accounting Firm          | 1      |
|------------------------------------------------------------------|--------|
|                                                             |   |
| Consolidated Balance Sheets                                      | 2      |
|                                                             |   |
| Consolidated Statements of Income                                | 4      |
|                                                             |   |
| Consolidated Statements of Comprehensive Income (Loss)           | 5      |
|                                                             |   |
| Consolidated Statements of Changes in Stockholders’ Equity | 6      |
|                                                             |   |
| Consolidated Statements of Cash Flows                            | 7      |
|                                                             |   |
| Notes to Consolidated Financial Statements                       | 8-40   |

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FIRST

| ASSETS                                                                        |   |
|-------------------------------------------------------------------------------|--------|
|                                                                          |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |
|                                                                          |   | 2010 |   |   | 2009 |   |
|                                                                          |   |   |   |   |   |   |
| Cash and Cash Equivalents                                                     |   |   | 5,961,826 |   |   |   | 2,531,126 |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Investment Securities                                                         |   |   |   |   |   |   |   |   |
|   Available for Sale, at Fair Value                                 |   |   | 5,204,594 |   |   |   | 7,594,425 |   |
|   Held to Maturity, at Cost (Fair Value of $11,580,363, and         |   |   |   |   |   |   |   |   |
|    $18,048,359 as of December 31, 2010 and 2009, Respectively) |   |   | 10,800,469 |   |   |   | 16,794,363 |   |
|                                                                          |   |   |   |   |   |   |   |   |
|   Total Investments Securities                                      |   |   | 16,005,063 |   |   |   | 24,388,788 |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Other Investments                                                             |   |   | 620,100 |   |   |   | 400,800 |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Loans Held for Sale                                                           |   |   | 13,908,172 |   |   |   | 9,637,123 |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Loans                                                                         |   |   | 31,895,912 |   |   |   | 36,630,587 |   |
|   Allowance for Loan Losses                                         |   |   | (478,039 | ) |   |   | (414,670 | ) |
|                                                                          |   |   |   |   |   |   |   |   |
|   Net Loans                                                         |   |   | 31,417,873 |   |   |   | 36,215,917 |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Premises and Equipment                                                        |   |   | 3,076,825 |   |   |   | 2,276,681 |   |
|                                                                          |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Other Real Estate Owned                                                       |   |   | 522,061 |   |   |   | 653,501 |   |
|                                                                          |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Other Assets                                                                  |   |   | 539,480 |   |   |   | 462,021 |   |
|                                                                          |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |
| Total Assets                                                                  |   | $ | 72,051,400 |   |   | $ | 76,565,957 |   |

----

| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                        |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |
| Deposits                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |
|   Noninterest-Bearing                                                                                                                                                                                                                                             |   | $ | 3,905,003 |   |   | $ | 3,076,222 |   |
|   Interest-Bearing                                                                                                                                                                                                                                                |   |   | 58,757,378 |   |   |   | 66,490,456 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                        |   |   | 62,662,381 |   |   |   | 69,566,678 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Borrowings                                                                                                                                                                                                                                                                  |   |   | 2,000,000 |   |   |   | 2,000,000 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Other Liabilities                                                                                                                                                                                                                                                           |   |   | 744,224 |   |   |   | 600,370 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Commitments and Contingencies                                                                                                                                                                                                                                               |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders’ Equity                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
|   Preferred Stock, Non-voting; Non-participating; Variable Rate Cumulative; No Par Value; 10,000,000 Shares Authorized; 75,000 Shares Issued and Outstanding at December 31, 2009; Liquidation Preference of $10 Per Share Plus Accumulated Undeclared Dividends; |   |   | - |   |   |   | 750,000 |   |
|   Common Stock, No Par Value; 300,000,000 Shares    Authorized; 8,121,293 and 4,998,820 Shares Issued    and Outstanding at December 31, 2010 and 2009, Respectively                                                      |   |   | 17,030,466 |   |   |   | 14,948,028 |   |
|   Accumulated Deficit                                                                                                                                                                                                                                             |   |   | (10,445,022 | ) |   |   | (11,031,585 | ) |
|   Treasury Stock, 670 shares, at cost                                                                                                                                                                                                                             |   |   | (1,005 | ) |   |   | (1,005 | ) |
|   Accumulated Other Comprehensive Income (Loss)                                                                                                                                                                                                                   |   |   | 60,356 |   |   |   | (266,529 | ) |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                        |   |   | 6,644,795 |   |   |   | 4,398,909 |   |
|                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                                                                                            |   | $ | 72,051,400 |   |   | $ | 76,565,957 |   |

----

FIRST

|                                                          |   | 2010   |      |   | 2009   |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Interest Income                                               |   |   |      |   |   |   |
|   Loans, Including Fees                             |   | $      | 2,515,885 |   |   | $      | 2,367,833 |   |
|   Investments                                       |   |   | 1,704,441 |   |   |   | 2,529,228 |   |
|   Federal Funds Sold                                |   |   | -         |   |   |   | 176 |   |
|   Interest Bearing Deposits                         |   |   | 9,933     |   |   |   | 1,475 |   |
|                                                          |   |   |      |   |   |   |   |   |
|      Total Interest Income           |   |   | 4,230,259 |   |   |   | 4,898,712 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Interest Expense                                              |   |   |      |   |   |   |   |   |
|   Deposits                                          |   |   | 1,046,314 |   |   |   | 1,649,373 |   |
|   Borrowings                                        |   |   | 55,478    |   |   |   | 65,591 |   |
|                                                          |   |   |      |   |   |   |   |   |
|      Total Interest Expense          |   |   | 1,101,792 |   |   |   | 1,714,964 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Net Interest Income                                           |   |   | 3,128,467 |   |   |   | 3,183,748 |   |
|                                                          |   |   |      |   |   |   |   |   |
|   Provision for Loan Losses                         |   |   | 750,390   |   |   |   | 333,673 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Net Interest Income After Provision for Loan Losses           |   |   | 2,378,077 |   |   |   | 2,850,075 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Noninterest Income                                            |   |   |      |   |   |   |   |   |
|   Service Charges on Deposits                       |   |   | 49,420    |   |   |   | 44,707 |   |
|   Mortgage Origination and Processing Fees          |   |   | 5,613,400 |   |   |   | 2,175,625 |   |
|   Securities Gains                                  |   |   | 145,602   |   |   |   | 24,984 |   |
|   Impairment loss on other investments              |   |   | -         |   |   |   | (62,420 | ) |
|   Other                                             |   |   | 75,797    |   |   |   | 44,385 |   |
|                                                          |   |   |      |   |   |   |   |   |
|                                                          |   |   | 5,884,219 |   |   |   | 2,227,281 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Noninterest Expense                                           |   |   |      |   |   |   |   |   |
|   Salaries and Employee Benefits                    |   |   | 4,403,509 |   |   |   | 2,480,962 |   |
|   Occupancy and Equipment                           |   |   | 444,912   |   |   |   | 436,669 |   |
|   Professional Fees                                 |   |   | 398,568   |   |   |   | 285,627 |   |
|   Advertising and Marketing                         |   |   | 244,652   |   |   |   | 259,696 |   |
|   Data Processing                                   |   |   | 791,468   |   |   |   | 560,775 |   |
|   Insurance, Tax, and Regulatory Assessments        |   |   | 322,274   |   |   |   | 253,229 |   |
|   Lending Related Expense                           |   |   | 671,388   |   |   |   | 426,456 |   |
|   Other Noninterest Expense                         |   |   | 318,613   |   |   |   | 330,382 |   |
|                                                          |   |   |      |   |   |   |   |   |
|       Total Noninterest Expense |   |   | 7,595,384 |   |   |   | 5,033,796 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Income Before Income Taxes                                    |   |   | 666,912   |   |   |   | 43,560 |   |
|                                                          |   |   |      |   |   |   |   |   |
|   Provision for Income Taxes                        |   |   | -         |   |   |   | - |   |
|                                                          |   |   |      |   |   |   |   |   |
| Net Income                                                    |   | $      | 666,912   |   |   | $      | 43,560 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Earnings Per Share                                            |   |   |      |   |   |   |   |   |
|    Basic                                       |   | $      | .10       |   |   | $      | .00 |   |
|    Diluted                                     |   | $      | .10       |   |   | $      | .00 |   |
|                                                          |   |   |      |   |   |   |   |   |
| Weighted Average Shares Outstanding                           |   |   | 6,615,252 |   |   |   | 4,744,478 |   |

----

FIRST

|                                                                        |   |   |     |   |   |   |
|-----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                        |   | 2010   |     |   | 2009   |   |
|                                                                        |   |   |     |   |   |   |
| Net Income                                                                  |   | $      | 666,912  |   |   | $      | 43,560 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Other Comprehensive Income (Loss)                                           |   |   |     |   |   |   |   |   |
|   Unrealized Gains (Losses) on Securities Arising During the Year |   |   | 472,487  |   |   |   | (158,440 | ) |
|   Reclassification Adjustment                                     |   |   | (145,602 | )      |   |   | (24,984 | ) |
|                                                                        |   |   |     |   |   |   |   |   |
|   Net Change in Unrealized Gains (Losses) on Securities           |   |   | 326,885  |   |   |   | (183,424 | ) |
|                                                                        |   |   |     |   |   |   |   |   |
| Comprehensive Income (Loss)                                                 |   | $      | 993,797  |   |   | $      | (139,864 | ) |

----

F
IRST

|                                                                                                |   | Preferred Stock |    |   | Common Stock |   |     | Accumulated |   |   | Treasury  |   |   | AccumulatedComprehensive |       |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|----------|-------------|--------|--------|-----------|--------|--------|--------------------------|------------|--------|--------|--------|
|                                                                                                |   | Shares          |    |   | Amount       |   |     | Shares      |   |   | Amount    |   |   | Deficit                  |       |   | Stock  |   |   | Income (Loss) |   |   | Total |   |
|                                                                                                |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                                                          |   |            | 75,000  |   |         | $      | 750,000  |        |   |   | 3,979,127 |   |   | $                        | 13,572,151 |   |   | $      | (11,075,145 | ) |   | $ | - |   |   | $ | (83,105 | ) |   | $ | 3,163,901 |   |
|                                                                                                |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Issuance of Common Stock                                                                |   |            | -       |   |         |   | -        |        |   |   | 1,019,693 |   |   |                     | 1,529,541  |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 1,529,541 |   |
|   Common Stock Issuance Costs                                                             |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | (206,211   | )      |   |   | - |   |   |   |   |   |   |   | - |   |   |   | (206,211 | ) |
|   Stock Compensation Costs                                                                |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | 52,547     |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 52,547 |   |
|   Purchase of Treasury Stock                                                              |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   | (1,005 | ) |   |   |   |   |   |   | (1,005 | ) |
|   Net Change in Unrealized Losses on    Securities Available for Sale |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | -          |   |   |   | - |   |   |   |   |   |   |   | (183,424 | ) |   |   | (183,424 | ) |
|   Net Income                                                                              |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | -          |   |   |   | 43,560 |   |   |   |   |   |   |   | - |   |   |   | 43,560 |   |
|                                                                                                |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                                                          |   |            | 75,000  |   |         | $      | 750,000  |        |   |   | 4,998,820 |   |   | $                        | 14,948,028 |   |   | $      | (11,031,585 | ) |   | $ | (1,005 | ) |   | $ | (266,529 | ) |   | $ | 4,398,909 |   |
|                                                                                                |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Issuance of Common Stock                                                                |   |            | -       |   |         |   | -        |        |   |   | 1,883,145 |   |   |                     | 1,261,707  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,261,707 |   |
|   Common Stock Issuance Costs                                                             |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | (18,877    | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (18.877 | ) |
|   Exchange of Preferred Stock plus accrued   dividends for Common Stock    |   |            | (75,000 | )      |         |   | (750,000 | )           |   |   | 1,239,328 |   |   |                     | 830,349    |   |   |   | (80,349 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|   Stock Compensation Costs                                                                |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | 9,259      |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 9.259 |   |
|   Net Change in Unrealized Gain on    Securities Available for Sale   |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | -          |   |   |   | - |   |   |   |   |   |   |   | 326,885 |   |   |   | 326.885 |   |
|   Net Income                                                                              |   |            | -       |   |         |   | -        |        |   |   | -         |   |   |                     | -          |   |   |   | 666,912 |   |   |   |   |   |   |   | - |   |   |   | 666.912 |   |
|                                                                                                |   |            |    |   |         |   |     |        |   |   |      |   |   |                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                                                          |   |            | -       |   |         | $      | -        |        |   |   | 8,121,293 |   |   | $                        | 17,030,466 |   |   | $      | (10,445,022 | ) |   | $ | (1,005 | ) |   | $ | 60,356 |   |   | $ | 6,644,795 |   |

----

FIRST

|                                                                           |   | 2010   |       |   | 2009   |   |
|--------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Cash Flows from Operating Activities                                           |   |   |       |   |   |   |
|   Net Income                                                         |   | $      | 666,912    |   |   | $      | 43,560 |   |
|   Adjustments to Reconcile Net Income to                             |   |   |       |   |   |   |   |   |
|     Net Cash Used by Operating Activities                  |   |   |       |   |   |   |   |   |
|       Provision for Loan Losses                  |   |   | 750,390    |   |   |   | 333,673 |   |
|       Depreciation                               |   |   | 187,840    |   |   |   | 201,255 |   |
|       Amortization and Accretion                 |   |   | (722,633   | )      |   |   | (968,310 | ) |
|       Loss on Sale of Other Assets               |   |   | 10,543     |   |   |   | 11,665 |   |
|       Loss on Sale of Other Real Estate Owned    |   |   | 34,644     |   |   |   | - |   |
|       Writedown of Other Real Estate Owned       |   |   | 67,512     |   |   |   | - |   |
|       Impairment Loss on Other Investments       |   |   | -          |   |   |   | 62,420 |   |
|       Gains on Sales of Securities               |   |   | (145,602   | )      |   |   | (24,984 | ) |
|       Stock Compensation Expense                 |   |   | 9,259      |   |   |   | 52,547 |   |
|       Change In                                  |   |   |       |   |   |   |   |   |
|         Loans Held for Sale            |   |   | (4,271,049 | )      |   |   | (7,773,373 | ) |
|         Other Assets                   |   |   | (108,148   | )      |   |   | (131,988 | ) |
|         Other Liabilities              |   |   | 143,854    |   |   |   | 6,615 |   |
|                                                                           |   |   |       |   |   |   |   |   |
|                                                                           |   |   | (3,376,478 | )      |   |   | (8,186,920 | ) |
|                                                                           |   |   |       |   |   |   |   |   |
| Cash Flows from Investing Activities                                           |   |   |       |   |   |   |   |   |
|   Purchases of Investment Securities Available for Sale              |   |   | (3,000,000 | )      |   |   | (9,691,104 | ) |
|   Proceeds from Maturities, Calls and Paydowns of                    |   |   |       |   |   |   |   |   |
|     Investment Securities Available for Sale               |   |   | 2,242,552  |   |   |   | 6,577,621 |   |
|   Proceeds from the Sale of Investment Securities Available for Sale |   |   | 3,524,842  |   |   |   | 6,642,492 |   |
|   Purchases of Investment Securities Held to Maturity                |   |   | -          |   |   |   | (11,599,251 | ) |
|   Proceeds from Maturities, Calls and Paydowns of                    |   |   |       |   |   |   |   |   |
|     Investment Securities Held to Maturity                 |   |   | 4,797,322  |   |   |   | 2,769,432 |   |
|   Proceeds from the Sale of Investment Securities Held to Maturity   |   |   | 2,014,129  |   |   |   | - |   |
|   Purchases of Other Investments                                     |   |   | (221,700   | )      |   |   | (73,750 | ) |
|   Proceeds from the Sale of Other Investments                        |   |   | 2,400      |   |   |   | 37,700 |   |
|   Net Change in Loans                                                |   |   | 4,014,583  |   |   |   | 59,744 |   |
|   Proceeds from the Sale of Other Real Estate Owned                  |   |   | 62,356     |   |   |   | 54,353 |   |
|   Proceeds from the Sale of Other Assets                             |   |   | 24,107     |   |   |   | - |   |
|   Purchases of Premises and Equipment                                |   |   | (1,018,600 | )      |   |   | (52,368 | ) |
|   Proceeds from Sale of Premises and Equipment                       |   |   | 26,655     |   |   |   | - |   |
|                                                                           |   |   |       |   |   |   |   |   |
|                                                                           |   |   | 12,468,646 |   |   |   | (5,275,131 | ) |
|                                                                           |   |   |       |   |   |   |   |   |
| Cash Flows from Financing Activities                                           |   |   |       |   |   |   |   |   |
|   Net Change in Deposits                                             |   |   | (6,904,298 | )      |   |   | 12,445,824 |   |
|   Purchase of Treasury Stock                                         |   |   | -          |   |   |   | (1,005 | ) |
|   Payment of Stock Issuance Costs                                    |   |   | (18,877    | )      |   |   | (206,211 | ) |
|   Proceeds from the Issuance of Common Stock                         |   |   | 1,261,707  |   |   |   | 1,529,541 |   |
|                                                                           |   |   |       |   |   |   |   |   |
|                                                                           |   |   | (5,661,468 | )      |   |   | 13,768,150 |   |
|                                                                           |   |   |       |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                      |   |   | 3,430,700  |   |   |   | 306,099 |   |
|                                                                           |   |   |       |   |   |   |   |   |
| Cash and Cash Equivalents, Beginning                                           |   |   | 2,531,126  |   |   |   | 2,225,027 |   |
|                                                                           |   |   |       |   |   |   |   |   |
| Cash and Cash Equivalents, Ending                                              |   | $      | 5,961,826  |   |   | $      | 2,531,126 |   |

----

FIRST

----

----

----

----

|   | Buildings and improvements | 5 - 40 years |
|--------|----------------------------|--------------|
|   | Furniture and equipment    | 3 - 10 years |

----

|                                 |   | 2010   |      |   | 2009   |   |
|--------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                 |   |   |      |   |   |   |
| Cash Paid During the Year for:       |   |   |      |   |   |   |
|     Interest     |   | $      | 1,180,121 |   |   | $      | 1,649,150 |   |
|     Income Taxes |   | $      | -         |   |   | $      | - |   |

|   Transfer of Loans to Other Real Estate                              |   | $      | 33,072  |   |   | $      | 653,501  |   |
|---------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|----------|--------|
|                                                                            |   |   |    |   |   |   |     |   |
|   Change in Unrealized Gain (Loss) on Securities Available for Sale   |   | $      | 326,885 |   |   | $      | (183,424 | )      |
|                                                                            |   |   |    |   |   |   |     |   |
|   Conversion of Preferred Stock to Common Stock and Accrued Dividends |   | $      | 830,349 |   |   | $      | -        |   |

----

----

|                                                 |   | December 31, 2010 |       |
|------------------------------------------------------|--------|-------------------|------------|
|                                                 |   | AmortizedCost     |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
| Securities Available for Sale                        |   |              |       |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. Government Agencies    |   | $                 | 2,000,000  |   |   | $ | - |   |   | $ | (82,562 | ) |   | $ | 1,917,438 |   |
| Obligations of States and Political Subdivisions     |   |              | 332,455    |   |   |   | - |   |   |   | (6,955 | ) |   |   | 325,500 |   |
| Mortgage Backed Securities-GNMA                      |   |              | 365,670    |   |   |   | 16,221 |   |   |   | - |   |   |   | 381,891 |   |
| Mortgage Backed Securities-FNMA and FHLMC            |   |              | 457,571    |   |   |   | 6,312 |   |   |   | (3,493 | ) |   |   | 460,390 |   |
| Private Label Residential Mortgage Backed Securities |   |              | 1,337,633  |   |   |   | 141,334 |   |   |   | (12,879 | ) |   |   | 1,466,088 |   |
| Private Label Commercial Mortgage Backed Securities  |   |              | 652,752    |   |   |   | 535 |   |   |   | - |   |   |   | 653,287 |   |
|                                                 |   | $                 | 5,146,081  |   |   | $ | 164,402 |   |   | $ | (105,889 | ) |   | $ | 5,204,594 |   |
| Securities Held to Maturity                          |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Private Label Residential Mortgage Backed Securities |   | $                 | 766,732    |   |   | $ | 87,519 |   |   | $ | - |   |   | $ | 854,251 |   |
| Private Label Commercial Mortgage Backed Securities  |   |              | 10,033,737 |   |   |   | 692,605 |   |   |   | (230 | ) |   |   | 10,726,112 |   |
|                                                 |   | $                 | 10,800,469 |   |   | $ | 780,124 |   |   | $ | (230 | ) |   | $ | 11,580,363 |   |

|                                                 |   | December 31, 2009 |       |
|------------------------------------------------------|--------|-------------------|------------|
|                                                 |   | AmortizedCost     |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | Fair Value |   |
| Securities Available for Sale                        |   |              |       |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. Government Agencies    |   | $                 | 983,146    |   |   | $ | 28,888 |   |   | $ | - |   |   | $ | 1,012,034 |   |
| Obligations of States and Political Subdivisions     |   |              | 326,855    |   |   |   | - |   |   |   | (87,693 | ) |   |   | 239,162 |   |
| Mortgage Backed Securities-GNMA                      |   |              | 1,435,829  |   |   |   | 71,850 |   |   |   | - |   |   |   | 1,507,679 |   |
| Mortgage Backed Securities-FNMA and FHLMC            |   |              | 794,697    |   |   |   | 9,750 |   |   |   | (1,928 | ) |   |   | 802,519 |   |
| Private Label Residential Mortgage Backed Securities |   |              | 2,720,521  |   |   |   | 4,331 |   |   |   | (288,440 | ) |   |   | 2,436,412 |   |
| Private Label Commercial Mortgage Backed Securities  |   |              | 726,226    |   |   |   | 12,223 |   |   |   | - |   |   |   | 738,449 |   |
| Corporate Debt Securities                            |   |              | 575,000    |   |   |   | 6,700 |   |   |   | (9,490 | ) |   |   | 572,210 |   |
| Equity Securities                                    |   |              | 298,680    |   |   |   | - |   |   |   | (12,720 | ) |   |   | 285,960 |   |
|                                                 |   | $                 | 7,860,954  |   |   | $ | 133,742 |   |   | $ | (400,271 | ) |   | $ | 7,594,425 |   |
| Securities Held to Maturity                          |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Private Label Residential Mortgage Backed Securities |   | $                 | 1,963,140  |   |   | $ | 255,583 |   |   | $ | - |   |   | $ | 2,218,723 |   |
| Private Label Commercial Mortgage Backed Securities  |   |              | 14,831,223 |   |   |   | 1,056,040 |   |   |   | (57,627 | ) |   |   | 15,829,636 |   |
|                                                 |   | $                 | 16,764,363 |   |   | $ | 1,311,623 |   |   | $ | (57,627 | ) |   | $ | 18,048,359 |   |

----

|                                                           |   |  December 31, 2010 |      |
|----------------------------------------------------------------|--------|-------------------------|-----------|
|                                                           |   | Less than 12 Months     |      |   | 12 Months or Greater |   |   | Total |   |
|                                                           |   | Fair Value              |      |   | Gross Unrealized Losses |   |   | Fair Value |   |   | Gross Unrealized Losses |   |   | Fair Value |   |   | TotalUnrealized Losses |   |
| Securities Available for Sale                                  |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of  U.S. Government Agencies   |   | $                       | 1,917,438 |   |   | $ | (82,562 | ) |   | $ | - |   |   | $ | - |   |   | $ | 1,917,438 |   |   | $ | (82,562 | ) |
| Obligations of  States and Political Subdivisions    |   |                    |      |   |   |   |   |   |   |   | 325,500 |   |   |   | (6,955 | ) |   |   | 325,500 |   |   |   | (6,955 | ) |
| Mortgage Backed Securities-FNMA and FHLMC                      |   |                    | -         |   |   |   | - |   |   |   | 262,607 |   |   |   | (3,493 | ) |   |   | 262,607 |   |   |   | (3,493 | ) |
| Private Label Residential Mortgage Backed Securities           |   |                    | -         |   |   |   | - |   |   |   | 196,830 |   |   |   | (12,879 | ) |   |   | 196,830 |   |   |   | (12,879 | ) |
|                                                           |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | $                       | 1,917,438 |   |   | $ | (82,562 | ) |   | $ | 784,937 |   |   | $ | (23,327 | ) |   | $ | 2,702,375 |   |   | $ | (105,889 | ) |
|                                                           |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities Held to Maturity                                    |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Private Label Commercial Mortgage Backed Securities            |   | $                       | 327,692   |   |   | $ | (230 | ) |   | $ | - |   |   | $ | - |   |   | $ | 327,692 |   |   | $ | (230 | ) |

|                                                        |   |  December 31, 2009 |      |
|-------------------------------------------------------------|--------|-------------------------|-----------|
|                                                        |   | Less than 12 Months     |      |   | 12 Months or Greater |   |   | Total |   |
|                                                        |   | Fair Value              |      |   | Gross Unrealized Losses |   |   | Fair Value |   |   | Gross Unrealized Losses |   |   | Fair Value |   |   | TotalUnrealized Losses |   |
| Securities Available for Sale                               |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of  States and Political Subdivisions |   | $                       | 239,162   |   |   | $ | (87,693 | ) |   | $ | - |   |   | $ | - |   |   | $ | 239,162 |   |   | $ | (87,693 | ) |
| Mortgage Backed Securities-FNMA and FHLMC                   |   |                    | -         |   |   |   | - |   |   |   | 492,889 |   |   |   | (1,928 | ) |   |   | 492,889 |   |   |   | (1,928 | ) |
| Private Label Residential Mortgage Backed Securities        |   |                    | 1,463,016 |   |   |   | (117,778 | ) |   |   | 416,654 |   |   |   | (170,662 | ) |   |   | 1,879,670 |   |   |   | (288,440 | ) |
| Corporate Debt Securities                                   |   |                    | 315,510   |   |   |   | (9,490 | ) |   |   | - |   |   |   | - |   |   |   | 315,510 |   |   |   | (9,490 | ) |
| Equity Securities                                           |   |                    | -         |   |   |   | - |   |   |   | 285,960 |   |   |   | (12,720 | ) |   |   | 285,960 |   |   |   | (12,720 | ) |
|                                                        |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                        |   | $                       | 2,017,688 |   |   | $ | (214,961 | ) |   | $ | 1,195,503 |   |   | $ | (185,310 | ) |   | $ | 3,213,191 |   |   | $ | (400,271 | ) |
|                                                        |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities Held to Maturity                                 |   |                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Private Label Commercial Mortgage Backed Securities         |   | $                       | 887,578   |   |   | $ | (57,627 | ) |   | $ | - |   |   | $ | - |   |   | $ | 887,578 |   |   | $ | (57,627 | ) |

----

----

|                                             |   | Available for Sale |      |   | Held to Maturity |   |
|--------------------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                             |   | Amortized Cost     |      |   | Fair Value       |   |   | Weighted Average Yield |   |   | Amortized Cost |   |   | Fair Value |   |   | Weighted Average Yield |   |
| Obligations of U.S. Government Agencies          |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Less than 1 Year         |   | $                  | 2,000,000 |   |             | $      | 1,917,438 |   |   |   | 2.06 | % |   | $ | - |   |   | $ | - |   |   |   | - |   |
| Obligations of States and Political Subdivisions |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     1 to 5 Years             |   |               | 332,455   |   |             |   | 325,500 |   |   |   | 8.71 | % |   |   | - |   |   |   | - |   |   |   | - |   |
| Mortgage Backed Securities                       |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Less than 1 Year         |   |               | 266,100   |   |             |   | 262,607 |   |   |   | 5.25 | % |   |   | 222,501 |   |   |   | 229,384 |   |   |   | 10.35 | % |
|     1 to 5 Years             |   |               | 1,053,933 |   |             |   | 1,047,900 |   |   |   | 8.57 | % |   |   | 10,333,184 |   |   |   | 11,054,683 |   |   |   | 10.04 | % |
|     5 to 10 Years            |   |               | 1,127,923 |   |             |   | 1,269,258 |   |   |   | 7.36 | % |   |   | 244,784 |   |   |   | 296,296 |   |   |   | 9.58 | % |
|     Over 10 Years            |   |               | 365,670   |   |             |   | 381,891 |   |   |   | 2.18 | % |   |   | - |   |   |   | - |   |   |   | - |   |
|                                             |   | $                  | 5,146,081 |   |             | $      | 5,204,594 |   |   |   | 5.16 | % |   | $ | 10,800,469 |   |   |   | 11,580,363 |   |   |   | 10.05 | % |

|                                                       |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                       |   |   |       |   |   |   |
| Commercial and Financial                                   |   | $      | 2,946,664  |   |   | $      | 3,698,597 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Commercial Real Estate -Owner Occupied                     |   |   | 8,549,938  |   |   |   | 10,995,858 |   |
| Commercial Real Estate -Other                              |   |   | 1,933,797  |   |   |   | 2,004,081 |   |
|   Total Commercial Real Estate                   |   |   | 10,483,735 |   |   |   | 12,999,939 |   |
|                                                       |   |   |       |   |   |   |   |   |
| 1-4 Family Residential Construction                        |   |   | 995,760    |   |   |   | 683,508 |   |
| Other Construction, land development, and other land loans |   |   | 4,165,571  |   |   |   | 4,060,893 |   |
|   Total Construction and Land                    |   |   | 5,161,331  |   |   |   | 4,744,401 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Farmland                                                   |   |   | 1,172,500  |   |   |   | 1,285,250 |   |
| Residential Real Estate                                    |   |   | 11,032,850 |   |   |   | 12,035,972 |   |
| Multifamily Real Estate                                    |   |   | 236,213    |   |   |   | 243,372 |   |
|   All Other Real Estate                          |   |   | 12,441,763 |   |   |   | 13,564,594 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Consumer                                                   |   |   | 838,343    |   |   |   | 1,526,295 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Total Loans                                                |   |   | 31,871,836 |   |   |   | 36,533,826 |   |
| Unamortized costs                                          |   |   | 24,076     |   |   |   | 96,761 |   |
|                                                       |   |   |       |   |   |   |   |   |
| Total Loans plus unamortized costs                         |   | $      | 31,895,912 |   |   | $      | 36,630,587 |   |

----

----

----

|                                                       |   | Current |       |   | Accruing30-89 Days Past Due |   |    | Nonaccrual |   |   | Total     |   |
|------------------------------------------------------------|--------|---------|------------|--------|-----------------------------|--------|---------|------------|--------|--------|-----------|--------|
|                                                       |   |    |       |   |                        |   |    |       |   |   |      |   |
| Commercial and Financial                                   |   | $       | 2,909,725  |   |                        | $      | 36,939  |       |   | $      | -         |   |   | $ | 2,946,664 |   |
| Commercial Real Estate -Owner Occupied                     |   |    | 8,549,938  |   |                        |   | -       |       |   |   | -         |   |   |   | 8,549,938 |   |
| Commercial Real Estate -Other                              |   |    | 1,933,797  |   |                        |   | -       |       |   |   | -         |   |   |   | 1,933,797 |   |
|      Total Commercial Real Estate |   |    | 10,483,735 |   |                        |   | -       |       |   |   | -         |   |   |   | 10,483,735 |   |
|                                                       |   |    |       |   |                        |   |    |       |   |   |      |   |   |   |   |   |
| 1-4 Family Residential Construction                        |   |    | 918,952    |   |                        |   | 76,808  |       |   |   | -         |   |   |   | 995,760 |   |
| Other Construction, land development, and other land loans |   |    | 3,761,320  |   |                        |   | -       |       |   |   | 404,250   |   |   |   | 4,165,571 |   |
|     Total Construction and Land        |   |    | 4,680,272  |   |                        |   | 76,808  |       |   |   | 404,250   |   |   |   | 5,161,331 |   |
|                                                       |   |    |       |   |                        |   |    |       |   |   |      |   |   |   |   |   |
| Farmland                                                   |   |    | 778,440    |   |                        |   | -       |       |   |   | 394,060   |   |   |   | 1,172,500 |   |
| Residential Real Estate                                    |   |    | 10,176,610 |   |                        |   | 162,167 |       |   |   | 694,072   |   |   |   | 11,032,849 |   |
| Mulitfamily Real Estate                                    |   |    | 236,414    |   |                        |   | -       |       |   |   | -         |   |   |   | 236,414 |   |
|      All Other Real Estate        |   |    | 11,191,464 |   |                        |   | 162,167 |       |   |   | 1,088,132 |   |   |   | 12,441,763 |   |
|                                                       |   |    |       |   |                        |   |    |       |   |   |      |   |   |   |   |   |
| Consumer                                                   |   |    | 828,133    |   |                        |   | 557     |       |   |   | 9,653     |   |   |   | 838,343 |   |
|                                                       |   |    |       |   |                        |   |    |       |   |   |      |   |   |   |   |   |
|     Total Loans                        |   | $       | 30,093,329 |   |                        | $      | 276,471 |       |   | $      | 1,502,035 |   |   | $ | 31,871,836 |   |

----

|                                                       |   | Pass   |       |   | Special Mention |   |      | Substandard |   |   | Total     |   |
|------------------------------------------------------------|--------|--------|------------|--------|-----------------|--------|-----------|-------------|--------|--------|-----------|--------|
| Commercial and Financial                                   |   | $      | 2,875,652  |   |            | $      | 71,012    |        |   | $      | -         |   |   | $ | 2,946,664 |   |
|                                                       |   |   |       |   |            |   |      |        |   |   |      |   |   |   |   |   |
| Commercial Real Estate -Owner Occupied                     |   |   | 8,549,938  |   |            |   | -         |        |   |   | -         |   |   |   | 8,549,938 |   |
| Commercial Real Estate -Other                              |   |   | 1,869,881  |   |            |   | 63,916    |        |   |   | -         |   |   |   | 1,933,797 |   |
|   Total Commercial Real Estate                   |   |   | 10,419,819 |   |            |   | 63,916    |        |   |   | -         |   |   |   | 10,483,735 |   |
|                                                       |   |   |       |   |            |   |      |        |   |   |      |   |   |   |   |   |
| 1-4 Family Residential Construction                        |   |   | 948,986    |   |            |   | 46,774    |        |   |   | -         |   |   |   | 995,760 |   |
| Other Construction, land development, and other land loans |   |   | 3,761,321  |   |            |   | -         |        |   |   | 404,250   |   |   |   | 4,165,571 |   |
|   Total Construction and Land                    |   |   | 4,710,307  |   |            |   | 46,774    |        |   |   | 404,250   |   |   |   | 5,161,331 |   |
|                                                       |   |   |       |   |            |   |      |        |   |   |      |   |   |   |   |   |
| Farmland                                                   |   |   | 778,440    |   |            |   | -         |        |   |   | 394,060   |   |   |   | 1,172,500 |   |
| Residential Real Estate                                    |   |   | 9,306,999  |   |            |   | 1,031,176 |        |   |   | 694,675   |   |   |   | 11,032,850 |   |
| Multifamily Real Estate                                    |   |   | 236,413    |   |            |   | -         |        |   |   | -         |   |   |   | 236,413 |   |
|   All Other Real Estate                          |   |   | 10,321,852 |   |            |   | 1,031,176 |        |   |   | 1,088,735 |   |   |   | 12,441,763 |   |
|                                                       |   |   |       |   |            |   |      |        |   |   |      |   |   |   |   |   |
| Consumer                                                   |   |   | 812,853    |   |            |   | 5,492     |        |   |   | 19,998    |   |   |   | 838,343 |   |
|                                                       |   |   |       |   |            |   |      |        |   |   |      |   |   |   |   |   |
| Total Loans                                                |   | $      | 29,140,483 |   |            | $      | 1,218,370 |        |   | $      | 1,512,983 |   |   | $ | 31,871,836 |   |

----

|                                                |   | 2010   |     |   | 2009   |   |
|-----------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                |   |   |     |   |   |   |
| Balance, Beginning                                  |   | $      | 414,670  |   |   | $      | 838,234 |   |
|   Provision Charged to Operating Expenses |   |   | 750,390  |   |   |   | 333,673 |   |
|   Loans Charged Off                       |   |   | (692,967 | )      |   |   | (780,090 | ) |
|   Loan Recoveries                         |   |   | 5,946    |   |   |   | 22,853 |   |
|                                                |   |   |     |   |   |   |   |   |
| Balance, Ending                                     |   | $      | 478,039  |   |   | $      | 414,670 |   |

|                                                  |   | As Of and For The Year Ended December 31, 2010 |      |
|-------------------------------------------------------|--------|------------------------------------------------|-----------|
|                                                  |   | Commercial                                     |      |   | CommercialReal Estate |   |   | Constructionand Land |   |   | All Other RealEstate |   |   | Consumer |   |   | Total |   |
| Allowance for loan losses                             |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                     |   | $                                              | 84,175    |   |   | $ | 19,143 |   |   | $ | 85,239 |   |   | $ | 180,035 |   |   | $ | 46,078 |   |   | $ | 414,670 |   |
| Charge-offs                                           |   |                                           | -         |   |   |   | - |   |   |   | (503,679 | ) |   |   | (154,455 | ) |   |   | (34,833 | ) |   |   | (692,967 | ) |
| Recoveries                                            |   |                                           | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,946 |   |   |   | 5,946 |   |
| Provision                                             |   |                                           | (38,719   | ) |   |   | (2,100 | ) |   |   | 610,095 |   |   |   | 171,180 |   |   |   | 9,934 |   |   |   | 750,390 |   |
|                                                  |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $                                              | 45,456    |   |   | $ | 17,043 |   |   | $ | 191,655 |   |   | $ | 196,760 |   |   | $ | 27,125 |   |   | $ | 478,039 |   |
|                                                  |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment |   | $                                              | -         |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                  |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                 |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                        |   | $                                              | 2,946,664 |   |   | $ | 10,483,735 |   |   | $ | 5,161,331 |   |   | $ | 12,441,763 |   |   | $ | 838,343 |   |   | $ | 31,871,836 |   |
|                                                  |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment |   | $                                              | -         |   |   | $ | - |   |   | $ | 404,250 |   |   | $ | 1,088,735 |   |   | $ | - |   |   | $ | 1,492,985 |   |
|                                                  |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | Impaired Loans                                 |      |
|------------------------------------------------------------|--------|------------------------------------------------|-----------|
|                                                       |   | For the Years Ended December 31, 2010 and 2009 |      |
|                                                       |   | RecordedInvestment                             |      |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomerecognized |   |
| 2010                                                       |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |
| With no related allowance recorded:                        |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Construction, land development, and other land loans |   |                                           | 404,250   |   |   |   | 518,788 |   |   |   | - |   |   |   | 331,385 |   |   |   | - |   |
| Farmland                                                   |   |                                           | 394,060   |   |   |   | 525,000 |   |   |   | - |   |   |   | 32,838 |   |   |   | - |   |
| Residential Real Estate                                    |   |                                           | 694,675   |   |   |   | 759,052 |   |   |   | - |   |   |   | 639,968 |   |   |   | 10,070 |   |
| Total                                                      |   | $                                              | 1,492,985 |   |   | $ | 1,802,840 |   |   | $ | - |   |   | $ | 1,004,191 |   |   | $ | 10,070 |   |
|                                                       |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                       |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With no related allowance recorded:                        |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, Financial and Agricultural                     |   | $                                              | -         |   |   | $ | - |   |   | $ | - |   |   | $ | 37,649 |   |   | $ | - |   |
| Other Construction, land development, and other land loans |   |                                           | 351,584   |   |   |   | 626,584 |   |   |   | - |   |   |   | 409,660 |   |   |   | - |   |
| Consumer                                                   |   |                                           | -         |   |   |   | - |   |   |   | - |   |   |   | 2,246 |   |   |   | - |   |
|                                                       |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With an allowance recorded:                                |   |                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential Real Estate                                    |   |                                           | 608,128   |   |   |   | 608,128 |   |   |   | 24,427 |   |   |   | 325,551 |   |   |   | 37,474 |   |
| Total                                                      |   | $                                              | 959,712   |   |   | $ | 1,234,712 |   |   | $ | 24,427 |   |   | $ | 775,106 |   |   | $ | 37,474 |   |

----

|                       |   | 2010   |       |   | 2009   |   |
|----------------------------|--------|--------|------------|--------|--------|--------|
|                       |   |   |       |   |   |   |
| Land and Land Improvements |   | $      | 1,409,442  |   |   | $      | 409,442 |   |
| Building                   |   |   | 1,693,776  |   |   |   | 1,693,776 |   |
| Leasehold Improvements     |   |   | -          |   |   |   | 18,820 |   |
| Furniture and Equipment    |   |   | 1,270,939  |   |   |   | 1,252,296 |   |
| Bank Vehicles              |   |   | 46,388     |   |   |   | 88,904 |   |
|                       |   |   |       |   |   |   |   |   |
|                       |   |   | 4,420,545  |   |   |   | 3,463,238 |   |
|                       |   |   |       |   |   |   |   |   |
| Accumulated Depreciation   |   |   | (1,343,720 | )      |   |   | (1,186,557 | ) |
|                       |   |   |       |   |   |   |   |   |
|                       |   | $      | 3,076,825  |   |   | $      | 2,276,681 |   |

----

|                    |   | 2010   |       |   | 2009   |   |
|-------------------------|--------|--------|------------|--------|--------|--------|
|                    |   |   |       |   |   |   |
| Interest-Bearing Demand |   | $      | 8,505,693  |   |   | $      | 8,443,141 |   |
| MMDA and Savings        |   |   | 15,926,491 |   |   |   | 11,950,003 |   |
| Time, $100,000 and Over |   |   | 18,865,595 |   |   |   | 18,025,985 |   |
| Other Time              |   |   | 15,459,599 |   |   |   | 28,071,327 |   |
|                    |   |   |       |   |   |   |   |   |
|                    |   | $      | 58,757,377 |   |   | $      | 66,490,456 |   |

| Year   |   | Amount |       |
|--------|--------|--------|------------|
|   |   |   |       |
| 2011   |   | $      | 21,413,346 |   |
| 2012   |   |   | 12,470,449 |   |
| 2013   |   |   | 400,000    |   |
| 2014   |   |   | 39,210     |   |
| 2015   |   |   | 2,189      |   |
|   |   |   |       |   |
|   |   | $      | 34,325,193 |   |

----

|                          |   | 2010   |     |   | 2009   |   |
|-------------------------------|--------|--------|----------|--------|--------|--------|
|                          |   |   |     |   |   |   |
| Deferred Expense              |   | $      | 256,748  |   |   | $      | 42,245 |   |
| Change in Valuation Allowance |   |   | (256,748 | )      |   |   | (42,245 | ) |
|                          |   |   |     |   |   |   |   |   |
|                          |   | $      | -        |   |   | $      | - |   |

|                                    |   | Years Ended December 31, |     |
|-----------------------------------------|--------|--------------------------|----------|
|                                    |   | 2010                     |     |   | 2009 |   |
| Tax provision at federal statutory rate |   | $                        | 226,750  |   |   | $ | 14,810 |   |
|   Stock Compensation          |   |                     | 3,148    |   |   |   | 17,866 |   |
|   State Income Taxes          |   |                     | 25,141   |   |   |   | - |   |
|   Other items, net            |   |                     | 1,709    |   |   |   | 9,569 |   |
|   Valuation Allowance         |   |                     | (256,748 | ) |   |   | (42,245 | ) |
|                                    |   |                     |     |   |   |   |   |   |
|                                    |   |                     |     |   |   |   |   |   |
| Income Tax Expense                      |   | $                        | -        |   |   | $ | - |   |

|                                     |   | 2010   |       |   | 2009   |   |
|------------------------------------------|--------|--------|------------|--------|--------|--------|
| Deferred Income Tax Assets               |   |   |       |   |   |   |
|   Operating Loss Carryforwards |   | $      | 3,579,315  |   |   | $      | 3,957,990 |   |
|   Stock Compensation           |   |   | 26,855     |   |   |   | 27,219 |   |
|   Capital Loss                 |   |   | 21,146     |   |   |   | 21,433 |   |
|   Other Real Estate            |   |   | 22,871     |   |   |   | - |   |
|   Other                        |   |   | 5,292      |   |   |   | 7,202 |   |
|                                     |   |   |       |   |   |   |   |   |
|                                     |   |   | 3,655,479  |   |   |   | 4,013,844 |   |
| Deferred Tax Liabilities                 |   |   |       |   |   |   |   |   |
|   Premises and Equipment       |   |   | 27,350     |   |   |   | 26,979 |   |
|   Allowance for Loan Losses    |   |   | 7,996      |   |   |   | 83,963 |   |
|                                     |   |   |       |   |   |   |   |   |
|                                     |   |   | 35,346     |   |   |   | 110,942 |   |
|                                     |   |   |       |   |   |   |   |   |
|                                     |   |   | 3,620,133  |   |   |   | 3,876,881 |   |
| Less Valuation Allowance                 |   |   | (3,620,133 | )      |   |   | (3,902,902 | ) |
|                                     |   |   |       |   |   |   |   |   |
| Net Deferred Tax Asset                   |   | $      | -          |   |   | $      | - |   |

----

----

|                                                                          |   | ApproximateContract Amount |      |
|-------------------------------------------------------------------------------|--------|----------------------------|-----------|
|                                                                          |   | 2010                       |      |   | 2009 |   |
| Financial Instruments Whose Contract  Amounts Represent Credit Risk |   |                       |      |   |   |   |
|     Commitments to Extend Credit                          |   | $                          | 1,222,000 |   |   | $ | 3,238,000 |   |
|     Standby Letters of Credit                             |   |                       | 550,000   |   |   |   | 276,000 |   |

----

|                             |   | 2010   |     |   | 2009   |   |
|----------------------------------|--------|--------|----------|--------|--------|--------|
|                             |   |   |     |   |   |   |
| Balance, Beginning               |   | $      | 118,501  |   |   | $      | 321,340 |   |
|   New Loans            |   |   | 417,624  |   |   |   | 110,006 |   |
|   Principal Repayments |   |   | (423,203 | )      |   |   | (312,845 | ) |
|                             |   |   |     |   |   |   |   |   |
| Balance, Ending                  |   | $      | 112,922  |   |   | $      | 118,501 |   |

----

|                                        |   | Shares |     |   | Weighted Average Exercise Price |   |
|---------------------------------------------|--------|--------|----------|--------|---------------------------------|--------|
|                                        |   |   |     |   |                            |   |
| Outstanding, December 31, 2008              |   |   | 538,334  |   |                            | $      | 2.78 |   |
|                                        |   |   |     |   |                            |   |   |   |
|   Granted                         |   |   | 30,000   |   |                            | $      | 1.50 |   |
|   Exercised                       |   |   | -        |   |                            |   | - |   |
|   Forfeited                       |   |   | (118,500 | )      |                            | $      | 1.60 |   |
|                                        |   |   |     |   |                            |   |   |   |
| Outstanding, December 31, 2009              |   |   | 449,834  |   |                            | $      | 2.53 |   |
|                                        |   |   |     |   |                            |   |   |   |
|   Granted                         |   |   | -        |   |                            |   | - |   |
|   Exercised                       |   |   | -        |   |                            |   | - |   |
|   Forfeited                       |   |   | (210,000 | )      |                            | $      | 1.50 |   |
|                                        |   |   |     |   |                            |   |   |   |
| Outstanding, December 31, 2010              |   |   | 239,834  |   |                            | $      | 3.44 |   |
|                                        |   |   |     |   |                            |   |   |   |
| Eligible to be Exercised, December 31, 2010 |   |   | 152,234  |   |                            | $      | 4.56 |   |

----

| Exercise Prices              |   | Number Outstanding |    |   | Weighted Average Remaining Contractual Life |   |   | Number Exercisable |   |   | Weighted Average Remaining Contractual Life |   |
|------------------------------|--------|--------------------|---------|--------|---------------------------------------------|--------|--------|--------------------|--------|--------|---------------------------------------------|--------|
|                         |   |               |    |   |                                        |   |   |               |   |   |                                        |   |
| $10.00                       |   |               | 13,334  |   |                                        |   | 2.4    |               |   |   | 13,334                                      |   |   |   | 2.4 |   |
|     5.00 |   |               | 100,500 |   |                                        |   | 4.8    |               |   |   | 100,500                                     |   |   |   | 4.8 |   |
|     1.50 |   |               | 126,000 |   |                                        |   | 7.5    |               |   |   | 38,400                                      |   |   |   | 7.5 |   |
|                         |   |               |    |   |                                        |   |   |               |   |   |                                        |   |   |   |   |   |
|                         |   |               | 239,834 |   |                                        |   | 6.0    |               |   |   | 152,234                                     |   |   |   | 5.2 |   |
|                         |   |               |    |   |                                        |   |   |               |   |   |                                        |   |   |   |   |   |

|                                           |   | 2009   |   |
|------------------------------------------------|--------|--------|--------|
|                                           |   |   |   |
| Dividend Yield                                 |   |   | 0.00   | % |
| Risk Free Interest Rate                        |   |   | 1.89   | % |
| Expected Life (in Years)                       |   |   | 6.5    |   |
| Expected Volatility                            |   |   | 92     | % |
| Weighted average fair value per option granted |   | $      | 1.16   |   |

----

|                   |   | Exercise Prices |   |   | Number Outstanding |   |      | Weighted Average Remaining Contractual Life |   |          | Number Exercisable |   |   | Weighted Average Remaining Contractual Life |      |
|------------------------|--------|-----------------|--------|--------|--------------------|--------|-----------|---------------------------------------------|--------|---------------|--------------------|--------|--------|---------------------------------------------|-----------|
| 2002 Warrants          |   | $               | 10.00  |   |               |   | 153,393   |                                        |   |          | 1.5                |   |   |                                        | 153,393   |   |   |   | 1.5 |   |
| 2007 Original Warrants |   | $               | 0.67   |   |               |   | 2,985,077 |                                        |   | no expiration |               |   |   | 2,985,077                                   |      |   | no expiration |   |
| 2007 B Warrants        |   | $               | 0.67   |   |               |   | 167,910   |                                        |   | no expiration |               |   |   | 167,910                                     |      |   | no expiration |   |
| 2010 Warrants          |   | $               | 0.67   |   |               |   | 1,883,145 |                                        |   |          | 9.5                |   |   |                                        | 1,883,145 |   |   |   | 9.5 |   |
|                   |   |            |   |   |               |   | 5,189,526 |                                        |   |          |               |   |   |                                        | 5,189,526 |   |   |   |   |   |

----

----

|                                                 |   | December 31, 2010 |   |   | December 31, 2009 |   |
|------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                 |   | Carrying          |   |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                                 |   | Amount            |   |   | Fair Value        |   |   | Amount |   |   | Fair Value |   |
|                                                 |   | (in Thousands)    |   |
| Assets                                               |   |              |   |   |              |   |   |   |   |   |   |   |
|   Cash and Short-Term Investments          |   | $                 | 5,962  |   |              | $      | 5,962 |   |   | $ | 2,531 |   |   | $ | 2,531 |   |
|   Investment Securities Available for Sale |   |              | 5,205  |   |              |   | 5,205 |   |   |   | 7,594 |   |   |   | 7,594 |   |
|   Investment Securities Held to Maturity   |   |              | 10,800 |   |              |   | 11,580 |   |   |   | 16,794 |   |   |   | 18,048 |   |
|   Other Investments                        |   |              | 620    |   |              |   | 620 |   |   |   | 401 |   |   |   | 401 |   |
|   Loans, Net                               |   |              | 31,418 |   |              |   | 31,664 |   |   |   | 9,637 |   |   |   | 9,637 |   |
|   Loans Held for Sale                      |   |              | 13,908 |   |              |   | 13,908 |   |   |   | 36,215 |   |   |   | 36,572 |   |
|   Accrued Interest Receivable              |   |              | 221    |   |              |   | 221 |   |   |   | 279 |   |   |   | 279 |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                          |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits                                 |   |              | 62,662 |   |              |   | 62,582 |   |   |   | 69,567 |   |   |   | 69,596 |   |
|   Borrowings                               |   |              | 2,000  |   |              |   | 2,077 |   |   |   | 2,000 |   |   |   | 2,062 |   |
|   Accrued Interest Payable                 |   |              | 200    |   |              |   | 200 |   |   |   | 279 |   |   |   | 279 |   |

----

----

|                                     |   |   |       |   | Fair Value Measurements atDecember 31, 2010 Using |   |
|------------------------------------------|--------|--------|------------|--------|---------------------------------------------------|--------|
|                                     |   | Total  |       |   | Level 1                                           |   |   | Level 2 |   |   | Level 3 |   |
|                                     |   |   |       |   |                                              |   |   |   |   |   |   |   |
| Investment Securities Available for Sale |   | $      | 5,204,594  |   |                                              |   | - |   |   | $ | 5,204,594 |   |   |   | - |   |
| Loans Held for Sale                      |   |   | 13,908,172 |   |                                              |   | - |   |   |   | 13,908,172 |   |   |   | - |   |

|                                     |   |   |      |   | Fair Value Measurements atDecember 31, 2009 Using |   |
|------------------------------------------|--------|--------|-----------|--------|---------------------------------------------------|--------|
|                                     |   | Total  |      |   | Level 1                                           |   |   | Level 2 |   |   | Level 3 |   |
|                                     |   |   |      |   |                                              |   |   |   |   |   |   |   |
| Investment Securities Available for Sale |   | $      | 7,594,425 |   |                                              |   | - |   |   | $ | 7,594,425 |   |   |   | - |   |
| Loans Held for Sale                      |   |   | 9,637,123 |   |                                              |   | - |   |   |   | 9,637,123 |   |   |   | - |   |

|              |   | Fair Value Measurements atDecember 31, 2010 Using |   |   |    |   |
|-------------------|--------|--------------------------------------------------------|--------|--------|---------|--------|
|              |   | Level 1                                                |   |   | Level 2 |   |   | Level 3 |   |   | Total (Losses) |   |
|              |   |                                                   |   |   |    |   |   |   |   |   |   |   |
| Impaired Loans    |   |                                                   | -      |   |    |   | - |   |   | $ | 1,284,851 |   |   | $ | (309,855 | ) |
| Other Real Estate |   |                                                   | -      |   |    |   | - |   |   |   | 522,061 |   |   |   | (67,512 | ) |

|              |   | Fair Value Measurements atDecember 31, 2009 Using |   |   |    |   |
|-------------------|--------|---------------------------------------------------|--------|--------|---------|--------|
|              |   | Level 1                                           |   |   | Level 2 |   |   | Level 3 |   |   | Total (Losses) |   |
|              |   |                                              |   |   |    |   |   |   |   |   |   |   |
| Impaired Loans    |   |                                              | -      |   |    |   | - |   |   | $ | 935,284 |   |   | $ | (299,427 | ) |
| Other Real Estate |   |                                              | -      |   |    |   | - |   |   |   | 653,501 |   |   |   | (34,644 | ) |

----

|                             |   | Actual |   |   | For Capital Adequacy Purposes |   |   | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |   |
|----------------------------------|--------|--------|--------|--------|-------------------------------|--------|--------|---------------------------------------------------------------|--------|
|                             |   | Amount |   |   | Ratio                         |   |   | Amount                                                        |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                             |   |   |   |   |                          |   |   | (In Thousands)                                                |   |   |   |   |   |   |   |
| December 31, 2010                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| Total Capital to                 |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
|   Risk-Weighted Assets |   | $      | 6,789  |   |                          |   | 15.99  | %                                                             |   | $ | 3,397 |   |   |   | 8.00 | % |   | $ | 4,247 |   |   |   | 10.00 | % |
| Tier I Capital to                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Risk-Weighted Assets |   |   | 6,311  |   |                          |   | 14.86  |                                                          |   |   | 1,699 |   |   |   | 4.00 |   |   |   | 2,548 |   |   |   | 6.00 |   |
| Tier I Capital to                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Average Assets       |   |   | 6,311  |   |                          |   | 8.50   |                                                          |   |   | 2,968 |   |   |   | 4.00 |   |   |   | 3,710 |   |   |   | 5.00 |   |
|                             |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital to                 |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Risk-Weighted Assets |   | $      | 5,062  |   |                          |   | 10.82  | %                                                             |   | $ | 3,748 |   |   |   | 8.00 | % |   | $ | 4,685 |   |   |   | 10.00 | % |
| Tier I Capital to                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Risk-Weighted Assets |   |   | 4,647  |   |                          |   | 9.94   |                                                          |   |   | 1,874 |   |   |   | 4.00 |   |   |   | 2,811 |   |   |   | 6.00 |   |
| Tier I Capital to                |   |   |   |   |                          |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Average Assets       |   |   | 4,647  |   |                          |   | 6.22   |                                                          |   |   | 2,991 |   |   |   | 4.00 |   |   |   | 3,739 |   |   |   | 5.00 |   |

----

| ASSETS                                           |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |
|                                             |   | 2010 |   |   | 2009 |   |
|                                             |   |   |   |   |   |   |
| Cash and Interest-Bearing Deposits               |   | $ | 299,891 |   |   | $ | 25,907 |   |
| Investment in Subsidiary                         |   |   | 6,370,685 |   |   |   | 4,393,532 |   |
| Other Assets                                     |   |   | - |   |   |   | 937 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total Assets                                     |   | $ | 6,670,576 |   |   | $ | 4,420,376 |   |
|                                             |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |
|                                             |   |   |   |   |   |   |   |   |
| Other Liabilities                                |   | $ | 25,781 |   |   | $ | 21,467 |   |
|                                             |   |   |   |   |   |   |   |   |
| Stockholders’ Equity                       |   |   | 6,644,795 |   |   |   | 4,398,909 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders’ Equity |   | $ | 6,670,576 |   |   | $ | 4,420,376 |   |

|                                                                  |   | 2010   |     |   | 2009   |   |
|-----------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                  |   |   |     |   |   |   |
| Expenses                                                              |   |   |     |   |   |   |
|   Professional Fees                                         |   |   | 120,436  |   |   |   | 94,939 |   |
|   Other                                                     |   |   | 3,662    |   |   |   | 19,402 |   |
|                                                                  |   |   |     |   |   |   |   |   |
|                                                                  |   |   | 124,098  |   |   |   | 114,341 |   |
|                                                                  |   |   |     |   |   |   |   |   |
| Loss Before Equity in  Undistributed Earnings of Subsidiary |   |   | (124,098 | )      |   |   | (114,341 | ) |
|                                                                  |   |   |     |   |   |   |   |   |
| Equity in Undistributed Earnings of Subsidiary                        |   |   | 791,010  |   |   |   | 157,901 |   |
|                                                                  |   |   |     |   |   |   |   |   |
| Net Income                                                            |   | $      | 666,912  |   |   | $      | 43,560 |   |

----

|                                                                               |   | 2010   |      |   | 2009   |   |
|------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                               |   |   |      |   |   |   |
| Cash Flows from Operating Activities                                               |   |   |      |   |   |   |
|   Net Income                                                             |   | $      | 666,912   |   |   | $      | 43,560 |   |
|   Adjustments to Reconcile Net Income to Net                             |   |   |      |   |   |   |   |   |
|     Cash Used by Operating Activities                          |   |   |      |   |   |   |   |   |
|       Equity in Undistributed Earnings of Subsidiary |   |   | (791,010  | )      |   |   | (157,901 | ) |
|       Change In                                      |   |   |      |   |   |   |   |   |
|         Other Assets                       |   |   | 937       |   |   |   | 1,892 |   |
|         Other Liabilities                  |   |   | 4,315     |   |   |   | (166,979 | ) |
|                                                                               |   |   |      |   |   |   |   |   |
|                                                                               |   |   | (118,846  | )      |   |   | (279,428 | ) |
|                                                                               |   |   |      |   |   |   |   |   |
| Cash Flows from Investing Activities                                               |   |   |      |   |   |   |   |   |
|   Capital Infusion in Subsidiary                                         |   |   | (850,000  | )      |   |   | (1,050,000 | ) |
|                                                                               |   |   |      |   |   |   |   |   |
| Cash Flows from Financing Activities                                               |   |   |      |   |   |   |   |   |
|   Purchase of Treasury Stock                                             |   |   | -         |   |   |   | (1,005 | ) |
|   Proceeds from Issuance of Common Stock                                 |   |   | 1,261,707 |   |   |   | 1,529,541 |   |
|   Payments of Stock Issuance Costs                                       |   |   | (18,877   | )      |   |   | (206,211 | ) |
|                                                                               |   |   |      |   |   |   |   |   |
|                                                                               |   |   | 1,242,830 |   |   |   | 1,322,325 |   |
|                                                                               |   |   |      |   |   |   |   |   |
| Net Increase (Decrease) in Cash                                                    |   |   | 273,984   |   |   |   | (7,103 | ) |
|                                                                               |   |   |      |   |   |   |   |   |
| Cash and Interest-Bearing Deposits, Beginning                                      |   |   | 25,907    |   |   |   | 33,010 |   |
|                                                                               |   |   |      |   |   |   |   |   |
| Cash and Interest-Bearing Deposits, Ending                                         |   | $      | 299,891   |   |   | $      | 25,907 |   |
|                                                                               |   |   |      |   |   |   |   |   |