| 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                                                             | 8  |
| Note  3 – Loans                                                                            | 11 |
| Note  4 – Stock Options                                                                    | 12 |
| Note 5 – Preferred Stock                                                                             | 13 |
| Note 6 – Common Stock                                                                                | 13 |
| Note  7 – Earnings Per Share                                                               | 14 |
| Note  8 – Employee Benefit Plans                                                           | 15 |
| Note  9 – Goodwill and Other Intangible Assets                                             | 16 |
| Note 10 – Mortgage Servicing Rights                                                                  | 16 |
| Note  11 – Income Taxes                                                                    | 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                                                                               | 22 |
| Use of Non-GAAP Financial Measures                                                                         | 23 |
| Executive Summary                                                                                          | 25 |
| Net Interest Income                                                                                        | 25 |
| Average Daily Balance Sheets                                                                               | 27 |
| Non-Interest Income                                                                                        | 28 |
| Non-Interest Expense                                                                                       | 28 |
| Income Taxes                                                                                               | 28 |
| Investments                                                                                                | 28 |
| Impaired Securities                                                                                        | 30 |
| Federal Home Loan Bank Stock                                                                               | 31 |
| Loans                                                                                                      | 32 |
| Loans Concentrations                                                                                       | 33 |
| Credit Risk Management and Allowance for Loan Losses                                                       | 34 |
| Non-Performing Loans                                                                                       | 38 |
| Impaired Loans                                                                                             | 39 |
| Past Due Loans                                                                                             | 39 |
| Potential Problem Loans and Loans in Process of Foreclosure                                                | 39 |
| Other Real Estate Owned                                                                                    | 40 |
| Goodwill                                                                                                   | 41 |
| Liquidity Management                                                                                       | 41 |
| Deposits                                                                                                   | 41 |
| Borrowed Funds                                                                                             | 41 |
| Shareholders’ Equity                                                                                 | 42 |
| Contractual Obligations                                                                                    | 42 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk                                  | 43 |
| Market-Risk Management                                                                                     | 43 |
| Asset/Liability Management                                                                                 | 43 |
| Interest Rate Risk Management                                                                              | 44 |
| Item 4: Controls and Procedures                                                                            | 45 |
| Part II – Other Information                                                                          | 46 |
| Item 1 – Legal Proceedings                                                                           | 46 |
| Item 1a – Risk Factors                                                                               | 46 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                 | 46 |
| Item 3 – Default Upon Senior Securities                                                              | 46 |
| Item 4 – Submission of Matters to a Vote of Security Holders                                         | 46 |
| Item 5 – Other Information                                                                           | 46 |
| Item 6 – Exhibits                                                                                    | 47 |
| Signatures                                                                                                 | 48 |

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| Dollars in thousands,                      |   | For the three months ended March 31, |      |
|--------------------------------------------|--------|--------------------------------------|-----------|
| except for per share amounts               |   | 2010                                 |      |   | 2009 |   |
|                                       |   |                                 |      |   |   |   |
| Summary of Operations                      |   |                                 |      |   |   |   |
| Interest Income                            |   | $                                    | 14,133    |   |   | $ | 16,618 |   |
| Interest Expense                           |   |                                 | 4,112     |   |   |   | 5,545 |   |
| Net Interest Income                        |   |                                 | 10,021    |   |   |   | 11,073 |   |
| Provision for Loan Losses                  |   |                                 | 2,400     |   |   |   | 1,650 |   |
| Non-Interest Income                        |   |                                 | 2,175     |   |   |   | 2,586 |   |
| Non-Interest Expense                       |   |                                 | 6,282     |   |   |   | 6,787 |   |
| Net Income                                 |   |                                 | 2,684     |   |   |   | 3,728 |   |
| Per Common Share Data                      |   |                                 |      |   |   |   |   |   |
| Basic Earnings per Share                   |   | $                                    | 0.24      |   |   | $ | 0.37 |   |
| Diluted Earnings per Share                 |   |                                 | 0.24      |   |   |   | 0.37 |   |
| Cash Dividends Declared                    |   |                                 | 0.195     |   |   |   | 0.195 |   |
| Book Value                                 |   |                                 | 12.71     |   |   |   | 12.36 |   |
| Tangible Book Value2                       |   |                                 | 9.87      |   |   |   | 9.51 |   |
| Market Value                               |   |                                 | 15.94     |   |   |   | 15.86 |   |
| Financial Ratios                           |   |                                 |      |   |   |   |   |   |
| Return on Average Equity1                  |   |                                 | 8.69      | % |   |   | 12.63 | % |
| Return on Average Tangible Equity1,2       |   |                                 | 11.15     | % |   |   | 16.43 | % |
| Return on Average Assets1                  |   |                                 | 0.82      | % |   |   | 1.11 | % |
| Average Equity to Average Assets           |   |                                 | 11.30     | % |   |   | 8.79 | % |
| Average Tangible Equity to Average Assets2 |   |                                 | 9.22      | % |   |   | 6.76 | % |
| Net Interest Margin Tax-Equivalent1,2      |   |                                 | 3.51      | % |   |   | 3.68 | % |
| Dividend Payout Ratio                      |   |                                 | 81.25     | % |   |   | 52.70 | % |
| Allowance for Loan Losses/Total Loans      |   |                                 | 1.53      | % |   |   | 0.99 | % |
| Non-Performing Loans to Total Loans        |   |                                 | 2.46      | % |   |   | 1.32 | % |
| Non-Performing Assets to Total Assets      |   |                                 | 2.20      | % |   |   | 1.23 | % |
| Efficiency Ratio2                          |   |                                 | 49.06     | % |   |   | 40.12 | % |
| At  Period End                   |   |                                 |      |   |   |   |   |   |
| Total Assets                               |   | $                                    | 1,336,544 |   |   | $ | 1,398,500 |   |
| Total Loans                                |   |                                 | 935,008   |   |   |   | 990,014 |   |
| Total Investment Securities                |   |                                 | 296,465   |   |   |   | 309,106 |   |
| Total Deposits                             |   |                                 | 939,180   |   |   |   | 987,440 |   |
| Total Shareholders’ Equity           |   |                                 | 148,542   |   |   |   | 144,600 |   |

----

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| In thousands of dollars                                                                                                                                                   |   | March 31, 2010 |       |   | December 31, 2009 |   |       | March 31, 2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|------------|--------|-------------------|--------|------------|----------------|--------|
| Assets                                                                                                                                                                    |   |           |       |   |              |   |       |           |   |
| Cash and due from banks                                                                                                                                                   |   | $              | 11,731     |   |              | $      | 15,332     |           |   | $ | 15,815 |   |
| Overnight funds sold                                                                                                                                                      |   |           | -          |   |              |   | -          |           |   |   | - |   |
| Securities available for sale                                                                                                                                             |   |           | 131,441    |   |              |   | 81,838     |           |   |   | 11,891 |   |
| Securities to be held to maturity   (fair value $166,964 at March 31, 2010, $192,838 at   December 31, 2009 and $291,271 at March 31, 2009) |   |           | 165,024    |   |              |   | 190,537    |           |   |   | 297,215 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock, at cost                                                                                                            |   |           | 15,443     |   |              |   | 15,443     |           |   |   | 14,693 |   |
| Loans held for sale (fair value approximates cost)                                                                                                                        |   |           | 4,152      |   |              |   | 2,876      |           |   |   | 1,949 |   |
| Loans                                                                                                                                                                     |   |           | 935,008    |   |              |   | 952,492    |           |   |   | 990,014 |   |
| Less: allowance for loan losses                                                                                                                                           |   |           | 14,283     |   |              |   | 13,637     |           |   |   | 9,805 |   |
|      Net loans                                                                                                                                   |   |           | 920,725    |   |              |   | 938,855    |           |   |   | 980,209 |   |
| Accrued interest receivable                                                                                                                                               |   |           | 6,110      |   |              |   | 4,889      |           |   |   | 7,077 |   |
| Premises and equipment                                                                                                                                                    |   |           | 18,069     |   |              |   | 18,331     |           |   |   | 18,860 |   |
| Other real estate owned                                                                                                                                                   |   |           | 6,351      |   |              |   | 5,345      |           |   |   | 2,652 |   |
| Goodwill                                                                                                                                                                  |   |           | 27,684     |   |              |   | 27,684     |           |   |   | 27,684 |   |
| Other assets                                                                                                                                                              |   |           | 29,814     |   |              |   | 30,264     |           |   |   | 20,455 |   |
|         Total Assets                                                                                                              |   | $              | 1,336,544  |   |              | $      | 1,331,394  |           |   | $ | 1,398,500 |   |
| Liabilities                                                                                                                                                               |   |           |       |   |              |   |       |           |   |   |   |   |
| Demand deposits                                                                                                                                                           |   | $              | 61,371     |   |              | $      | 66,317     |           |   | $ | 56,162 |   |
| NOW deposits                                                                                                                                                              |   |           | 111,965    |   |              |   | 114,955    |           |   |   | 103,711 |   |
| Money market deposits                                                                                                                                                     |   |           | 84,694     |   |              |   | 94,425     |           |   |   | 111,904 |   |
| Savings deposits                                                                                                                                                          |   |           | 94,833     |   |              |   | 90,873     |           |   |   | 86,130 |   |
| Certificates of deposit under $100,000                                                                                                                                    |   |           | 228,670    |   |              |   | 212893     |           |   |   | 246,464 |   |
| Certificates $100,000 to $250,000                                                                                                                                         |   |           | 314,010    |   |              |   | 287051     |           |   |   | 307,999 |   |
| Certificates $250,000 and over                                                                                                                                            |   |           | 43,637     |   |              |   | 56153      |           |   |   | 75,070 |   |
|      Total deposits                                                                                                                              |   |           | 939,180    |   |              |   | 922,667    |           |   |   | 987,440 |   |
| Borrowed funds                                                                                                                                                            |   |           | 236,913    |   |              |   | 249,778    |           |   |   | 254,124 |   |
| Other liabilities                                                                                                                                                         |   |           | 11,909     |   |              |   | 11,011     |           |   |   | 12,336 |   |
|      Total Liabilities                                                                                                                           |   |           | 1,188,002  |   |              |   | 1,183,456  |           |   |   | 1,253,900 |   |
| Shareholders’ Equity                                                                                                                                                |   |           |       |   |              |   |       |           |   |   |   |   |
| Preferred stock                                                                                                                                                           |   |           | 24,631     |   |              |   | 24,606     |           |   |   | 24,532 |   |
| Common stock                                                                                                                                                              |   |           | 98         |   |              |   | 97         |           |   |   | 97 |   |
| Additional paid-in capital                                                                                                                                                |   |           | 45,209     |   |              |   | 45,121     |           |   |   | 44,799 |   |
| Retained earnings                                                                                                                                                         |   |           | 78,919     |   |              |   | 78,450     |           |   |   | 75,766 |   |
| Accumulated other comprehensive loss     Net unrealized loss on securities available for sale                                                    |   |           | (108       | )      |              |   | (125       | )              |   |   | (328 | ) |
|      Net unrealized loss on postretirement benefit costs                                                                                         |   |           | (207       | )      |              |   | (211       | )              |   |   | (266 | ) |
|     Total Shareholders’ Equity                                                                                                                  |   |           | 148,542    |   |              |   | 147,938    |           |   |   | 144,600 |   |
|        Total Liabilities & Shareholders’ Equity                                                                              |   | $              | 1,336,544  |   |              | $      | 1,331,394  |           |   | $ | 1,398,500 |   |
| Common Stock                                                                                                                                                              |   |           |       |   |              |   |       |           |   |   |   |   |
| Number of shares authorized                                                                                                                                               |   |           | 18,000,000 |   |              |   | 18,000,000 |           |   |   | 18,000,000 |   |
| Number of shares issued and outstanding                                                                                                                                   |   |           | 9,751,474  |   |              |   | 9,744,170  |           |   |   | 9,711,805 |   |
| Book value per share                                                                                                                                                      |   | $              | 12.71      |   |              | $      | 12.66      |           |   | $ | 12.36 |   |

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|                                                     |   | For the three months endedMarch 31, |      |
|----------------------------------------------------------|--------|-------------------------------------|-----------|
| In thousands of dollars                                  |   | 2010                                |      |   | 2009 |   |
| Interest income                                          |   |                                |      |   |   |   |
| Interest and fees on loans                               |   | $                                   | 11,150    |   |   | $ | 12,927 |   |
| Interest on deposits with other banks                    |   |                                | 2         |   |   |   | - |   |
| Interest and dividends on investments                    |   |                                | 2,981     |   |   |   | 3,691 |   |
|      Total interest income      |   |                                | 14,133    |   |   |   | 16,618 |   |
| Interest expense                                         |   |                                |      |   |   |   |   |   |
| Interest on deposits                                     |   |                                | 2,480     |   |   |   | 3,645 |   |
| Interest on borrowed funds                               |   |                                | 1,632     |   |   |   | 1,900 |   |
|      Total interest expense     |   |                                | 4,112     |   |   |   | 5,545 |   |
| Net interest income                                      |   |                                | 10,021    |   |   |   | 11,073 |   |
| Provision for loan losses                                |   |                                | 2,400     |   |   |   | 1,650 |   |
| Net interest income after provision for loan losses      |   |                                | 7,621     |   |   |   | 9,423 |   |
| Non-interest income                                      |   |                                |      |   |   |   |   |   |
| Investment management and fiduciary income               |   |                                | 411       |   |   |   | 325 |   |
| Service charges on deposit accounts                      |   |                                | 709       |   |   |   | 558 |   |
| Net securities gains                                     |   |                                | 2         |   |   |   | - |   |
| Mortgage origination and servicing income                |   |                                | 278       |   |   |   | 681 |   |
| Other operating income                                   |   |                                | 775       |   |   |   | 1,022 |   |
|      Total non-interest income  |   |                                | 2,175     |   |   |   | 2,586 |   |
| Non-interest expense                                     |   |                                |      |   |   |   |   |   |
| Salaries and employee benefits                           |   |                                | 2,745     |   |   |   | 2,589 |   |
| Occupancy expense                                        |   |                                | 394       |   |   |   | 441 |   |
| Furniture and equipment expense                          |   |                                | 581       |   |   |   | 569 |   |
| FDIC insurance premiums                                  |   |                                | 475       |   |   |   | 362 |   |
| Net securities losses                                    |   |                                | -         |   |   |   | 142 |   |
| Other than temporary impairment charge                   |   |                                | -         |   |   |   | 916 |   |
| Amortization of identified intangibles                   |   |                                | 71        |   |   |   | 71 |   |
| Other operating expense                                  |   |                                | 2,016     |   |   |   | 1,697 |   |
|      Total non-interest expense |   |                                | 6,282     |   |   |   | 6,787 |   |
| Income before income taxes                               |   |                                | 3,514     |   |   |   | 5,222 |   |
| Applicable income taxes                                  |   |                                | 830       |   |   |   | 1,494 |   |
| NET INCOME                                               |   | $                                   | 2,684     |   |   | $ | 3,728 |   |
| Less preferred stock dividends and premium amortization  |   |                                | 337       |   |   |   | 150 |   |
| Net income available to common shareholders              |   | $                                   | 2,347     |   |   | $ | 3,578 |   |
| Earnings per common shareBasic earnings per share        |   | $                                   | 0.24      |   |   | $ | 0.37 |   |
| Diluted earnings per share                               |   | $                                   | 0.24      |   |   | $ | 0.37 |   |
| Weighted average number of common shares outstanding     |   |                                | 9,750,056 |   |   |   | 9,705,783 |   |
| Incremental shares                                       |   |                                | 4,888     |   |   |   | 16,536 |   |
| Cash dividends declared per common share                 |   | $                                   | 0.195     |   |   | $ | 0.195 |   |

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|                                                                               |   |      |   |   |                       |   |      |     |   |   |          |   |   | Accumulated         |   |   |   |   |
|------------------------------------------------------------------------------------|--------|-----------|--------|--------|----------------------------|--------|-----------|----------|--------|--------|---------------|--------|--------|---------------------|--------|--------|--------|--------|
|                                                                               |   |      |   |   | Common stock and           |   |      |     |   |   | other         |   |   | Total               |   |
| In thousands of dollars,                                                           |   | Preferred |   |   | additional paid-in capital |   |      | Retained |   |   | comprehensive |   |   | shareholders’ |   |
| except number of shares                                                            |   | stock     |   |   | Shares                     |   |      | Amount   |   |   | earnings      |   |   | loss                |   |   | equity |   |
| Balance at December 31, 2008                                                       |   | $         | -      |   |                       |   | 9,696,397 |     |   | $      | 44,214        |   |   | $                   | 74,057 |   |   | $      | (1,090 | ) |   | $ | 117,181 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 3,728  |   |   |   | - |   |   |   | 3,728 |   |
| Net unrealized gain on securities available for sale,net of taxes of $265          |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 491 |   |   |   | 491 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $3 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 5 |   |   |   | 5 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 3,728  |   |   |   | 496 |   |   |   | 4,224 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | (2,019 | )      |   |   | - |   |   |   | (2,019 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 9             |   |   |                | -      |   |   |   | - |   |   |   | 9 |   |
| 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                               |   |      | 25     |   |                       |   | -         |     |   |   | (25           | )      |   |                | -      |   |   |   | - |   |   |   | - |   |
| Payment to repurchase common stock                                                 |   |      | -      |   |                       |   | (2,564    | )        |   |   | (39           | )      |   |                | -      |   |   |   | - |   |   |   | (39 | ) |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 17,972    |     |   |   | 244           |   |   |                | -      |   |   |   | - |   |   |   | 244 |   |
| Balance at March 31, 2009                                                          |   | $         | 24,532 |   |                       |   | 9,711,805 |     |   | $      | 44,896        |   |   | $                   | 75,766 |   |   | $      | (594 | ) |   | $ | 144,600 |   |
|                                                                               |   |      |   |   |                       |   |      |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                       |   | $         | 24,606 |   |                       |   | 9,744,170 |     |   | $      | 45,218        |   |   | $                   | 78,450 |   |   | $      | (336 | ) |   | $ | 147,938 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 2,684  |   |   |   | - |   |   |   | 2,684 |   |
| Net unrealized gain on securities available for sale,net of taxes of $8            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 17 |   |   |   | 17 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $2 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 4 |   |   |   | 4 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 2,684  |   |   |   | 21 |   |   |   | 2,705 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | (2,215 | )      |   |   | - |   |   |   | (2,215 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 9             |   |   |                | -      |   |   |   | - |   |   |   | 9 |   |
| Amortization of premium for preferred stock issuance                               |   |      | 25     |   |                       |   | -         |     |   |   | (25           | )      |   |                | -      |   |   |   | - |   |   |   | - |   |
| Payment to repurchase common stock                                                 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 7,304     |     |   |   | 105           |   |   |                | -      |   |   |   | - |   |   |   | 105 |   |
| Balance at March 31, 2010                                                          |   | $         | 24,631 |   |                       |   | 9,751,474 |     |   | $      | 45,307        |   |   | $                   | 78,919 |   |   | $      | (315 | ) |   | $ | 148,542 |   |

----

|                                                                              |   | For the three months ended |    |
|-----------------------------------------------------------------------------------|--------|----------------------------|---------|
| In thousands of dollars                                                           |   | March 31, 2010             |    |   | March 31, 2009 |   |
| Cash flows from operating activities                                              |   |                       |    |   |   |   |
|      Net income                                          |   | $                          | 2,684   |   |   | $ | 3,728 |   |
| Adjustments to reconcile net income to net cash provided by operating activities  |   |                       |    |   |   |
| Depreciation                                                                      |   |                       | 369     |   |   |   | 374 |   |
| Change in deferred income taxes                                                   |   |                       | 192     |   |   |   | - |   |
| Provision for loan losses                                                         |   |                       | 2,400   |   |   |   | 1,650 |   |
| Loans originated for resale                                                       |   |                       | (10,122 | ) |   |   | (34,991 | ) |
| Proceeds from sales and transfers of loans                                        |   |                       | 8,846   |   |   |   | 34,340 |   |
| Net (gain) loss on sale or call of securities held-to-maturity                    |   |                       | (2      | ) |   |   | 142 |   |
| Write-down of securities available for sale                                       |   |                       | -       |   |   |   | 916 |   |
| Provision for losses on other real estate owned                                   |   |                       | 156     |   |   |   | - |   |
| Equity compensation expense                                                       |   |                       | 9       |   |   |   | 9 |   |
| Net (increase) decrease in other assets and accrued interest                      |   |                       | (1,082  | ) |   |   | 580 |   |
| Net increase in other liabilities                                                 |   |                       | 867     |   |   |   | 1,585 |   |
| Net amortization of premiums on investments                                       |   |                       | (100    | ) |   |   | (1,033 | ) |
| Amortization of investment in limited partnership                                 |   |                       | 75      |   |   |   | - |   |
| Net acquisition amortization                                                      |   |                       | 70      |   |   |   | 27 |   |
|      Net cash provided by operating activities           |   |                       | 4,362   |   |   |   | 7,327 |   |
| Cash flows from investing activities                                              |   |                       |    |   |   |   |   |   |
| Proceeds from maturities, payments and calls of securities available for sale     |   |                       | 3,715   |   |   |   | 24 |   |
| Proceeds from sales of securities available for sale                              |   |                       | 202     |   |   |   | 1,865 |   |
| Proceeds from maturities, payments and calls of securities to be held to maturity |   |                       | 25,597  |   |   |   | 36,327 |   |
| Proceeds from sales of other real estate owned                                    |   |                       | 202     |   |   |   | - |   |
| Purchases of securities available for sale                                        |   |                       | (53,477 | ) |   |   | - |   |
| Purchases of securities to be held to maturity                                    |   |                       | -       |   |   |   | (98,752 | ) |
| Net (increase) decrease in loans                                                  |   |                       | 14,366  |   |   |   | (11,610 | ) |
| Capital expenditures                                                              |   |                       | (107    | ) |   |   | (3,209 | ) |
|      Net cash used in investing activities               |   |                       | (9,502  | ) |   |   | (75,355 | ) |
| Cash flows from financing activities                                              |   |                       |    |   |   |   |   |   |
| Net decrease in demand, savings, and money market accounts                        |   |                       | (13,707 | ) |   |   | (30,880 | ) |
| Net increase in certificates of deposit                                           |   |                       | 30,221  |   |   |   | 92,605 |   |
| Repayment on long-term borrowings                                                 |   |                       | -       |   |   |   | (12,000 | ) |
| Net decrease in short-term borrowings                                             |   |                       | (12,865 | ) |   |   | (5,927 | ) |
| Proceeds from issuance of preferred stock                                         |   |                       | -       |   |   |   | 25,000 |   |
| Payments to repurchase common stock                                               |   |                       | -       |   |   |   | (39 | ) |
| Proceeds from sale of common stock                                                |   |                       | 105     |   |   |   | 244 |   |
| Dividends paid                                                                    |   |                       | (2,215  | ) |   |   | (2,016 | ) |
|      Net cash provided by financing activities           |   |                       | 1,539   |   |   |   | 66,987 |   |
| Net decrease in cash and cash equivalents                                         |   |                       | (3,601  | ) |   |   | (1,041 | ) |
| Cash and cash equivalents at beginning of year                                    |   |                       | 15,332  |   |   |   | 16,856 |   |
|      Cash and cash equivalents at end of period          |   | $                          | 11,731  |   |   | $ | 15,815 |   |
| Interest paid                                                                     |   | $                          | 4,170   |   |   | $ | 5,755 |   |
| Income taxes paid                                                                 |   | $                          | -       |   |   | $ | 59 |   |
| Non-cash transactions                                                             |   |                       |    |   |   |   |   |   |
| Change in net unrealized gain on available for sale securities, net of tax        |   | $                          | (17     | ) |   | $ | (491 | ) |
| Net transfer from loans to other real estate owned                                |   | $                          | 1,364   |   |   | $ | 224 |   |

----

----

|                              |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair Value  |   |
|-----------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
| In thousands of dollars           |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | (Estimated) |   |
| Securities available for sale     |   |      |    |   |       |   |   |       |   |   |        |   |
| U.S. Treasury and agency          |   | $         | 58,251  |   |       | $      | 260    |       |   | $      | (148        | )      |   | $ | 58,363 |   |
| Mortgage-backed securities        |   |      | 49,709  |   |       |   | 214    |       |   |   | (344        | )      |   |   | 49,579 |   |
| State and political subdivisions  |   |      | 22,115  |   |       |   | 338    |       |   |   | (200        | )      |   |   | 22,253 |   |
| Corporate securities              |   |      | 1,118   |   |       |   | -      |       |   |   | (289        | )      |   |   | 829 |   |
| Other equity securities           |   |      | 415     |   |       |   | 15     |       |   |   | (13         | )      |   |   | 417 |   |
|                              |   | $         | 131,608 |   |       | $      | 827    |       |   | $      | (994        | )      |   | $ | 131,441 |   |
| Securities to be held to maturity |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency          |   | $         | 29,341  |   |       | $      | 21     |       |   | $      | (1,227      | )      |   | $ | 28,135 |   |
| Mortgage-backed securities        |   |      | 79,470  |   |       |   | 2,172  |       |   |   | (198        | )      |   |   | 81,444 |   |
| State and political subdivisions  |   |      | 56,063  |   |       |   | 1,556  |       |   |   | (384        | )      |   |   | 57,235 |   |
| Corporate securities              |   |      | 150     |   |       |   | -      |       |   |   | -           |   |   |   | 150 |   |
|                              |   | $         | 165,024 |   |       | $      | 3,749  |       |   | $      | (1,809      | )      |   | $ | 166,964 |   |

|                              |   | 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 |   |

|                    |   | Securities available for sale |    |   | Securities to be held to maturity |   |
|-------------------------|--------|-------------------------------|---------|--------|-----------------------------------|--------|
| In thousands of dollars |   | Amortized Cost                |    |   | Fair Value (Estimated)            |   |   | Amortized Cost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less   |   | $                             | -       |   |                              | $      | - |   |   | $ | 689 |   |   | $ | 707 |   |
| Due in 1 to 5 years     |   |                          | 18,501  |   |                              |   | 18,761 |   |   |   | 6,813 |   |   |   | 7,114 |   |
| Due in 5 to 10 years    |   |                          | 3,108   |   |                              |   | 3,189 |   |   |   | 13,520 |   |   |   | 14,067 |   |
| Due after 10 years      |   |                          | 109,584 |   |                              |   | 109,074 |   |   |   | 144,002 |   |   |   | 145,076 |   |
| Equity securities       |   |                          | 415     |   |                              |   | 417 |   |   |   | - |   |   |   | - |   |
|                    |   | $                             | 131,608 |   |                              | $      | 131,441 |   |   | $ | 165,024 |   |   | $ | 166,964 |   |

----

|                    |   | Securities available for sale |   |   | Securities to be held to maturity |   |
|-------------------------|--------|-------------------------------|--------|--------|-----------------------------------|--------|
| In thousands of dollars |   | Amortized Cost                |   |   | Fair Value (Estimated)            |   |   | Amortized Cost |   |   | 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 three months endedMarch 31, 2010 |   |   | For the three months endedMarch 31, 2009 |   |
|-------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|
| Proceeds from sales           |   | $                                        | 202    |   |                                     | $      | 1,865 |   |
| Gross gains                   |   | $                                        | 2      |   |                                     | $      | 9 |   |
| Gross losses                  |   |                                     | -      |   |                                     |   | (151 | ) |
| Net gain/(loss)               |   | $                                        | 2      |   |                                     | $      | (142 | ) |
| Related income taxes          |   | $                                        | 1      |   |                                     | $      | (50 | ) |

|                             |   | 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         |   | $                   | 42,086 |   |              | $      | (1,375 | )      |   | $ | - |   |   | $ | - |   |   | $ | 42,086 |   |   | $ | (1,375 | ) |
| Mortgage-backed securities       |   |                | 40,826 |   |              |   | (542   | )      |   |   | - |   |   |   | - |   |   |   | 40,826 |   |   |   | (542 | ) |
| State and political subdivisions |   |                | 14,625 |   |              |   | (226   | )      |   |   | 1,348 |   |   |   | (358 | ) |   |   | 15,973 |   |   |   | (584 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 830 |   |   |   | (289 | ) |   |   | 830 |   |   |   | (289 | ) |
| Other equity securities          |   |                | 1      |   |              |   | -      |   |   |   | 52 |   |   |   | (13 | ) |   |   | 53 |   |   |   | (13 | ) |
|                             |   | $                   | 97,538 |   |              | $      | (2,143 | )      |   | $ | 2,230 |   |   | $ | (660 | ) |   | $ | 99,768 |   |   | $ | (2,803 | ) |

----

|                             |   | 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        |   | March 31, 2010 |    |   | December 31, 2009 |   |   | March 31, 2009 |   |
|--------------------------------|--------|----------------|---------|--------|-------------------|--------|--------|----------------|--------|
| Commercial                     |   |           |    |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $              | 242,017 |   |              |   | 25.9   | %              |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 225,426 |   |   |   | 22.8 | % |
|    Construction |   |           | 49,026  |   |              |   | 5.2    | %              |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 55,723 |   |   |   | 5.6 | % |
|    Other        |   |           | 121,669 |   |              |   | 13.0   | %              |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 125,033 |   |   |   | 12.6 | % |
| Municipal                      |   |           | 24,203  |   |              |   | 2.6    | %              |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 43,010 |   |   |   | 4.3 | % |
| Residential                    |   |           |    |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |           | 362,459 |   |              |   | 38.8   | %              |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 411,959 |   |   |   | 41.7 | % |
|    Construction |   |           | 17,879  |   |              |   | 1.9    | %              |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 26,495 |   |   |   | 2.7 | % |
| Home equity line of credit     |   |           | 98,241  |   |              |   | 10.5   | %              |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 81,297 |   |   |   | 8.2 | % |
| Consumer                       |   |           | 19,514  |   |              |   | 2.1    | %              |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 21,071 |   |   |   | 2.1 | % |
| Total loans                    |   | $              | 935,008 |   |              |   | 100.0  | %              |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 990,014 |   |   |   | 100.0 | % |

| In thousands of dollars                 |   | March 31, 2010 |   |   | March 31, 2009 |   |
|-----------------------------------------|--------|----------------|--------|--------|----------------|--------|
| Balance at beginning of year            |   | $              | 13,637 |   |           | $      | 8,800 |   |
| Provision charged to operating expenses |   |           | 2,400  |   |           |   | 1,650 |   |
|                                    |   |           | 16,037 |   |           |   | 10,450 |   |
| Loans charged off                       |   |           | (1,857 | )      |           |   | (694 | ) |
| Recoveries on loans                     |   |           | 103    |   |           |   | 49 |   |
|   Net loans charged off       |   |           | (1,754 | )      |           |   | (645 | ) |
| Balance at end of period                |   | $              | 14,283 |   |           | $      | 9,805 |   |

| In thousands of dollars                                                              |   | March 31, 2010 |    |   | December 31, 2009 |   |    | March 31, 2009 |   |
|--------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|----------------|--------|
| Balance of impaired loans                                                            |   | $              | 26,086  |   |              | $      | 25,843  |           |   | $ | 13,073 |   |
| Less portion for which no allowance for loan losses is allocated                     |   |           | (16,706 | )      |              |   | (13,682 | )              |   |   | (5,214 | ) |
| Portion of impaired loan balance for which an allowance for loan losses is allocated |   |           | 9,380   |   |              |   | 12,161  |           |   |   | 7,859 |   |
| Portion of allowance for loan losses allocated to the impaired loan balance          |   |           | 2,115   |   |              |   | 2,196   |           |   |   | 2,264 |   |

----

|                                            |   | 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 March 31, 2010                    |   |             | -       |   |                                  | $      | - |   |

|                                            |   | Number of Shares |   |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Term |   |   | 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 March 31, 2010                   |   |             | 55,500 |   |                            | $      | 15.89  |                                        |   |   | 4.1                                     |   |   | $ | 89 |   |
| Exercisable at March 31, 2010                   |   |             | 55,500 |   |                            | $      | 15.89  |                                        |   |   | 4.1                                     |   |   | $ | 89 |   |

----

----

|                                                                          |   | Income      |   |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|-----------|-----------|--------|
| In thousands, except number of shares and per share data                      |   | (Numerator) |   |   | (Denominator) |   |      | Amount    |   |
| For the three months ended March 31, 2010                                     |   |        |   |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 2,684  |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337    |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,347  |   |          |   | 9,750,056 |      |   | $ | 0.24 |   |
| Effect of dilutive securities: incentive stock options and warrants           |   |        |   |   |          |   | 4,888     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   |        | 2,347  |   |          |   | 9,754,944 |      |   | $ | 0.24 |   |
| For the three months ended March 31, 2009                                     |   |        |   |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 3,728  |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 150    |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 3,578  |   |          |   | 9,705,783 |      |   | $ | 0.37 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 16,536    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 3,578  |   |          |   | 9,722,319 |      |   | $ | 0.37 |   |

|                             |  Outstanding |  In-the-Money |  Out-of-the-Money |
|----------------------------------|-------------------|--------------------|------------------------|
| As of March 31, 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 March 31, 2009             |              |               |                   |
| Incentive stock options          | 73,500            | 31,500             | 42,000                 |
| Warrants issued to U.S. Treasury | 225,904           | -                  | 225,904                |
| Total dilutive securities        | 299,404           | 31,500             | 267,904                |

----

|                                    |   | At March 31, |   |
|-----------------------------------------|--------|--------------|--------|
| In thousands of dollars                 |   | 2010         |   |   | 2009 |   |
| Change in benefit obligation            |   |         |   |   |   |   |
| Benefit obligation at beginning of year |   | $            | 1,962  |   |   | $ | 1,990 |   |
| Service cost                            |   |         | 5      |   |   |   | 5 |   |
| Interest cost                           |   |         | 34     |   |   |   | 34 |   |
| Benefits paid                           |   |         | (37    | ) |   |   | (39 | ) |
| Benefit obligation at end of period     |   |         | 1,964  |   |   |   | 1,990 |   |
| Funded status                           |   |         |   |   |   |   |   |   |
| Benefit obligation at end of period     |   |         | (1,964 | ) |   |   | (1,990 | ) |
| Accrued benefit cost                    |   | $            | (1,964 | ) |   | $ | (1,990 | ) |

----

|                                               |   | For three months endedMarch 31, |   |
|----------------------------------------------------|--------|---------------------------------|--------|
|  In thousands of dollars                      |   | 2010                            |   |   | 2009 |   |
| Components of net periodic benefit cost            |   |                            |   |   |   |   |
| Service cost                                       |   | $                               | 5      |   |   | $ | 4 |   |
| Interest cost                                      |   |                            | 34     |   |   |   | 34 |   |
| Amortization of unrecognized transition obligation |   |                            | 7      |   |   |   | 7 |   |
| Amortization of prior service credit               |   |                            | (1     | ) |   |   | (1 | ) |
| Amortization of accumulated losses                 |   |                            | 5      |   |   |   | 5 |   |
| Net periodic benefit cost                          |   | $                               | 50     |   |   | $ | 49 |   |

|                                                                                        |   | At March 31, |   |
|---------------------------------------------------------------------------------------------|--------|--------------|--------|
| In thousands of dollars                                                                     |   | 2010         |   |   | 2009 |   |
| Unamortized prior service credit                                                            |   | $            | -      |   |   | $ | 1 |   |
| Unamortized net actuarial loss                                                              |   |         | (233   | ) |   |   | (296 | ) |
| Unrecognized transition obligation                                                          |   |         | (85    | ) |   |   | (114 | ) |
|                                                                                        |   |         | (318   | ) |   |   | (409 | ) |
| Deferred tax benefit at 35%                                                                 |   |         | 111    |   |   |   | 143 |   |
| Net unrecognized postretirement benefits included in accumulated other comprehensive income |   | $            | (207   | ) |   | $ | (266 | ) |

----

| In thousands of dollars   |   | March 31, 2010 |   |   | December 31, 2009 |   |   | March 31, 2009 |   |
|---------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
| Mortgage servicing rights |   | $              | 5,205  |   |              | $      | 5,086  |           |   | $ | 4,239 |   |
| Accumulated amortization  |   |           | (3,913 | )      |              |   | (3,814 | )              |   |   | (3,412 | ) |
| Impairment reserve        |   |           | (68    | )      |              |   | (73    | )              |   |   | (224 | ) |
|                      |   | $              | 1,224  |   |              | $      | 1,199  |           |   | $ | 603 |   |

----

|                                               |   | At March 31, 2010 |   |
|----------------------------------------------------|--------|-------------------|--------|
| In thousands of dollars                            |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |              |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                 | -      |   |   | $ | 58,363 |   |   | $ | - |   |   | $ | 58,363 |   |
|    Mortgage-backed securities       |   |              | -      |   |   |   | 49,579 |   |   |   | - |   |   |   | 49,579 |   |
|    State and political subdivisions |   |              | -      |   |   |   | 22,253 |   |   |   | - |   |   |   | 22,253 |   |
|    Corporate securities             |   |              | -      |   |   |   | 829 |   |   |   | - |   |   |   | 829 |   |
|    Other equity securities          |   |              | -      |   |   |   | 417 |   |   |   | - |   |   |   | 417 |   |
| Total assets                                       |   | $                 | -      |   |   | $ | 131,441 |   |   | $ | - |   |   | $ | 131,441 |   |

|                                               |   | 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 March 31, 2010 |   |
|---------------------------|--------|-------------------|--------|
| In thousands of dollars   |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                 | -      |   |   | $ | 1,224 |   |   | $ | - |   |   | $ | 1,224 |   |
| Loans held for sale       |   |              | -      |   |   |   | 4,152 |   |   |   | - |   |   |   | 4,152 |   |
| Other real estate owned   |   |              | -      |   |   |   | 6,351 |   |   |   | - |   |   |   | 6,351 |   |
| Impaired loans            |   |              | -      |   |   |   | 7,265 |   |   |   | - |   |   |   | 7,265 |   |
| Total assets              |   | $                 | -      |   |   | $ | 18,992 |   |   | $ | - |   |   | $ | 18,992 |   |

|                      |   | At December 31, 2009 |   |
|---------------------------|--------|----------------------|--------|
| In thousands of dollars   |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                    | -      |   |   | $ | 1,199 |   |   | $ | - |   |   | $ | 1,199 |   |
| Loans held for sale       |   |                 | -      |   |   |   | 2,876 |   |   |   | - |   |   |   | 2,876 |   |
| Other real estate owned   |   |                 | -      |   |   |   | 5,345 |   |   |   | - |   |   |   | 5,345 |   |
| Impaired loans            |   |                 | -      |   |   |   | 9,965 |   |   |   | - |   |   |   | 9,965 |   |
| Total assets              |   | $                    | -      |   |   | $ | 19,385 |   |   | $ | - |   |   | $ | 19,385 |   |

|                                                  |   | March 31, 2010 |    |   | December 31, 2009 |   |
|-------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                  |   | Carrying       |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|  In thousands of dollars                         |   | amount         |    |   | fair value        |   |   | amount |   |   | fair value |   |
| Financial assets                                      |   |           |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $              | 11,731  |   |              | $      | 11,731 |   |   | $ | 15,332 |   |   | $ | 15,332 |   |
| Securities available for sale                         |   |           | 131,441 |   |              |   | 131,441 |   |   |   | 81,838 |   |   |   | 81,838 |   |
| Securities to be held to maturity                     |   |           | 165,024 |   |              |   | 166,964 |   |   |   | 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                                   |   |           | 4,152   |   |              |   | 4,152 |   |   |   | 2,876 |   |   |   | 2,876 |   |
| Loans (net of allowance for loan losses)              |   |           | 920,725 |   |              |   | 931,009 |   |   |   | 938,555 |   |   |   | 938,095 |   |
| Accrued interest receivable                           |   |           | 6,110   |   |              |   | 6,110 |   |   |   | 4,889 |   |   |   | 4,889 |   |
| Financial liabilities                                 |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   | $              | 939,180 |   |              | $      | 897,086 |   |   | $ | 922,667 |   |   | $ | 877,883 |   |
| Borrowed funds                                        |   |           | 236,913 |   |              |   | 242,178 |   |   |   | 249,778 |   |   |   | 255,292 |   |
| Accrued interest payable                              |   |           | 1,019   |   |              |   | 1,019 |   |   |   | 1,078 |   |   |   | 1,078 |   |

----

----

----

----

----

|                                |   | For the three months ended March 31, |   |
|-------------------------------------|--------|--------------------------------------|--------|
|  In thousands of dollars       |   | 2010                                 |   |   | 2009 |   |
| Net interest income as presented    |   | $                                    | 10,021 |   |   | $ | 11,073 |   |
| Effect of tax-exempt income         |   |                                 | 560    |   |   |   | 574 |   |
| Net interest income, tax-equivalent |   | $                                    | 10,581 |   |   | $ | 11,647 |   |

|                                                 |   | For the three months ended March 31, |   |
|------------------------------------------------------|--------|--------------------------------------|--------|
| In thousands of dollars                              |   | 2010                                 |   |   | 2009 |   |
| Non-interest expense, as presented                   |   | $                                    | 6,282  |   |   | $ | 6,787 |   |
| Net securities losses                                |   |                                 | -      |   |   |   | (142 | ) |
| Other than temporary impairment charge               |   |                                 | -      |   |   |   | (916 | ) |
| Adjusted non-interest expense                        |   |                                 | 6,282  |   |   |   | 5,729 |   |
| Net interest income, as presented                    |   |                                 | 10,021 |   |   |   | 11,073 |   |
| Effect of tax-exempt income                          |   |                                 | 560    |   |   |   | 574 |   |
| Non-interest income, as presented                    |   |                                 | 2,175  |   |   |   | 2,586 |   |
| Effect of non-interest tax-exempt income             |   |                                 | 47     |   |   |   | 46 |   |
| Net securities gains                                 |   |                                 | 2      |   |   |   | - |   |
| Adjusted net interest income plusnon-interest income |   | $                                    | 12,805 |   |   | $ | 14,279 |   |
| Non-GAAP efficiency ratio                            |   |                                 | 49.06  | % |   |   | 40.12 | % |
| GAAP efficiency ratio                                |   |                                 | 51.51  | % |   |   | 49.69 | % |

----

|                                            |   | For the three months ended March 31, |    |
|-------------------------------------------------|--------|--------------------------------------|---------|
|  In thousands of dollars                   |   | 2010                                 |    |   | 2009 |   |
| Average shareholders’ equity as presented |   | $                                    | 149,911 |   |   | $ | 142,484 |   |
| Intangible assets                               |   |                                 | (27,684 | ) |   |   | (27,684 | ) |
| Tangible average shareholders’ equity     |   | $                                    | 122,227 |   |   | $ | 114,800 |   |

----

| Three months ended March 31,                         |   | 2010               |   |   | 2009               |   |
|------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| Dollars in thousands                                 |   | Amount of interest |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |               |   |   |               |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                  | 2      |   |               |   | 0.20 | % |   | $ | - |   |   |   | 0.00 | % |
| Investments                                          |   |               | 3,417  |   |               |   | 4.89 | % |   |   | 4,085 |   |   |   | 5.86 | % |
| Loans held for sale                                  |   |               | 37     |   |               |   | 4.80 | % |   |   | 21 |   |   |   | 5.16 | % |
| Loans                                                |   |               | 11,237 |   |               |   | 4.87 | % |   |   | 13,086 |   |   |   | 5.38 | % |
|    Total interest-earning assets      |   |               | 14,693 |   |               |   | 4.87 | % |   |   | 17,192 |   |   |   | 5.49 | % |
| Interest-bearing liabilities                         |   |               |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |               | 2,480  |   |               |   | 1.15 | % |   |   | 3,645 |   |   |   | 1.71 | % |
| Other borrowings                                     |   |               | 1,632  |   |               |   | 2.87 | % |   |   | 1,900 |   |   |   | 2.72 | % |
|    Total interest-bearing liabilities |   |               | 4,112  |   |               |   | 1.51 | % |   |   | 5,545 |   |   |   | 1.96 | % |
| Net interest income                                  |   | $                  | 10,581 |   |               |   |   |   |   | $ | 11,647 |   |   |   |   |   |
| Interest rate spread                                 |   |               |   |   |               |   | 3.36 | % |   |   |   |   |   |   | 3.53 | % |
| Net interest margin                                  |   |               |   |   |               |   | 3.51 | % |   |   |   |   |   |   | 3.68 | % |

| Three months ended March 31, 2010 compared to 2009 |   |   |   |   |   |   |   |         |   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------------|--------|--------|
| Dollars in thousands                               |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                         |   |   |   |   |   |   |   |         |   |   |   |   |
| Interest-bearing deposits                          |   | $      | -      |   |   | $      | -      |         |   | $      | 2 |   |   | $ | 2 |   |
| Investment securities                              |   |   | 10     |   |   |   | (677   | )            |   |   | (1 | ) |   |   | (668 | ) |
| Loans held for sale                                |   |   | 19     |   |   |   | (1     | )            |   |   | (2 | ) |   |   | 16 |   |
| Loans                                              |   |   | (654   | )      |   |   | (1,258 | )            |   |   | 63 |   |   |   | (1,849 | ) |
|    Total interest income            |   |   | (625   | )      |   |   | (1,936 | )            |   |   | 62 |   |   |   | (2,499 | ) |
| Interest expense                                   |   |   |   |   |   |   |   |         |   |   |   |   |   |   |   |   |
| Deposits                                           |   |   | 39     |   |   |   | (1,191 | )            |   |   | (13 | ) |   |   | (1,165 | ) |
| Other borrowings2                                  |   |   | (356   | )      |   |   | 108    |         |   |   | (20 | ) |   |   | (268 | ) |
| Total interest expense                             |   |   | (317   | )      |   |   | (1,083 | )            |   |   | (33 | ) |   |   | (1,433 | ) |
|    Change in net interest income    |   | $      | (308   | )      |   | $      | (853   | )            |   | $      | 95 |   |   | $ | (1,066 | ) |

----

|                                                                                         |   | For the three monthsEnded March 31, |      |
|----------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|
|  In thousands of dollars                                                                |   | 2010                                |      |   | 2009 |   |
| Assets                                                                                       |   |                                |      |   |   |   |
| Cash and due from banks                                                                      |   | $                                   | 15,387    |   |   | $ | 13,277 |   |
| Overnight funds sold                                                                         |   |                                | -         |   |   |   | - |   |
| Securities available for sale                                                                |   |                                | 107,396   |   |   |   | 12,994 |   |
| Securities to be held to maturity                                                            |   |                                | 176,246   |   |   |   | 269,931 |   |
| Federal Reserve Bank and   Federal Home Loan Bank stock, at cost              |   |                                | 15,443    |   |   |   | 14,693 |   |
| Loans held for sale (fair value approximates cost)                                           |   |                                | 3,123     |   |   |   | 1,649 |   |
| Loans                                                                                        |   |                                | 936,488   |   |   |   | 985,777 |   |
| Allowance for loan losses                                                                    |   |                                | (14,225   | ) |   |   | (9,270 | ) |
|      Net loans                                                      |   |                                | 922,263   |   |   |   | 976,507 |   |
| Accrued interest receivable                                                                  |   |                                | 5,358     |   |   |   | 6,333 |   |
| Premises and equipment                                                                       |   |                                | 18,220    |   |   |   | 16,400 |   |
| Other real estate owned                                                                      |   |                                | 5,654     |   |   |   | 2,468 |   |
| Goodwill                                                                                     |   |                                | 27,684    |   |   |   | 27,684 |   |
| Other assets                                                                                 |   |                                | 29,416    |   |   |   | 19,896 |   |
|         Total Assets                                 |   | $                                   | 1,326,190 |   |   | $ | 1,361,832 |   |
| Liabilities & Shareholders' Equity                                                       |   |                                |      |   |   |   |   |   |
| Demand deposits                                                                              |   | $                                   | 61,476    |   |   | $ | 61,502 |   |
| NOW deposits                                                                                 |   |                                | 115,186   |   |   |   | 103,005 |   |
| Money market deposits                                                                        |   |                                | 90,402    |   |   |   | 120,020 |   |
| Savings deposits                                                                             |   |                                | 92,897    |   |   |   | 82,355 |   |
| Certificates of deposit                                                                      |   |                                | 218,592   |   |   |   | 231,510 |   |
| Certificates $100,000 to $250,000                                                            |   |                                | 314,078   |   |   |   | 253,594 |   |
| Certificates $250,000 and over                                                               |   |                                | 43,638    |   |   |   | 75,070 |   |
|      Total deposits                                                 |   |                                | 936,269   |   |   |   | 927,056 |   |
| Borrowed funds                                                                               |   |                                | 230,368   |   |   |   | 283,406 |   |
| Dividends payable                                                                            |   |                                | 977       |   |   |   | 904 |   |
| Other liabilities                                                                            |   |                                | 8,665     |   |   |   | 7,982 |   |
|      Total Liabilities                                              |   |                                | 1,176,279 |   |   |   | 1,219,348 |   |
| Shareholders’ Equity:                                                                  |   |                                |      |   |   |   |   |   |
| Preferred stock                                                                              |   |                                | 24,606    |   |   |   | 22,778 |   |
| Common stock                                                                                 |   |                                | 97        |   |   |   | 97 |   |
| Additional paid-in capital                                                                   |   |                                | 45,187    |   |   |   | 44,232 |   |
| Retained earnings                                                                            |   |                                | 80,194    |   |   |   | 76,462 |   |
| Accumulated other comprehensive income (loss)                                                |   |                                |      |   |   |   |   |   |
|    Net unrealized gains (losses) on securities available for sale             |   |                                | 37        |   |   |   | (814 | ) |
|    Net unrealized loss on postretirement benefit costs                        |   |                                | (210      | ) |   |   | (271 | ) |
|     Total shareholders’ equity                                     |   |                                | 149,911   |   |   |   | 142,484 |   |
|        Total Liabilities & Shareholders’ Equity |   | $                                   | 1,326,190 |   |   | $ | 1,361,832 |   |

----

----

| In thousands of dollars           |   | March 31, 2010 |    |   | December 31, 2009 |   |    | March 31,2009 |   |
|-----------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|---------------|--------|
| Securities available for sale     |   |           |    |   |              |   |    |          |   |
| U.S. Treasury and agency          |   | $              | 58,363  |   |              | $      | 30,959  |          |   | $ | - |   |
| Mortgage-backed securities        |   |           | 49,579  |   |              |   | 31,148  |          |   |   | 910 |   |
| State and political subdivisions  |   |           | 22,253  |   |              |   | 18,514  |          |   |   | 8,934 |   |
| Corporate securities              |   |           | 829     |   |              |   | 818     |          |   |   | 1,795 |   |
| Other equity securities           |   |           | 417     |   |              |   | 399     |          |   |   | 252 |   |
|                              |   | $              | 131,441 |   |              | $      | 81,838  |          |   | $ | 11,891 |   |
| Securities to be held to maturity |   |           |    |   |              |   |    |          |   |   |   |   |
| U.S. Treasury and agency          |   | $              | 29,341  |   |              | $      | 39,099  |          |   | $ | 109,122 |   |
| Mortgage-backed securities        |   |           | 79,470  |   |              |   | 90,193  |          |   |   | 125,709 |   |
| State and political subdivisions  |   |           | 56,063  |   |              |   | 61,095  |          |   |   | 62,234 |   |
| Corporate securities              |   |           | 150     |   |              |   | 150     |          |   |   | 150 |   |
|                              |   |           | 165,024 |   |              |   | 190,537 |          |   |   | 297,215 |   |
| Total securities                  |   | $              | 296,465 |   |              | $      | 272,375 |          |   | $ | 309,106 |   |

|                                     |   | Available For Sale |    |   | Held to Maturity  |   |
|------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|  In thousands of dollars            |   | 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                |   |               | 15,051  |   |              |   | 2.75 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 43,312  |   |              |   | 5.22 | % |   |   | 29,341 |   |   |   | 6.02 | % |
|   Total                        |   |               | 58,363  |   |              |   | 4.58 | % |   |   | 29,341 |   |   |   | 6.02 | % |
|  Mortgage-Backed Securities         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | 94 |   |   |   | 4.47 | % |
|  Due in 1 to 5 years                |   |               | 73      |   |              |   | 5.71 | % |   |   | 1,501 |   |   |   | 4.16 | % |
|  Due in 5 to 10 years               |   |               | 81      |   |              |   | 8.50 | % |   |   | 1,175 |   |   |   | 5.82 | % |
|  Due after 10 years                 |   |               | 49,425  |   |              |   | 3.84 | % |   |   | 76,700 |   |   |   | 3.91 | % |
|   Total                        |   |               | 49,579  |   |              |   | 3.85 | % |   |   | 79,470 |   |   |   | 3.94 | % |
|  State & Political Subdivisions |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | 595 |   |   |   | 7.69 | % |
|  Due in 1 to 5 years                |   |               | 3,637   |   |              |   | 7.30 | % |   |   | 5,162 |   |   |   | 6.39 | % |
|  Due in 5 to 10 years               |   |               | 3,108   |   |              |   | 7.39 | % |   |   | 12,345 |   |   |   | 6.51 | % |
|  Due after 10 years                 |   |               | 15,508  |   |              |   | 6.23 | % |   |   | 37,961 |   |   |   | 6.38 | % |
|   Total                        |   |               | 22,253  |   |              |   | 6.57 | % |   |   | 56,063 |   |   |   | 6.42 | % |
|  Corporate Securities               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 1 to 5 years                |   |               | -       |   |              |   | 0.00 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 829     |   |              |   | 1.34 | % |   |   | - |   |   |   | 0.00 | % |
|   Total                        |   |               | 829     |   |              |   | 1.34 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Equity Securities                  |   |               | 417     |   |              |   | 2.64 | % |   |   | - |   |   |   | 0.00 | % |
|                                     |   | $                  | 131,441 |   |              |   | 4.62 | % |   | $ | 165,024 |   |   |   | 5.15 | % |

----

|                             |   | 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         |   | $                   | 42,086 |   |              | $      | (1,375 | )      |   | $ | - |   |   | $ | - |   |   | $ | 42,086 |   |   | $ | (1,375 | ) |
| Mortgage-backed securities       |   |                | 40,826 |   |              |   | (542   | )      |   |   | - |   |   |   | - |   |   |   | 40,826 |   |   |   | (542 | ) |
| State and political subdivisions |   |                | 14,625 |   |              |   | (226   | )      |   |   | 1,348 |   |   |   | (358 | ) |   |   | 15,973 |   |   |   | (584 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 830 |   |   |   | (289 | ) |   |   | 830 |   |   |   | (289 | ) |
| Other equity securities          |   |                | 1      |   |              |   | -      |   |   |   | 52 |   |   |   | (13 | ) |   |   | 53 |   |   |   | (13 | ) |
|                             |   | $                   | 97,538 |   |              | $      | (2,143 | )      |   | $ | 2,230 |   |   | $ | (660 | ) |   | $ | 99,768 |   |   | $ | (2,803 | ) |

----

----

| In thousands of dollars        |   | March 31, 2010 |    |   | December 31, 2009 |   |   | March 31, 2009 |   |
|--------------------------------|--------|----------------|---------|--------|-------------------|--------|--------|----------------|--------|
| Commercial                     |   |           |    |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $              | 242,017 |   |              |   | 25.9   | %              |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 225,426 |   |   |   | 22.8 | % |
|    Construction |   |           | 49,026  |   |              |   | 5.2    | %              |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 55,723 |   |   |   | 5.6 | % |
|    Other        |   |           | 121,669 |   |              |   | 13.0   | %              |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 125,033 |   |   |   | 12.6 | % |
| Municipal                      |   |           | 24,203  |   |              |   | 2.6    | %              |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 43,010 |   |   |   | 4.3 | % |
| Residential                    |   |           |    |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |           | 362,459 |   |              |   | 38.8   | %              |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 411,959 |   |   |   | 41.7 | % |
|    Construction |   |           | 17,879  |   |              |   | 1.9    | %              |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 26,495 |   |   |   | 2.7 | % |
| Home equity line of credit     |   |           | 98,241  |   |              |   | 10.5   | %              |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 81,297 |   |   |   | 8.2 | % |
| Consumer                       |   |           | 19,514  |   |              |   | 2.1    | %              |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 21,071 |   |   |   | 2.1 | % |
| Total loans                    |   | $              | 935,008 |   |              |   | 100.0  | %              |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 990,014 |   |   |   | 100.0 | % |

----

| In thousands of dollars        |   | < 1 Year |   |   | 1 - 5 Years |   |   | 5 - 10 Years |   |   | > 10 Years |   |   | Total  |    |
|--------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------|
| Commercial                     |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |
|    Real estate  |   | $           | 8,052  |   |        | $      | 11,506 |         |   | $      | 24,925        |   |   | $      | 197,534 |   |   | $ | 242,017 |   |
|    Construction |   |        | 16,698 |   |        |   | 5,159  |         |   |   | 659           |   |   |   | 26,510  |   |   |   | 49,026 |   |
|    Other        |   |        | 18,165 |   |        |   | 23,139 |         |   |   | 36,108        |   |   |   | 44,257  |   |   |   | 121,669 |   |
| Municipal                      |   |        | 2,479  |   |        |   | 4,813  |         |   |   | 6,307         |   |   |   | 10,604  |   |   |   | 24,203 |   |
| Residential                    |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |   |   |   |   |   |
|    Term         |   |        | 5,192  |   |        |   | 8,071  |         |   |   | 33,924        |   |   |   | 315,272 |   |   |   | 362,459 |   |
|    Construction |   |        | 4,497  |   |        |   | 6,671  |         |   |   | 19            |   |   |   | 6,692   |   |   |   | 17,879 |   |
| Home equity line of credit     |   |        | 1,145  |   |        |   | 1,149  |         |   |   | 695           |   |   |   | 95,252  |   |   |   | 98,241 |   |
| Consumer                       |   |        | 5,969  |   |        |   | 9,549  |         |   |   | 1,271         |   |   |   | 2,725   |   |   |   | 19,514 |   |
| Total loans                    |   | $           | 62,197 |   |        | $      | 70,057 |         |   | $      | 103,908       |   |   | $      | 698,846 |   |   | $ | 935,008 |   |

|                           |   | Fixed-Rate |    |   | Adjustable-Rate |   |   | Total  |   |
|--------------------------------|--------|------------|---------|--------|-----------------|--------|--------|--------|--------|
| In thousands of dollars        |   | Amount     |    |   | % of total      |   |   | Amount |   |   | % of total |   |   | Amount |   |   | % of total |   |
| Commercial                     |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $          | 52,821  |   |            |   | 5.7    | %      |   | $ | 189,196 |   |   |   | 20.2 | % |   | $ | 242,017 |   |   |   | 25.9 | % |
|    Construction |   |       | 10,727  |   |            |   | 1.1    | %      |   |   | 38,299 |   |   |   | 4.1 | % |   |   | 49,026 |   |   |   | 5.2 | % |
|    Other        |   |       | 57,324  |   |            |   | 6.1    | %      |   |   | 64,345 |   |   |   | 6.9 | % |   |   | 121,669 |   |   |   | 13.0 | % |
| Municipal                      |   |       | 20,403  |   |            |   | 2.2    | %      |   |   | 3,800 |   |   |   | 0.4 | % |   |   | 24,203 |   |   |   | 2.6 | % |
| Residential                    |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |       | 126,414 |   |            |   | 13.5   | %      |   |   | 236,045 |   |   |   | 25.3 | % |   |   | 362,459 |   |   |   | 38.8 | % |
|    Construction |   |       | 7,161   |   |            |   | 0.8    | %      |   |   | 10,718 |   |   |   | 1.1 | % |   |   | 17,879 |   |   |   | 1.9 | % |
| Home equity line of credit     |   |       | 2,103   |   |            |   | 0.2    | %      |   |   | 96,138 |   |   |   | 10.3 | % |   |   | 98,241 |   |   |   | 10.5 | % |
| Consumer                       |   |       | 16,495  |   |            |   | 1.8    | %      |   |   | 3,019 |   |   |   | 0.3 | % |   |   | 19,514 |   |   |   | 2.1 | % |
| Total loans                    |   | $          | 293,448 |   |            |   | 31.4   | %      |   | $ | 641,560 |   |   |   | 68.6 | % |   | $ | 935,008 |   |   |   | 100.0 | % |

----

----

----

| In thousands of dollars        |   | March 31, 2010 |   |   | December 31, 2009 |   |   | March 31, 2009 |   |
|--------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
| Commercial                     |   |           |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $              | 5,002  |   |              |   | 25.9   | %              |   | $ | 5,297 |   |   |   | 25.2 | % |   | $ | 3,771 |   |   |   | 22.8 | % |
|    Construction |   |           | 925    |   |              |   | 5.2    | %              |   |   | 896 |   |   |   | 5.1 | % |   |   | 636 |   |   |   | 5.6 | % |
|    Other        |   |           | 3,109  |   |              |   | 13.0   | %              |   |   | 3,095 |   |   |   | 12.0 | % |   |   | 2,221 |   |   |   | 12.6 | % |
| Municipal                      |   |           | 21     |   |              |   | 2.6    | %              |   |   | 23 |   |   |   | 4.8 | % |   |   | 20 |   |   |   | 4.3 | % |
| Residential                    |   |           |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |           | 1,249  |   |              |   | 38.8   | %              |   |   | 1,197 |   |   |   | 38.7 | % |   |   | 858 |   |   |   | 41.7 | % |
|    Construction |   |           | 487    |   |              |   | 1.9    | %              |   |   | 43 |   |   |   | 1.8 | % |   |   | 46 |   |   |   | 2.7 | % |
| Home equity line of credit     |   |           | 492    |   |              |   | 10.5   | %              |   |   | 515 |   |   |   | 9.9 | % |   |   | 508 |   |   |   | 8.2 | % |
| Consumer                       |   |           | 656    |   |              |   | 2.1    | %              |   |   | 716 |   |   |   | 2.5 | % |   |   | 626 |   |   |   | 2.1 | % |
| Unallocated                    |   |           | 2,342  |   |              |   | 0.0    | %              |   |   | 1,855 |   |   |   | 0.0 | % |   |   | 1,119 |   |   |   | 0.0 | % |
| Total                          |   | $              | 14,283 |   |              |   | 100.0  | %              |   | $ | 13,637 |   |   |   | 100.0 | % |   | $ | 9,805 |   |   |   | 100.0 | % |

----

| Dollars in thousands                                          |   | March 31, 2010 |   |   | December 31, 2009 |   |   | March 31, 2009 |   |
|---------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
| Balance at beginning of year                                  |   | $              | 13,637 |   |              | $      | 8,800  |           |   | $ | 8,800 |   |
| Loans charged off:                                            |   |           |   |   |              |   |   |           |   |   |   |   |
| Commercial                                                    |   |           |   |   |              |   |   |           |   |   |   |   |
|    Real estate                                 |   |           | 779    |   |              |   | 2,430  |           |   |   | - |   |
|    Construction                                |   |           | 175    |   |              |   | -      |           |   |   | - |   |
|    Other                                       |   |           | 316    |   |              |   | 2,329  |           |   |   | 545 |   |
| Municipal                                                     |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                                                   |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term                                        |   |           | 271    |   |              |   | 1,767  |           |   |   | 60 |   |
|    Construction                                |   |           | -      |   |              |   | 47     |           |   |   | - |   |
| Home equity line of credit                                    |   |           | -      |   |              |   | 177    |           |   |   | - |   |
| Consumer                                                      |   |           | 316    |   |              |   | 826    |           |   |   | 89 |   |
| Total                                                         |   |           | 1,857  |   |              |   | 7,576  |           |   |   | 694 |   |
| Recoveries on loans previously charged off                    |   |           |   |   |              |   |   |           |   |   |   |   |
| Commercial                                                    |   |           |   |   |              |   |   |           |   |   |   |   |
|    Real estate                                 |   |           | -      |   |              |   | -      |           |   |   | - |   |
|    Construction                                |   |           | -      |   |              |   | -      |           |   |   | - |   |
|    Other                                       |   |           | 22     |   |              |   | 79     |           |   |   | 21 |   |
| Municipal                                                     |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                                                   |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term                                        |   |           | 1      |   |              |   | 59     |           |   |   | 1 |   |
|    Construction                                |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Home equity line of credit                                    |   |           | -      |   |              |   | 1      |           |   |   | - |   |
| Consumer                                                      |   |           | 80     |   |              |   | 114    |           |   |   | 27 |   |
| Total                                                         |   |           | 103    |   |              |   | 253    |           |   |   | 49 |   |
| Net loans charged off                                         |   |           | 1,754  |   |              |   | 7,323  |           |   |   | 645 |   |
| Provision for loan losses                                     |   |           | 2,400  |   |              |   | 12,160 |           |   |   | 1,650 |   |
| Balance at end of period                                      |   | $              | 14,283 |   |              | $      | 13,637 |           |   | $ | 9,805 |   |
| Ratio of net loans charged off to average loans outstanding   |   |           | 0.76   | %      |              |   | 0.75   | %              |   |   | 0.27 | % |
| Ratio of allowance for loan losses to total loans outstanding |   |           | 1.53   | %      |              |   | 1.43   | %              |   |   | 0.99 | % |

----

| In thousands of dollars                   |   | March 31, 2010 |   |   | December 31, 2009 |   |   | March 31, 2009 |   |
|-------------------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
| Commercial                                |   |           |   |   |              |   |   |           |   |
|    Real estate             |   | $              | 7,345  |   |              | $      | 6,589  |           |   | $ | 7,933 |   |
|    Construction            |   |           | 459    |   |              |   | 458    |           |   |   | - |   |
|    Other                   |   |           | 2,901  |   |              |   | 2,735  |           |   |   | 3,548 |   |
| Municipal                                 |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                               |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term                    |   |           | 8,907  |   |              |   | 6,322  |           |   |   | 5,507 |   |
|    Construction            |   |           | 3,176  |   |              |   | 3,182  |           |   |   | 27 |   |
| Home equity line of credit                |   |           | 161    |   |              |   | 143    |           |   |   | 363 |   |
| Consumer                                  |   |           | 85     |   |              |   | 309    |           |   |   | 159 |   |
| Total non-performing loans                |   | $              | 23,034 |   |              | $      | 19,738 |           |   | $ | 17,537 |   |
| Non-accrual loans included in above total |   | $              | 23,018 |   |              | $      | 18,562 |           |   | $ | 13,073 |   |

| ·   | 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                                  |   | March 31,2010 |   |   | December 31,2009 |   |   | March 31, 2009 |   |
|-------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|--------|---------------------|--------|
| Commercial                                            |   |          |   |   |             |   |   |                |   |
|    Real estate                         |   | $             | 8,862  |   |             | $      | 9,443  |                |   | $ | 9,634 |   |
|   Construction                              |   |          | 459    |   |             |   | 458    |                |   |   | - |   |
|    Other                               |   |          | 2,087  |   |             |   | 3,607  |                |   |   | 4,826 |   |
| Municipal                                             |   |          | -      |   |             |   | -      |                |   |   | - |   |
| Residential                                           |   |          |   |   |             |   |   |                |   |   |   |   |
|    Term                                |   |          | 12,268 |   |             |   | 11,747 |                |   |   | 14,150 |   |
|    Construction                        |   |          | 1,845  |   |             |   | 3,182  |                |   |   | 416 |   |
| Home equity line of credit                            |   |          | 574    |   |             |   | 682    |                |   |   | 1,032 |   |
| Consumer                                              |   |          | 768    |   |             |   | 775    |                |   |   | 556 |   |
| Total                                                 |   | $             | 26,863 |   |             | $      | 29,894 |                |   | $ | 30,614 |   |
| Loans 30-89 days past due to total loans              |   |          | 0.90   | %      |             |   | 1.26   | %                   |   |   | 1.32 | % |
| Loans 90+ days past due and accruing to total loans   |   |          | 0.00   | %      |             |   | 0.12   | %                   |   |   | 0.45 | % |
| Loans 90+ days past due on non-accrual to total loans |   |          | 1.97   | %      |             |   | 1.76   | %                   |   |   | 1.32 | % |
| Total past due loans to total loans                   |   |          | 2.87   | %      |             |   | 3.14   | %                   |   |   | 3.09 | % |

----

| Dollars in thousands           |   | March 31, 2010 |   |   | December 31, 2009 |   |   | March 31, 2009 |   |
|--------------------------------|--------|----------------|--------|--------|-------------------|--------|--------|----------------|--------|
| Carrying Value                 |   |           |   |   |              |   |   |           |   |
| Commercial                     |   |           |   |   |              |   |   |           |   |
|    Real estate  |   | $              | -      |   |              | $      | -      |           |   | $ | - |   |
|   Construction       |   |           | 1,232  |   |              |   | 1,182  |           |   |   | 1,152 |   |
|    Other        |   |           | 2,661  |   |              |   | 1,920  |           |   |   | 731 |   |
| Municipal                      |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                    |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term         |   |           | 3,129  |   |              |   | 2,826  |           |   |   | 1,094 |   |
|    Construction |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Home equity line of credit     |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Consumer                       |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Total                          |   | $              | 7,022  |   |              | $      | 5,928  |           |   | $ | 2,977 |   |
| Related Allowance              |   |           |   |   |              |   |   |           |   |   |   |   |
| Commercial                     |   |           |   |   |              |   |   |           |   |   |   |   |
|    Real estate  |   | $              | -      |   |              | $      | -      |           |   | $ | - |   |
|   Construction       |   |           | 460    |   |              |   | 476    |           |   |   | 325 |   |
|    Other        |   |           | 35     |   |              |   | -      |           |   |   | - |   |
| Municipal                      |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                    |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term         |   |           | 176    |   |              |   | 107    |           |   |   | - |   |
|    Construction |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Home equity line of credit     |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Consumer                       |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Total                          |   | $              | 671    |   |              | $      | 583    |           |   | $ | 325 |   |
| Net Value                      |   |           |   |   |              |   |   |           |   |   |   |   |
| Commercial                     |   |           |   |   |              |   |   |           |   |   |   |   |
|    Real estate  |   | $              | -      |   |              | $      | -      |           |   | $ | - |   |
|   Construction       |   |           | 772    |   |              |   | 706    |           |   |   | 827 |   |
|    Other        |   |           | 2,626  |   |              |   | 1,920  |           |   |   | 731 |   |
| Municipal                      |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Residential                    |   |           |   |   |              |   |   |           |   |   |   |   |
|    Term         |   |           | 2,953  |   |              |   | 2,719  |           |   |   | 1,094 |   |
|    Construction |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Home equity line of credit     |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Consumer                       |   |           | -      |   |              |   | -      |           |   |   | - |   |
| Total                          |   | $              | 6,351  |   |              | $      | 5,345  |           |   | $ | 2,652 |   |

----

| In thousands of dollars                                      |   | Total  |    |   | Less than1 year |   |    | 1-3years |   |   | 3-5years |   |   | More than 5 years |    |
|--------------------------------------------------------------|--------|--------|---------|--------|-----------------|--------|---------|----------|--------|--------|----------|--------|--------|-------------------|---------|
|  Borrowed funds                                         |   | $      | 236,913 |   |            |   | 136,738 |     |   |   | 20,000   |   |   |              | 30,000  |   |   |   | 50,175 |   |
|  Operating leases                                       |   |   | 871     |   |            |   | 194     |     |   |   | 320      |   |   |              | 112     |   |   |   | 225 |   |
|  Certificates of deposit                                |   |   | 586,317 |   |            |   | 429,967 |     |   |   | 53,168   |   |   |              | 103,182 |   |   |   | - |   |
|  Total                                                  |   | $      | 824,101 |   |            |   | 566,899 |     |   |   | 73,488   |   |   |              | 133,294 |   |   |   | 50,420 |   |
|  Unused line, collateralized by residential real estate |   | $      | 78,083  |   |            |   | 78,083  |     |   |   | -        |   |   |              | -       |   |   |   | - |   |
|  Other unused commitments                               |   | $      | 50,126  |   |            |   | 50,126  |     |   |   | -        |   |   |              | -       |   |   |   | - |   |
|  Standby letters of credit                              |   | $      | 1,466   |   |            |   | 1,466   |     |   |   | -        |   |   |              | -       |   |   |   | - |   |
|  Commitments to extend credit                           |   | $      | 20,869  |   |            |   | 20,869  |     |   |   | -        |   |   |              | -       |   |   |   | - |   |
|  Total loan commitments and unused lines of credit      |   | $      | 153,312 |   |            |   | 153,312 |     |   |   | -        |   |   |              | -       |   |   |   | - |   |

----

|                                                  |   |   | 0-90    |   |   |   | 90-365  |   |   |   | 1-5     |   |   |   | 5+       |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
|                                                  |   | Days   |    |   | Days   |   |    | Years  |   |   | Years   |   |
|  Investment securities at amortized cost         |   | $      | 78,221  |   |   | $      | 41,230  |   |   | $      | 99,233  |   |   | $      | 77,948   |   |
| Federal Home Loan Bank and Federal Reserve Bank Stock |   |   | 14,031  |   |   |   | -       |   |   |   | -       |   |   |   | 1,412    |   |
|  Loans held for sale                             |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | 4,152    |   |
|  Loans                                           |   |   | 450,926 |   |   |   | 149,247 |   |   |   | 256,360 |   |   |   | 78,475   |   |
|  Other interest-earning assets                   |   |   | -       |   |   |   | 9,578   |   |   |   | -       |   |   |   | -        |   |
|  Non-rate-sensitive assets                       |   |   | 4,965   |   |   |   | -       |   |   |   | -       |   |   |   | 70,766   |   |
|  Total assets                                    |   |   | 548,143 |   |   |   | 200,055 |   |   |   | 355,593 |   |   |   | 232,753  |   |
|  Interest-bearing deposits                       |   |   | 327,145 |   |   |   | 195,767 |   |   |   | 148,076 |   |   |   | 206,821  |   |
|  Borrowed funds                                  |   |   | 86,741  |   |   |   | 50,009  |   |   |   | 40,050  |   |   |   | 60,113   |   |
|  Non-rate-sensitive liabilities and equity       |   |   | 1,850   |   |   |   | 5,850   |   |   |   | 38,800  |   |   |   | 175,322  |   |
|  Total liabilities and equity                    |   |   | 415,736 |   |   |   | 251,626 |   |   |   | 226,926 |   |   |   | 442,256  |   |
|  Period gap                                      |   | $      | 132,407 |   |   | $      | (51,571 | )      |   | $      | 128,667 |   |   | $      | (209,503 | )      |
|  Percent of total assets                         |   |   | 9.91    | %      |   |   | -3.86   | %      |   |   | 9.63    | %      |   |   | -15.68   | %      |
|  Cumulative gap (current)                        |   |   | 132,407 |   |   |   | 80,836  |   |   |   | 209,503 |   |   |   | -        |   |
|  Percent of total assets                         |   |   | 9.91    | %      |   |   | 6.05    | %      |   |   | 15.68   | %      |   |   | 0.00     | %      |

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