| MAINE                                                          | 01-0404322                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| MAIN STREET, DAMARISCOTTA,   MAINE | 04543            |
|---------------------------------------------------|------------------|
| (Address of principal executive offices)          |  (Zip code) |

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| Part I. Financial Information                                                                              | 1  |
|------------------------------------------------------------------------------------------------------------|----|
| Selected Financial Data (Unaudited)                                                                        | 1  |
| Item 1 – Financial Statements                                                                        | 2  |
| Report of Independent Registered Public Accounting Firm                                                    | 2  |
| Consolidated Balance Sheets (Unaudited)                                                                    | 3  |
| Consolidated Statements of Income (Unaudited)                                                              | 4  |
| Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)                               | 5  |
| Consolidated Statements of Cash Flows (Unaudited)                                                          | 6  |
| Notes to Consolidated Financial Statements                                                                 | 7  |
| Note 1 – Basis of Presentation                                                                       | 7  |
| Note 2 –Investment Securities                                                                        | 7  |
| Note 3 – Loans                                                                                       | 10 |
| Note 4 – Stock Options and Stock and Stock Based Compensation                                        | 11 |
| Note 5 – Preferred and Common Stock                                                                  | 12 |
| Note 6 – Earnings Per Share                                                                          | 13 |
| Note 7 – Employee Benefit Plans                                                                      | 14 |
| Note 8 – Goodwill and Other Intangible Assets                                                        | 16 |
| Note 9 – Mortgage Servicing Rights                                                                   | 16 |
| Note 10 – Income Taxes                                                                               | 17 |
| Note 11- Certificates of Deposit                                                                           | 17 |
| Note 12 – Reclassifications                                                                          | 17 |
| Note 13 – Fair Value Disclosures                                                                     | 17 |
| Note 14 – Impact of Recently Issued Accounting Standards                                             | 21 |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Forward-Looking Statements                                                                                 | 22 |
| Critical Accounting Policies                                                                               | 23 |
| Use of Non-GAAP Financial Measures                                                                         | 23 |
| Executive Summary                                                                                          | 25 |
| Net Interest Income                                                                                        | 26 |
| Average Daily Balance Sheets                                                                               | 29 |
| Non-Interest Income                                                                                        | 30 |
| Non-Interest Expense                                                                                       | 30 |
| Income Taxes                                                                                               | 30 |
| Investments                                                                                                | 30 |
| Impaired Securities                                                                                        | 32 |
| Federal Home Loan Bank Stock                                                                               | 34 |
| Loans and Loans Held for Sale                                                                              | 34 |
| Loans                                                                                                      | 35 |
| Credit Risk Management and Allowance for Loan Losses                                                       | 36 |
| Non-Performing Loans and Troubled Debt Restructured                                                        | 40 |
| Impaired Loans                                                                                             | 42 |
| Past Due Loans                                                                                             | 42 |
| Potential Problem Loans and Loans in Process of Foreclosure                                                | 42 |
| Other Real Estate Owned                                                                                    | 43 |
| Goodwill                                                                                                   | 44 |
| Liquidity Management                                                                                       | 44 |
| Deposits                                                                                                   | 44 |
| Borrowed Funds                                                                                             | 44 |
| Shareholders’ Equity                                                                                 | 45 |
| Off-Balance-Sheet Financial Instruments and Contractual Obligations                                        | 45 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk                                  | 46 |
| Market-Risk Management                                                                                     | 46 |
| Asset/Liability Management                                                                                 | 46 |
| Interest Rate Risk Management                                                                              | 47 |
| Item 4: Controls and Procedures                                                                            | 48 |
| Part II – Other Information                                                                          | 49 |
| Item 1 – Legal Proceedings                                                                           | 49 |
| Item 1a – Risk Factors                                                                               | 49 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                 | 49 |
| Item 3 – Default Upon Senior Securities                                                              | 49 |
| Item 4 – Other Information                                                                           | 49 |
| Item 5 – Exhibits                                                                                    | 50 |
| Signatures                                                                                                 | 51 |

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| In thousands of dollars                    |   | For the nine months ended September 30, |      |   | For the quarters endedSeptember 30, |   |
|--------------------------------------------|--------|----------------------------------------------|-----------|--------|-------------------------------------|--------|
| except for per share amounts               |   | 2010                                         |      |   | 2009                                |   |   | 2010 |   |   | 2009 |   |
|                                       |   |                                         |      |   |                                |   |   |   |   |   |   |   |
| Summary of Operations                      |   |                                         |      |   |                                |   |   |   |   |   |   |   |
| Interest Income                            |   | $                                            | 42,918    |   |                                | $      | 48,093 |   |   | $ | 14,570 |   |   | $ | 15,224 |   |
| Interest Expense                           |   |                                         | 12,687    |   |                                |   | 14,768 |   |   |   | 4,317 |   |   |   | 4,409 |   |
| Net Interest Income                        |   |                                         | 30,231    |   |                                |   | 33,325 |   |   |   | 10,253 |   |   |   | 10,815 |   |
| Provision for Loan Losses                  |   |                                         | 6,300     |   |                                |   | 7,660 |   |   |   | 1,800 |   |   |   | 3,060 |   |
| Non-Interest Income                        |   |                                         | 6,524     |   |                                |   | 8,525 |   |   |   | 2,067 |   |   |   | 2,977 |   |
| Non-Interest Expense                       |   |                                         | 18,405    |   |                                |   | 19,892 |   |   |   | 6,228 |   |   |   | 6,872 |   |
| Net Income                                 |   |                                         | 9,039     |   |                                |   | 10,380 |   |   |   | 3,195 |   |   |   | 2,890 |   |
| Per Common Share Data                      |   |                                         |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings per Share                   |   | $                                            | 0.82      |   |                                | $      | 0.98 |   |   | $ | 0.29 |   |   | $ | 0.26 |   |
| Diluted Earnings per Share                 |   |                                         | 0.82      |   |                                |   | 0.98 |   |   |   | 0.29 |   |   |   | 0.26 |   |
| Cash Dividends Declared                    |   |                                         | 0.585     |   |                                |   | 0.585 |   |   |   | 0.195 |   |   |   | 0.195 |   |
| Book Value per Common Share                |   |                                         | 13.06     |   |                                |   | 12.65 |   |   |   | 13.06 |   |   |   | 12.65 |   |
| Tangible Book Value per Common Share       |   |                                         | 10.23     |   |                                |   | 9.80 |   |   |   | 10.23 |   |   |   | 9.80 |   |
| Market Value                               |   |                                         | 13.83     |   |                                |   | 18.60 |   |   |   | 13.83 |   |   |   | 18.60 |   |
| Financial Ratios                           |   |                                         |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Return on Average Equity1                  |   |                                         | 9.55      | %      |                                |   | 11.40 | % |   |   | 9.88 | % |   |   | 9.28 | % |
| Return on Average Tangible Equity1,2       |   |                                         | 12.23     | %      |                                |   | 14.76 | % |   |   | 12.60 | % |   |   | 11.96 | % |
| Return on Average Assets1                  |   |                                         | 0.90      | %      |                                |   | 1.02 | % |   |   | 0.93 | % |   |   | 0.85 | % |
| Average Equity to Average Assets           |   |                                         | 11.22     | %      |                                |   | 10.69 | % |   |   | 11.18 | % |   |   | 11.01 | % |
| Average Tangible Equity to Average Assets2 |   |                                         | 9.17      | %      |                                |   | 8.66 | % |   |   | 9.16 | % |   |   | 8.95 | % |
| Net Interest Margin Tax-Equivalent1,2      |   |                                         | 3.39      | %      |                                |   | 3.65 | % |   |   | 3.36 | % |   |   | 3.59 | % |
| Dividend Payout Ratio                      |   |                                         | 71.34     | %      |                                |   | 59.69 | % |   |   | 67.24 | % |   |   | 75.00 | % |
| Allowance for Loan Losses/Total Loans      |   |                                         | 1.55      | %      |                                |   | 1.31 | % |   |   | 1.55 | % |   |   | 1.31 | % |
| Non-Performing Loans to Total Loans        |   |                                         | 2.36      | %      |                                |   | 1.80 | % |   |   | 2.36 | % |   |   | 1.80 | % |
| Non-Performing Assets to Total Assets      |   |                                         | 1.97      | %      |                                |   | 1.58 | % |   |   | 1.97 | % |   |   | 1.58 | % |
| Efficiency Ratio2                          |   |                                         | 47.68     | %      |                                |   | 43.01 | % |   |   | 48.11 | % |   |   | 47.54 | % |
| At Period End                              |   |                                         |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                               |   | $                                            | 1,374,624 |   |                                | $      | 1,331,842 |   |   | $ | 1,374,624 |   |   | $ | 1,331,842 |   |
| Total Loans                                |   |                                         | 918,538   |   |                                |   | 973,823 |   |   |   | 918,538 |   |   |   | 973,823 |   |
| Total Investment Securities                |   |                                         | 368,859   |   |                                |   | 265,052 |   |   |   | 368,859 |   |   |   | 265,052 |   |
| Total Deposits                             |   |                                         | 986,932   |   |                                |   | 960,072 |   |   |   | 986,932 |   |   |   | 960,072 |   |
| Total Shareholders’ Equity           |   |                                         | 152,230   |   |                                |   | 147,614 |   |   |   | 152,230 |   |   |   | 147,614 |   |

----

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| In thousands of dollars                                                                                                                            |   | September 30,2010 |       |   | December 31,2009 |   |       | September 30, 2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|------------------|--------|------------|-------------------------|--------|
| Assets                                                                                                                                             |   |              |       |   |             |   |       |                    |   |
| Cash and due from banks                                                                                                                            |   | $                 | 13,880     |   |             | $      | 15,332     |                    |   | $ | 16,421 |   |
| Overnight funds sold                                                                                                                               |   |              | -          |   |             |   | -          |                    |   |   | 7,500 |   |
| Securities available for sale                                                                                                                      |   |              | 232,075    |   |             |   | 81,838     |                    |   |   | 38,575 |   |
| Securities to be held to maturity (fair value of $126,668 at September 30, 2010, $192,838 at December 31, 2009 and $216,921 at September 30, 2009) |   |              | 121,341    |   |             |   | 190,537    |                    |   |   | 211,784 |   |
| Federal Reserve Bank stock, at cost                                                                                                                |   |              | 1,412      |   |             |   | 1,412      |                    |   |   | 662 |   |
| Federal Home Loan Bank stock, at cost                                                                                                              |   |              | 14,031     |   |             |   | 14,031     |                    |   |   | 14,031 |   |
| Loans held for sale                                                                                                                                |   |              | 1,031      |   |             |   | 2,876      |                    |   |   | 2,794 |   |
| Loans                                                                                                                                              |   |              | 918,538    |   |             |   | 952,492    |                    |   |   | 973,823 |   |
| Less allowance for loan losses                                                                                                                     |   |              | 14,245     |   |             |   | 13,637     |                    |   |   | 12,800 |   |
| Net loans                                                                                                                                          |   |              | 904,293    |   |             |   | 938,855    |                    |   |   | 961,023 |   |
| Accrued interest receivable                                                                                                                        |   |              | 5,445      |   |             |   | 4,889      |                    |   |   | 5,648 |   |
| Premises and equipment                                                                                                                             |   |              | 18,458     |   |             |   | 18,331     |                    |   |   | 18,357 |   |
| Other real estate owned                                                                                                                            |   |              | 5,338      |   |             |   | 5,345      |                    |   |   | 2,995 |   |
| Goodwill                                                                                                                                           |   |              | 27,684     |   |             |   | 27,684     |                    |   |   | 27,684 |   |
| Other assets                                                                                                                                       |   |              | 29,636     |   |             |   | 30,264     |                    |   |   | 24,368 |   |
| Total assets                                                                                                                                       |   | $                 | 1,374,624  |   |             | $      | 1,331,394  |                    |   | $ | 1,331,842 |   |
| Liabilities                                                                                                                                        |   |              |       |   |             |   |       |                    |   |   |   |   |
| Demand deposits                                                                                                                                    |   | $                 | 80,695     |   |             | $      | 66,317     |                    |   | $ | 74,049 |   |
| NOW deposits                                                                                                                                       |   |              | 123,899    |   |             |   | 114,955    |                    |   |   | 112,087 |   |
| Money market deposits                                                                                                                              |   |              | 69,119     |   |             |   | 94,425     |                    |   |   | 101,352 |   |
| Savings deposits                                                                                                                                   |   |              | 102,911    |   |             |   | 90,873     |                    |   |   | 93,363 |   |
| Certificates of deposit                                                                                                                            |   |              | 610,308    |   |             |   | 556,097    |                    |   |   | 579,221 |   |
| Total deposits                                                                                                                                     |   |              | 986,932    |   |             |   | 922,667    |                    |   |   | 960,072 |   |
| Borrowed funds – short term                                                                                                                  |   |              | 92,500     |   |             |   | 149,601    |                    |   |   | 82,882 |   |
| Borrowed funds – long term                                                                                                                   |   |              | 130,172    |   |             |   | 100,177    |                    |   |   | 130,179 |   |
| Other liabilities                                                                                                                                  |   |              | 12,790     |   |             |   | 11,011     |                    |   |   | 11,095 |   |
| Total Liabilities                                                                                                                                  |   |              | 1,222,394  |   |             |   | 1,183,456  |                    |   |   | 1,184,228 |   |
| Shareholders' equity                                                                                                                               |   |              |       |   |             |   |       |                    |   |   |   |   |
| Preferred stock                                                                                                                                    |   |              | 24,680     |   |             |   | 24,606     |                    |   |   | 24,582 |   |
| Common stock                                                                                                                                       |   |              | 98         |   |             |   | 97         |                    |   |   | 97 |   |
| Additional paid-in capital                                                                                                                         |   |              | 45,385     |   |             |   | 45,121     |                    |   |   | 45,003 |   |
| Retained earnings                                                                                                                                  |   |              | 80,843     |   |             |   | 78,450     |                    |   |   | 78,000 |   |
| Net unrealized gain/(loss) on securities available-for-sale                                                                                        |   |              | 1,421      |   |             |   | (125       | )                       |   |   | 189 |   |
| Net unrealized loss on postretirement benefit costs                                                                                                |   |              | (197       | )      |             |   | (211       | )                       |   |   | (257 | ) |
| Total shareholders' equity                                                                                                                         |   |              | 152,230    |   |             |   | 147,938    |                    |   |   | 147,614 |   |
| Total liabilities & shareholders' equity                                                                                                       |   | $                 | 1,374,624  |   |             | $      | 1,331,394  |                    |   | $ | 1,331,842 |   |
| Common Stock                                                                                                                                       |   |              |       |   |             |   |       |                    |   |   |   |   |
| Number of shares authorized                                                                                                                        |   |              | 18,000,000 |   |             |   | 18,000,000 |                    |   |   | 18,000,000 |   |
| Number of shares issued and outstanding                                                                                                            |   |              | 9,765,631  |   |             |   | 9,744,170  |                    |   |   | 9,725,405 |   |
| Book value per common share                                                                                                                        |   | $                 | 13.06      |   |             | $      | 12.66      |                    |   | $ | 12.65 |   |

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|                                                          |   | For the nine months ended September 30, |      |   | For the quarters ended September 30, |   |
|---------------------------------------------------------------|--------|-----------------------------------------|-----------|--------|--------------------------------------|--------|
| In thousands of dollars                                       |   | 2010                                    |      |   | 2009                                 |   |   | 2010 |   |   | 2009 |   |
| Interest income                                               |   |                                    |      |   |                                 |   |   |   |   |   |   |   |
| Interest and fees on loans                                    |   | $                                       | 33,342    |   |                                 | $      | 37,704 |   |   | $ | 11,136 |   |   | $ | 12,171 |   |
| Interest on deposits with other banks                         |   |                                    | 5         |   |                                 |   | 1 |   |   |   | 3 |   |   |   | 1 |   |
| Interest and dividends on investments                         |   |                                    | 9,571     |   |                                 |   | 10,388 |   |   |   | 3,431 |   |   |   | 3,052 |   |
|      Total interest income           |   |                                    | 42,918    |   |                                 |   | 48,093 |   |   |   | 14,570 |   |   |   | 15,224 |   |
| Interest expense                                              |   |                                    |      |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                          |   |                                    | 7,699     |   |                                 |   | 9,403 |   |   |   | 2,648 |   |   |   | 2,709 |   |
| Interest on borrowed funds                                    |   |                                    | 4,988     |   |                                 |   | 5,365 |   |   |   | 1,669 |   |   |   | 1,700 |   |
|      Total interest expense          |   |                                    | 12,687    |   |                                 |   | 14,768 |   |   |   | 4,317 |   |   |   | 4,409 |   |
| Net interest income                                           |   |                                    | 30,231    |   |                                 |   | 33,325 |   |   |   | 10,253 |   |   |   | 10,815 |   |
| Provision for loan losses                                     |   |                                    | 6,300     |   |                                 |   | 7,660 |   |   |   | 1,800 |   |   |   | 3,060 |   |
| Net interest income after provision for loan losses           |   |                                    | 23,931    |   |                                 |   | 25,665 |   |   |   | 8,453 |   |   |   | 7,755 |   |
| Non-interest income                                           |   |                                    |      |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Investment management and fiduciary income                    |   |                                    | 1,116     |   |                                 |   | 998 |   |   |   | 329 |   |   |   | 320 |   |
| Service charges on deposit accounts                           |   |                                    | 2,194     |   |                                 |   | 1,754 |   |   |   | 689 |   |   |   | 596 |   |
| Net securities gains                                          |   |                                    | 2         |   |                                 |   | - |   |   |   | - |   |   |   | 1 |   |
| Mortgage origination and servicing income                     |   |                                    | 906       |   |                                 |   | 1,913 |   |   |   | 293 |   |   |   | 370 |   |
| Other operating income                                        |   |                                    | 2,306     |   |                                 |   | 3,860 |   |   |   | 756 |   |   |   | 1,690 |   |
|      Total non-interest income       |   |                                    | 6,524     |   |                                 |   | 8,525 |   |   |   | 2,067 |   |   |   | 2,977 |   |
| Non-interest expense                                          |   |                                    |      |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                |   |                                    | 8,662     |   |                                 |   | 7,994 |   |   |   | 3,109 |   |   |   | 2,842 |   |
| Occupancy expense                                             |   |                                    | 1,129     |   |                                 |   | 1,182 |   |   |   | 353 |   |   |   | 348 |   |
| Furniture and equipment expense                               |   |                                    | 1,671     |   |                                 |   | 1,700 |   |   |   | 550 |   |   |   | 562 |   |
| FDIC insurance premiums                                       |   |                                    | 1,428     |   |                                 |   | 1,276 |   |   |   | 476 |   |   |   | 315 |   |
| Net securities losses                                         |   |                                    | -         |   |                                 |   | 147 |   |   |   | - |   |   |   | - |   |
| Other than temporary impairment charge                        |   |                                    | -         |   |                                 |   | 916 |   |   |   | - |   |   |   | - |   |
| Amortization of identified intangibles                        |   |                                    | 213       |   |                                 |   | 213 |   |   |   | 71 |   |   |   | 71 |   |
| Other operating expense                                       |   |                                    | 5,302     |   |                                 |   | 6,464 |   |   |   | 1,669 |   |   |   | 2,734 |   |
|      Total non-interest expense      |   |                                    | 18,405    |   |                                 |   | 19,892 |   |   |   | 6,228 |   |   |   | 6,872 |   |
| Income before income taxes                                    |   |                                    | 12,050    |   |                                 |   | 14,298 |   |   |   | 4,292 |   |   |   | 3,860 |   |
| Applicable income taxes                                       |   |                                    | 3,011     |   |                                 |   | 3,918 |   |   |   | 1,097 |   |   |   | 970 |   |
| NET INCOME                                                    |   | $                                       | 9,039     |   |                                 | $      | 10,380 |   |   | $ | 3,195 |   |   | $ | 2,890 |   |
| Less dividends and amortization of premium on preferred stock |   |                                    | 1,011     |   |                                 |   | 824 |   |   |   | 337 |   |   |   | 337 |   |
| Net income available to common shareholders                   |   | $                                       | 8,028     |   |                                 | $      | 9,556 |   |   | $ | 2,858 |   |   | $ | 2,553 |   |
| Basic earnings per common share                               |   | $                                       | 0.82      |   |                                 | $      | 0.98 |   |   | $ | 0.29 |   |   | $ | 0.26 |   |
| Diluted earnings per common share                             |   | $                                       | 0.82      |   |                                 | $      | 0.98 |   |   | $ | 0.29 |   |   | $ | 0.26 |   |
| Weighted average number of shares outstanding                 |   |                                    | 9,757,074 |   |                                 |   | 9,716,129 |   |   |   | 9,764,184 |   |   |   | 9,723,757 |   |
| Incremental shares                                            |   |                                    | 4,707     |   |                                 |   | 26,808 |   |   |   | 4,062 |   |   |   | 52,629 |   |
| Cash dividends declared per share                             |   | $                                       | 0.585     |   |                                 | $      | 0.585 |   |   | $ | 0.195 |   |   | $ | 0.195 |   |

----

|                                                                               |   |      |   |   |                       |   |      |     |   |   |          |   |   | Accumulated   |   |   |   |   |
|------------------------------------------------------------------------------------|--------|-----------|--------|--------|----------------------------|--------|-----------|----------|--------|--------|---------------|--------|--------|---------------|--------|--------|--------|--------|
|                                                                               |   |      |   |   | Common stock and           |   |      |     |   |   | other         |   |   | Total         |   |
| In thousands of dollars except                                                     |   | Preferred |   |   | additional paid-in capital |   |      | Retained |   |   | comprehensive |   |   | shareholders' |   |
| number of shares                                                                   |   | stock     |   |   | Shares                     |   |      | Amount   |   |   | earnings      |   |   | income (loss) |   |   | equity |   |
| Balance at December 31, 2008                                                       |   | $         | -      |   |                       |   | 9,696,397 |     |   |   | 44,214        |   |   |          | 74,057 |   |   |   | (1,090 | ) |   |   | 117,181 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | 10,380 |   |   |   | - |   |   |   | 10,380 |   |
| Net unrealized gain on securities available for sale, net of taxes of $543         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | -      |   |   |   | 1,008 |   |   |   | 1,008 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $7 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | -      |   |   |   | 14 |   |   |   | 14 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | 10,380 |   |   |   | 1,022 |   |   |   | 11,402 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | (6,437 | )      |   |   | - |   |   |   | (6,437 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 28            |   |   |          | -      |   |   |   | - |   |   |   | 28 |   |
| Proceeds from sale of preferred stock                                              |   |      | 25,000 |   |                       |   | -         |     |   |   | -             |   |   |          | -      |   |   |   | - |   |   |   | 25,000 |   |
| Premium on issuance of preferred stock                                             |   |      | (493   | )      |                       |   | -         |     |   |   | 493           |   |   |          | -      |   |   |   | - |   |   |   | - |   |
| Amortization of premium for preferred stock issuance                               |   |      | 75     |   |                       |   | -         |     |   |   | (75           | )      |   |          | -      |   |   |   | - |   |   |   | - |   |
| Payment to repurchase common stock                                                 |   |      | -      |   |                       |   | (7,685    | )        |   |   | (138          | )      |   |          | -      |   |   |   | - |   |   |   | (138 | ) |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 36,693    |     |   |   | 578           |   |   |          | -      |   |   |   | - |   |   |   | 578 |   |
| Balance at September 30, 2009                                                      |   | $         | 24,582 |   |                       |   | 9,725,405 |     |   |   | 45,100        |   |   |          | 78,000 |   |   |   | (68 | ) |   |   | 147,614 |   |
|                                                                               |   |      |   |   |                       |   |      |     |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                       |   | $         | 24,606 |   |                       |   | 9,744,170 |     |   |   | 45,218        |   |   |          | 78,450 |   |   |   | (336 | ) |   |   | 147,938 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | 9,039  |   |   |   | - |   |   |   | 9,039 |   |
| Net unrealized gain on securities available for sale, net of taxes of $461         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | -      |   |   |   | 1,546 |   |   |   | 1,546 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $4 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | -      |   |   |   | 14 |   |   |   | 14 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | 9,039  |   |   |   | 1,560 |   |   |   | 10,599 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |          | (6,646 | )      |   |   | - |   |   |   | (6,646 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 28            |   |   |          | -      |   |   |   | - |   |   |   | 28 |   |
| Amortization of premium for preferred stock issuance                               |   |      | 74     |   |                       |   | -         |     |   |   | (74           | )      |   |          | -      |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 21,461    |     |   |   | 311           |   |   |          | -      |   |   |   | - |   |   |   | 311 |   |
| Balance at September 30, 2010                                                      |   | $         | 24,680 |   |                       |   | 9,765,631 |     |   |   | 45,483        |   |   |          | 80,843 |   |   |   | 1,224 |   |   |   | 152,230 |   |

----

|                                                                              |   | For the nine months ended |     |
|-----------------------------------------------------------------------------------|--------|---------------------------|----------|
| In thousands of dollars                                                           |   | Sept 30, 2010             |     |   | Sept 30, 2009 |   |
| Cash flows from operating activities                                              |   |                      |     |   |   |   |
|      Net income                                          |   | $                         | 9,039    |   |   | $ | 10,380 |   |
| Adjustments to reconcile net income to net cash provided by operating activities  |   |                      |     |   |   |
| Depreciation                                                                      |   |                      | 1,062    |   |   |   | 1,112 |   |
| Change in deferred taxes                                                          |   |                      | 949      |   |   |   | (565 | ) |
| Provision for loan losses                                                         |   |                      | 6,300    |   |   |   | 7,660 |   |
| Loans originated for resale                                                       |   |                      | (39,369  | ) |   |   | (98,868 | ) |
| Proceeds from sales and transfers of loans                                        |   |                      | 41,214   |   |   |   | 97,372 |   |
| Net (gain) loss on sale or call of securities held-to-maturity                    |   |                      | (2       | ) |   |   | 147 |   |
| Write-down of securities available for sale                                       |   |                      | -        |   |   |   | 916 |   |
| Net loss on sale of other real estate owned                                       |   |                      | 31       |   |   |   | - |   |
| Provision for losses on other real estate owned                                   |   |                      | 310      |   |   |   | 412 |   |
| Equity compensation expense                                                       |   |                      | 28       |   |   |   | 28 |   |
| Net increase in other assets and accrued interest                                 |   |                      | (640     | ) |   |   | (618 | ) |
| Net increase (decrease) in other liabilities                                      |   |                      | 287      |   |   |   | (720 | ) |
| Net accretion (amortization) of premiums on investments                           |   |                      | 181      |   |   |   | (2,359 | ) |
| Amortization of investment in limited partnership                                 |   |                      | 225      |   |   |   | - |   |
| Net acquisition amortization                                                      |   |                      | 173      |   |   |   | 126 |   |
| Net loss on disposal of assets                                                    |   |                      | -        |   |   |   | 3 |   |
|      Net cash provided by operating activities           |   |                      | 19,788   |   |   |   | 15,026 |   |
| Cash flows from investing activities                                              |   |                      |     |   |   |   |   |   |
| Sale of overnight funds                                                           |   |                      | -        |   |   |   | (7,500 | ) |
| Proceeds from maturities, payments and calls of securities available for sale     |   |                      | 77,239   |   |   |   | 6,128 |   |
| Proceeds from sales of securities available for sale                              |   |                      | 202      |   |   |   | 2,914 |   |
| Proceeds from maturities, payments and calls of securities to be held to maturity |   |                      | 70,522   |   |   |   | 162,389 |   |
| Proceeds from sales of other real estate owned                                    |   |                      | 2,593    |   |   |   | 568 |   |
| Purchases of securities available for sale                                        |   |                      | (226,805 | ) |   |   | (32,917 | ) |
| Purchases of securities to be held to maturity                                    |   |                      | -        |   |   |   | (138,187 | ) |
| Net increase in loans                                                             |   |                      | 25,334   |   |   |   | 243 |   |
| Capital expenditures                                                              |   |                      | (1,188   | ) |   |   | (3,444 | ) |
|      Net cash used in investing activities               |   |                      | (52,103  | ) |   |   | (9,806 | ) |
| Cash flows from financing activities                                              |   |                      |     |   |   |   |   |   |
| Net increase (decrease) in demand, savings, and money market accounts             |   |                      | 10,054   |   |   |   | (7,936 | ) |
| Net increase in certificates of deposit                                           |   |                      | 54,243   |   |   |   | 42,281 |   |
| Advances on long-term borrowings                                                  |   |                      | 10,000   |   |   |   | - |   |
| Repayment on long-term borrowings                                                 |   |                      | -        |   |   |   | (27,000 | ) |
| Net decrease in short-term borrowings                                             |   |                      | (37,099  | ) |   |   | (32,006 | ) |
| Proceeds from issuance of preferred stock                                         |   |                      | -        |   |   |   | 25,000 |   |
| Payments to repurchase common stock                                               |   |                      | -        |   |   |   | (138 | ) |
| Proceeds from sale of common stock                                                |   |                      | 311      |   |   |   | 578 |   |
| Dividends paid                                                                    |   |                      | (6,646   | ) |   |   | (6,434 | ) |
|      Net cash provided (used) by financing activities    |   |                      | 30,863   |   |   |   | (5,655 | ) |
| Net decrease in cash and cash equivalents                                         |   |                      | (1,452   | ) |   |   | (435 | ) |
| Cash and cash equivalents at beginning of year                                    |   |                      | 15,332   |   |   |   | 16,856 |   |
|      Cash and cash equivalents at end of period          |   | $                         | 13,880   |   |   | $ | 16,421 |   |
| Interest paid                                                                     |   | $                         | 12,856   |   |   | $ | 15,195 |   |
| Income taxes paid                                                                 |   | $                         | 2,130    |   |   | $ | 4,634 |   |
| Non-cash transactions                                                             |   |                      |     |   |   |   |   |   |
| Change in net unrealized gain on available for sale securities, net of tax        |   | $                         | (1,546   | ) |   | $ | (1,008 | ) |
| Net transfer from loans to other real estate owned                                |   | $                         | 2,927    |   |   | $ | 1,547 |   |

----

|                               |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair Value  |   |
|------------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
| In thousands of dollars            |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | (Estimated) |   |
| Securities available for sale:     |   |      |    |   |       |   |   |       |   |   |        |   |
| U.S. Treasury and agency           |   | $         | 18,892  |   |       | $      | 1,422  |       |   | $      | -           |   |   | $ | 20,314 |   |
| Mortgage-backed securities         |   |      | 175,184 |   |       |   | 1,118  |       |   |   | (1,505      | )      |   |   | 174,797 |   |
| State and political subdivisions   |   |      | 34,327  |   |       |   | 1,405  |       |   |   | -           |   |   |   | 35,732 |   |
| Corporate securities               |   |      | 1,114   |   |       |   | -      |       |   |   | (267        | )      |   |   | 847 |   |
| Other equity securities            |   |      | 371     |   |       |   | 19     |       |   |   | (5          | )      |   |   | 385 |   |
|                               |   | $         | 229,888 |   |       | $      | 3,964  |       |   | $      | (1,777      | )      |   | $ | 232,075 |   |
| Securities to be held to maturity: |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency           |   | $         | 8,091   |   |       | $      | 48     |       |   | $      | (8          | )      |   | $ | 8,131 |   |
| Mortgage-backed securities         |   |      | 62,328  |   |       |   | 2,621  |       |   |   | (109        | )      |   |   | 64,840 |   |
| State and political subdivisions   |   |      | 50,772  |   |       |   | 2,960  |       |   |   | (185        | )      |   |   | 53,547 |   |
| Corporate securities               |   |      | 150     |   |       |   | -      |       |   |   | -           |   |   |   | 150 |   |
|                               |   | $         | 121,341 |   |       | $      | 5,629  |       |   | $      | (302        | )      |   | $ | 126,668 |   |
| Non-marketable securities:         |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| Federal Home Loan Bank Stock       |   |      | 14,031  |   |       |   | -      |       |   |   | -           |   |   |   | 14,031 |   |
| Federal Reserve Bank Stock         |   |      | 1,412   |   |       |   | -      |       |   |   | -           |   |   |   | 1,412 |   |
|                               |   | $         | 15,443  |   |       | $      | -      |       |   | $      | -           |   |   | $ | 15,443 |   |

----

|                              |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair Value  |   |
|-----------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
|  In thousands of dollars     |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | (Estimated) |   |
| Securities available for sale     |   |      |    |   |       |   |   |       |   |   |        |   |
| U.S. Treasury and agency          |   | $         | 31,022  |   |       | $      | 90     |       |   | $      | (153        | )      |   | $ | 30,959 |   |
| Mortgage-backed securities        |   |      | 31,254  |   |       |   | 133    |       |   |   | (239        | )      |   |   | 31,148 |   |
| State and political subdivisions  |   |      | 18,219  |   |       |   | 414    |       |   |   | (119        | )      |   |   | 18,514 |   |
| Corporate securities              |   |      | 1,120   |   |       |   | -      |       |   |   | (302        | )      |   |   | 818 |   |
| Other equity securities           |   |      | 414     |   |       |   | 6      |       |   |   | (21         | )      |   |   | 399 |   |
|                              |   | $         | 82,029  |   |       | $      | 643    |       |   | $      | (834        | )      |   | $ | 81,838 |   |
| Securities to be held to maturity |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency          |   | $         | 39,099  |   |       | $      | 142    |       |   | $      | (554        | )      |   | $ | 38,687 |   |
| Mortgage-backed securities        |   |      | 90,193  |   |       |   | 1,839  |       |   |   | (363        | )      |   |   | 91,669 |   |
| State and political subdivisions  |   |      | 61,095  |   |       |   | 1,603  |       |   |   | (366        | )      |   |   | 62,332 |   |
| Corporate securities              |   |      | 150     |   |       |   | -      |       |   |   | -           |   |   |   | 150 |   |
|                              |   | $         | 190,537 |   |       | $      | 3,584  |       |   | $      | (1,283      | )      |   | $ | 192,838 |   |
| Non-marketable securities:        |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| Federal Home Loan Bank Stock      |   |      | 14,031  |   |       |   | -      |       |   |   | -           |   |   |   | 14,031 |   |
| Federal Reserve Bank Stock        |   |      | 1,412   |   |       |   | -      |       |   |   | -           |   |   |   | 1,412 |   |
| Total                             |   | $         | 15,443  |   |       | $      | -      |       |   | $      | -           |   |   | $ | 15,443 |   |

|                    |   | Securities available for sale |    |   | Securities to be held to maturity |   |
|-------------------------|--------|-------------------------------|---------|--------|-----------------------------------|--------|
| In thousands of dollars |   | AmortizedCost                 |    |   | Fair Value (Estimated)            |   |   | AmortizedCost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less   |   | $                             | -       |   |                              | $      | - |   |   | $ | 1,197 |   |   | $ | 1,210 |   |
| Due in 1 to 5 years     |   |                          | 2,948   |   |                              |   | 3,140 |   |   |   | 5,838 |   |   |   | 6,189 |   |
| Due in 5 to 10 years    |   |                          | 2,387   |   |                              |   | 2,440 |   |   |   | 15,161 |   |   |   | 16,184 |   |
| Due after 10 years      |   |                          | 224,182 |   |                              |   | 226,110 |   |   |   | 99,145 |   |   |   | 103,085 |   |
| Equity securities       |   |                          | 371     |   |                              |   | 385 |   |   |   | - |   |   |   | - |   |
|                    |   | $                             | 229,888 |   |                              | $      | 232,075 |   |   | $ | 121,341 |   |   | $ | 126,668 |   |

|                    |   | Securities available for sale |   |   | Securities to be held to maturity |   |
|-------------------------|--------|-------------------------------|--------|--------|-----------------------------------|--------|
| In thousands of dollars |   | AmortizedCost                 |   |   | Fair Value (Estimated)            |   |   | AmortizedCost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less   |   | $                             | -      |   |                              | $      | - |   |   | $ | 330 |   |   | $ | 335 |   |
| Due in 1 to 5 years     |   |                          | 18,144 |   |                              |   | 18,381 |   |   |   | 7,934 |   |   |   | 8,245 |   |
| Due in 5 to 10 years    |   |                          | 3,671  |   |                              |   | 3,783 |   |   |   | 15,020 |   |   |   | 15,591 |   |
| Due after 10 years      |   |                          | 59,800 |   |                              |   | 59,275 |   |   |   | 167,253 |   |   |   | 168,667 |   |
| Equity securities       |   |                          | 414    |   |                              |   | 399 |   |   |   | - |   |   |   | - |   |
|                    |   | $                             | 82,029 |   |                              | $      | 81,838 |   |   | $ | 190,537 |   |   | $ | 192,838 |   |

----

| In thousands of dollars  |   | For the nine months endedSeptember 30, 2010 |   |   | For the nine months endedSeptember 30, 2009 |   |
|-------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------------|--------|
| Proceeds from sales           |   | $                                           | 202    |   |                                        | $      | 2,914 |   |
| Gross gains                   |   | $                                           | 2      |   |                                        | $      | 9 |   |
| Gross losses                  |   |                                        | -      |   |                                        |   | (156 | ) |
| Net gain/(loss)               |   | $                                           | 2      |   |                                        | $      | (147 | ) |
| Related income taxes          |   | $                                           | 1      |   |                                        | $      | (55 | ) |

|                             |   | Less than 12 months |    |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |    |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| In thousands of dollars          |   | Value               |    |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 5,924   |   |              | $      | (8     | )      |   | $ | - |   |   | $ | - |   |   | $ | 5,924 |   |   | $ | (8 | ) |
| Mortgage-backed securities       |   |                | 136,212 |   |              |   | (1,594 | )      |   |   | 1,028 |   |   |   | (20 | ) |   |   | 137,240 |   |   |   | (1,614 | ) |
| State and political subdivisions |   |                | 312     |   |              |   | (3     | )      |   |   | 1,561 |   |   |   | (182 | ) |   |   | 1,873 |   |   |   | (185 | ) |
| Corporate securities             |   |                | -       |   |              |   | -      |   |   |   | 848 |   |   |   | (267 | ) |   |   | 848 |   |   |   | (267 | ) |
| Other equity securities          |   |                | -       |   |              |   | -      |   |   |   | 48 |   |   |   | (5 | ) |   |   | 48 |   |   |   | (5 | ) |
|                             |   | $                   | 142,448 |   |              | $      | (1,605 | )      |   | $ | 3,485 |   |   | $ | (474 | ) |   | $ | 145,933 |   |   | $ | (2,079 | ) |

|                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|  In thousands of dollars    |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 19,999 |   |              | $      | (707   | )      |   | $ | - |   |   | $ | - |   |   | $ | 19,999 |   |   | $ | (707 | ) |
| Mortgage-backed securities       |   |                | 47,509 |   |              |   | (602   | )      |   |   | - |   |   |   | - |   |   |   | 47,509 |   |   |   | (602 | ) |
| State and political subdivisions |   |                | 9,396  |   |              |   | (147   | )      |   |   | 1,350 |   |   |   | (338 | ) |   |   | 10,746 |   |   |   | (485 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 818 |   |   |   | (302 | ) |   |   | 818 |   |   |   | (302 | ) |
| Other equity securities          |   |                | -      |   |              |   | -      |   |   |   | 44 |   |   |   | (21 | ) |   |   | 44 |   |   |   | (21 | ) |
|                             |   | $                   | 76,904 |   |              | $      | (1,456 | )      |   | $ | 2,212 |   |   | $ | (661 | ) |   | $ | 79,116 |   |   | $ | (2,117 | ) |

----

| In thousands of dollars        |   | September 30, 2010 |    |   | December 31, 2009 |   |   | September 30, 2009 |   |
|--------------------------------|--------|--------------------|---------|--------|-------------------|--------|--------|--------------------|--------|
| Commercial                     |   |               |    |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $                  | 251,767 |   |              |   | 27.4   | %                  |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 236,807 |   |   |   | 24.3 | % |
|    Construction |   |               | 40,304  |   |              |   | 4.4    | %                  |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 50,601 |   |   |   | 5.2 | % |
|    Other        |   |               | 106,993 |   |              |   | 11.6   | %                  |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 118,151 |   |   |   | 12.1 | % |
| Municipal                      |   |               | 25,737  |   |              |   | 2.8    | %                  |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 55,889 |   |   |   | 5.7 | % |
| Residential                    |   |               |    |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |               | 352,872 |   |              |   | 38.4   | %                  |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 381,718 |   |   |   | 39.3 | % |
|    Construction |   |               | 18,380  |   |              |   | 2.0    | %                  |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 17,056 |   |   |   | 1.8 | % |
| Home equity line of credit     |   |               | 104,434 |   |              |   | 11.4   | %                  |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 88,830 |   |   |   | 9.1 | % |
| Consumer                       |   |               | 18,051  |   |              |   | 2.0    | %                  |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 24,771 |   |   |   | 2.5 | % |
| Total loans                    |   | $                  | 918,538 |   |              |   | 100.0  | %                  |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 973,823 |   |   |   | 100.0 | % |

----

| In thousands of dollars                 |   | September 30, 2010 |   |   | September 30, 2009 |   |
|-----------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| Balance at beginning of year            |   | $                  | 13,637 |   |               | $      | 8,800 |   |
| Provision charged to operating expenses |   |               | 6,300  |   |               |   | 7,660 |   |
|                                    |   |               | 19,937 |   |               |   | 16,460 |   |
| Loans charged off                       |   |               | (5,916 | )      |               |   | (3,817 | ) |
| Recoveries on loans                     |   |               | 224    |   |               |   | 157 |   |
|   Net loans charged off       |   |               | (5,692 | )      |               |   | (3,660 | ) |
| Balance at end of period                |   | $                  | 14,245 |   |               | $      | 12,800 |   |

| In thousands of dollars                                                              |   | September 30,2010 |    |   | December 31,2009 |   |    | September 30,2009 |   |
|--------------------------------------------------------------------------------------|--------|-------------------|---------|--------|------------------|--------|---------|-------------------|--------|
| Balance of impaired loans                                                            |   | $                 | 25,375  |   |             | $      | 25,843  |              |   | $ | 17,571 |   |
| Less portion for which no allowance for loan losses is allocated                     |   |              | (16,174 | )      |             |   | (13,682 | )                 |   |   | (8,081 | ) |
| Portion of impaired loan balance for which an allowance for loan losses is allocated |   |              | 9,201   |   |             |   | 12,161  |              |   |   | 9,490 |   |
| Portion of allowance for loan losses allocated to the impaired loan balance          |   | $                 | 1,073   |   |             | $      | 2,196   |              |   | $ | 2,810 |   |

----

|                             |   | Number of Shares |    |   | Weighted AverageGrant Date Fair Value |   |
|----------------------------------|--------|------------------|---------|--------|---------------------------------------|--------|
| Non-vested at December 31, 2009  |   |             | 21,000  |   |                                  | $      | 4.41 |   |
|   Granted in 2010      |   |             | -       |   |                                  |   | - |   |
|   Vested in 2010       |   |             | (21,000 | )      |                                  |   | 4.41 |   |
|   Forfeited in 2010    |   |             | -       |   |                                  |   | - |   |
| Non-vested at September 30, 2010 |   |             | -       |   |                                  | $      | - |   |

|                                            |   | Number of Shares |   |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Term (In years) |   |   | Aggregate Intrinsic Value(In thousands) |   |
|-------------------------------------------------|--------|------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|-----------------------------------------|--------|
| Outstanding at December 31, 2009                |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   |                                    |   |   |   |
|      Granted in 2010   |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
|      Exercised in 2010 |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
|      Forfeited in 2010 |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
| Outstanding at September 30, 2010               |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   | 3.8                                     |   |   | $ | 51 |   |
| Exercisable at September 30, 2010               |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   | 3.8                                     |   |   | $ | 51 |   |

----

|                                                                          |   | Income      |   |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|-----------|-----------|--------|
| In thousands, except number of shares and per share data                      |   | (Numerator) |   |   | (Denominator) |   |      | Amount    |   |
| For the nine months ended September 30, 2010                                  |   |        |   |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 9,039  |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 1,011  |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 8,028  |   |          |   | 9,757,074 |      |   | $ | 0.82 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 4,707     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 8,028  |   |          |   | 9,761,781 |      |   | $ | 0.82 |   |
| For the nine months ended September 30, 2009                                  |   |        |   |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 10,380 |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 824    |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 9,556  |   |          |   | 9,716,129 |      |   | $ | 0.98 |   |
| Effect of dilutive securities: incentive stock options and warrants           |   |        |   |   |          |   | 26,808    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 9,556  |   |          |   | 9,742,937 |      |   | $ | 0.98 |   |

----

|                                                                          |   | Income      |   |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|-----------|-----------|--------|
| In thousands, except number of shares and per share data                      |   | (Numerator) |   |   | (Denominator) |   |      | Amount    |   |
| For the quarter ended September 30, 2010                                      |   |        |   |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 3,195  |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337    |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,858  |   |          |   | 9,764,184 |      |   | $ | 0.29 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 4,062     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 2,858  |   |          |   | 9,768,246 |      |   | $ | 0.29 |   |
| For the quarter ended September 30, 2009                                      |   |        |   |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 2,890  |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337    |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,553  |   |          |   | 9,723,757 |      |   | $ | 0.26 |   |
| Effect of dilutive securities: incentive stock options and warrants           |   |        |   |   |          |   | 52,629    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 2,553  |   |          |   | 9,776,386 |      |   | $ | 0.26 |   |

|                             |  Outstanding |  In-the-Money |  Out-of-the-Money |
|----------------------------------|-------------------|--------------------|------------------------|
| As of September 30, 2010         |              |               |                   |
| Incentive stock options          | 55,500            | 13,500             | 42,000                 |
| Warrants issued to U.S. Treasury | 225,904           | -                  | 225,904                |
| Total dilutive securities        | 281,404           | 13,500             | 267,904                |
| As of September 30, 2009         |              |               |                   |
| Incentive stock options          | 73,500            | 73,500             | -                      |
| Warrants issued to U.S. Treasury | 225,904           | 225,904            | -                      |
| Total dilutive securities        | 299,404           | 299,404            | -                      |

----

|                                    |   | For the nine months ended September 30, |   |
|-----------------------------------------|--------|----------------------------------------------|--------|
| In thousands of dollars                 |   | 2010                                         |   |   | 2009 |   |
| Change in benefit obligation            |   |                                         |   |   |   |   |
| Benefit obligation at beginning of year |   | $                                            | 1,962  |   |   | $ | 1,990 |   |
| Service cost                            |   |                                         | 16     |   |   |   | 15 |   |
| Interest cost                           |   |                                         | 101    |   |   |   | 101 |   |
| Benefits paid                           |   |                                         | (111   | ) |   |   | (117 | ) |
| Benefit obligation at end of period     |   |                                         | 1,968  |   |   |   | 1,989 |   |
| Funded status                           |   |                                         |   |   |   |   |   |   |
| Benefit obligation at end of period     |   |                                         | (1,968 | ) |   |   | (1,989 | ) |
| Accrued benefit cost at end of period   |   | $                                            | (1,968 | ) |   | $ | (1,989 | ) |

|                                               |   | For nine months endedSeptember 30, |   |   | For three months endedSeptember 30, |   |
|----------------------------------------------------|--------|------------------------------------|--------|--------|-------------------------------------|--------|
|  In thousands of dollars                      |   | 2010                               |   |   | 2009                                |   |   | 2010 |   |   | 2009 |   |
| Components of net periodic benefit cost            |   |                               |   |   |                                |   |   |   |   |   |   |   |
| Service cost                                       |   | $                                  | 16     |   |                                | $      | 15 |   |   | $ | 5 |   |   | $ | 7 |   |
| Interest cost                                      |   |                               | 101    |   |                                |   | 101 |   |   |   | 34 |   |   |   | 33 |   |
| Amortization of unrecognized transition obligation |   |                               | 21     |   |                                |   | 21 |   |   |   | 7 |   |   |   | 7 |   |
| Amortization of prior service credit               |   |                               | (1     | )      |                                |   | (2 | ) |   |   | - |   |   |   | - |   |
| Amortization of accumulated losses                 |   |                               | 18     |   |                                |   | 15 |   |   |   | 6 |   |   |   | 5 |   |
| Net periodic benefit cost                          |   | $                                  | 155    |   |                                | $      | 150 |   |   | $ | 52 |   |   | $ | 52 |   |

----

| In thousands of dollars                                                                            |   | September 30,2010 |   |   | December 31,2009 |   |   | September 30,2009 |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|--------|-------------------|--------|
| Unamortized net actuarial loss                                                                     |   | $                 | (233   | )      |             | $      | (233   | )                 |   | $ | (295 | ) |
| Unrecognized transition obligation                                                                 |   |              | (70    | )      |             |   | (92    | )                 |   |   | (100 | ) |
|                                                                                               |   |              | (303   | )      |             |   | (325   | )                 |   |   | (395 | ) |
| Deferred tax benefit at 35%                                                                        |   |              | 106    |   |             |   | 114    |              |   |   | 138 |   |
| Net unrecognized postretirement benefits included in accumulated other comprehensive income (loss) |   | $                 | (197   | )      |             | $      | (211   | )                 |   | $ | (257 | ) |

| In thousands of dollars   |   | September 30,2010 |   |   | December 31, 2009 |   |   | September 30, 2009 |   |
|---------------------------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------------|--------|
| Mortgage servicing rights |   | $                 | 5,467  |   |              | $      | 5,086  |                    |   | $ | 4,911 |   |
| Accumulated amortization  |   |              | (4,128 | )      |              |   | (3,814 | )                       |   |   | (3,715 | ) |
| Impairment reserve        |   |              | (216   | )      |              |   | (73    | )                       |   |   | (71 | ) |
|                      |   | $                 | 1,123  |   |              | $      | 1,199  |                    |   | $ | 1,125 |   |

----

| In thousands of dollars               |   | September 30, 2010 |    |   | December 31, 2009 |   |    | September 30, 2009 |   |
|---------------------------------------|--------|--------------------|---------|--------|-------------------|--------|---------|--------------------|--------|
| Certificates of deposit < $100,000 |   | $                  | 243,977 |   |              | $      | 212,893 |               |   | $ | 228,835 |   |
| Certificates $100,000 to $250,000     |   |               | 326,515 |   |              |   | 287,051 |               |   |   | 284,143 |   |
| Certificates $250,000 and over        |   |               | 39,816  |   |              |   | 56,153  |               |   |   | 66,243 |   |
|                                  |   | $                  | 610,308 |   |              | $      | 556,097 |               |   | $ | 579,221 |   |

----

|                                               |   | At September 30, 2010 |   |
|----------------------------------------------------|--------|-----------------------|--------|
| In thousands of dollars                            |   | Level 1               |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |                  |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                     | -      |   |   | $ | 20,314 |   |   | $ | - |   |   | $ | 20,314 |   |
|    Mortgage-backed securities       |   |                  | -      |   |   |   | 174,797 |   |   |   | - |   |   |   | 174,797 |   |
|    State and political subdivisions |   |                  | -      |   |   |   | 35,732 |   |   |   | - |   |   |   | 35,732 |   |
|    Corporate securities             |   |                  | -      |   |   |   | 847 |   |   |   | - |   |   |   | 847 |   |
|    Other equity securities          |   |                  | -      |   |   |   | 385 |   |   |   | - |   |   |   | 385 |   |
| Total assets                                       |   | $                     | -      |   |   | $ | 232,075 |   |   | $ | - |   |   | $ | 232,075 |   |

|                                               |   | At December 31, 2009 |   |
|----------------------------------------------------|--------|----------------------|--------|
| In thousands of dollars                            |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |                 |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                    | -      |   |   | $ | 30,959 |   |   | $ | - |   |   | $ | 30,959 |   |
|    Mortgage-backed securities       |   |                 | -      |   |   |   | 31,148 |   |   |   | - |   |   |   | 31,148 |   |
|    State and political subdivisions |   |                 | -      |   |   |   | 18,514 |   |   |   | - |   |   |   | 18,514 |   |
|    Corporate securities             |   |                 | -      |   |   |   | 818 |   |   |   | - |   |   |   | 818 |   |
|    Other equity securities          |   |                 | -      |   |   |   | 399 |   |   |   | - |   |   |   | 399 |   |
| Total assets                                       |   | $                    | -      |   |   | $ | 81,838 |   |   | $ | - |   |   | $ | 81,838 |   |

----

|                      |   | At September 30, 2010 |   |
|---------------------------|--------|-----------------------|--------|
| In thousands of dollars   |   | Level 1               |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                     | -      |   |   | $ | 1,166 |   |   | $ | - |   |   | $ | 1,166 |   |
| Loans held for sale       |   |                  | -      |   |   |   | 1,031 |   |   |   | - |   |   |   | 1,031 |   |
| Other real estate owned   |   |                  | -      |   |   |   | 5,338 |   |   |   | - |   |   |   | 5,338 |   |
| Impaired loans            |   |                  | -      |   |   |   | 8,128 |   |   |   | - |   |   |   | 8,128 |   |
| Total assets              |   | $                     | -      |   |   | $ | 15,613 |   |   | $ | - |   |   | $ | 15,613 |   |

|                      |   | At December 31, 2009 |   |
|---------------------------|--------|----------------------|--------|
| In thousands of dollars   |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                    | -      |   |   | $ | 1,422 |   |   | $ | - |   |   | $ | 1,422 |   |
| Loans held for sale       |   |                 | -      |   |   |   | 2,876 |   |   |   | - |   |   |   | 2,876 |   |
| Other real estate owned   |   |                 | -      |   |   |   | 5,345 |   |   |   | - |   |   |   | 5,345 |   |
| Impaired loans            |   |                 | -      |   |   |   | 9,965 |   |   |   | - |   |   |   | 9,965 |   |
| Total assets              |   | $                    | -      |   |   | $ | 19,608 |   |   | $ | - |   |   | $ | 19,608 |   |

|                                                  |   | September 30, 2010 |    |   | December 31, 2009 |   |
|-------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                  |   | Carrying           |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|  In thousands of dollars                         |   | amount             |    |   | fair value        |   |   | amount |   |   | fair value |   |
| Financial assets                                      |   |               |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $                  | 13,880  |   |              | $      | 13,880 |   |   | $ | 15,332 |   |   | $ | 15,332 |   |
| Securities available for sale                         |   |               | 232,075 |   |              |   | 232,075 |   |   |   | 81,838 |   |   |   | 81,838 |   |
| Securities to be held to maturity                     |   |               | 121,341 |   |              |   | 126,668 |   |   |   | 190,537 |   |   |   | 192,838 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock |   |               | 15,443  |   |              |   | 15,443 |   |   |   | 15,443 |   |   |   | 15,443 |   |
| Loans held for sale                                   |   |               | 1,031   |   |              |   | 1,031 |   |   |   | 2,876 |   |   |   | 2,876 |   |
| Loans (net of allowance for loan losses)              |   |               | 904,293 |   |              |   | 917,068 |   |   |   | 938,855 |   |   |   | 938,095 |   |
| Accrued interest receivable                           |   |               | 5,445   |   |              |   | 5,445 |   |   |   | 4,889 |   |   |   | 4,889 |   |
| Financial liabilities                                 |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   | $                  | 986,932 |   |              | $      | 966,060 |   |   | $ | 922,667 |   |   | $ | 877,883 |   |
| Borrowed funds                                        |   |               | 222,672 |   |              |   | 231,621 |   |   |   | 249,778 |   |   |   | 255,292 |   |
| Accrued interest payable                              |   |               | 911     |   |              |   | 911 |   |   |   | 1,078 |   |   |   | 1,078 |   |

----

----

----

----

----

|                                |   | For the nine months ended September 30, |   |   | For the quarters ended September 30, |   |
|-------------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------|--------|
|  In thousands of dollars       |   | 2010                                    |   |   | 2009                                 |   |   | 2010 |   |   | 2009 |   |
| Net interest income, as presented   |   | $                                       | 30,231 |   |                                 | $      | 33,325 |   |   | $ | 10,253 |   |   | $ | 10,815 |   |
| Effect of tax-exempt income         |   |                                    | 1,704  |   |                                 |   | 1,787 |   |   |   | 577 |   |   |   | 617 |   |
| Net interest income, tax equivalent |   | $                                       | 31,935 |   |                                 | $      | 35,112 |   |   | $ | 10,830 |   |   | $ | 11,432 |   |

|                                                  |   | For the nine months endedSeptember 30, |   |   | For the quarters endedSeptember 30, |   |
|-------------------------------------------------------|--------|----------------------------------------|--------|--------|-------------------------------------|--------|
| Dollars in thousands                                  |   | 2010                                   |   |   | 2009                                |   |   | 2010 |   |   | 2009 |   |
| Non-interest expense, as presented                    |   | $                                      | 18,405 |   |                                | $      | 19,892 |   |   | $ | 6,228 |   |   | $ | 6,872 |   |
| Net securities losses                                 |   |                                   | -      |   |                                |   | (147 | ) |   |   | - |   |   |   | - |   |
| Other than temporary impairment charge                |   |                                   | -      |   |                                |   | (916 | ) |   |   | - |   |   |   | - |   |
| Adjusted non-interest expense                         |   |                                   | 18,405 |   |                                |   | 18,829 |   |   |   | 6,228 |   |   |   | 6,872 |   |
| Net interest income, as presented                     |   |                                   | 30,231 |   |                                |   | 33,325 |   |   |   | 10,253 |   |   |   | 10,815 |   |
| Effect of tax-exempt income                           |   |                                   | 1,704  |   |                                |   | 1,787 |   |   |   | 577 |   |   |   | 617 |   |
| Non-interest income, as presented                     |   |                                   | 6,524  |   |                                |   | 8,525 |   |   |   | 2,067 |   |   |   | 2,977 |   |
| Effect of non-interest tax-exempt income              |   |                                   | 141    |   |                                |   | 138 |   |   |   | 47 |   |   |   | 46 |   |
| Net securities gains                                  |   |                                   | 2      |   |                                |   | - |   |   |   | - |   |   |   | 1 |   |
| Adjusted net interest income plus non-interest income |   | $                                      | 38,602 |   |                                | $      | 43,775 |   |   | $ | 12,944 |   |   | $ | 14,456 |   |
| Non-GAAP efficiency ratio                             |   |                                   | 47.68  | %      |                                |   | 43.01 | % |   |   | 48.11 | % |   |   | 47.54 | % |
| GAAP efficiency ratio                                 |   |                                   | 50.07  | %      |                                |   | 47.53 | % |   |   | 50.55 | % |   |   | 49.83 | % |

----

|                                       |   | For the nine months endedSeptember 30, |    |   | For the quarters endedSeptember 30, |   |
|--------------------------------------------|--------|----------------------------------------|---------|--------|-------------------------------------|--------|
|  In thousands of dollars              |   | 2010                                   |    |   | 2009                                |   |   | 2010 |   |   | 2009 |   |
| Average shareholders' equity, as presented |   | $                                      | 151,132 |   |                                | $      | 145,990 |   |   | $ | 152,951 |   |   | $ | 148,094 |   |
| Intangible assets                          |   |                                   | 27,684  |   |                                |   | 27,684 |   |   |   | 27,684 |   |   |   | 27,684 |   |
| Tangible average shareholders' equity      |   | $                                      | 123,448 |   |                                | $      | 118,306 |   |   | $ | 125,267 |   |   | $ | 120,410 |   |

----

|                                                 |   | For the nine months ended |   |
|------------------------------------------------------|--------|---------------------------|--------|
|                                                 |   | September 30, 2010        |   |   | September 30, 2009 |   |
| Dollars in thousands                                 |   | Amount of interest        |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |                      |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                         | 5      |   |   |   | 6.08 | % |   | $ | 1 |   |   |   | 4.95 | % |
| Investments                                          |   |                      | 10,913 |   |   |   | 4.54 | % |   |   | 11,585 |   |   |   | 5.21 | % |
| Loans held for sale                                  |   |                      | 125    |   |   |   | 4.72 | % |   |   | 45 |   |   |   | 4.83 | % |
| Loans                                                |   |                      | 33,579 |   |   |   | 4.81 | % |   |   | 38,249 |   |   |   | 5.18 | % |
|    Total interest-earning assets      |   |                      | 44,622 |   |   |   | 4.74 | % |   |   | 49,880 |   |   |   | 5.19 | % |
| Interest-bearing liabilities                         |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |                      | 7,699  |   |   |   | 1.16 | % |   |   | 9,403 |   |   |   | 1.41 | % |
| Other borrowings                                     |   |                      | 4,988  |   |   |   | 2.90 | % |   |   | 5,365 |   |   |   | 2.84 | % |
|    Total interest-bearing liabilities |   |                      | 12,687 |   |   |   | 1.52 | % |   |   | 14,768 |   |   |   | 1.72 | % |
| Net interest income                                  |   | $                         | 31,935 |   |   |   |   |   |   | $ | 35,112 |   |   |   |   |   |
| Interest rate spread                                 |   |                      |   |   |   |   | 3.22 | % |   |   |   |   |   |   | 3.46 | % |
| Net interest margin                                  |   |                      |   |   |   |   | 3.39 | % |   |   |   |   |   |   | 3.65 | % |

----

|                                                 |   | For the quarters ended |   |
|------------------------------------------------------|--------|------------------------|--------|
|                                                 |   | September 30, 2010     |   |   | September 30, 2009 |   |
| Dollars in thousands                                 |   | Amount of interest     |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |                   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                      | 3      |   |   |   | 3.65 | % |   | $ | 1 |   |   |   | 4.84 | % |
| Investments                                          |   |                   | 3,890  |   |   |   | 4.47 | % |   |   | 3,454 |   |   |   | 4.97 | % |
| Loans held for sale                                  |   |                   | 45     |   |   |   | 4.69 | % |   |   | 44 |   |   |   | 4.49 | % |
| Loans                                                |   |                   | 11,210 |   |   |   | 4.79 | % |   |   | 12,342 |   |   |   | 4.98 | % |
|    Total interest-earning assets      |   |                   | 15,148 |   |   |   | 4.70 | % |   |   | 15,841 |   |   |   | 4.97 | % |
| Interest-bearing liabilities                         |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |                   | 2,648  |   |   |   | 1.17 | % |   |   | 2,709 |   |   |   | 1.21 | % |
| Other borrowings                                     |   |                   | 1,669  |   |   |   | 2.88 | % |   |   | 1,700 |   |   |   | 2.95 | % |
|    Total interest-bearing liabilities |   |                   | 4,317  |   |   |   | 1.52 | % |   |   | 4,409 |   |   |   | 1.57 | % |
| Net interest income                                  |   | $                      | 10,831 |   |   |   |   |   |   | $ | 11,432 |   |   |   |   |   |
| Interest rate spread                                 |   |                   |   |   |   |   | 3.19 | % |   |   |   |   |   |   | 3.41 | % |
| Net interest margin                                  |   |                   |   |   |   |   | 3.36 | % |   |   |   |   |   |   | 3.59 | % |

| For the nine months ended September 30, 2010 compared to 2009 |   |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|
| In thousands of dollars                                       |   | Volume |   |   | Rate |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                     |   | $      | 3      |   |   | $ | - |   |   | $ | 1 |   |   | $ | 4 |   |
| Investment securities                                         |   |   | 934    |   |   |   | (1,486 | ) |   |   | (120 | ) |   |   | (672 | ) |
| Loans held for sale                                           |   |   | 38     |   |   |   | (2 | ) |   |   | (1 | ) |   |   | 35 |   |
| Loans                                                         |   |   | (2,028 | )      |   |   | (2,743 | ) |   |   | 146 |   |   |   | (4,625 | ) |
|    Total interest income                       |   |   | (1,053 | )      |   |   | (4,231 | ) |   |   | 26 |   |   |   | (5,258 | ) |
| Interest expense                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                      |   |   | (38    | )      |   |   | (1,673 | ) |   |   | 7 |   |   |   | (1,704 | ) |
| Other borrowings2                                             |   |   | (481   | )      |   |   | 114 |   |   |   | (10 | ) |   |   | (377 | ) |
| Total interest expense                                        |   |   | (519   | )      |   |   | (1,559 | ) |   |   | (3 | ) |   |   | (2,081 | ) |
|    Change in net interest income               |   | $      | (534   | )      |   | $ | (2,672 | ) |   | $ | 29 |   |   | $ | (3,177 | ) |

----

| For the quarters ended September 30, 2010 compared to 2009 |   |   |   |   |   |   |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| In thousands of dollars                                    |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                                  |   | $      | 3      |   |   | $      | -      |   |   | $ | (1 | ) |   | $ | 2 |   |
| Investment securities                                      |   |   | 863    |   |   |   | (342   | ) |   |   | (85 | ) |   |   | 436 |   |
| Loans held for sale                                        |   |   | (1     | )      |   |   | 2      |   |   |   | - |   |   |   | 1 |   |
| Loans                                                      |   |   | (693   | )      |   |   | (465   | ) |   |   | 26 |   |   |   | (1,132 | ) |
|    Total interest income                    |   |   | 172    |   |   |   | (805   | ) |   |   | (60 | ) |   |   | (693 | ) |
| Interest expense                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                   |   |   | 32     |   |   |   | (92    | ) |   |   | (1 | ) |   |   | (61 | ) |
| Other borrowings2                                          |   |   | 9      |   |   |   | (40    | ) |   |   | - |   |   |   | (31 | ) |
| Total interest expense                                     |   |   | 41     |   |   |   | (132   | ) |   |   | (1 | ) |   |   | (92 | ) |
|    Change in net interest income            |   | $      | 131    |   |   | $      | (673   | ) |   | $ | (59 | ) |   | $ | (601 | ) |

----

|                                                                                         |   | For the nine months ended |      |   | For the quarters ended |   |
|----------------------------------------------------------------------------------------------|--------|---------------------------|-----------|--------|------------------------|--------|
|                                                                                         |   | September 30, 2010        |      |   | September 30, 2009     |   |   | September 30, 2010 |   |   | September 30, 2009 |   |
| Assets                                                                                       |   |                      |      |   |                   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                      |   | $                         | 15,736    |   |                   | $      | 14,345 |   |   | $ | 18,256 |   |   | $ | 16,869 |   |
| Overnight funds sold                                                                         |   |                      | 110       |   |                   |   | 27 |   |   |   | 326 |   |   |   | 82 |   |
| Securities available for sale                                                                |   |                      | 153,762   |   |                   |   | 22,707 |   |   |   | 203,694 |   |   |   | 35,288 |   |
| Securities to be held to maturity                                                            |   |                      | 152,014   |   |                   |   | 259,863 |   |   |   | 125,832 |   |   |   | 226,015 |   |
| Federal Reserve Bank stock, at cost                                                          |   |                      | 1,412     |   |                   |   | 662 |   |   |   | 1,412 |   |   |   | 662 |   |
| Federal Home Loan Bank Stock, at cost                                                        |   |                      | 14,031    |   |                   |   | 14,031 |   |   |   | 14,031 |   |   |   | 14,031 |   |
| Loans held for sale (fair value approximates cost)                                           |   |                      | 3,539     |   |                   |   | 2,493 |   |   |   | 3,810 |   |   |   | 3,884 |   |
| Loans                                                                                        |   |                      | 933,854   |   |                   |   | 986,196 |   |   |   | 928,357 |   |   |   | 983,613 |   |
| Allowance for loan losses                                                                    |   |                      | (14,453   | )      |                   |   | (10,617 | ) |   |   | (14,392 | ) |   |   | (12,325 | ) |
|      Net loans                                                      |   |                      | 919,401   |   |                   |   | 975,579 |   |   |   | 913,965 |   |   |   | 971,288 |   |
| Accrued interest receivable                                                                  |   |                      | 5,596     |   |                   |   | 6,368 |   |   |   | 5,442 |   |   |   | 6,002 |   |
| Premises and equipment                                                                       |   |                      | 18,395    |   |                   |   | 17,906 |   |   |   | 18,659 |   |   |   | 18,531 |   |
| Other real estate owned                                                                      |   |                      | 5,425     |   |                   |   | 2,538 |   |   |   | 5,003 |   |   |   | 2,533 |   |
| Goodwill                                                                                     |   |                      | 27,684    |   |                   |   | 27,684 |   |   |   | 27,684 |   |   |   | 27,684 |   |
| Other assets                                                                                 |   |                      | 29,306    |   |                   |   | 21,139 |   |   |   | 29,356 |   |   |   | 22,799 |   |
|         Total Assets                                 |   | $                         | 1,346,411 |   |                   | $      | 1,365,342 |   |   | $ | 1,367,470 |   |   | $ | 1,345,668 |   |
| Liabilities & Shareholders’ Equity                                                 |   |                      |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                                                                              |   | $                         | 65,560    |   |                   | $      | 63,531 |   |   | $ | 74,625 |   |   | $ | 70,108 |   |
| NOW deposits                                                                                 |   |                      | 116,457   |   |                   |   | 105,323 |   |   |   | 119,547 |   |   |   | 107,684 |   |
| Money market deposits                                                                        |   |                      | 80,879    |   |                   |   | 111,601 |   |   |   | 72,472 |   |   |   | 103,697 |   |
| Savings deposits                                                                             |   |                      | 95,806    |   |                   |   | 86,514 |   |   |   | 100,000 |   |   |   | 90,916 |   |
| Certificates of deposit                                                                      |   |                      | 596,270   |   |                   |   | 589,603 |   |   |   | 606,541 |   |   |   | 585,825 |   |
|      Total deposits                                                 |   |                      | 954,972   |   |                   |   | 956,572 |   |   |   | 973,185 |   |   |   | 958,230 |   |
| Borrowed funds – short term                                                            |   |                      | 10,163    |   |                   |   | 6,688 |   |   |   | 40,148 |   |   |   | 12,394 |   |
| Borrowed funds – long term                                                             |   |                      | 219,484   |   |                   |   | 245,582 |   |   |   | 189,442 |   |   |   | 215,934 |   |
| Dividends payable                                                                            |   |                      | 987       |   |                   |   | 932 |   |   |   | 988 |   |   |   | 1,015 |   |
| Other liabilities                                                                            |   |                      | 9,674     |   |                   |   | 9,578 |   |   |   | 10,756 |   |   |   | 10,001 |   |
|      Total Liabilities                                              |   |                      | 1,195,280 |   |                   |   | 1,219,352 |   |   |   | 1,214,519 |   |   |   | 1,197,574 |   |
| Shareholders’ Equity:                                                                  |   |                      |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                                              |   |                      | 24,606    |   |                   |   | 24,267 |   |   |   | 24,656 |   |   |   | 24,558 |   |
| Common stock                                                                                 |   |                      | 97        |   |                   |   | 97 |   |   |   | 98 |   |   |   | 97 |   |
| Additional paid-in capital                                                                   |   |                      | 45,187    |   |                   |   | 44,713 |   |   |   | 45,360 |   |   |   | 44,985 |   |
| Retained earnings                                                                            |   |                      | 80,873    |   |                   |   | 77,631 |   |   |   | 81,505 |   |   |   | 79,013 |   |
| Net unrealized gain (loss) on available-for-sale securities                                  |   |                      | 573       |   |                   |   | (452 | ) |   |   | 1,531 |   |   |   | (298 | ) |
| Net unrealized loss on postretirement benefit costs                                          |   |                      | (205      | )      |                   |   | (266 | ) |   |   | (199 | ) |   |   | (261 | ) |
|     Total Shareholders’ Equity                                     |   |                      | 151,131   |   |                   |   | 145,990 |   |   |   | 152,951 |   |   |   | 148,094 |   |
|        Total Liabilities & Shareholders’ Equity |   | $                         | 1,346,411 |   |                   | $      | 1,365,342 |   |   | $ | 1,367,470 |   |   | $ | 1,345,668 |   |

----

----

| In thousands of dollars           |   | September 30, 2010 |    |   | December 31, 2009 |   |    | September 30,2009 |   |
|-----------------------------------|--------|--------------------|---------|--------|-------------------|--------|---------|-------------------|--------|
| Securities available for sale     |   |               |    |   |              |   |    |              |   |
| U.S. Treasury and agency          |   | $                  | 20,314  |   |              | $      | 30,959  |              |   | $ | 10,404 |   |
| Mortgage-backed securities        |   |               | 174,797 |   |              |   | 31,148  |              |   |   | 16,597 |   |
| State and political subdivisions  |   |               | 35,732  |   |              |   | 18,514  |              |   |   | 10,124 |   |
| Corporate securities              |   |               | 847     |   |              |   | 818     |              |   |   | 1,178 |   |
| Other equity securities           |   |               | 385     |   |              |   | 399     |              |   |   | 272 |   |
|                              |   | $                  | 232,075 |   |              | $      | 81,838  |              |   | $ | 38,575 |   |
| Securities to be held to maturity |   |               |    |   |              |   |    |              |   |   |   |   |
| U.S. Treasury and agency          |   | $                  | 8,091   |   |              | $      | 39,099  |              |   | $ | 44,036 |   |
| Mortgage-backed securities        |   |               | 62,328  |   |              |   | 90,193  |              |   |   | 105,259 |   |
| State and political subdivisions  |   |               | 50,772  |   |              |   | 61,095  |              |   |   | 62,339 |   |
| Corporate securities              |   |               | 150     |   |              |   | 150     |              |   |   | 150 |   |
|                              |   | $                  | 121,341 |   |              | $      | 190,537 |              |   | $ | 211,784 |   |
| Non-marketable securities:        |   |               |    |   |              |   |    |              |   |   |   |   |
| Federal Home Loan Bank Stock      |   |               | 14,031  |   |              |   | 14,031  |              |   |   | 14,031 |   |
| Federal Reserve Bank Stock        |   |               | 1,412   |   |              |   | 1,412   |              |   |   | 662 |   |
|                              |   |               | 15,443  |   |              |   | 15,443  |              |   |   | 14,693 |   |
| Total securities                  |   | $                  | 368,859 |   |              | $      | 287,818 |              |   | $ | 265,052 |   |

----

|                                     |   | Available For Sale |    |   | Held to Maturity  |   |
|------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|  Dollars in thousands               |   | Fair Value         |    |   | Yield to maturity |   |   | Amortized Cost |   |   | Yield to maturity |   |
|  U.S. Treasury & Agency         |   |               |    |   |              |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   | $                  | -       |   |              |   | 0.00 | % |   | $ | - |   |   |   | 0.00 | % |
|  Due in 1 to 5 years                |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 20,314  |   |              |   | 5.45 | % |   |   | 8,091 |   |   |   | 6.14 | % |
|   Total                        |   |               | 20,314  |   |              |   | 5.45 | % |   |   | 8,091 |   |   |   | 6.14 | % |
|  Mortgage-Backed Securities         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | 2 |   |   |   | 6.04 | % |
|  Due in 1 to 5 years                |   |               | 44      |   |              |   | 5.71 | % |   |   | 1,118 |   |   |   | 4.16 | % |
|  Due in 5 to 10 years               |   |               | 76      |   |              |   | 8.50 | % |   |   | 1,033 |   |   |   | 5.93 | % |
|  Due after 10 years                 |   |               | 174,677 |   |              |   | 4.12 | % |   |   | 60,175 |   |   |   | 4.02 | % |
|   Total                        |   |               | 174,797 |   |              |   | 4.12 | % |   |   | 62,328 |   |   |   | 4.06 | % |
|  State & Political Subdivisions |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | 1,045 |   |   |   | 7.44 | % |
|  Due in 1 to 5 years                |   |               | 3,096   |   |              |   | 7.07 | % |   |   | 4,720 |   |   |   | 6.25 | % |
|  Due in 5 to 10 years               |   |               | 2,364   |   |              |   | 7.36 | % |   |   | 14,128 |   |   |   | 6.49 | % |
|  Due after 10 years                 |   |               | 30,272  |   |              |   | 6.21 | % |   |   | 30,879 |   |   |   | 6.32 | % |
|   Total                        |   |               | 35,732  |   |              |   | 6.36 | % |   |   | 50,772 |   |   |   | 6.38 | % |
|  Corporate Securities               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Due in 1 to 5 years                |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 847     |   |              |   | 1.61 | % |   |   | - |   |   |   | 0.00 | % |
|   Total                        |   |               | 847     |   |              |   | 1.61 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Equity Securities                  |   |               | 385     |   |              |   | 3.07 | % |   |   | - |   |   |   | 0.00 | % |
|                                     |   | $                  | 232,075 |   |              |   | 4.57 | % |   | $ | 121,341 |   |   |   | 5.17 | % |

----

|                             |   | Less than 12 months |    |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|---------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |    |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| In thousands of dollars          |   | Value               |    |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 5,924   |   |              | $      | (8     | )      |   | $ | - |   |   | $ | - |   |   | $ | 5,924 |   |   | $ | (8 | ) |
| Mortgage-backed securities       |   |                | 136,212 |   |              |   | (1,594 | )      |   |   | 1,028 |   |   |   | (20 | ) |   |   | 137,240 |   |   |   | (1,614 | ) |
| State and political subdivisions |   |                | 312     |   |              |   | (3     | )      |   |   | 1,561 |   |   |   | (182 | ) |   |   | 1,873 |   |   |   | (185 | ) |
| Corporate securities             |   |                | -       |   |              |   | -      |   |   |   | 848 |   |   |   | (267 | ) |   |   | 848 |   |   |   | (267 | ) |
| Other equity securities          |   |                | -       |   |              |   | -      |   |   |   | 48 |   |   |   | (5 | ) |   |   | 48 |   |   |   | (5 | ) |
|                             |   | $                   | 142,448 |   |              | $      | (1,605 | )      |   | $ | 3,485 |   |   | $ | (474 | ) |   | $ | 145,933 |   |   | $ | (2,079 | ) |

----

----

| Dollars in thousands           |   | September 30, 2010 |    |   | December 31, 2009 |   |   | September 30, 2009 |   |
|--------------------------------|--------|--------------------|---------|--------|-------------------|--------|--------|--------------------|--------|
| Commercial                     |   |               |    |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $                  | 251,767 |   |              |   | 27.4   | %                  |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 236,807 |   |   |   | 24.3 | % |
|    Construction |   |               | 40,304  |   |              |   | 4.4    | %                  |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 50,601 |   |   |   | 5.2 | % |
|    Other        |   |               | 106,993 |   |              |   | 11.6   | %                  |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 118,151 |   |   |   | 12.1 | % |
| Municipal                      |   |               | 25,737  |   |              |   | 2.8    | %                  |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 55,889 |   |   |   | 5.7 | % |
| Residential                    |   |               |    |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |               | 352,872 |   |              |   | 38.4   | %                  |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 381,718 |   |   |   | 39.3 | % |
|    Construction |   |               | 18,380  |   |              |   | 2.0    | %                  |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 17,056 |   |   |   | 1.8 | % |
| Home equity line of credit     |   |               | 104,434 |   |              |   | 11.4   | %                  |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 88,830 |   |   |   | 9.1 | % |
| Consumer                       |   |               | 18,051  |   |              |   | 2.0    | %                  |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 24,771 |   |   |   | 2.5 | % |
| Total loans                    |   | $                  | 918,538 |   |              |   | 100.0  | %                  |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 973,823 |   |   |   | 100.0 | % |

----

| In thousands of dollars        |   | < 1 Year |   |   | 1 - 5 Years |   |   | 5 - 10 Years |   |   | > 10 Years |   |   | Total  |    |
|--------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------|
| Commercial                     |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |
|    Real estate  |   | $           | 12,161 |   |        | $      | 13,653 |         |   | $      | 20,280        |   |   | $      | 205,673 |   |   | $ | 251,767 |   |
|    Construction |   |        | 12,634 |   |        |   | 5,766  |         |   |   | 276           |   |   |   | 21,628  |   |   |   | 40,304 |   |
|    Other        |   |        | 17,398 |   |        |   | 24,235 |         |   |   | 31,105        |   |   |   | 34,255  |   |   |   | 106,993 |   |
| Municipal                      |   |        | 8,004  |   |        |   | 2,996  |         |   |   | 7,905         |   |   |   | 6,832   |   |   |   | 25,737 |   |
| Residential                    |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |   |   |   |   |   |
|    Term         |   |        | 7,331  |   |        |   | 13,919 |         |   |   | 28,134        |   |   |   | 303,488 |   |   |   | 352,872 |   |
|    Construction |   |        | 9,011  |   |        |   | 874    |         |   |   | 301           |   |   |   | 8,194   |   |   |   | 18,380 |   |
| Home equity line of credit     |   |        | 1,380  |   |        |   | 363    |         |   |   | 1,050         |   |   |   | 101,641 |   |   |   | 104,434 |   |
| Consumer                       |   |        | 6,919  |   |        |   | 7,679  |         |   |   | 1,147         |   |   |   | 2,306   |   |   |   | 18,051 |   |
| Total loans                    |   | $           | 74,838 |   |        | $      | 69,485 |         |   | $      | 90,198        |   |   | $      | 684,017 |   |   | $ | 918,538 |   |

|                           |   | Fixed-Rate |    |   | Adjustable-Rate |   |   | Total  |   |
|--------------------------------|--------|------------|---------|--------|-----------------|--------|--------|--------|--------|
| Dollars in thousands           |   | Amount     |    |   | % of total      |   |   | Amount |   |   | % of total |   |   | Amount |   |   | % of total |   |
| Commercial                     |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $          | 49,875  |   |            |   | 5.4    | %      |   | $ | 201,892 |   |   |   | 22.0 | % |   | $ | 251,767 |   |   |   | 27.4 | % |
|    Construction |   |       | 6,857   |   |            |   | 0.7    | %      |   |   | 33,447 |   |   |   | 3.6 | % |   |   | 40,304 |   |   |   | 4.4 | % |
|    Other        |   |       | 49,319  |   |            |   | 5.4    | %      |   |   | 57,674 |   |   |   | 6.3 | % |   |   | 106,993 |   |   |   | 11.6 | % |
| Municipal                      |   |       | 22,093  |   |            |   | 2.4    | %      |   |   | 3,644 |   |   |   | 0.4 | % |   |   | 25,737 |   |   |   | 2.8 | % |
| Residential                    |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |       | 127,447 |   |            |   | 13.9   | %      |   |   | 225,425 |   |   |   | 24.5 | % |   |   | 352,872 |   |   |   | 38.4 | % |
|    Construction |   |       | 5,124   |   |            |   | 0.6    | %      |   |   | 13,256 |   |   |   | 1.4 | % |   |   | 18,380 |   |   |   | 2.0 | % |
| Home equity line of credit     |   |       | 2,309   |   |            |   | 0.3    | %      |   |   | 102,125 |   |   |   | 11.1 | % |   |   | 104,434 |   |   |   | 11.4 | % |
| Consumer                       |   |       | 14,934  |   |            |   | 1.6    | %      |   |   | 3,117 |   |   |   | 0.3 | % |   |   | 18,051 |   |   |   | 2.0 | % |
| Total loans                    |   | $          | 277,958 |   |            |   | 30.3   | %      |   | $ | 640,580 |   |   |   | 69.7 | % |   | $ | 918,538 |   |   |   | 100.0 | % |

----

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| Dollars in thousands           |   | September 30, 2010 |   |   | December 31, 2009 |   |   | September 30, 2009 |   |
|--------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Commercial                     |   |               |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $                  | 4,992  |   |              |   | 27.4   | %                  |   | $ | 5,297 |   |   |   | 25.2 | % |   | $ | 4,822 |   |   |   | 24.3 | % |
|    Construction |   |               | 780    |   |              |   | 4.4    | %                  |   |   | 896 |   |   |   | 5.1 | % |   |   | 752 |   |   |   | 5.2 | % |
|    Other        |   |               | 2,330  |   |              |   | 11.6   | %                  |   |   | 3,095 |   |   |   | 12.0 | % |   |   | 2,950 |   |   |   | 12.1 | % |
| Municipal                      |   |               | 20     |   |              |   | 2.8    | %                  |   |   | 23 |   |   |   | 4.8 | % |   |   | 22 |   |   |   | 5.7 | % |
| Residential                    |   |               |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |               | 1,221  |   |              |   | 38.4   | %                  |   |   | 1,197 |   |   |   | 38.7 | % |   |   | 1,100 |   |   |   | 39.3 | % |
|    Construction |   |               | 47     |   |              |   | 2.0    | %                  |   |   | 43 |   |   |   | 1.8 | % |   |   | 40 |   |   |   | 1.8 | % |
| Home equity line of credit     |   |               | 506    |   |              |   | 11.4   | %                  |   |   | 515 |   |   |   | 9.9 | % |   |   | 534 |   |   |   | 9.1 | % |
| Consumer                       |   |               | 638    |   |              |   | 2.0    | %                  |   |   | 716 |   |   |   | 2.5 | % |   |   | 646 |   |   |   | 2.5 | % |
| Unallocated                    |   |               | 3,711  |   |              |   | 0.0    | %                  |   |   | 1,855 |   |   |   | 0.0 | % |   |   | 1,934 |   |   |   | 0.0 | % |
| Total                          |   | $                  | 14,245 |   |              |   | 100.0  | %                  |   | $ | 13,637 |   |   |   | 100.0 | % |   | $ | 12,800 |   |   |   | 100.0 | % |

----

| Dollars in thousands                                          |   | September 30,2010 |   |   | December 31,2009 |   |   | September 30,2009 |   |
|---------------------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|--------|-------------------|--------|
| Balance at beginning of year                                  |   | $                 | 13,637 |   |             | $      | 8,800  |              |   | $ | 8,800 |   |
| Loans charged off:                                            |   |              |   |   |             |   |   |              |   |   |   |   |
| Commercial                                                    |   |              |   |   |             |   |   |              |   |   |   |   |
|    Real estate                                 |   |              | 3,351  |   |             |   | 2,430  |              |   |   | 1,405 |   |
|    Construction                                |   |              | 175    |   |             |   | -      |              |   |   | - |   |
|    Other                                       |   |              | 1,028  |   |             |   | 2,329  |              |   |   | 1,058 |   |
| Municipal                                                     |   |              | -      |   |             |   | -      |              |   |   | - |   |
| Residential                                                   |   |              |   |   |             |   |   |              |   |   |   |   |
|    Term                                        |   |              | 315    |   |             |   | 1,767  |              |   |   | 696 |   |
|    Construction                                |   |              | 402    |   |             |   | 47     |              |   |   | 47 |   |
| Home equity line of credit                                    |   |              | 8      |   |             |   | 177    |              |   |   | 117 |   |
| Consumer                                                      |   |              | 637    |   |             |   | 826    |              |   |   | 494 |   |
| Total                                                         |   |              | 5,916  |   |             |   | 7,576  |              |   |   | 3,817 |   |
| Recoveries on loans previously charged off                    |   |              |   |   |             |   |   |              |   |   |   |   |
| Commercial                                                    |   |              |   |   |             |   |   |              |   |   |   |   |
|    Real estate                                 |   |              | 3      |   |             |   | -      |              |   |   | - |   |
|    Construction                                |   |              | -      |   |             |   | -      |              |   |   | - |   |
|    Other                                       |   |              | 38     |   |             |   | 79     |              |   |   | 72 |   |
| Municipal                                                     |   |              | -      |   |             |   | -      |              |   |   | - |   |
| Residential                                                   |   |              |   |   |             |   |   |              |   |   |   |   |
|    Term                                        |   |              | 3      |   |             |   | 59     |              |   |   | 3 |   |
|    Construction                                |   |              | -      |   |             |   | -      |              |   |   | - |   |
| Home equity line of credit                                    |   |              | -      |   |             |   | 1      |              |   |   | - |   |
| Consumer                                                      |   |              | 180    |   |             |   | 114    |              |   |   | 82 |   |
| Total                                                         |   |              | 224    |   |             |   | 253    |              |   |   | 157 |   |
| Net loans charged off                                         |   |              | 5,692  |   |             |   | 7,323  |              |   |   | 3,660 |   |
| Provision for loan losses                                     |   |              | 6,300  |   |             |   | 12,160 |              |   |   | 7,660 |   |
| Balance at end of period                                      |   | $                 | 14,245 |   |             | $      | 13,637 |              |   | $ | 12,800 |   |
| Ratio of net loans charged off to average loans outstanding   |   |              | 0.82   | %      |             |   | 0.75   | %                 |   |   | 0.49 | % |
| Ratio of allowance for loan losses to total loans outstanding |   |              | 1.55   | %      |             |   | 1.43   | %                 |   |   | 1.31 | % |

----

| In thousands of dollars        |   | September 30, 2010 |   |   | December 31, 2009 |   |   | September 30, 2009 |   |
|--------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Commercial                     |   |               |   |   |              |   |   |               |   |
|    Real estate  |   | $                  | 6,946  |   |              | $      | 6,198  |               |   | $ | 6,706 |   |
|    Construction |   |               | 438    |   |              |   | 458    |               |   |   | 485 |   |
|    Other        |   |               | 2,424  |   |              |   | 2,638  |               |   |   | 2,954 |   |
| Municipal                      |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Residential                    |   |               |   |   |              |   |   |               |   |   |   |   |
|    Term         |   |               | 9,772  |   |              |   | 5,868  |               |   |   | 5,567 |   |
|    Construction |   |               | 1,738  |   |              |   | 3,182  |               |   |   | 1,701 |   |
| Home equity line of credit     |   |               | 280    |   |              |   | 143    |               |   |   | 88 |   |
| Consumer                       |   |               | 107    |   |              |   | 75     |               |   |   | 71 |   |
| Total nonperforming loans      |   | $                  | 21,705 |   |              | $      | 18,562 |               |   | $ | 17,572 |   |

| ·   | The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, an inability to refinance with another lender, and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Bank has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Dollars in thousands                                  |   | September 30,2010 |   |   | December 31,2009 |   |   | September 30, 2009 |   |
|-------------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|--------|-------------------------|--------|
| Commercial                                            |   |              |   |   |             |   |   |                    |   |
|    Real estate                         |   | $                 | 6,337  |   |             | $      | 9,443  |                    |   | $ | 9,732 |   |
|    Construction                        |   |              | 234    |   |             |   | 458    |                    |   |   | 574 |   |
|    Other                               |   |              | 2,135  |   |             |   | 3,607  |                    |   |   | 4,309 |   |
| Municipal                                             |   |              | -      |   |             |   | -      |                    |   |   | - |   |
| Residential                                           |   |              |   |   |             |   |   |                    |   |   |   |   |
|    Term                                |   |              | 11,762 |   |             |   | 11,747 |                    |   |   | 11,034 |   |
|    Construction                        |   |              | 423    |   |             |   | 3,182  |                    |   |   | 1,818 |   |
| Home equity line of credit                            |   |              | 1,800  |   |             |   | 682    |                    |   |   | 357 |   |
| Consumer                                              |   |              | 339    |   |             |   | 775    |                    |   |   | 298 |   |
| Total                                                 |   | $                 | 23,030 |   |             | $      | 29,894 |                    |   | $ | 28,122 |   |
| Loans 30-89 days past due to total loans              |   |              | 0.86   | %      |             |   | 1.26   | %                       |   |   | 0.98 | % |
| Loans 90+ days past due and accruing to total loans   |   |              | 0.08   | %      |             |   | 0.12   | %                       |   |   | 0.47 | % |
| Loans 90+ days past due on non-accrual to total loans |   |              | 1.56   | %      |             |   | 1.76   | %                       |   |   | 1.44 | % |
| Total past due loans to total loans                   |   |              | 2.50   | %      |             |   | 3.14   | %                       |   |   | 2.89 | % |

----

| In thousands of dollars        |   | September 30, 2010 |   |   | December 31, 2009 |   |   | September 30, 2009 |   |
|--------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Carrying Value                 |   |               |   |   |              |   |   |               |   |
| Commercial                     |   |               |   |   |              |   |   |               |   |
|    Real estate  |   | $                  | -      |   |              | $      | -      |               |   | $ | - |   |
|    Construction |   |               | 1,420  |   |              |   | 1,182  |               |   |   | 1,152 |   |
|    Other        |   |               | 1,056  |   |              |   | 1,920  |               |   |   | 1,528 |   |
| Municipal                      |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Residential                    |   |               |   |   |              |   |   |               |   |   |   |   |
|    Term         |   |               | 3,532  |   |              |   | 2,826  |               |   |   | 990 |   |
|    Construction |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Home equity line of credit     |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Consumer                       |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Total                          |   | $                  | 6,008  |   |              | $      | 5,928  |               |   | $ | 3,670 |   |
| Related Allowance              |   |               |   |   |              |   |   |               |   |   |   |   |
| Commercial                     |   |               |   |   |              |   |   |               |   |   |   |   |
|    Real estate  |   | $                  | -      |   |              | $      | -      |               |   | $ | - |   |
|    Construction |   |               | 400    |   |              |   | 476    |               |   |   | 477 |   |
|    Other        |   |               | 43     |   |              |   | -      |               |   |   | 142 |   |
| Municipal                      |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Residential                    |   |               |   |   |              |   |   |               |   |   |   |   |
|    Term         |   |               | 227    |   |              |   | 107    |               |   |   | 56 |   |
|    Construction |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Home equity line of credit     |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Consumer                       |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Total                          |   | $                  | 670    |   |              | $      | 583    |               |   | $ | 675 |   |
| Net Value                      |   |               |   |   |              |   |   |               |   |   |   |   |
| Commercial                     |   |               |   |   |              |   |   |               |   |   |   |   |
|    Real estate  |   | $                  | -      |   |              | $      | -      |               |   | $ | - |   |
|    Construction |   |               | 1,020  |   |              |   | 706    |               |   |   | 675 |   |
|    Other        |   |               | 1,013  |   |              |   | 1,920  |               |   |   | 1,386 |   |
| Municipal                      |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Residential                    |   |               |   |   |              |   |   |               |   |   |   |   |
|    Term         |   |               | 3,305  |   |              |   | 2,719  |               |   |   | 934 |   |
|    Construction |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Home equity line of credit     |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Consumer                       |   |               | -      |   |              |   | -      |               |   |   | - |   |
| Total                          |   | $                  | 5,338  |   |              | $      | 5,345  |               |   | $ | 2,995 |   |

----

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| In thousands of dollars                                 |   | Total  |    |   | Less than1 year |   |    | 1-3years |   |   | 3-5years |   |   | More than5 years |    |
|---------------------------------------------------------|--------|--------|---------|--------|-----------------|--------|---------|----------|--------|--------|----------|--------|--------|------------------|---------|
|  Borrowed funds                                    |   | $      | 222,672 |   |            |   | 92,500  |     |   |   | 20,000   |   |   |             | 60,000  |   |   |   | 50,172 |   |
|  Operating leases                                  |   |   | 774     |   |            |   | 145     |     |   |   | 289      |   |   |             | 109     |   |   |   | 231 |   |
|  Certificates of deposit                           |   |   | 610,308 |   |            |   | 396,758 |     |   |   | 52,014   |   |   |             | 161,536 |   |   |   | - |   |
|  Total                                             |   | $      | 833,754 |   |            |   | 489,403 |     |   |   | 72,303   |   |   |             | 221,645 |   |   |   | 50,403 |   |
|  Total loan commitments and unused lines of credit |   | $      | 131,282 |   |            |   | 131,282 |     |   |   | -        |   |   |             | -       |   |   |   | - |   |

----

|                                                  |   |   | 0-90    |   |   |   | 90-365  |   |   |   | 1-5     |   |   |   | 5+       |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| Dollars in thousands                             |   | Days   |    |   | Days   |   |    | Years  |   |   | Years   |   |
| Investment securities at amortized cost               |   | $      | 40,173  |   |   | $      | 63,617  |   |   | $      | 150,410 |   |   | $      | 99,216   |   |
| Federal Home Loan Bank and Federal Reserve Bank Stock |   |   | -       |   |   |   | -       |   |   |   | 14,031  |   |   |   | 1,412    |   |
| Loans held for sale                                   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | 1,031    |   |
| Loans                                                 |   |   | 451,430 |   |   |   | 167,742 |   |   |   | 247,952 |   |   |   | 51,414   |   |
| Other interest-earning assets                         |   |   | -       |   |   |   | 9,754   |   |   |   | -       |   |   |   | -        |   |
| Non-rate-sensitive assets                             |   |   | 6,256   |   |   |   | -       |   |   |   | -       |   |   |   | 70,186   |   |
|  Total assets                                    |   |   | 497,859 |   |   |   | 241,113 |   |   |   | 412,393 |   |   |   | 223,259  |   |
| Interest-bearing deposits                             |   |   | 287,460 |   |   |   | 187,433 |   |   |   | 204,518 |   |   |   | 226,826  |   |
| Borrowed funds                                        |   |   | 92,504  |   |   |   | 9       |   |   |   | 80,050  |   |   |   | 50,109   |   |
| Non-rate-sensitive liabilities and equity             |   |   | 1,850   |   |   |   | 5,850   |   |   |   | 38,800  |   |   |   | 199,215  |   |
|  Total liabilities and equity                    |   |   | 381,814 |   |   |   | 193,292 |   |   |   | 323,368 |   |   |   | 476,150  |   |
| Period gap                                            |   | $      | 116,045 |   |   | $      | 47,821  |   |   | $      | 89,025  |   |   | $      | (252,891 | )      |
| Percent of total assets                               |   |   | 8.44    | %      |   |   | 3.48    | %      |   |   | 6.48    | %      |   |   | -18.40   | %      |
| Cumulative gap (current)                              |   |   | 116,045 |   |   |   | 163,866 |   |   |   | 252,891 |   |   |   | (0       | )      |
| Percent of total assets                               |   |   | 8.44    | %      |   |   | 11.92   | %      |   |   | 18.40   | %      |   |   | 0.00     | %      |

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