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

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

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| Part I. Financial Information                                                                              | 1  |
|------------------------------------------------------------------------------------------------------------|----|
| Selected Financial Data (Unaudited)                                                                        | 1  |
| Item 1 – Financial Statements                                                                        | 2  |
| Report of Independent Registered Public Accounting Firm                                                    | 2  |
| Consolidated Balance Sheets (Unaudited)                                                                    | 3  |
| Consolidated Statements of Income (Unaudited)                                                              | 4  |
| Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)                               | 5  |
| Consolidated Statements of Cash Flows (Unaudited)                                                          | 6  |
| Notes to Consolidated Financial Statements                                                                 | 7  |
| Note  1 – Basis of Presentation                                                            | 7  |
| Note  2 –Investment Securities                                                             | 7  |
| Note  3 – Loans                                                                            | 10 |
| Note  4 – Stock Options and Stock-Based Compenstation                                      | 11 |
| Note 5 – Preferred Stock                                                                             | 12 |
| Note 6 – Common Stock                                                                                | 13 |
| Note  7 – Earnings Per Share                                                               | 13 |
| 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                                                                                        | 26 |
| Average Daily Balance Sheets                                                                               | 28 |
| Non-Interest Income                                                                                        | 29 |
| Non-Interest Expense                                                                                       | 29 |
| Income Taxes                                                                                               | 29 |
| Investments                                                                                                | 29 |
| Impaired Securities                                                                                        | 31 |
| Federal Home Loan Bank Stock                                                                               | 33 |
| Loans and Loans Held for Sale                                                                              | 34 |
| Loans Concentrations                                                                                       | 35 |
| Credit Risk Management and Allowance for Loan Losses                                                       | 35 |
| Non-Performing Loans and Troubled Debt Restructured                                                        | 39 |
| Impaired Loans                                                                                             | 40 |
| Past Due Loans                                                                                             | 41 |
| Potential Problem Loans and Loans in Process of Foreclosure                                                | 41 |
| Other Real Estate Owned                                                                                    | 41 |
| Goodwill                                                                                                   | 43 |
| Liquidity Management                                                                                       | 43 |
| Deposits                                                                                                   | 43 |
| Borrowed Funds                                                                                             | 43 |
| Shareholders’ Equity                                                                                 | 44 |
| Off-Balance-Sheet Financial Instruments  and Contractual Obligations                             | 45 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk                                  | 45 |
| Market-Risk Management                                                                                     | 45 |
| Asset/Liability Management                                                                                 | 45 |
| Interest Rate Risk Management                                                                              | 47 |
| Item 4: Controls and Procedures                                                                            | 48 |
| Part II – Other Information                                                                          | 48 |
| Item 1 – Legal Proceedings                                                                           | 48 |
| Item 1a – Risk Factors                                                                               | 48 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                 | 48 |
| Item 3 – Default Upon Senior Securities                                                              | 48 |
| Item 4 – Submission of Matters to a Vote of Security Holders                                         | 48 |
| Item 5 – Other Information                                                                           | 48 |
| Item 6 – Exhibits                                                                                    | 49 |
| Signatures                                                                                                 | 50 |

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| In thousands of dollars                    |   | For the six months ended June 30, |      |   | For the quarters endedJune 30, |   |
|--------------------------------------------|--------|-----------------------------------|-----------|--------|--------------------------------|--------|
| except for per share amounts               |   | 2010                              |      |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                       |   |                              |      |   |                           |   |   |   |   |   |   |   |
| Summary of Operations                      |   |                              |      |   |                           |   |   |   |   |   |   |   |
| Interest Income                            |   | $                                 | 28,348    |   |                           | $      | 32,869 |   |   | $ | 14,215 |   |   | $ | 16,251 |   |
| Interest Expense                           |   |                              | 8,370     |   |                           |   | 10,359 |   |   |   | 4,258 |   |   |   | 4,814 |   |
| Net Interest Income                        |   |                              | 19,978    |   |                           |   | 22,510 |   |   |   | 9,957 |   |   |   | 11,437 |   |
| Provision for Loan Losses                  |   |                              | 4,500     |   |                           |   | 4,600 |   |   |   | 2,100 |   |   |   | 2,950 |   |
| Non-Interest Income                        |   |                              | 4,457     |   |                           |   | 5,549 |   |   |   | 2,282 |   |   |   | 2,963 |   |
| Non-Interest Expense                       |   |                              | 12,177    |   |                           |   | 13,021 |   |   |   | 5,895 |   |   |   | 6,234 |   |
| Net Income                                 |   |                              | 5,844     |   |                           |   | 7,490 |   |   |   | 3,160 |   |   |   | 3,762 |   |
| Per Common Share Data                      |   |                              |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings per Share                   |   | $                                 | 0.53      |   |                           | $      | 0.72 |   |   | $ | 0.29 |   |   | $ | 0.35 |   |
| Diluted Earnings per Share                 |   |                              | 0.53      |   |                           |   | 0.72 |   |   |   | 0.29 |   |   |   | 0.35 |   |
| Cash Dividends Declared                    |   |                              | 0.390     |   |                           |   | 0.390 |   |   |   | 0.195 |   |   |   | 0.195 |   |
| Book Value per Common Share                |   |                              | 12.89     |   |                           |   | 12.51 |   |   |   | 12.89 |   |   |   | 12.51 |   |
| Tangible Book Value per Common Share       |   |                              | 10.05     |   |                           |   | 9.66 |   |   |   | 10.05 |   |   |   | 9.66 |   |
| Market Value                               |   |                              | 13.13     |   |                           |   | 19.47 |   |   |   | 13.13 |   |   |   | 19.47 |   |
| Financial Ratios                           |   |                              |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Return on Average Equity1                  |   |                              | 9.38      | %      |                           |   | 12.48 | % |   |   | 10.05 | % |   |   | 12.29 | % |
| Return on Average Tangible Equity1,2       |   |                              | 12.03     | %      |                           |   | 16.18 | % |   |   | 12.87 | % |   |   | 15.86 | % |
| Return on Average Assets1                  |   |                              | 0.88      | %      |                           |   | 1.10 | % |   |   | 0.94 | % |   |   | 1.09 | % |
| Average Equity to Average Assets           |   |                              | 11.25     | %      |                           |   | 10.54 | % |   |   | 11.21 | % |   |   | 10.61 | % |
| Average Tangible Equity to Average Assets2 |   |                              | 9.18      | %      |                           |   | 8.52 | % |   |   | 9.15 | % |   |   | 8.62 | % |
| Net Interest Margin Tax-Equivalent1,2      |   |                              | 3.41      | %      |                           |   | 3.68 | % |   |   | 3.35 | % |   |   | 3.69 | % |
| Dividend Payout Ratio                      |   |                              | 73.58     | %      |                           |   | 54.17 | % |   |   | 67.24 | % |   |   | 55.71 | % |
| Allowance for Loan Losses/Total Loans      |   |                              | 1.52      | %      |                           |   | 1.20 | % |   |   | 1.52 | % |   |   | 1.20 | % |
| Non-Performing Loans to Total Loans        |   |                              | 2.53      | %      |                           |   | 1.57 | % |   |   | 2.53 | % |   |   | 1.57 | % |
| Non-Performing Assets to Total Assets      |   |                              | 2.14      | %      |                           |   | 1.36 | % |   |   | 2.14 | % |   |   | 1.36 | % |
| Efficiency Ratio2                          |   |                              | 47.46     | %      |                           |   | 40.78 | % |   |   | 45.86 | % |   |   | 41.40 | % |
| At  Period End                   |   |                              |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                               |   | $                                 | 1,326,275 |   |                           | $      | 1,369,986 |   |   | $ | 1,326,275 |   |   | $ | 1,369,986 |   |
| Total Loans                                |   |                              | 932,010   |   |                           |   | 982,336 |   |   |   | 932,010 |   |   |   | 982,336 |   |
| Total Investment Securities                |   |                              | 294,584   |   |                           |   | 298,292 |   |   |   | 294,584 |   |   |   | 298,292 |   |
| Total Deposits                             |   |                              | 949,501   |   |                           |   | 913,949 |   |   |   | 949,501 |   |   |   | 913,949 |   |
| Total Shareholders’ Equity           |   |                              | 150,445   |   |                           |   | 146,198 |   |   |   | 150,445 |   |   |   | 146,198 |   |

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| In thousands of dollars                                                                                                                  |   | June 30,2010 |       |   | December 31,2009 |   |       | June 30, 2009 |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|------------|--------|------------------|--------|------------|--------------------|--------|
| Assets                                                                                                                                   |   |         |       |   |             |   |       |               |   |
| Cash and due from banks                                                                                                                  |   | $            | 22,219     |   |             | $      | 15,332     |               |   | $ | 18,575 |   |
| Overnight funds sold                                                                                                                     |   |         | -          |   |             |   | -          |               |   |   | - |   |
| Securities available for sale                                                                                                            |   |         | 149,249    |   |             |   | 81,838     |               |   |   | 35,972 |   |
| Securities to be held to maturity (fair value of $134,249 at June 30, 2010, $192,838 at December 31, 2009 and $247,100 at June 30, 2009) |   |         | 129,892    |   |             |   | 190,537    |               |   |   | 247,627 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock, at cost                                                                           |   |         | 15,443     |   |             |   | 15,443     |               |   |   | 14,693 |   |
| Loans held for sale                                                                                                                      |   |         | 3,426      |   |             |   | 2,876      |               |   |   | 3,162 |   |
| Loans                                                                                                                                    |   |         | 932,010    |   |             |   | 952,492    |               |   |   | 982,336 |   |
| Less allowance for loan losses                                                                                                           |   |         | 14,165     |   |             |   | 13,637     |               |   |   | 11,752 |   |
| Net loans                                                                                                                                |   |         | 917,845    |   |             |   | 938,855    |               |   |   | 970,584 |   |
| Accrued interest receivable                                                                                                              |   |         | 6,536      |   |             |   | 4,889      |               |   |   | 7,140 |   |
| Premises and equipment                                                                                                                   |   |         | 18,739     |   |             |   | 18,331     |               |   |   | 18,610 |   |
| Other real estate owned                                                                                                                  |   |         | 4,794      |   |             |   | 5,345      |               |   |   | 2,797 |   |
| Goodwill                                                                                                                                 |   |         | 27,684     |   |             |   | 27,684     |               |   |   | 27,684 |   |
| Other assets                                                                                                                             |   |         | 30,448     |   |             |   | 30,264     |               |   |   | 23,142 |   |
| Total assets                                                                                                                             |   | $            | 1,326,275  |   |             | $      | 1,331,394  |               |   | $ | 1,369,986 |   |
| Liabilities                                                                                                                              |   |         |       |   |             |   |       |               |   |   |   |   |
| Demand deposits                                                                                                                          |   | $            | 62,821     |   |             | $      | 66,317     |               |   | $ | 63,266 |   |
| NOW deposits                                                                                                                             |   |         | 112,256    |   |             |   | 114,955    |               |   |   | 100,283 |   |
| Money market deposits                                                                                                                    |   |         | 77,231     |   |             |   | 94,425     |               |   |   | 104,803 |   |
| Savings deposits                                                                                                                         |   |         | 95,686     |   |             |   | 90,873     |               |   |   | 86,305 |   |
| Certificates of deposit                                                                                                                  |   |         | 237,757    |   |             |   | 212,893    |               |   |   | 202,039 |   |
| Certificates $100,000 to $250,000                                                                                                        |   |         | 313,908    |   |             |   | 287,051    |               |   |   | 306,996 |   |
| Certificates $250,000 and over                                                                                                           |   |         | 49,842     |   |             |   | 56,153     |               |   |   | 50,257 |   |
| Total deposits                                                                                                                           |   |         | 949,501    |   |             |   | 922,667    |               |   |   | 913,949 |   |
| Borrowed funds                                                                                                                           |   |         | 213,944    |   |             |   | 249,778    |               |   |   | 297,361 |   |
| Other liabilities                                                                                                                        |   |         | 12,385     |   |             |   | 11,011     |               |   |   | 12,478 |   |
| Total Liabilities                                                                                                                        |   |         | 1,175,830  |   |             |   | 1,183,456  |               |   |   | 1,223,788 |   |
| Shareholders' equity                                                                                                                     |   |         |       |   |             |   |       |               |   |   |   |   |
| Preferred stock                                                                                                                          |   |         | 24,655     |   |             |   | 24,606     |               |   |   | 24,557 |   |
| Common stock                                                                                                                             |   |         | 98         |   |             |   | 97         |               |   |   | 97 |   |
| Additional paid-in capital                                                                                                               |   |         | 45,298     |   |             |   | 45,121     |               |   |   | 44,958 |   |
| Retained earnings                                                                                                                        |   |         | 79,864     |   |             |   | 78,450     |               |   |   | 77,320 |   |
| Net unrealized gain/(loss) on securities available-for-sale                                                                              |   |         | 732        |   |             |   | (125       | )                  |   |   | (472 | ) |
| Net unrealized loss on postretirement benefit costs                                                                                      |   |         | (202       | )      |             |   | (211       | )                  |   |   | (262 | ) |
| Total shareholders' equity                                                                                                               |   |         | 150,445    |   |             |   | 147,938    |               |   |   | 146,198 |   |
| Total liabilities & shareholders' equity                                                                                             |   | $            | 1,326,275  |   |             | $      | 1,331,394  |               |   | $ | 1,369,986 |   |
| Common Stock                                                                                                                             |   |         |       |   |             |   |       |               |   |   |   |   |
| Number of shares authorized                                                                                                              |   |         | 18,000,000 |   |             |   | 18,000,000 |               |   |   | 18,000,000 |   |
| Number of shares issued and outstanding                                                                                                  |   |         | 9,758,218  |   |             |   | 9,744,170  |               |   |   | 9,722,204 |   |
| Book value per common share                                                                                                              |   | $            | 12.89      |   |             | $      | 12.66      |               |   | $ | 12.51 |   |

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| For the six months ended June 30,                             |   |   | For the quarters ended June 30, |   |
|---------------------------------------------------------------|--------|--------|---------------------------------|--------|
| In thousands of dollars                                       |   | 2010   |                            |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Interest income                                               |   |   |                            |   |   |   |   |   |   |   |   |   |
| Interest and fees on loans                                    |   | $      | 22,206                          |   |   | $ | 25,533 |   |   | $ | 11,056 |   |   | $ | 12,606 |   |
| Interest on deposits with other banks                         |   |   | 2                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Interest and dividends on investments                         |   |   | 6,140                           |   |   |   | 7,336 |   |   |   | 3,159 |   |   |   | 3,645 |   |
|      Total interest income           |   |   | 28,348                          |   |   |   | 32,869 |   |   |   | 14,215 |   |   |   | 16,251 |   |
| Interest expense                                              |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                          |   |   | 5,051                           |   |   |   | 6,694 |   |   |   | 2,571 |   |   |   | 3,049 |   |
| Interest on borrowed funds                                    |   |   | 3,319                           |   |   |   | 3,665 |   |   |   | 1,687 |   |   |   | 1,765 |   |
|      Total interest expense          |   |   | 8,370                           |   |   |   | 10,359 |   |   |   | 4,258 |   |   |   | 4,814 |   |
| Net interest income                                           |   |   | 19,978                          |   |   |   | 22,510 |   |   |   | 9,957 |   |   |   | 11,437 |   |
| Provision for loan losses                                     |   |   | 4,500                           |   |   |   | 4,600 |   |   |   | 2,100 |   |   |   | 2,950 |   |
| Net interest income after provision for loan losses           |   |   | 15,478                          |   |   |   | 17,910 |   |   |   | 7,857 |   |   |   | 8,487 |   |
| Non-interest income                                           |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment management and fiduciary income                    |   |   | 787                             |   |   |   | 678 |   |   |   | 376 |   |   |   | 353 |   |
| Service charges on deposit accounts                           |   |   | 1,505                           |   |   |   | 1,158 |   |   |   | 796 |   |   |   | 600 |   |
| Net securities gains                                          |   |   | 2                               |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Mortgage origination and servicing income                     |   |   | 613                             |   |   |   | 1,543 |   |   |   | 335 |   |   |   | 862 |   |
| Other operating income                                        |   |   | 1,550                           |   |   |   | 2,170 |   |   |   | 775 |   |   |   | 1,148 |   |
|      Total non-interest income       |   |   | 4,457                           |   |   |   | 5,549 |   |   |   | 2,282 |   |   |   | 2,963 |   |
| Non-interest expense                                          |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                |   |   | 5,553                           |   |   |   | 5,152 |   |   |   | 2,808 |   |   |   | 2,563 |   |
| Occupancy expense                                             |   |   | 776                             |   |   |   | 834 |   |   |   | 382 |   |   |   | 393 |   |
| Furniture and equipment expense                               |   |   | 1,121                           |   |   |   | 1,138 |   |   |   | 540 |   |   |   | 569 |   |
| FDIC insurance premiums                                       |   |   | 952                             |   |   |   | 961 |   |   |   | 477 |   |   |   | 599 |   |
| Net securities losses                                         |   |   | -                               |   |   |   | 148 |   |   |   | - |   |   |   | 6 |   |
| Other than temporary impairment charge                        |   |   | -                               |   |   |   | 916 |   |   |   | - |   |   |   | - |   |
| Amortization of identified intangibles                        |   |   | 142                             |   |   |   | 142 |   |   |   | 71 |   |   |   | 71 |   |
| Other operating expense                                       |   |   | 3,633                           |   |   |   | 3,730 |   |   |   | 1,617 |   |   |   | 2,033 |   |
|      Total non-interest expense      |   |   | 12,177                          |   |   |   | 13,021 |   |   |   | 5,895 |   |   |   | 6,234 |   |
| Income before income taxes                                    |   |   | 7,758                           |   |   |   | 10,438 |   |   |   | 4,244 |   |   |   | 5,216 |   |
| Applicable income taxes                                       |   |   | 1,914                           |   |   |   | 2,948 |   |   |   | 1,084 |   |   |   | 1,454 |   |
| NET INCOME                                                    |   | $      | 5,844                           |   |   | $ | 7,490 |   |   | $ | 3,160 |   |   | $ | 3,762 |   |
| Less dividends and amortization of premium on preferred stock |   |   | 674                             |   |   |   | 488 |   |   |   | 337 |   |   |   | 337 |   |
| Net income available to common shareholders                   |   | $      | 5,170                           |   |   | $ | 7,002 |   |   | $ | 2,823 |   |   | $ | 3,425 |   |
| Basic earnings per common share                               |   | $      | 0.53                            |   |   | $ | 0.72 |   |   | $ | 0.29 |   |   | $ | 0.35 |   |
| Diluted earnings per common share                             |   | $      | 0.53                            |   |   | $ | 0.72 |   |   | $ | 0.29 |   |   | $ | 0.35 |   |
| Weighted average number of shares outstanding                 |   |   | 9,753,500                       |   |   |   | 9,712,252 |   |   |   | 9,756,907 |   |   |   | 9,718,650 |   |
| Incremental shares                                            |   |   | 5,009                           |   |   |   | 16,951 |   |   |   | 5,128 |   |   |   | 21,626 |   |
| Cash dividends declared per share                             |   | $      | 0.390                           |   |   | $ | 0.390 |   |   | $ | 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      |   |   | income (loss)       |   |   | equity |   |
| Balance atDecember 31, 2008                                                        |   | $         | -      |   |                       |   | 9,696,397 |     |   | $      | 44,214        |   |   | $                   | 74,057 |   |   | $      | (1,090 | ) |   | $ | 117,181 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 7,490  |   |   |   | - |   |   |   | 7,490 |   |
| Net unrealized gain on securities available for sale,net of taxes of $186          |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 347 |   |   |   | 347 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $6 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 9 |   |   |   | 9 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 7,490  |   |   |   | 356 |   |   |   | 7,846 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | (4,227 | )      |   |   | - |   |   |   | (4,227 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 19            |   |   |                | -      |   |   |   | - |   |   |   | 19 |   |
| 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                               |   |      | 50     |   |                       |   | -         |     |   |   | (50           | )      |   |                | -      |   |   |   | - |   |   |   | - |   |
| Payment to repurchase common stock                                                 |   |      | -      |   |                       |   | (2,637    | )        |   |   | (39           | )      |   |                | -      |   |   |   | - |   |   |   | (39 | ) |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 28,444    |     |   |   | 418           |   |   |                | -      |   |   |   | - |   |   |   | 418 |   |
| Balance at June 30, 2009                                                           |   | $         | 24,557 |   |                       |   | 9,722,204 |     |   | $      | 45,055        |   |   | $                   | 77,320 |   |   | $      | (734 | ) |   | $ | 146,198 |   |
|                                                                               |   |      |   |   |                       |   |      |     |   |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |
| Balance atDecember 31, 2009                                                        |   | $         | 24,606 |   |                       |   | 9,744,170 |     |   | $      | 45,218        |   |   | $                   | 78,450 |   |   | $      | (336 | ) |   | $ | 147,938 |   |
| Net income                                                                         |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 5,844  |   |   |   | - |   |   |   | 5,844 |   |
| Net unrealized gain on securities available for sale,net of taxes of $461          |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 857 |   |   |   | 857 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $6 |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | -      |   |   |   | 9 |   |   |   | 9 |   |
| Comprehensive income                                                               |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | 5,844  |   |   |   | 866 |   |   |   | 6,710 |   |
| Cash dividends declared                                                            |   |      | -      |   |                       |   | -         |     |   |   | -             |   |   |                | (4,430 | )      |   |   | - |   |   |   | (4,430 | ) |
| Equity compensation expense                                                        |   |      | -      |   |                       |   | -         |     |   |   | 19            |   |   |                | -      |   |   |   | - |   |   |   | 19 |   |
| Amortization of premium for preferred stock issuance                               |   |      | 49     |   |                       |   | -         |     |   |   | (49           | )      |   |                | -      |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of common stock                                                 |   |      | -      |   |                       |   | 14,048    |     |   |   | 208           |   |   |                | -      |   |   |   | - |   |   |   | 208 |   |
| Balance at June 30, 2010                                                           |   | $         | 24,655 |   |                       |   | 9,758,218 |     |   | $      | 45,396        |   |   | $                   | 79,864 |   |   | $      | 530 |   |   | $ | 150,445 |   |

----

|                                                                              |   | For the six months ended |     |
|-----------------------------------------------------------------------------------|--------|--------------------------|----------|
| In thousands of dollars                                                           |   | June 30, 2010            |     |   | June 30, 2009 |   |
| Cash flows from operating activities                                              |   |                     |     |   |   |   |
|      Net income                                          |   | $                        | 5,844    |   |   | $ | 7,490 |   |
| Adjustments to reconcile net income to net cash provided by operating activities  |   |                     |     |   |   |
| Depreciation                                                                      |   |                     | 726      |   |   |   | 746 |   |
| Change in deferred income taxes                                                   |   |                     | 192      |   |   |   | - |   |
| Provision for loan losses                                                         |   |                     | 4,500    |   |   |   | 4,600 |   |
| Loans originated for resale                                                       |   |                     | (21,553  | ) |   |   | (80,646 | ) |
| Proceeds from sales and transfers of loans                                        |   |                     | 21,003   |   |   |   | 78,782 |   |
| Net (gain) loss on sale or call of securities held-to-maturity                    |   |                     | (2       | ) |   |   | 148 |   |
| Write-down of securities available for sale                                       |   |                     | -        |   |   |   | 916 |   |
| Net gain on sale of other real estate owned                                       |   |                     | (19      | ) |   |   | - |   |
| Provision for losses on other real estate owned                                   |   |                     | 164      |   |   |   | 126 |   |
| Equity compensation expense                                                       |   |                     | 19       |   |   |   | 19 |   |
| Net increase in other assets and accrued interest                                 |   |                     | (2,429   | ) |   |   | (2,161 | ) |
| Net increase in other liabilities                                                 |   |                     | 895      |   |   |   | 1,731 |   |
| Net amortization of premiums on investments                                       |   |                     | (203     | ) |   |   | (1,862 | ) |
| Amortization of investment in limited partnership                                 |   |                     | 150      |   |   |   | - |   |
| Net acquisition amortization                                                      |   |                     | 244      |   |   |   | 126 |   |
|      Net cash provided by operating activities           |   |                     | 9,531    |   |   |   | 10,015 |   |
| Cash flows from investing activities                                              |   |                     |     |   |   |   |   |   |
| Proceeds from maturities, payments and calls of securities available for sale     |   |                     | 35,132   |   |   |   | 3,154 |   |
| Proceeds from sales of securities available for sale                              |   |                     | 202      |   |   |   | 2,914 |   |
| Proceeds from maturities, payments and calls of securities to be held to maturity |   |                     | 60,755   |   |   |   | 126,174 |   |
| Proceeds from sales of other real estate owned                                    |   |                     | 1,963    |   |   |   | 20 |   |
| Purchases of securities available for sale                                        |   |                     | (101,332 | ) |   |   | (28,485 | ) |
| Purchases of securities to be held to maturity                                    |   |                     | -        |   |   |   | (138,187 | ) |
| Net (increase) decrease in loans                                                  |   |                     | 14,953   |   |   |   | (5,226 | ) |
| Capital expenditures                                                              |   |                     | (1,134   | ) |   |   | (3,331 | ) |
|      Net cash provided (used) in investing activities    |   |                     | 10,539   |   |   |   | (42,967 | ) |
| Cash flows from financing activities                                              |   |                     |     |   |   |   |   |   |
| Net decrease in demand, savings, and money market accounts                        |   |                     | (18,576  | ) |   |   | (34,130 | ) |
| Net increase in certificates of deposit                                           |   |                     | 45,442   |   |   |   | 22,352 |   |
| Advances on long-term borrowings                                                  |   |                     | 10,000   |   |   |   | - |   |
| Repayment on long-term borrowings                                                 |   |                     | -        |   |   |   | (12,000 | ) |
| Net change in short-term borrowings                                               |   |                     | (45,827  | ) |   |   | 37,294 |   |
| Proceeds from issuance of preferred stock                                         |   |                     | -        |   |   |   | 25,000 |   |
| Payments to repurchase common stock                                               |   |                     | -        |   |   |   | (39 | ) |
| Proceeds from sale of common stock                                                |   |                     | 208      |   |   |   | 418 |   |
| Dividends paid                                                                    |   |                     | (4,430   | ) |   |   | (4,224 | ) |
|      Net cash (used) provided by financing activities    |   |                     | (13,183  | ) |   |   | 34,671 |   |
| Net increase in cash and cash equivalents                                         |   |                     | 6,887    |   |   |   | 1,719 |   |
| Cash and cash equivalents at beginning of year                                    |   |                     | 15,332   |   |   |   | 16,856 |   |
|      Cash and cash equivalents at end of period          |   | $                        | 22,219   |   |   | $ | 18,575 |   |
| Interest paid                                                                     |   | $                        | 8,313    |   |   | $ | 10,531 |   |
| Income taxes paid                                                                 |   | $                        | 1,210    |   |   | $ | 2,569 |   |
| Non-cash transactions                                                             |   |                     |     |   |   |   |   |   |
| Change in net unrealized gain (loss) on available for sale securities, net of tax |   | $                        | (857     | ) |   | $ | 347 |   |
| Net transfer from loans to other real estate owned                                |   | $                        | 1,557    |   |   | $ | 515 |   |

----

|                              |   | Amortized |    |   | Unrealized |   |   | Unrealized |   |   | Fair Value  |   |
|-----------------------------------|--------|-----------|---------|--------|------------|--------|--------|------------|--------|--------|-------------|--------|
| In thousands of dollars           |   | Cost      |    |   | Gains      |   |   | Losses     |   |   | (Estimated) |   |
| Securities available for sale     |   |      |    |   |       |   |   |       |   |   |        |   |
| U.S. Treasury and agency          |   | $         | 50,556  |   |       | $      | 895    |       |   | $      | -           |   |   | $ | 51,451 |   |
| Mortgage-backed securities        |   |      | 66,777  |   |       |   | 824    |       |   |   | (617        | )      |   |   | 66,984 |   |
| State and political subdivisions  |   |      | 29,259  |   |       |   | 459    |       |   |   | (129        | )      |   |   | 29,589 |   |
| Corporate securities              |   |      | 1,116   |   |       |   | -      |       |   |   | (299        | )      |   |   | 817 |   |
| Other equity securities           |   |      | 415     |   |       |   | 12     |       |   |   | (19         | )      |   |   | 408 |   |
|                              |   | $         | 148,123 |   |       | $      | 2,190  |       |   | $      | (1,064      | )      |   | $ | 149,249 |   |
| Securities to be held to maturity |   |      |    |   |       |   |   |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency          |   | $         | 7,973   |   |       | $      | 39     |       |   | $      | (184        | )      |   | $ | 7,828 |   |
| Mortgage-backed securities        |   |      | 69,756  |   |       |   | 2,947  |       |   |   | (126        | )      |   |   | 72,577 |   |
| State and political subdivisions  |   |      | 52,013  |   |       |   | 2,007  |       |   |   | (326        | )      |   |   | 53,694 |   |
| Corporate securities              |   |      | 150     |   |       |   | -      |       |   |   | -           |   |   |   | 150 |   |
|                              |   | $         | 129,892 |   |       | $      | 4,993  |       |   | $      | (636        | )      |   | $ | 134,249 |   |

----

|                              |   | 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 |   | AmortizedCost                 |    |   | Fair Value (Estimated)            |   |   | AmortizedCost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less   |   | $                             | -       |   |                              | $      | - |   |   | $ | 1,200 |   |   | $ | 1,217 |   |
| Due in 1 to 5 years     |   |                          | 3,506   |   |                              |   | 3,721 |   |   |   | 6,014 |   |   |   | 6,343 |   |
| Due in 5 to 10 years    |   |                          | 2,680   |   |                              |   | 2,746 |   |   |   | 15,226 |   |   |   | 15,981 |   |
| Due after 10 years      |   |                          | 141,522 |   |                              |   | 142,374 |   |   |   | 107,452 |   |   |   | 110,708 |   |
| Equity securities       |   |                          | 415     |   |                              |   | 408 |   |   |   | - |   |   |   | - |   |
|                    |   | $                             | 148,123 |   |                              | $      | 149,249 |   |   | $ | 129,892 |   |   | $ | 134,249 |   |

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

----

| In thousands of dollars  |   | For the six months endedJune 30, 2010 |   |   | For the six months endedJune 30, 2009 |   |
|-------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|
| Proceeds from sales           |   | $                                     | 202    |   |                                  | $      | 2,914 |   |
| Gross gains                   |   | $                                     | 2      |   |                                  | $      | 18 |   |
| Gross losses                  |   |                                  | -      |   |                                  |   | (166 | ) |
| Net gain/(loss)               |   | $                                     | 2      |   |                                  | $      | (148 | ) |
| Related income taxes          |   | $                                     | 1      |   |                                  | $      | (52 | ) |

|                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| In thousands of dollars          |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 5,659  |   |              | $      | (184   | )      |   | $ | - |   |   | $ | - |   |   | $ | 5,659 |   |   | $ | (184 | ) |
| Mortgage-backed securities       |   |                | 28,511 |   |              |   | (704   | )      |   |   | 2,339 |   |   |   | (39 | ) |   |   | 30,850 |   |   |   | (743 | ) |
| State and political subdivisions |   |                | 12,266 |   |              |   | (140   | )      |   |   | 1,410 |   |   |   | (315 | ) |   |   | 13,676 |   |   |   | (455 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 817 |   |   |   | (299 | ) |   |   | 817 |   |   |   | (299 | ) |
| Other equity securities          |   |                | -      |   |              |   | (1     | )      |   |   | 47 |   |   |   | (18 | ) |   |   | 47 |   |   |   | (19 | ) |
|                             |   | $                   | 46,436 |   |              | $      | (1,029 | )      |   | $ | 4,613 |   |   | $ | (671 | ) |   | $ | 51,049 |   |   | $ | (1,700 | ) |

|                             |   | 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        |   | June 30, 2010 |    |   | December 31, 2009 |   |   | June 30, 2009 |   |
|--------------------------------|--------|---------------|---------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 260,799 |   |              |   | 28.0   | %             |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 241,291 |   |   |   | 24.6 | % |
|    Construction |   |          | 35,932  |   |              |   | 3.9    | %             |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 49,768 |   |   |   | 5.1 | % |
|    Other        |   |          | 113,831 |   |              |   | 12.2   | %             |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 128,597 |   |   |   | 13.1 | % |
| Municipal                      |   |          | 23,795  |   |              |   | 2.6    | %             |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 44,004 |   |   |   | 4.5 | % |
| Residential                    |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 359,774 |   |              |   | 38.4   | %             |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 391,475 |   |   |   | 39.7 | % |
|    Construction |   |          | 18,302  |   |              |   | 2.0    | %             |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 18,691 |   |   |   | 1.9 | % |
| Home equity line of credit     |   |          | 100,450 |   |              |   | 10.8   | %             |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 87,079 |   |   |   | 8.9 | % |
| Consumer                       |   |          | 19,127  |   |              |   | 2.1    | %             |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 21,431 |   |   |   | 2.2 | % |
| Total loans                    |   | $             | 932,010 |   |              |   | 100.0  | %             |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 982,336 |   |   |   | 100.0 | % |

----

| In thousands of dollars                 |   | June 30, 2010 |   |   | June 30, 2009 |   |
|-----------------------------------------|--------|---------------|--------|--------|---------------|--------|
| Balance at beginning of year            |   | $             | 13,637 |   |          | $      | 8,800 |   |
| Provision charged to operating expenses |   |          | 4,500  |   |          |   | 4,600 |   |
|                                    |   |          | 18,137 |   |          |   | 13,400 |   |
| Loans charged off                       |   |          | (4,138 | )      |          |   | (1,724 | ) |
| Recoveries on loans                     |   |          | 166    |   |          |   | 76 |   |
|   Net loans charged off       |   |          | (3,972 | )      |          |   | (1,648 | ) |
| Balance at end of period                |   | $             | 14,165 |   |          | $      | 11,752 |   |

| In thousands of dollars                                                              |   | June 30,2010 |    |   | December 31,2009 |   |    | June 30,2009 |   |
|--------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|---------|--------------|--------|
| Balance of impaired loans                                                            |   | $            | 26,599  |   |             | $      | 25,843  |         |   | $ | 15,409 |   |
| Less portion for which no allowance for loan losses is allocated                     |   |         | (16,644 | )      |             |   | (13,682 | )            |   |   | (5,689 | ) |
| Portion of impaired loan balance for which an allowance for loan losses is allocated |   |         | 9,955   |   |             |   | 12,161  |         |   |   | 9,720 |   |
| Portion of allowance for loan losses allocated to the impaired loan balance          |   | $            | 2,062   |   |             | $      | 2,196   |         |   | $ | 2,689 |   |

----

|                            |   | 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 June 30, 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 June 30, 2010                    |   |             | 55,500 |   |                            | $      | 15.89  |                                        |   |   | 3.8                                     |   |   | $ | 51 |   |
| Exercisable at June 30, 2010                    |   |             | 55,500 |   |                            | $      | 15.89  |                                        |   |   | 3.8                                     |   |   | $ | 51 |   |

----

|                                                                          |   | Income      |   |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|-----------|-----------|--------|
| In thousands, except number of shares and per share data                      |   | (Numerator) |   |   | (Denominator) |   |      | Amount    |   |
| For the six months ended June 30, 2010                                        |   |        |   |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 5,844  |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 674    |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 5,170  |   |          |   | 9,753,500 |      |   | $ | 0.53 |   |
| Effect of dilutive securities: incentive stock options and warrants           |   |        |   |   |          |   | 5,009     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 5,170  |   |          |   | 9,758,509 |      |   | $ | 0.53 |   |
| For the six months ended June 30, 2009                                        |   |        |   |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 7,490  |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 488    |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 7,002  |   |          |   | 9,712,252 |      |   | $ | 0.72 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 16,951    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 7,002  |   |          |   | 9,729,203 |      |   | $ | 0.72 |   |

----

|                                                                          |   | Income      |   |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|--------|--------|---------------|--------|-----------|-----------|--------|
| In thousands, except number of shares and per share data                      |   | (Numerator) |   |   | (Denominator) |   |      | Amount    |   |
| For the quarter ended June 30, 2010                                           |   |        |   |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 3,160  |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337    |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,823  |   |          |   | 9,756,907 |      |   | $ | 0.29 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 5,128     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 2,823  |   |          |   | 9,762,035 |      |   | $ | 0.29 |   |
| For the quarter ended June 30, 2009                                           |   |        |   |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 3,762  |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337    |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 3,425  |   |          |   | 9,718,650 |      |   | $ | 0.35 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |   |   |          |   | 21,626    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 3,425  |   |          |   | 9,740,276 |      |   | $ | 0.35 |   |

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

----

|                                    |   | For the six months ended June 30, |   |
|-----------------------------------------|--------|-----------------------------------|--------|
| In thousands of dollars                 |   | 2010                              |   |   | 2009 |   |
| Change in benefit obligation            |   |                              |   |   |   |   |
| Benefit obligation at beginning of year |   | $                                 | 1,962  |   |   | $ | 1,990 |   |
| Service cost                            |   |                              | 11     |   |   |   | 8 |   |
| Interest cost                           |   |                              | 67     |   |   |   | 68 |   |
| Benefits paid                           |   |                              | (74    | ) |   |   | (78 | ) |
| Benefit obligation at end of period     |   |                              | 1,966  |   |   |   | 1,988 |   |
| Funded status                           |   |                              |   |   |   |   |   |   |
| Benefit obligation at end of period     |   |                              | (1,966 | ) |   |   | (1,988 | ) |
| Accrued benefit cost at end of period   |   | $                                 | (1,966 | ) |   | $ | (1,988 | ) |

|                                               |   | For six months endedJune 30, |   |   | For three months endedJune 30, |   |
|----------------------------------------------------|--------|------------------------------|--------|--------|--------------------------------|--------|
|  In thousands of dollars                      |   | 2010                         |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Components of net periodic benefit cost            |   |                         |   |   |                           |   |   |   |   |   |   |   |
| Service cost                                       |   | $                            | 11     |   |                           | $      | 8 |   |   | $ | 6 |   |   | $ | 4 |   |
| Interest cost                                      |   |                         | 67     |   |                           |   | 68 |   |   |   | 33 |   |   |   | 34 |   |
| Amortization of unrecognized transition obligation |   |                         | 14     |   |                           |   | 14 |   |   |   | 7 |   |   |   | 7 |   |
| Amortization of prior service credit               |   |                         | (1     | )      |                           |   | (2 | ) |   |   | - |   |   |   | (1 | ) |
| Amortization of accumulated losses                 |   |                         | 12     |   |                           |   | 10 |   |   |   | 7 |   |   |   | 5 |   |
| Net periodic benefit cost                          |   | $                            | 103    |   |                           | $      | 98 |   |   | $ | 53 |   |   | $ | 49 |   |

----

| In thousands of dollars                                                                            |   | June 30,2010 |   |   | December 31,2009 |   |   | June 30,2009 |   |
|----------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|--------|--------------|--------|
| Unamortized net actuarial loss                                                                     |   | $            | (233   | )      |             | $      | (233   | )            |   | $ | (296 | ) |
| Unrecognized transition obligation                                                                 |   |         | (78    | )      |             |   | (92    | )            |   |   | (107 | ) |
|                                                                                               |   |         | (311   | )      |             |   | (325   | )            |   |   | (403 | ) |
| Deferred tax benefit at 35%                                                                        |   |         | 109    |   |             |   | 114    |         |   |   | 141 |   |
| Net unrecognized postretirement benefits included in accumulated other comprehensive income (loss) |   | $            | (202   | )      |             | $      | (211   | )            |   | $ | (262 | ) |

| In thousands of dollars   |   | June 30,2010 |   |   | December 31, 2009 |   |   | June 30, 2009 |   |
|---------------------------|--------|--------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Mortgage servicing rights |   | $            | 5,323  |   |              | $      | 5,086  |               |   | $ | 4,694 |   |
| Accumulated amortization  |   |         | (4,013 | )      |              |   | (3,814 | )                  |   |   | (3,594 | ) |
| Impairment reserve        |   |         | (60    | )      |              |   | (73    | )                  |   |   | (74 | ) |
|                      |   | $            | 1,250  |   |              | $      | 1,199  |               |   | $ | 1,026 |   |

----

----

|                                               |   | At June 30, 2010 |   |
|----------------------------------------------------|--------|------------------|--------|
| In thousands of dollars                            |   | Level 1          |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |             |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                | -      |   |   | $ | 51,451 |   |   | $ | - |   |   | $ | 51,451 |   |
|    Mortgage-backed securities       |   |             | -      |   |   |   | 66,984 |   |   |   | - |   |   |   | 66,984 |   |
|    State and political subdivisions |   |             | -      |   |   |   | 29,589 |   |   |   | - |   |   |   | 29,589 |   |
|    Corporate securities             |   |             | -      |   |   |   | 817 |   |   |   | - |   |   |   | 817 |   |
|    Other equity securities          |   |             | -      |   |   |   | 408 |   |   |   | - |   |   |   | 408 |   |
| Total assets                                       |   | $                | -      |   |   | $ | 149,249 |   |   | $ | - |   |   | $ | 149,249 |   |

|                                               |   | 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 June 30, 2010 |   |
|---------------------------|--------|------------------|--------|
| In thousands of dollars   |   | Level 1          |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                | -      |   |   | $ | 1,250 |   |   | $ | - |   |   | $ | 1,250 |   |
| Loans held for sale       |   |             | -      |   |   |   | 3,426 |   |   |   | - |   |   |   | 3,426 |   |
| Other real estate owned   |   |             | -      |   |   |   | 4,794 |   |   |   | - |   |   |   | 4,794 |   |
| Impaired loans            |   |             | -      |   |   |   | 7,893 |   |   |   | - |   |   |   | 7,893 |   |
| Total assets              |   | $                | -      |   |   | $ | 17,363 |   |   | $ | - |   |   | $ | 17,363 |   |

----

|                      |   | 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 |   |

|                                                  |   | June 30, 2010 |    |   | December 31, 2009 |   |
|-------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                  |   | Carrying      |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|  In thousands of dollars                         |   | amount        |    |   | fair value        |   |   | amount |   |   | fair value |   |
| Financial assets                                      |   |          |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $             | 22,219  |   |              | $      | 22,219 |   |   | $ | 15,332 |   |   | $ | 15,332 |   |
| Securities available for sale                         |   |          | 149,249 |   |              |   | 149,249 |   |   |   | 81,838 |   |   |   | 81,838 |   |
| Securities to be held to maturity                     |   |          | 129,892 |   |              |   | 134,249 |   |   |   | 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                                   |   |          | 3,426   |   |              |   | 3,426 |   |   |   | 2,876 |   |   |   | 2,876 |   |
| Loans (net of allowance for loan losses)              |   |          | 917,845 |   |              |   | 927,497 |   |   |   | 938,855 |   |   |   | 938,095 |   |
| Accrued interest receivable                           |   |          | 6,536   |   |              |   | 6,536 |   |   |   | 4,889 |   |   |   | 4,889 |   |
| Financial liabilities                                 |   |          |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   | $             | 949,501 |   |              | $      | 942,458 |   |   | $ | 922,667 |   |   | $ | 877,883 |   |
| Borrowed funds                                        |   |          | 213,944 |   |              |   | 220,746 |   |   |   | 249,778 |   |   |   | 255,292 |   |
| Accrued interest payable                              |   |          | 1,135   |   |              |   | 1,135 |   |   |   | 1,078 |   |   |   | 1,078 |   |

----

----

----

----

----

|                                |   | For the six months ended June 30, |   |   | For the quarters ended June 30, |   |
|-------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|--------|
|  In thousands of dollars       |   | 2010                              |   |   | 2009                            |   |   | 2010 |   |   | 2009 |   |
| Net interest income, as presented   |   | $                                 | 19,978 |   |                            | $      | 22,510 |   |   | $ | 9,957 |   |   | $ | 11,437 |   |
| Effect of tax-exempt income         |   |                              | 1,127  |   |                            |   | 1,170 |   |   |   | 567 |   |   |   | 596 |   |
| Net interest income, tax equivalent |   | $                                 | 21,105 |   |                            | $      | 23,680 |   |   | $ | 10,524 |   |   | $ | 12,033 |   |

|                                                  |   | For the six months endedJune 30, |   |   | For the quarters endedJune 30, |   |
|-------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
| In thousands of dollars                               |   | 2010                             |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Non-interest expense, as presented                    |   | $                                | 12,177 |   |                           | $      | 13,021 |   |   | $ | 5,895 |   |   | $ | 6,234 |   |
| Net securities losses                                 |   |                             | -      |   |                           |   | (148 | ) |   |   | - |   |   |   | (6 | ) |
| Other than temporary impairment charge                |   |                             | -      |   |                           |   | (916 | ) |   |   | - |   |   |   | - |   |
| Adjusted non-interest expense                         |   |                             | 12,177 |   |                           |   | 11,957 |   |   |   | 5,895 |   |   |   | 6,228 |   |
| Net interest income, as presented                     |   |                             | 19,978 |   |                           |   | 22,510 |   |   |   | 9,957 |   |   |   | 11,437 |   |
| Effect of tax-exempt income                           |   |                             | 1,127  |   |                           |   | 1,170 |   |   |   | 567 |   |   |   | 596 |   |
| Non-interest income, as presented                     |   |                             | 4,457  |   |                           |   | 5,549 |   |   |   | 2,282 |   |   |   | 2,963 |   |
| Effect of non-interest tax-exempt income              |   |                             | 94     |   |                           |   | 92 |   |   |   | 47 |   |   |   | 46 |   |
| Net securities gains                                  |   |                             | 2      |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted net interest income plus non-interest income |   | $                                | 25,658 |   |                           | $      | 29,321 |   |   | $ | 12,853 |   |   | $ | 15,042 |   |
| Non-GAAP efficiency ratio                             |   |                             | 47.46  | %      |                           |   | 40.78 | % |   |   | 45.86 | % |   |   | 41.40 | % |
| GAAP efficiency ratio                                 |   |                             | 49.83  | %      |                           |   | 46.41 | % |   |   | 48.17 | % |   |   | 43.29 | % |

----

|                                       |   | For the six months endedJune 30, |    |   | For the quarters endedJune 30, |   |
|--------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|  In thousands of dollars              |   | 2010                             |    |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Average shareholders' equity, as presented |   | $                                | 150,289 |   |                           | $      | 144,927 |   |   | $ | 150,759 |   |   | $ | 147,343 |   |
| Intangible assets                          |   |                             | 27,684  |   |                           |   | 27,684 |   |   |   | 27,684 |   |   |   | 27,684 |   |
| Tangible average shareholders' equity      |   | $                                | 122,605 |   |                           | $      | 117,243 |   |   | $ | 123,075 |   |   | $ | 119,659 |   |

----

| For the six months ended                             |   | June 30, 2010      |   |   | June 30, 2009      |   |
|------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| In thousands of dollars                              |   | Amount of interest |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |               |   |   |               |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                  | 2      |   |               |   | 0.00 | % |   | $ | - |   |   |   | 0.00 | % |
| Investments                                          |   |               | 7,023  |   |               |   | 4.58 | % |   |   | 8,132 |   |   |   | 5.32 | % |
| Loans held for sale                                  |   |               | 74     |   |               |   | 4.39 | % |   |   | 45 |   |   |   | 5.03 | % |
| Loans                                                |   |               | 22,376 |   |               |   | 4.82 | % |   |   | 25,862 |   |   |   | 5.28 | % |
|    Total interest-earning assets      |   |               | 29,475 |   |               |   | 4.76 | % |   |   | 34,039 |   |   |   | 5.29 | % |
| Interest-bearing liabilities                         |   |               |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |               | 5,051  |   |               |   | 1.15 | % |   |   | 6,694 |   |   |   | 1.51 | % |
| Other borrowings                                     |   |               | 3,319  |   |               |   | 2.91 | % |   |   | 3,665 |   |   |   | 2.79 | % |
|    Total interest-bearing liabilities |   |               | 8,370  |   |               |   | 1.51 | % |   |   | 10,359 |   |   |   | 1.80 | % |
| Net interest income                                  |   | $                  | 21,105 |   |               |   |   |   |   | $ | 23,680 |   |   |   |   |   |
| Interest rate spread                                 |   |               |   |   |               |   | 3.24 | % |   |   |   |   |   |   | 3.49 | % |
| Net interest margin                                  |   |               |   |   |               |   | 3.41 | % |   |   |   |   |   |   | 3.68 | % |

----

| For the quarters ended                               |   | June 30, 2010      |   |   | June 30, 2009      |   |
|------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| In thousands of dollars                              |   | Amount of interest |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |               |   |   |               |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                  | -      |   |               |   | 0.00 | % |   | $ | - |   |   |   | 0.00 | % |
| Investments                                          |   |               | 3,607  |   |               |   | 4.53 | % |   |   | 4,047 |   |   |   | 5.10 | % |
| Loans held for sale                                  |   |               | 41     |   |               |   | 4.47 | % |   |   | 22 |   |   |   | 4.50 | % |
| Loans                                                |   |               | 11,134 |   |               |   | 4.77 | % |   |   | 12,778 |   |   |   | 5.18 | % |
|    Total interest-earning assets      |   |               | 14,782 |   |               |   | 4.71 | % |   |   | 16,847 |   |   |   | 5.16 | % |
| Interest-bearing liabilities                         |   |               |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |               | 2,571  |   |               |   | 1.15 | % |   |   | 3,049 |   |   |   | 1.32 | % |
| Other borrowings                                     |   |               | 1,687  |   |               |   | 2.95 | % |   |   | 1,765 |   |   |   | 2.88 | % |
|    Total interest-bearing liabilities |   |               | 4,258  |   |               |   | 1.52 | % |   |   | 4,814 |   |   |   | 1.65 | % |
| Net interest income                                  |   | $                  | 10,524 |   |               |   |   |   |   | $ | 12,033 |   |   |   |   |   |
| Interest rate spread                                 |   |               |   |   |               |   | 3.19 | % |   |   |   |   |   |   | 3.51 | % |
| Net interest margin                                  |   |               |   |   |               |   | 3.35 | % |   |   |   |   |   |   | 3.69 | % |

| For the six months ended June 30, 2010 compared to 2009 |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| In thousands of dollars                                 |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                               |   | $      | -      |   |   | $      | -      |   |   | $ | 2 |   |   | $ | 2 |   |
| Investment securities                                   |   |   | 28     |   |   |   | (1,133 | ) |   |   | (4 | ) |   |   | (1,109 | ) |
| Loans held for sale                                     |   |   | 40     |   |   |   | (6     | ) |   |   | (5 | ) |   |   | 29 |   |
| Loans                                                   |   |   | (1,332 | )      |   |   | (2,271 | ) |   |   | 117 |   |   |   | (3,486 | ) |
|    Total interest income                 |   |   | (1,264 | )      |   |   | (3,410 | ) |   |   | 110 |   |   |   | (4,564 | ) |
| Interest expense                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                |   |   | (82    | )      |   |   | (1,580 | ) |   |   | 19 |   |   |   | (1,643 | ) |
| Other borrowings2                                       |   |   | (482   | )      |   |   | 156    |   |   |   | (20 | ) |   |   | (346 | ) |
| Total interest expense                                  |   |   | (564   | )      |   |   | (1,424 | ) |   |   | (1 | ) |   |   | (1,989 | ) |
|    Change in net interest income         |   | $      | (700   | )      |   | $      | (1,986 | ) |   | $ | 111 |   |   | $ | (2,575 | ) |

| For the quarters ended June 30, 2010 compared to 2009 |   |   |   |   |   |   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| In thousands of dollars                               |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                             |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |   | $ | - |   |
| Investment securities                                 |   |   | 9      |   |   |   | (448   | ) |   |   | (1 | ) |   |   | (440 | ) |
| Loans held for sale                                   |   |   | 19     |   |   |   | -      |   |   |   | - |   |   |   | 19 |   |
| Loans                                                 |   |   | (677   | )      |   |   | (1,021 | ) |   |   | 54 |   |   |   | (1,644 | ) |
|    Total interest income               |   |   | (649   | )      |   |   | (1,469 | ) |   |   | 53 |   |   |   | (2,065 | ) |
| Interest expense                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   |   | (102   | )      |   |   | (389   | ) |   |   | 13 |   |   |   | (478 | ) |
| Other borrowings2                                     |   |   | (120   | )      |   |   | 45     |   |   |   | (3 | ) |   |   | (78 | ) |
| Total interest expense                                |   |   | (222   | )      |   |   | (344   | ) |   |   | 10 |   |   |   | (556 | ) |
|    Change in net interest income       |   | $      | (427   | )      |   | $      | (1,125 | ) |   | $ | 43 |   |   | $ | (1,509 | ) |

----

|                                                                                   |   | For thesix months ended |      |   | For thequarters ended |   |
|----------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|-----------------------|--------|
|  In thousands of dollars                                                          |   | June 30, 2010           |      |   | June 30,2009          |   |   | June 30, 2010 |   |   | June 30,2009 |   |
| Assets                                                                                 |   |                    |      |   |                  |   |   |   |   |   |   |   |
| Cash and due from banks                                                                |   | $                       | 14,456    |   |                  | $      | 13,585 |   |   | $ | 13,535 |   |   | $ | 13,890 |   |
| Overnight funds sold                                                                   |   |                    | -         |   |                  |   | - |   |   |   | - |   |   |   | - |   |
| Securities available for sale                                                          |   |                    | 128,387   |   |                  |   | 16,313 |   |   |   | 149,171 |   |   |   | 19,595 |   |
| Securities to be held to maturity                                                      |   |                    | 165,321   |   |                  |   | 277,068 |   |   |   | 154,517 |   |   |   | 284,127 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock, at cost                         |   |                    | 15,443    |   |                  |   | 14,693 |   |   |   | 15,443 |   |   |   | 14,693 |   |
| Loans held for sale (fair value approximates cost)                                     |   |                    | 3,401     |   |                  |   | 1,805 |   |   |   | 3,677 |   |   |   | 1,960 |   |
| Loans                                                                                  |   |                    | 936,648   |   |                  |   | 987,508 |   |   |   | 936,807 |   |   |   | 989,221 |   |
| Allowance for loan losses                                                              |   |                    | (14,484   | )      |                  |   | (9,745 | ) |   |   | (14,741 | ) |   |   | (10,216 | ) |
|      Net loans                                                |   |                    | 922,164   |   |                  |   | 977,763 |   |   |   | 922,066 |   |   |   | 979,005 |   |
| Accrued interest receivable                                                            |   |                    | 5,674     |   |                  |   | 6,554 |   |   |   | 5,987 |   |   |   | 6,772 |   |
| Premises and equipment                                                                 |   |                    | 18,261    |   |                  |   | 17,588 |   |   |   | 18,302 |   |   |   | 18,764 |   |
| Other real estate owned                                                                |   |                    | 5,639     |   |                  |   | 2,540 |   |   |   | 5,625 |   |   |   | 2,612 |   |
| Goodwill                                                                               |   |                    | 27,684    |   |                  |   | 27,684 |   |   |   | 27,684 |   |   |   | 27,684 |   |
| Other assets                                                                           |   |                    | 29,298    |   |                  |   | 19,775 |   |   |   | 29,210 |   |   |   | 19,650 |   |
|         Total Assets                           |   | $                       | 1,335,728 |   |                  | $      | 1,375,368 |   |   | $ | 1,345,217 |   |   | $ | 1,388,752 |   |
|                                                                                   |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities & Stockholders’ Equity                                           |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                                                                        |   | $                       | 61,138    |   |                  | $      | 60,188 |   |   | $ | 60,518 |   |   | $ | 58,887 |   |
| NOW deposits                                                                           |   |                    | 114,886   |   |                  |   | 104,124 |   |   |   | 114,588 |   |   |   | 105,229 |   |
| Money market deposits                                                                  |   |                    | 85,152    |   |                  |   | 115,618 |   |   |   | 79,960 |   |   |   | 111,265 |   |
| Savings deposits                                                                       |   |                    | 93,674    |   |                  |   | 84,277 |   |   |   | 94,442 |   |   |   | 86,177 |   |
| Certificates of deposit                                                                |   |                    | 223,602   |   |                  |   | 233,689 |   |   |   | 229,737 |   |   |   | 235,844 |   |
| Certificates $100,000 to $250,000                                                      |   |                    | 317,357   |   |                  |   | 307,577 |   |   |   | 325,802 |   |   |   | 336,426 |   |
| Certificates $250,000 and over                                                         |   |                    | 49,842    |   |                  |   | 50,257 |   |   |   | 49,842 |   |   |   | 50,257 |   |
|      Total deposits                                           |   |                    | 945,651   |   |                  |   | 955,730 |   |   |   | 954,889 |   |   |   | 984,085 |   |
| Borrowed funds                                                                         |   |                    | 229,676   |   |                  |   | 264,439 |   |   |   | 228,992 |   |   |   | 245,681 |   |
| Dividends payable                                                                      |   |                    | 987       |   |                  |   | 889 |   |   |   | 998 |   |   |   | 874 |   |
| Other liabilities                                                                      |   |                    | 9,125     |   |                  |   | 9,383 |   |   |   | 9,579 |   |   |   | 10,769 |   |
|      Total Liabilities                                        |   |                    | 1,185,439 |   |                  |   | 1,230,441 |   |   |   | 1,194,458 |   |   |   | 1,241,409 |   |
| Shareholders' Equity:                                                                  |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                                        |   |                    | 24,606    |   |                  |   | 23,895 |   |   |   | 24,631 |   |   |   | 24,532 |   |
| Common stock                                                                           |   |                    | 97        |   |                  |   | 97 |   |   |   | 98 |   |   |   | 97 |   |
| Additional paid-in capital                                                             |   |                    | 45,187    |   |                  |   | 44,575 |   |   |   | 45,271 |   |   |   | 44,909 |   |
| Retained earnings                                                                      |   |                    | 80,518    |   |                  |   | 77,159 |   |   |   | 80,811 |   |   |   | 78,321 |   |
| Net unrealized gains (losses) on available-for-sale securities                         |   |                    | 89        |   |                  |   | (530 | ) |   |   | 155 |   |   |   | (250 | ) |
| Net unrealized loss on postretirement benefit costs                                    |   |                    | (208      | )      |                  |   | (269 | ) |   |   | (207 | ) |   |   | (266 | ) |
|     Total Stockholders’ Equity                               |   |                    | 150,289   |   |                  |   | 144,927 |   |   |   | 150,759 |   |   |   | 147,343 |   |
|        Total Liabilities & Stockholders' Equity |   | $                       | 1,335,728 |   |                  | $      | 1,375,368 |   |   | $ | 1,345,217 |   |   | $ | 1,388,752 |   |

----

----

| In thousands of dollars           |   | June 30, 2010 |    |   | December 31, 2009 |   |    | June 30,2009 |   |
|-----------------------------------|--------|---------------|---------|--------|-------------------|--------|---------|--------------|--------|
| Securities available for sale     |   |          |    |   |              |   |    |         |   |
| U.S. Treasury and agency          |   | $             | 51,451  |   |              | $      | 30,959  |         |   | $ | 9,600 |   |
| Mortgage-backed securities        |   |          | 66,984  |   |              |   | 31,148  |         |   |   | 14,945 |   |
| State and political subdivisions  |   |          | 29,589  |   |              |   | 18,514  |         |   |   | 10,083 |   |
| Corporate securities              |   |          | 817     |   |              |   | 818     |         |   |   | 1,075 |   |
| Other equity securities           |   |          | 408     |   |              |   | 399     |         |   |   | 269 |   |
|                              |   | $             | 149,249 |   |              | $      | 81,838  |         |   | $ | 35,972 |   |
| Securities to be held to maturity |   |          |    |   |              |   |    |         |   |   |   |   |
| U.S. Treasury and agency          |   | $             | 7,973   |   |              | $      | 39,099  |         |   | $ | 65,234 |   |
| Mortgage-backed securities        |   |          | 69,756  |   |              |   | 90,193  |         |   |   | 119,217 |   |
| State and political subdivisions  |   |          | 52,013  |   |              |   | 61,095  |         |   |   | 63,026 |   |
| Corporate securities              |   |          | 150     |   |              |   | 150     |         |   |   | 150 |   |
|                              |   |          | 129,892 |   |              |   | 190,537 |         |   |   | 247,627 |   |
| Total securities                  |   | $             | 279,141 |   |              | $      | 272,375 |         |   | $ | 283,599 |   |

----

|                                     |   | Available For Sale |    |   | Held to Maturity |   |
|------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|  In thousands of dollars            |   | FairValue          |    |   | Yield toMaturity |   |   | AmortizedCost |   |   | Yield toMaturity |   |
|  U.S. Treasury & Agency         |   |               |    |   |             |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   | $                  | -       |   |             |   | 0.00 | % |   | $ | - |   |   |   | 0.00 | % |
|  Due in 1 to 5 years                |   |               | -       |   |             |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |             |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 51,451  |   |             |   | 4.76 | % |   |   | 7,973 |   |   |   | 6.14 | % |
|   Total                        |   |               | 51,451  |   |             |   | 4.76 | % |   |   | 7,973 |   |   |   | 6.14 | % |
|  Mortgage-Backed Securities         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |             |   | 0.00 | % |   |   | 5 |   |   |   | 6.03 | % |
|  Due in 1 to 5 years                |   |               | 59      |   |             |   | 5.71 | % |   |   | 1,302 |   |   |   | 4.16 | % |
|  Due in 5 to 10 years               |   |               | 78      |   |             |   | 8.50 | % |   |   | 1,104 |   |   |   | 5.87 | % |
|  Due after 10 years                 |   |               | 66,847  |   |             |   | 4.03 | % |   |   | 67,345 |   |   |   | 3.97 | % |
|   Total                        |   |               | 66,984  |   |             |   | 4.03 | % |   |   | 69,756 |   |   |   | 4.00 | % |
|  State & Political Subdivisions |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |             |   | 0.00 | % |   |   | 1,045 |   |   |   | 7.44 | % |
|  Due in 1 to 5 years                |   |               | 3,662   |   |             |   | 7.29 | % |   |   | 4,712 |   |   |   | 6.25 | % |
|  Due in 5 to 10 years               |   |               | 2,668   |   |             |   | 7.46 | % |   |   | 14,122 |   |   |   | 6.49 | % |
|  Due after 10 years                 |   |               | 23,259  |   |             |   | 6.25 | % |   |   | 32,134 |   |   |   | 6.38 | % |
|   Total                        |   |               | 29,589  |   |             |   | 6.49 | % |   |   | 52,013 |   |   |   | 6.42 | % |
|  Corporate Securities               |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |             |   | 0.00 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Due in 1 to 5 years                |   |               | -       |   |             |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |             |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 817     |   |             |   | 1.34 | % |   |   | - |   |   |   | 0.00 | % |
|   Total                        |   |               | 817     |   |             |   | 1.34 | % |   |   | 150 |   |   |   | 1.50 | % |
|  Equity Securities                  |   |               | 408     |   |             |   | 2.53 | % |   |   |   |   |   |   |   |   |
|                                     |   | $                  | 149,249 |   |             |   | 4.75 | % |   | $ | 129,892 |   |   |   | 5.10 | % |

----

|                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| In thousands of dollars          |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 5,659  |   |              | $      | (184   | )      |   | $ | - |   |   | $ | - |   |   | $ | 5,659 |   |   | $ | (184 | ) |
| Mortgage-backed securities       |   |                | 28,511 |   |              |   | (704   | )      |   |   | 2,339 |   |   |   | (39 | ) |   |   | 30,850 |   |   |   | (743 | ) |
| State and political subdivisions |   |                | 12,266 |   |              |   | (140   | )      |   |   | 1,410 |   |   |   | (315 | ) |   |   | 13,676 |   |   |   | (455 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 817 |   |   |   | (299 | ) |   |   | 817 |   |   |   | (299 | ) |
| Other equity securities          |   |                | -      |   |              |   | (1     | )      |   |   | 47 |   |   |   | (18 | ) |   |   | 47 |   |   |   | (19 | ) |
|                             |   | $                   | 46,436 |   |              | $      | (1,029 | )      |   | $ | 4,613 |   |   | $ | (671 | ) |   | $ | 51,049 |   |   | $ | (1,700 | ) |

----

----

| In thousands of dollars        |   | June 30, 2010 |    |   | December 31, 2009 |   |   | June 30, 2009 |   |
|--------------------------------|--------|---------------|---------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 260,799 |   |              |   | 28.0   | %             |   | $ | 240,178 |   |   |   | 25.2 | % |   | $ | 241,291 |   |   |   | 24.6 | % |
|    Construction |   |          | 35,932  |   |              |   | 3.9    | %             |   |   | 48,714 |   |   |   | 5.1 | % |   |   | 49,768 |   |   |   | 5.1 | % |
|    Other        |   |          | 113,831 |   |              |   | 12.2   | %             |   |   | 114,486 |   |   |   | 12.0 | % |   |   | 128,597 |   |   |   | 13.1 | % |
| Municipal                      |   |          | 23,795  |   |              |   | 2.6    | %             |   |   | 45,952 |   |   |   | 4.8 | % |   |   | 44,004 |   |   |   | 4.5 | % |
| Residential                    |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 359,774 |   |              |   | 38.4   | %             |   |   | 367,267 |   |   |   | 38.7 | % |   |   | 391,475 |   |   |   | 39.7 | % |
|    Construction |   |          | 18,302  |   |              |   | 2.0    | %             |   |   | 17,361 |   |   |   | 1.8 | % |   |   | 18,691 |   |   |   | 1.9 | % |
| Home equity line of credit     |   |          | 100,450 |   |              |   | 10.8   | %             |   |   | 94,324 |   |   |   | 9.9 | % |   |   | 87,079 |   |   |   | 8.9 | % |
| Consumer                       |   |          | 19,127  |   |              |   | 2.1    | %             |   |   | 24,210 |   |   |   | 2.5 | % |   |   | 21,431 |   |   |   | 2.2 | % |
| Total loans                    |   | $             | 932,010 |   |              |   | 100.0  | %             |   | $ | 952,492 |   |   |   | 100.0 | % |   | $ | 982,336 |   |   |   | 100.0 | % |

----

| In thousands of dollars        |   | < 1 Year |   |   | 1 - 5 Years |   |   | 5 - 10 Years |   |   | > 10 Years |   |   | Total  |    |
|--------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------|
| Commercial                     |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |
|    Real estate  |   | $           | 12,661 |   |        | $      | 10,966 |         |   | $      | 24,223        |   |   | $      | 212,949 |   |   | $ | 260,799 |   |
|    Construction |   |        | 17,303 |   |        |   | 2,578  |         |   |   | 388           |   |   |   | 15,663  |   |   |   | 35,932 |   |
|    Other        |   |        | 20,816 |   |        |   | 24,277 |         |   |   | 32,763        |   |   |   | 35,975  |   |   |   | 113,831 |   |
| Municipal                      |   |        | 6,711  |   |        |   | 2,796  |         |   |   | 8,228         |   |   |   | 6,060   |   |   |   | 23,795 |   |
| Residential                    |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |   |   |   |   |   |
|    Term         |   |        | 9,695  |   |        |   | 12,464 |         |   |   | 29,840        |   |   |   | 307,775 |   |   |   | 359,774 |   |
|    Construction |   |        | 9,838  |   |        |   | 486    |         |   |   | 314           |   |   |   | 7,664   |   |   |   | 18,302 |   |
| Home equity line of credit     |   |        | 1,174  |   |        |   | 681    |         |   |   | 1,117         |   |   |   | 97,478  |   |   |   | 100,450 |   |
| Consumer                       |   |        | 7,011  |   |        |   | 8,294  |         |   |   | 1,158         |   |   |   | 2,664   |   |   |   | 19,127 |   |
| Total loans                    |   | $           | 85,209 |   |        | $      | 62,542 |         |   | $      | 98,031        |   |   | $      | 686,228 |   |   | $ | 932,010 |   |

|                           |   | Fixed-Rate |    |   | Adjustable-Rate |   |   | Total  |   |
|--------------------------------|--------|------------|---------|--------|-----------------|--------|--------|--------|--------|
| In thousands of dollars        |   | Amount     |    |   | % of total      |   |   | Amount |   |   | % of total |   |   | Amount |   |   | % of total |   |
| Commercial                     |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $          | 53,186  |   |            |   | 5.7    | %      |   | $ | 207,613 |   |   |   | 22.3 | % |   | $ | 260,799 |   |   |   | 28.0 | % |
|    Construction |   |       | 7,434   |   |            |   | 0.8    | %      |   |   | 28,498 |   |   |   | 3.1 | % |   |   | 35,932 |   |   |   | 3.9 | % |
|    Other        |   |       | 56,214  |   |            |   | 6.0    | %      |   |   | 57,617 |   |   |   | 6.2 | % |   |   | 113,831 |   |   |   | 12.2 | % |
| Municipal                      |   |       | 20,108  |   |            |   | 2.1    | %      |   |   | 3,687 |   |   |   | 0.4 | % |   |   | 23,795 |   |   |   | 2.6 | % |
| Residential                    |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |       | 129,087 |   |            |   | 13.9   | %      |   |   | 230,687 |   |   |   | 24.7 | % |   |   | 359,774 |   |   |   | 38.4 | % |
|    Construction |   |       | 5,637   |   |            |   | 0.6    | %      |   |   | 12,665 |   |   |   | 1.4 | % |   |   | 18,302 |   |   |   | 2.0 | % |
| Home equity line of credit     |   |       | 2,398   |   |            |   | 0.3    | %      |   |   | 98,052 |   |   |   | 10.5 | % |   |   | 100,450 |   |   |   | 10.8 | % |
| Consumer                       |   |       | 15,968  |   |            |   | 1.7    | %      |   |   | 3,159 |   |   |   | 0.3 | % |   |   | 19,127 |   |   |   | 2.1 | % |
| Total loans                    |   | $          | 290,032 |   |            |   | 31.1   | %      |   | $ | 641,978 |   |   |   | 68.9 | % |   | $ | 932,010 |   |   |   | 100.0 | % |

----

----

----

| In thousands of dollars        |   | June 30, 2010 |   |   | December 31, 2009 |   |   | June 30, 2009 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 5,553  |   |              |   | 28.0   | %             |   | $ | 5,297 |   |   |   | 25.2 | % |   | $ | 4,407 |   |   |   | 24.6 | % |
|    Construction |   |          | 708    |   |              |   | 3.9    | %             |   |   | 896 |   |   |   | 5.1 | % |   |   | 710 |   |   |   | 5.1 | % |
|    Other        |   |          | 2,796  |   |              |   | 12.2   | %             |   |   | 3,095 |   |   |   | 12.0 | % |   |   | 2,925 |   |   |   | 13.1 | % |
| Municipal                      |   |          | 21     |   |              |   | 2.6    | %             |   |   | 23 |   |   |   | 4.8 | % |   |   | 22 |   |   |   | 4.5 | % |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 1,270  |   |              |   | 38.4   | %             |   |   | 1,197 |   |   |   | 38.7 | % |   |   | 1,319 |   |   |   | 39.7 | % |
|    Construction |   |          | 361    |   |              |   | 2.0    | %             |   |   | 43 |   |   |   | 1.8 | % |   |   | 39 |   |   |   | 1.9 | % |
| Home equity line of credit     |   |          | 488    |   |              |   | 10.8   | %             |   |   | 515 |   |   |   | 9.9 | % |   |   | 531 |   |   |   | 8.9 | % |
| Consumer                       |   |          | 733    |   |              |   | 2.1    | %             |   |   | 716 |   |   |   | 2.5 | % |   |   | 654 |   |   |   | 2.2 | % |
| Unallocated                    |   |          | 2,235  |   |              |   | 0.0    | %             |   |   | 1,855 |   |   |   | 0.0 | % |   |   | 1,145 |   |   |   | 0.0 | % |
| Total                          |   | $             | 14,165 |   |              |   | 100.0  | %             |   | $ | 13,637 |   |   |   | 100.0 | % |   | $ | 11,752 |   |   |   | 100.0 | % |

----

| In thousands of dollars                                       |   | June 30,2010 |   |   | December 31, 2009 |   |   | June 30,2009 |   |
|---------------------------------------------------------------|--------|--------------|--------|--------|-------------------|--------|--------|--------------|--------|
| Balance at beginning of year                                  |   | $            | 13,637 |   |              | $      | 8,800  |         |   | $ | 8,800 |   |
| Loans charged off:                                            |   |         |   |   |              |   |   |         |   |   |   |   |
| Commercial                                                    |   |         |   |   |              |   |   |         |   |   |   |   |
|    Real estate                                 |   |         | 2,678  |   |              |   | 2,430  |         |   |   | 317 |   |
|    Construction                                |   |         | 175    |   |              |   | -      |         |   |   | - |   |
|    Other                                       |   |         | 566    |   |              |   | 2,329  |         |   |   | 848 |   |
| Municipal                                                     |   |         | -      |   |              |   | -      |         |   |   | - |   |
| Residential                                                   |   |         |   |   |              |   |   |         |   |   |   |   |
|    Term                                        |   |         | 291    |   |              |   | 1,767  |         |   |   | 225 |   |
|    Construction                                |   |         | -      |   |              |   | 47     |         |   |   | 47 |   |
| Home equity line of credit                                    |   |         | 8      |   |              |   | 177    |         |   |   | 46 |   |
| Consumer                                                      |   |         | 420    |   |              |   | 826    |         |   |   | 241 |   |
| Total                                                         |   |         | 4,138  |   |              |   | 7,576  |         |   |   | 1,724 |   |
| Recoveries on loans previously charged off                    |   |         |   |   |              |   |   |         |   |   |   |   |
| Commercial                                                    |   |         |   |   |              |   |   |         |   |   |   |   |
|    Real estate                                 |   |         | 2      |   |              |   | -      |         |   |   | - |   |
|    Construction                                |   |         | -      |   |              |   | -      |         |   |   | - |   |
|    Other                                       |   |         | 29     |   |              |   | 79     |         |   |   | 24 |   |
| Municipal                                                     |   |         | -      |   |              |   | -      |         |   |   | - |   |
| Residential                                                   |   |         | -      |   |              |   |   |         |   |   |   |   |
|    Term                                        |   |         | 2      |   |              |   | 59     |         |   |   | 2 |   |
|    Construction                                |   |         | -      |   |              |   | -      |         |   |   | - |   |
| Home equity line of credit                                    |   |         | -      |   |              |   | 1      |         |   |   | - |   |
| Consumer                                                      |   |         | 133    |   |              |   | 114    |         |   |   | 50 |   |
| Total                                                         |   |         | 166    |   |              |   | 253    |         |   |   | 76 |   |
| Net loans charged off                                         |   |         | 3,972  |   |              |   | 7,323  |         |   |   | 1,648 |   |
| Provision for loan losses                                     |   |         | 4,500  |   |              |   | 12,160 |         |   |   | 4,600 |   |
| Balance at end of period                                      |   | $            | 14,165 |   |              | $      | 13,637 |         |   | $ | 11,752 |   |
| Ratio of net loans charged off to average loans outstanding   |   |         | 0.86   | %      |              |   | 0.75   | %            |   |   | 0.34 | % |
| Ratio of allowance for loan losses to total loans outstanding |   |         | 1.52   | %      |              |   | 1.43   | %            |   |   | 1.20 | % |

----

| In thousands of dollars        |   | June 30, 2010 |   |   | December 31, 2009 |   |   | June 30, 2009 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |   |   |              |   |   |          |   |
|    Real estate  |   | $             | 7,333  |   |              | $      | 6,198  |          |   | $ | 7,588 |   |
|    Construction |   |          | 472    |   |              |   | 458    |          |   |   | - |   |
|    Other        |   |          | 2,505  |   |              |   | 2,638  |          |   |   | 3,220 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term         |   |          | 9,865  |   |              |   | 5,868  |          |   |   | 3,112 |   |
|    Construction |   |          | 2,936  |   |              |   | 3,182  |          |   |   | 1,364 |   |
| Home equity line of credit     |   |          | 170    |   |              |   | 143    |          |   |   | 52 |   |
| Consumer                       |   |          | 326    |   |              |   | 75     |          |   |   | 72 |   |
| Total nonperforming loans      |   | $             | 23,607 |   |              | $      | 18,562 |          |   | $ | 15,408 |   |

| ·   | 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. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| In thousands of dollars                               |   | June 30,2010 |   |   | December 31,2009 |   |   | June 30, 2009 |   |
|-------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|--------|--------------------|--------|
| Commercial                                            |   |         |   |   |             |   |   |               |   |
|    Real estate                         |   | $            | 8,014  |   |             | $      | 9,443  |               |   | $ | 10,752 |   |
|    Construction                        |   |         | 646    |   |             |   | 458    |               |   |   | 270 |   |
|    Other                               |   |         | 1,147  |   |             |   | 3,607  |               |   |   | 3,692 |   |
| Municipal                                             |   |         | -      |   |             |   | -      |               |   |   | - |   |
| Residential                                           |   |         |   |   |             |   |   |               |   |   |   |   |
|    Term                                |   |         | 13,344 |   |             |   | 11,747 |               |   |   | 13,718 |   |
|    Construction                        |   |         | 1,166  |   |             |   | 3,182  |               |   |   | - |   |
| Home equity line of credit                            |   |         | 1,574  |   |             |   | 682    |               |   |   | 951 |   |
| Consumer                                              |   |         | 628    |   |             |   | 775    |               |   |   | 498 |   |
| Total                                                 |   | $            | 26,519 |   |             | $      | 29,894 |               |   | $ | 29,881 |   |
| Loans 30-89 days past due to total loans              |   |         | 0.96   | %      |             |   | 1.26   | %                  |   |   | 1.37 | % |
| Loans 90+ days past due and accruing to total loans   |   |         | 0.15   | %      |             |   | 0.12   | %                  |   |   | 0.46 | % |
| Loans 90+ days past due on non-accrual to total loans |   |         | 1.74   | %      |             |   | 1.76   | %                  |   |   | 1.21 | % |
| Total past due loans to total loans                   |   |         | 2.85   | %      |             |   | 3.14   | %                  |   |   | 3.04 | % |

----

| In thousands of dollars        |   | June 30, 2010 |   |   | December 31, 2009 |   |   | June 30, 2009 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Carrying Value                 |   |          |   |   |              |   |   |          |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | 950    |   |              |   | 1,182  |          |   |   | 1,152 |   |
|    Other        |   |          | 1,310  |   |              |   | 1,920  |          |   |   | 1,001 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          | -      |   |              |   | -      |          |   |   | - |   |
|    Term         |   |          | 3,122  |   |              |   | 2,826  |          |   |   | 1,094 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 5,382  |   |              | $      | 5,928  |          |   | $ | 3,247 |   |
| Related Allowance              |   |          |   |   |              |   |   |          |   |   |   |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | 400    |   |              |   | 476    |          |   |   | 400 |   |
|    Other        |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          | -      |   |              |   | -      |          |   |   | - |   |
|    Term         |   |          | 188    |   |              |   | 107    |          |   |   | 50 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 588    |   |              | $      | 583    |          |   | $ | 450 |   |
| Net Value                      |   |          |   |   |              |   |   |          |   |   |   |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | 550    |   |              |   | 706    |          |   |   | 752 |   |
|    Other        |   |          | 1,310  |   |              |   | 1,920  |          |   |   | 1,001 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          | -      |   |              |   | -      |          |   |   | - |   |
|    Term         |   |          | 2,934  |   |              |   | 2,719  |          |   |   | 1,044 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 4,794  |   |              | $      | 5,345  |          |   | $ | 2,797 |   |

----

----

----

| In thousands of dollars                                      |   | Total  |    |   | Less than1 year |   |    | 1-3years |   |   | 3-5years |   |   | More than5 years |    |
|--------------------------------------------------------------|--------|--------|---------|--------|-----------------|--------|---------|----------|--------|--------|----------|--------|--------|------------------|---------|
|  Borrowed funds                                         |   | $      | 213,944 |   |            |   | 103,771 |     |   |   | 20,000   |   |   |             | 40,000  |   |   |   | 50,173 |   |
|  Operating leases                                       |   |   | 823     |   |            |   | 194     |     |   |   | 289      |   |   |             | 109     |   |   |   | 231 |   |
|  Certificates of deposit                                |   |   | 601,507 |   |            |   | 386,692 |     |   |   | 62,554   |   |   |             | 152,261 |   |   |   | - |   |
|  Total                                                  |   | $      | 816,274 |   |            |   | 490,657 |     |   |   | 82,843   |   |   |             | 192,370 |   |   |   | 50,404 |   |
|  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      |   | $      | 164,315 |   |            |   | 164,315 |     |   |   | -        |   |   |             | -       |   |   |   | - |   |

----

|                                                  |   |   | 0-90    |   |   |   | 90-365  |   |   |   | 1-5     |   |   |   | 5        | +      |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| In thousands of dollars                          |   | Days   |    |   | Days   |   |    | Years  |   |   | Years   |   |
| Investment securities at amortized cost               |   | $      | 52,372  |   |   | $      | 46,881  |   |   | $      | 104,767 |   |   | $      | 73,995   |   |
| Federal Home Loan Bank and Federal Reserve Bank Stock |   |   | -       |   |   |   | -       |   |   |   | 14,031  |   |   |   | 1,412    |   |
| Loans held for sale                                   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | 3,426    |   |
| Loans                                                 |   |   | 467,702 |   |   |   | 162,685 |   |   |   | 250,869 |   |   |   | 50,754   |   |
| Other interest-earning assets                         |   |   | -       |   |   |   | 9,666   |   |   |   | -       |   |   |   | -        |   |
| Non-rate-sensitive assets                             |   |   | 14,915  |   |   |   | -       |   |   |   | -       |   |   |   | 72,800   |   |
|  Total assets                                    |   |   | 534,989 |   |   |   | 219,232 |   |   |   | 369,667 |   |   |   | 202,387  |   |
| Interest-bearing deposits                             |   |   | 264,185 |   |   |   | 219,250 |   |   |   | 195,527 |   |   |   | 207,718  |   |
| Borrowed funds                                        |   |   | 88,774  |   |   |   | 15,009  |   |   |   | 55,051  |   |   |   | 55,110   |   |
| Non-rate-sensitive liabilities and equity             |   |   | 1,850   |   |   |   | 5,850   |   |   |   | 38,800  |   |   |   | 179,151  |   |
|  Total liabilities and equity                    |   |   | 354,809 |   |   |   | 240,109 |   |   |   | 289,378 |   |   |   | 441,979  |   |
| Period gap                                            |   | $      | 180,180 |   |   | $      | (20,877 | )      |   | $      | 80,289  |   |   | $      | (239,592 | )      |
| Percent of total assets                               |   |   | 13.59   | %      |   |   | -1.57   | %      |   |   | 6.05    | %      |   |   | -18.07   | %      |
| Cumulative gap (current)                              |   |   | 180,180 |   |   |   | 159,303 |   |   |   | 239,592 |   |   |   | -        |   |
| Percent of total assets                               |   |   | 13.59   | %      |   |   | 12.01   | %      |   |   | 18.07   | %      |   |   | 0.00     | %      |

----

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