| Maryland                        |   | 52-1652138                      |
|---------------------------------|--------|---------------------------------|
| (State of other jurisdiction of |   | (I.R.S. Employer                |
| incorporation or organization)  |   |   Identification No.) |

| 3035 Leonardtown Road, Waldorf, Maryland |   | 20601      |
|------------------------------------------|--------|------------|
| (Address of principal executive offices) |   | (Zip Code) |

| (301) 645-5601                                             |
|------------------------------------------------------------|
|  (Registrant's telephone number, including area code) |

| Not applicable                                                                     |
|------------------------------------------------------------------------------------|
| (Former name, former address and former fiscal year, if changed since last report) |

| Large Accelerated Filer   ̈     | Accelerated Filer   ̈    |
|-----------------------------------------------|----------------------------------------|
| Non-accelerated Filer   ̈       | Smaller Reporting Company  x |
| (Do not check if a smaller reporting company) |

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|                                                                                                            |   | Page |
|-----------------------------------------------------------------------------------------------------------------|--------|------|
| PART I - FINANCIAL INFORMATION                                                                                  |   |
|                                                                                                            |   |
| Item 1 – Financial Statements (Unaudited)                                                                 |   |
|                                                                                                            |   |
| Consolidated Balance Sheets – March 31, 2011 and December 31, 2010                                        | 3      |
|                                                                                                            |   |
| Consolidated Statements of Income - Quarters Ended March 31, 2011 and 2010                                      | 4      |
|                                                                                                            |   |
| Consolidated Statements of Cash Flows - Quarters Ended March 31, 2011 and 2010                                  | 5      |
|                                                                                                            |   |
| Notes to Consolidated Financial Statements                                                                      | 7      |
|                                                                                                            |   |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24     |
|                                                                                                            |   |
| Item 3 – Quantitative and Qualitative Disclosures about Market Risk                                       | 34     |
|                                                                                                            |   |
| Item 4 – Controls and Procedures                                                                          | 34     |
|                                                                                                            |   |
| PART II - OTHER INFORMATION                                                                                     |   |
|                                                                                                            |   |
| Item 1 – Legal Proceedings                                                                                | 35     |
|                                                                                                            |   |
| Item 1A – Risk Factors                                                                                    | 35     |
|                                                                                                            |   |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                      | 35     |
|                                                                                                            |   |
| Item 3 – Defaults Upon Senior Securities                                                                  | 36     |
|                                                                                                            |   |
| Item 4 – [Removed and Reserved]                                                                           | 36     |
|                                                                                                            |   |
| Item 5 – Other Information                                                                                | 36     |
|                                                                                                            |   |
| Item 6 – Exhibits                                                                                         | 36     |
|                                                                                                            |   |
| SIGNATURES                                                                                                      | 37     |

----

|                                                                                                                      |   | March 31,   |        |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|
|                                                                                                                      |   | 2010        |        |   | 2010         |   |
|                                                                                                                      |   | (Unaudited) |        |   |         |   |
|  Assets                                                                                                              |   |        |        |   |         |   |
| Cash and due from banks                                                                                                   |   | $           | 14,526,264  |   |         | $      | 8,695,590 |   |
| Federal funds sold                                                                                                        |   |        | 2,145,000   |   |         |   | 615,000 |   |
| Interest-bearing deposits with banks                                                                                      |   |        | 841,315     |   |         |   | 512,846 |   |
| Securities available for sale (AFS), at fair value                                                                        |   |        | 30,792,374  |   |         |   | 34,946,225 |   |
| Securities held to maturity (HTM), at amortized cost                                                                      |   |        | 113,656,094 |   |         |   | 126,988,316 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock - at cost                                                           |   |        | 6,354,000   |   |         |   | 6,315,600 |   |
| Loans receivable - net of allowance for loan losses of $7,281,777 and $7,669,147                                          |   |        | 647,378,198 |   |         |   | 654,449,936 |   |
| Premises and equipment, net                                                                                               |   |        | 12,147,339  |   |         |   | 12,132,141 |   |
| Foreclosed real estate                                                                                                    |   |        | 11,039,380  |   |         |   | 10,469,302 |   |
| Accrued interest receivable                                                                                               |   |        | 2,990,963   |   |         |   | 2,784,396 |   |
| Investment in bank owned life insurance                                                                                   |   |        | 17,607,387  |   |         |   | 17,447,692 |   |
| Other assets                                                                                                              |   |        | 12,404,561  |   |         |   | 10,579,058 |   |
| Total Assets                                                                                                              |   | $           | 871,882,875 |   |         | $      | 885,936,102 |   |
|                                                                                                                      |   |        |        |   |         |   |   |   |
|  Liabilities and Stockholders' Equity                                                                                |   |        |        |   |         |   |   |   |
| Deposits                                                                                                                  |   |        |        |   |         |   |   |   |
| Noninterest-bearing deposits                                                                                              |   | $           | 64,000,231  |   |         | $      | 75,642,197 |   |
|     Interest-bearing deposits                                                                         |   |        | 658,007,513 |   |         |   | 648,940,129 |   |
| Total deposits                                                                                                            |   |        | 722,007,744 |   |         |   | 724,582,326 |   |
| Short-term borrowings                                                                                                     |   |        | 453,090     |   |         |   | 816,422 |   |
| Long-term debt                                                                                                            |   |        | 60,612,359  |   |         |   | 70,624,044 |   |
| Guaranteed preferred beneficial interest in junior subordinated debentures                                                |   |        | 12,000,000  |   |         |   | 12,000,000 |   |
| Accrued expenses and other liabilities                                                                                    |   |        | 5,656,449   |   |         |   | 6,808,383 |   |
| Total Liabilities                                                                                                         |   |        | 800,729,642 |   |         |   | 814,831,175 |   |
|                                                                                                                      |   |        |        |   |         |   |   |   |
| Stockholders' Equity                                                                                                      |   |        |        |   |         |   |   |   |
| Fixed Rate Cumulative Perpetual Preferred Stock, Series A - par value $1,000; authorized 15,540;  issued 15,540 |   |        | 15,540,000  |   |         |   | 15,540,000 |   |
| Fixed Rate Cumulative Perpetual Preferred Stock, Series B - par value $1,000; authorized 777; issued 777                  |   |        | 777,000     |   |         |   | 777,000 |   |
| Common stock - par value $.01; authorized - 15,000,000 shares;                                                            |   |        |        |   |         |   |   |   |
| issued 3,021,144 and 3,002,616 shares, respectively                                                                       |   |        | 30,211      |   |         |   | 30,026 |   |
| Additional paid in capital                                                                                                |   |        | 17,252,791  |   |         |   | 16,962,460 |   |
| Retained earnings                                                                                                         |   |        | 37,780,539  |   |         |   | 37,892,557 |   |
| Accumulated other comprehensive gain                                                                                      |   |        | 313,738     |   |         |   | 411,188 |   |
| Unearned ESOP shares                                                                                                      |   |        | (541,046    | )      |         |   | (508,304 | ) |
| Total Stockholders’ Equity                                                                                          |   |        | 71,153,233  |   |         |   | 71,104,927 |   |
|                                                                                                                      |   |        |        |   |         |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                |   | $           | 871,882,875 |   |         | $      | 885,936,102 |   |

----

| QUARTERS ENDED MARCH 31, 2011 AND 2010                  |   | Quarters Ended March 31, |      |
|---------------------------------------------------------|--------|--------------------------|-----------|
|                                                    |   | 2011                     |      |   | 2010 |   |
| Interest and Dividend Income                            |   |                     |      |   |   |   |
| Loans, including fees                                   |   | $                        | 8,860,571 |   |   | $ | 8,758,786 |   |
| Taxable interest and dividends on investment securities |   |                     | 969,837   |   |   |   | 1,202,574 |   |
| Interest on deposits with banks                         |   |                     | 1,382     |   |   |   | 2,177 |   |
| Total Interest and Dividend Income                      |   |                     | 9,831,790 |   |   |   | 9,963,537 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Interest Expenses                                       |   |                     |      |   |   |   |   |   |
| Deposits                                                |   |                     | 2,608,520 |   |   |   | 2,819,281 |   |
| Short-term borrowings                                   |   |                     | 14,433    |   |   |   | 10,854 |   |
| Long-term debt                                          |   |                     | 599,364   |   |   |   | 648,766 |   |
| Total Interest Expenses                                 |   |                     | 3,222,317 |   |   |   | 3,478,901 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Net Interest Income                                     |   |                     | 6,609,473 |   |   |   | 6,484,636 |   |
| Provision for loan losses                               |   |                     | 2,005,830 |   |   |   | 858,374 |   |
| Net Interest Income After Provision For Loan Losses     |   |                     | 4,603,643 |   |   |   | 5,626,262 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Noninterest Income                                      |   |                     |      |   |   |   |   |   |
| Loan appraisal, credit, and miscellaneous charges       |   |                     | 158,098   |   |   |   | 170,412 |   |
| Income from bank owned life insurance                   |   |                     | 159,695   |   |   |   | 104,746 |   |
| Service charges                                         |   |                     | 426,959   |   |   |   | 404,044 |   |
| Gain on sale of loans held for sale                     |   |                     | 25,575    |   |   |   | 82,023 |   |
| Total Noninterest Income                                |   |                     | 770,327   |   |   |   | 761,225 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Noninterest Expenses                                    |   |                     |      |   |   |   |   |   |
| Salary and employee benefits                            |   |                     | 2,751,474 |   |   |   | 2,362,534 |   |
| Occupancy expense                                       |   |                     | 417,391   |   |   |   | 427,644 |   |
| Advertising                                             |   |                     | 118,696   |   |   |   | 76,749 |   |
| Data processing expense                                 |   |                     | 282,753   |   |   |   | 246,140 |   |
| Depreciation of furniture, fixtures, and equipment      |   |                     | 99,529    |   |   |   | 127,598 |   |
| Telephone communications                                |   |                     | 42,024    |   |   |   | 40,119 |   |
| Office supplies                                         |   |                     | 38,791    |   |   |   | 45,746 |   |
| Professional fees                                       |   |                     | 217,088   |   |   |   | 158,839 |   |
| FDIC insurance                                          |   |                     | 326,319   |   |   |   | 352,106 |   |
| Valuation allowance on foreclosed real estate           |   |                     | 315,883   |   |   |   | - |   |
| Other                                                   |   |                     | 501,276   |   |   |   | 400,934 |   |
| Total Noninterest Expenses                              |   |                     | 5,111,224 |   |   |   | 4,238,409 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Income before income taxes                              |   |                     | 262,746   |   |   |   | 2,149,078 |   |
| Income tax expense                                      |   |                     | 21,248    |   |   |   | 784,654 |   |
| Net Income                                              |   | $                        | 241,498   |   |   | $ | 1,364,424 |   |
| Preferred stock dividends                               |   |                     | 211,733   |   |   |   | 211,733 |   |
| Net Income Available to Common Shareholders             |   | $                        | 29,765    |   |   | $ | 1,152,691 |   |
|                                                    |   |                     |      |   |   |   |   |   |
| Per Common Share                                        |   |                     |      |   |   |   |   |   |
| Basic earnings                                          |   | $                        | 0.01      |   |   | $ | 0.39 |   |
| Diluted earnings                                        |   | $                        | 0.01      |   |   | $ | 0.38 |   |
| Cash dividends declared                                 |   | $                        | 0.40      |   |   | $ | 0.40 |   |

----

|                                                                                        |   | Quarters Ended March 31, |        |
|---------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                        |   | 2011                     |        |   | 2010 |   |
|                                                                                        |   |                     |        |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                       |   |                     |        |   |   |   |
| Net income                                                                                  |   | $                        | 241,498     |   |   | $ | 1,364,424 |   |
|                                                                                        |   |                     |        |   |   |   |   |   |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |   |                     |        |   |   |   |   |   |
|                                                                                        |   |                     |        |   |   |   |   |   |
| Provision for loan losses                                                                   |   |                     | 2,005,830   |   |   |   | 858,374 |   |
| Depreciation and amortization                                                               |   |                     | 214,957     |   |   |   | 251,863 |   |
| Loans originated for resale                                                                 |   |                     | (1,476,600  | ) |   |   | (3,144,500 | ) |
| Proceeds from sale of loans originated for sale                                             |   |                     | 1,491,984   |   |   |   | 3,146,147 |   |
| Gain on sale of loans held for sale                                                         |   |                     | (25,575     | ) |   |   | (82,023 | ) |
| Net amortization of premium/discount on investment securities                               |   |                     | 45,142      |   |   |   | (88,162 | ) |
| Increase in foreclosed real estate valuation allowance                                      |   |                     | 315,883     |   |   |   | - |   |
| Increase in cash surrender of bank owned life insurance                                     |   |                     | (159,695    | ) |   |   | (104,746 | ) |
| Deferred income tax benefit                                                                 |   |                     | (37,136     | ) |   |   | (133,570 | ) |
| (Increase) decrease in accrued interest receivable                                          |   |                     | (206,567    | ) |   |   | 13,280 |   |
| Increase (decrease) in deferred loan fees                                                   |   |                     | 75,657      |   |   |   | (32,576 | ) |
| Decrease  in accounts payable, accrued expenses, other liabilities                |   |                     | (1,151,934  | ) |   |   | (908,876 | ) |
| Increase in other assets                                                                    |   |                     | (1,738,166  | ) |   |   | (537,836 | ) |
|                                                                                        |   |                     |        |   |   |   |   |   |
| Net cash (used in) provided by operating activities                                         |   |                     | (404,722    | ) |   |   | 601,799 |   |
|                                                                                        |   |                     |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                       |   |                     |        |   |   |   |   |   |
| Purchase of investment securities available for sale                                        |   |                     | (30,493     | ) |   |   | (33,177 | ) |
| Proceeds from redemption or principal payments of investment securities available for sale  |   |                     | 4,055,862   |   |   |   | 4,312,203 |   |
| Purchase of investment securities held to maturity                                          |   |                     | (99,951     | ) |   |   | (5,999,899 | ) |
| Proceeds from maturities or principal payments of investment securities held to maturity    |   |                     | 13,367,862  |   |   |   | 5,583,073 |   |
| Net increase of FHLB and Federal Reserve stock                                              |   |                     | (38,400     | ) |   |   | - |   |
| Loans originated or acquired                                                                |   |                     | (47,637,459 | ) |   |   | (55,440,499 | ) |
| Principal collected on loans                                                                |   |                     | 51,751,940  |   |   |   | 57,218,716 |   |
| Purchase of premises and equipment                                                          |   |                     | (230,155    | ) |   |   | (148,270 | ) |
|                                                                                        |   |                     |        |   |   |   |   |   |
| Net cash provided by investing activities                                                   |   |                     | 21,139,206  |   |   |   | 5,492,147 |   |

----

|                                                            |   | Quarters Ended March 31, |        |
|-----------------------------------------------------------------|--------|--------------------------|-------------|
|                                                            |   | 2011                     |        |   | 2010 |   |
|                                                            |   |                     |        |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                           |   |                     |        |   |   |   |
| Net (decrease) increase in deposits                             |   | $                        | (2,574,582  | ) |   | $ | 21,612,021 |   |
| Payments of long-term borrowings                                |   |                     | (10,011,685 | ) |   |   | (5,011,226 | ) |
| Net decrease in short-term borrowings                           |   |                     | (363,332    | ) |   |   | (12,829,434 | ) |
| Exercise of stock options                                       |   |                     | 290,596     |   |   |   | 31,446 |   |
| Dividends paid                                                  |   |                     | (211,733    | ) |   |   | (211,733 | ) |
| Net change in unearned ESOP shares                              |   |                     | (32,742     | ) |   |   | (12,549 | ) |
| Redemption of common stock                                      |   |                     | (141,863    | ) |   |   | - |   |
|                                                            |   |                     |        |   |   |   |   |   |
| Net cash (used in) provided by financing activities             |   |                     | (13,045,341 | ) |   |   | 3,578,525 |   |
|                                                            |   |                     |        |   |   |   |   |   |
| INCREASE IN CASH AND CASH EQUIVALENTS                           |   | $                        | 7,689,143   |   |   | $ | 9,672,471 |   |
|                                                            |   |                     |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - JANUARY 1                           |   |                     | 9,823,436   |   |   |   | 11,247,967 |   |
|                                                            |   |                     |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS – MARCH 31                      |   | $                        | 17,512,579  |   |   | $ | 20,920,438 |   |
|                                                            |   |                     |        |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:              |   |                     |        |   |   |   |   |   |
| Cash paid during the quarter for:                               |   |                     |        |   |   |   |   |   |
| Interest                                                        |   | $                        | 3,329,167   |   |   | $ | 3,636,279 |   |
| Income taxes                                                    |   | $                        | -           |   |   | $ | 283,000 |   |
| Issuance of  common stock for payment of compensation |   | $                        | 241,036     |   |   | $ | - |   |
| Transfer from loans to foreclosed real estate                   |   | $                        | 1,156,723   |   |   | $ | 5,969,882 |   |

----

|   | 1. | BASIS OF PRESENTATION |
|--------|----|-----------------------|

|   | 2. | NATURE OF BUSINESS |
|--------|----|--------------------|

|   | 3. | FAIR VALUE MEASUREMENTS |
|--------|----|-------------------------|

----

----

|                                   |   |                           |       |   | Fair Value Measurements                                                   |   |
|----------------------------------------|--------|--------------------------------|------------|--------|-------------------------------------------------------------------------------------|--------|
|                                   |   |                           |       |   | At March 31, 2011                                                    |   |
|                                   |   |                           |       |   | Using:                                                                              |   |
|                                   |   | Estimated Fair Value |       |   | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   |   | Significant OtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Description of Asset                   |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |
| Securities available for sale:         |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |
| Asset-backed securities issued by GSEs |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |
| CMOs                                   |   | $                              | 23,742,541 |   |                                                                                | $      | - |   |   | $ | 23,742,541 |   |   | $ | - |   |
| MBS                                    |   |                           | 3,176,081  |   |                                                                                |   | - |   |   |   | 3,176,081 |   |   |   | - |   |
| Corporate equity securities            |   |                           | 37,512     |   |                                                                                |   | - |   |   |   | 37,512 |   |   |   | - |   |
| Bond mutual funds                      |   |                           | 3,836,240  |   |                                                                                |   | - |   |   |   | 3,836,240 |   |   |   | - |   |
| Total securities available for sale    |   | $                              | 30,792,374 |   |                                                                                | $      | - |   |   | $ | 30,792,374 |   |   | $ | - |   |

|                        |   |                           |       |   | Fair Value Measurements                                                   |   |
|-----------------------------|--------|--------------------------------|------------|--------|-------------------------------------------------------------------------------------|--------|
|                        |   |                           |       |   | At March 31, 2011                                                    |   |
|                        |   |                           |       |   | Using:                                                                              |   |
|                        |   | Estimated Fair Value |       |   | Quoted Prices inActive Marketsfor IdenticalAssets(Level 1) |   |   | Significant OtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Description of Asset        |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |
| Loans with impairment:      |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |
| Commercial real estate      |   | $                              | 6,018,319  |   |                                                                                | $      | - |   |   | $ | 6,018,319 |   |   | $ | - |   |
| Commercial loans            |   |                           | 4,198,992  |   |                                                                                |   | - |   |   |   | 4,198,992 |   |   |   | - |   |
| Total loans with impairment |   | $                              | 10,217,311 |   |                                                                                | $      | - |   |   | $ | 10,217,311 |   |   | $ | - |   |
|                        |   |                           |       |   |                                                                                |   |   |   |   |   |   |   |   |   |   |   |
| Foreclosed Real Estate      |   | $                              | 11,039,380 |   |                                                                                | $      | - |   |   | $ | 11,039,380 |   |   | $ | - |   |

----

|   | 4. | INCOME TAXES |
|--------|----|--------------|

|   | 5. | EARNINGS PER COMMON SHARE |
|--------|----|---------------------------|

|                                                                  |   | Quarters Ended |      |
|-----------------------------------------------------------------------|--------|----------------|-----------|
|                                                                  |   | March 31,      |      |
|                                                                  |   | 2011           |      |   | 2010 |   |
| Net Income                                                            |   | $              | 241,498   |   |   | $ | 1,364,424 |   |
| Less: dividends payable on preferred stock                            |   |           | (211,733  | ) |   |   | (211,733 | ) |
| Net income available to common shareholders                           |   | $              | 29,764    |   |   | $ | 1,152,691 |   |
|                                                                  |   |           |      |   |   |   |   |   |
| Average number of common shares outstanding                           |   |           | 3,009,516 |   |   |   | 2,978,388 |   |
| Effect of dilutive options                                            |   |           | 44,361    |   |   |   | 21,125 |   |
| Average number of shares used to calculate diluted earnings per share |   |           | 3,053,877 |   |   |   | 2,999,513 |   |

|   | 6. | COMPREHENSIVE INCOME |
|--------|----|----------------------|

|                                                        |   | Quarters Ended March 31, |    |
|-------------------------------------------------------------|--------|-------------------------------|---------|
|                                                        |   | 2011                          |    |   | 2010 |   |
| Net Income                                                  |   | $                             | 241,498 |   |   | $ | 1,364,424 |   |
| Other comprehensive income net of tax:                      |   |                          |    |   |   |   |   |   |
| Net unrealized holding (losses) gains arising during period |   |                          | (97,450 | ) |   |   | 98,455 |   |
| Comprehensive income                                        |   | $                             | 144,048 |   |   | $ | 1,462,879 |   |

----

|   | 7. | STOCK-BASED COMPENSATION |
|--------|----|--------------------------|

|                           |   |   |    |   | Weighted |   |   |      |   | Weighted-Average |
|--------------------------------|--------|--------|---------|--------|----------|--------|--------|-----------|--------|------------------|
|                           |   |   |    |   | Average  |   |   | Aggregate |   | Contractual Life |
|                           |   |   |    |   | Exercise |   |   | Intrinsic |   | Remaining In     |
|                           |   | Shares |    |   | Price    |   |   | Value     |   | Years            |
|                           |   |   |    |   |     |   |   |      |   |             |
| Outstanding at January 1, 2011 |   |   | 299,237 |   |     | $      | 16.86  |      |   | $                | 524,392 |   |   |
| Granted at fair value          |   |   | -       |   |     |   | -      |      |   |             |   |   |   |
| Exercised                      |   |   | (17,353 | )      |     |   | 8.45   |      |   |             | 163,796 |   |   |
| Expired                        |   |   | -       |   |     |   | -      |      |   |             |   |   |   |
| Forfeited                      |   |   | (1 ,576 | )      |     |   | 15.02  |      |   |             |   |   |   |
| Outstanding at March 31, 2011  |   |   | 280,308 |   |     | $      | 17.39  |      |   | $                | 530,312 |   | 2.3 |
| Exercisable at March 31, 2011  |   |   | 280,308 |   |     | $      | 17.39  |      |   | $                | 530,312 |   | 2.3 |

|                         |   | Restricted Stock |   |   | Restricted Stock Units               |   |
|------------------------------|--------|------------------|--------|--------|--------------------------------------|--------|
|                         |   | Numberof Shares  |   |   | Weighted Average GrantDate FairValue |   |   | Numberof Shares |   |   | Weighted Average GrantDate FairValue |   |
|                         |   |             |   |   |                                 |   |   |   |   |   |   |   |
| Nonvested at January 1, 2011 |   |             | 2,720  |   |                                 | $      | 11.90 |   |   |   | 3,739 |   |   | $ | 16.10 |   |
| Granted                      |   |             | 6,500  |   |                                 |   | 16.10 |   |   |   | 3,106 |   |   |   | 16.89 |   |
| Vested                       |   |             | (2,661 | )      |                                 |   | 16.10 |   |   |   | - |   |   |   | - |   |
|                         |   |             |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Nonvested at March 31, 2011  |   |             | 6,559  |   |                                 | $      | 14.36 |   |   |   | 6,845 |   |   | $ | 16.46 |   |

----

|   | 8. | GUARANTEED PREFERRED BENEFICIAL INTEREST IN JUNIOR SUBORDINATED DEBENTURES |
|--------|----|----------------------------------------------------------------------------|

|   | 9. | PREFERRED STOCK |
|--------|----|-----------------|

----

|   | 10. | SECURITIES |
|--------|-----|------------|

|                              |   |  March 31, 2011 |                    |
|----------------------------------------|--------|----------------------|-------------------------|
|                                   |   | Amortized            |                    |   | Gross Unrealized |   |   | Gross Unrealized |   |   | Estimated |   |
|                                   |   | Cost                 |                    |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Securities available for sale (AFS)    |   |                 |                    |   |   |   |   |   |   |   |   |   |
| Asset-backed securities issued by GSEs |   | $                    | 26,293,860              |   |   | $ | 624,762 |   |   | $ | - |   |   | $ | 26,918,622 |   |
| Corporate equity securities            |   |                 | 37,310                  |   |   |   | 202 |   |   |   | - |   |   |   | 37,512 |   |
| Bond mutual funds                      |   |                 | 3,727,702               |   |   |   | 108,538 |   |   |   | - |   |   |   | 3,836,240 |   |
| Total securities available for sale    |   | $                    | 30,058,872              |   |   | $ | 733,502 |   |   | $ | - |   |   | $ | 30,792,374 |   |
|                                   |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities held to maturity (HTM)      |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset-backed securities issued by:     |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GSEs                                   |   | $                    | 101,558,790             |   |   | $ | 1,444,706 |   |   | $ | 598,036 |   |   | $ | 102,405,460 |   |
| Other                                  |   |                 | 11,245,727              |   |   |   | 109,800 |   |   |   | 1,325,414 |   |   |   | 10,030,113 |   |
| Total debt securities held to maturity |   |                 | 112,804,517             |   |   |   | 1,554,506 |   |   |   | 1,923,450 |   |   |   | 112,435,573 |   |
|                                   |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government obligations            |   |                 | 851,577                 |   |   |   | - |   |   |   | - |   |   |   | 851,577 |   |
| Agency Bonds                           |   |                 | -                       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other investments                      |   |                 | -                       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total securities held to maturity      |   | $                    | 113,656,094             |   |   | $ | 1,554,506 |   |   | $ | 1,923,450 |   |   | $ | 113,287,148 |   |
|                                   |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |                 |  December 31, 2010 |   |
|                                   |   | Amortized            |                    |   | Gross Unrealized |   |   | Gross Unrealized |   |   | Estimated |   |
|                                   |   | Cost                 |                    |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Securities available for sale (AFS)    |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset-backed securities issued by GSEs |   | $                    | 30,327,808              |   |   | $ | 761,138 |   |   | $ | - |   |   | $ | 31,088,946 |   |
| Corporate equity securities            |   |                 | 37,310                  |   |   |   | 80 |   |   |   | - |   |   |   | 37,390 |   |
| Bond mutual funds                      |   |                 | 3,697,208               |   |   |   | 122,681 |   |   |   | - |   |   |   | 3,819,889 |   |
| Total securities available for sale    |   | $                    | 34,062,326              |   |   | $ | 883,899 |   |   | $ | - |   |   | $ | 34,946,225 |   |
|                                   |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities held to maturity (HTM)      |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset-backed securities issued by:     |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GSEs                                   |   | $                    | 113,772,011             |   |   | $ | 1,761,809 |   |   | $ | 782,270 |   |   | $ | 114,751,550 |   |
| Other                                  |   |                 | 12,463,500              |   |   |   | 132,928 |   |   |   | 1,709,386 |   |   |   | 10,887,042 |   |
| Total debt securities held to maturity |   |                 | 126,235,511             |   |   |   | 1,894,737 |   |   |   | 2,491,656 |   |   |   | 125,638,592 |   |
|                                   |   |                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government obligations            |   |                 | 752,805                 |   |   |   | - |   |   |   | - |   |   |   | 752,805 |   |
| Other investments                      |   |                 | -                       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total securities held to maturity      |   | $                    | 126,988,316             |   |   | $ | 1,894,737 |   |   | $ | 2,491,656 |   |   | $ | 126,391,397 |   |

----

|                                |   | Less Than 12 |       |   | More Than 12    |   |    |      |   |   |           |   |
|------------------------------------------|--------|--------------|------------|--------|-----------------|--------|---------|-----------|--------|--------|----------------|--------|
|                                     |   | Months       |       |   | Months          |   |    | Total     |   |
|                                     |   | FairValue    |       |   | Unrealized Loss |   |    | FairValue |   |   | UnrealizedLoss |   |   | FairValue |   |   | UnrealizedLoss |   |
| Asset-backed securities issued by GSEs   |   | $            | 45,728,435 |   |            | $      | 452,358 |      |   | $      | 8,132,117      |   |   | $ | 145,678 |   |   | $ | 53,860,552 |   |   | $ | 598,036 |   |
|                                     |   |         |       |   |            |   |    |      |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset-backed securities issued by others |   |         | -          |   |            |   | -       |      |   |   | 7,851,453      |   |   |   | 1,325,414 |   |   |   | 7,851,453 |   |   |   | 1,325,414 |   |
|                                     |   | $            | 45,728,435 |   |            | $      | 452,358 |      |   | $      | 15,983,570     |   |   | $ | 1,471,092 |   |   | $ | 61,712,005 |   |   | $ | 1,923,450 |   |

----

| Credit Rating |   | Amount |        |
|---------------|--------|--------|-------------|
| AAA           |   | $      | 131,572,646 |   |
| AA+           |   |   | 356,432     |   |
| AA-           |   |   | 777,355     |   |
| A-            |   |   | -           |   |
| BBB+          |   |   | 103,245     |   |
| BBB-          |   |   | 1,882,416   |   |
| BB+           |   |   | 1,257,437   |   |
| B+            |   |   | 652,599     |   |
| CCC+          |   |   | 3,121,009   |   |
| Total         |   | $      | 139,723,139 |   |

|   | 11. | FORECLOSED REAL ESTATE |
|--------|-----|------------------------|

|                             |   | Quarter Ended |       |   | Year Ended   |   |
|----------------------------------|--------|---------------|------------|--------|--------------|--------|
|                             |   | March 31,     |       |   | December 31, |   |
|                             |   | 2011          |       |   | 2010         |   |
| Balance at beginning of period   |   | $             | 10,469,302 |   |         | $      | 922,934 |   |
| Additions of underlying property |   |          | 1,348,107  |   |         |   | 11,768,778 |   |
| Disposals of underlying property |   |          | (462,146   | )      |         |   | (1,934,476 | ) |
| Valuation allowance              |   |          | (315,883   | )      |         |   | (287,934 | ) |
| Balance at end of period         |   | $             | 11,039,380 |   |         | $      | 10,469,302 |   |

|                |   | Quarters Ended March 31, |    |
|---------------------|--------|--------------------------|---------|
|                |   | 2011                     |    |   | 2010 |   |
| Valuation allowance |   | $                        | 315,883 |   |   | $ | - |   |
| Operating expenses  |   |                     | 143,868 |   |   |   | 1,786 |   |
|                |   | $                        | 459,751 |   |   | $ | 1,786 |   |

----

|   | 12. | LOANS |
|--------|-----|-------|

|                              |   | March 31, 2011 |        |   | December 31, 2010 |   |
|-----------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                              |   |           |        |   |              |   |
| Commercial real estate            |   | $              | 343,071,081 |   |              | $      | 336,299,836 |   |
| Residential first mortgages       |   |           | 144,139,698 |   |              |   | 136,048,577 |   |
| Construction and land development |   |           | 36,204,608  |   |              |   | 42,504,200 |   |
| Home equity and second mortgage   |   |           | 23,863,632  |   |              |   | 24,379,664 |   |
| Commercial loans                  |   |           | 89,365,928  |   |              |   | 104,566,261 |   |
| Consumer loans                    |   |           | 1,185,542   |   |              |   | 1,273,080 |   |
| Commercial equipment              |   |           | 17,841,327  |   |              |   | 17,983,648 |   |
|                              |   |           | 655,671,816 |   |              |   | 663,055,266 |   |
| Less:                             |   |           |        |   |              |   |   |   |
| Deferred loan fees                |   |           | 1,011,841   |   |              |   | 936,183 |   |
| Allowance for loan loss           |   |           | 7,281,777   |   |              |   | 7,669,147 |   |
|                              |   |           | 8,293,618   |   |              |   | 8,605,330 |   |
|                              |   |           |        |   |              |   |   |   |
|                              |   | $              | 647,378,198 |   |              | $      | 654,449,936 |   |

|                    |   |        |        |   |           |   |        | Construction |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |
|------------------------------|--------|-------------|-------------|--------|----------------|--------|-------------|--------------|--------|--------|-----------------|--------|--------|------------|------------|--------|----------|--------|------------|------------|--------|--------|-----------|--------|
| At March 31, 2011            |   | Commercial  |        |   | Residential    |   |        | and Land     |   |   | Home Equity     |   |   | Commercial |       |   | Consumer |   |       | Commercial |   |   |      |   |
|                         |   | Real Estate |        |   | First Mortgage |   |        | Development  |   |   | and Second Mtg. |   |   | Loans      |       |   | Loans    |   |       | Equipment  |   |   | Total     |   |
| Allowance for loan losses:   |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |
| Balance at January 1,        |   | $           | 3,313,983   |   |           | $      | 204,073     |         |   | $      | 1,266,625       |   |   | $          | 97,519     |   |     | $      | 2,552,039  |       |   | $      | 32,209    |   |   | $ | 202,699 |   |   | $ | 7,669,147 |   |
| Charge-offs                  |   |        | (515,049    | )      |           |   | (49,005     | )            |   |   | (213,020        | )      |   |       | -          |   |     |   | (1,568,150 | )          |   |   | (1,000    | )      |   |   | (48,005 | ) |   |   | (2,394,229 | ) |
| Recoveries                   |   |        | -           |   |           |   | -           |         |   |   | -               |   |   |       | -          |   |     |   | -          |       |   |   | 1,029     |   |   |   | - |   |   |   | 1,029 |   |
| Provisions                   |   |        | 576,468     |   |           |   | 190,867     |         |   |   | (83,322         | )      |   |       | (2,064     | )      |     |   | 1,328,925  |       |   |   | (3,785    | )      |   |   | (1,259 | ) |   |   | 2,005,830 |   |
| Balance at March 31,         |   | $           | 3,375,402   |   |           | $      | 345,935     |         |   | $      | 970,283         |   |   | $          | 95,455     |   |     | $      | 2,312,814  |       |   | $      | 28,453    |   |   | $ | 153,435 |   |   | $ | 7,281,777 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 514,829     |   |           | $      | -           |         |   | $      | -               |   |   | $          | -          |   |     | $      | 1,375,209  |       |   | $      | -         |   |   | $ | - |   |   | $ | 1,890,038 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 2,860,573   |   |           | $      | 345,935     |         |   | $      | 970,283         |   |   | $          | 95,455     |   |     | $      | 937,605    |       |   | $      | 28,453    |   |   | $ | 153,435 |   |   | $ | 5,391,739 |   |
| Loan receivables:            |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance               |   | $           | 343,071,081 |   |           | $      | 144,139,698 |         |   | $      | 36,204,608      |   |   | $          | 23,863,632 |   |     | $      | 89,365,928 |       |   | $      | 1,185,542 |   |   | $ | 17,841,327 |   |   | $ | 655,671,816 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 23,683,685  |   |           | $      | 4,773,045   |         |   | $      | 5,952,586       |   |   | $          | 359,050    |   |     | $      | 18,242,080 |       |   | $      | 154,821   |   |   | $ | 345,673 |   |   | $ | 53,510,940 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |       |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 319,387,396 |   |           | $      | 139,366,653 |         |   | $      | 30,252,022      |   |   | $          | 23,504,582 |   |     | $      | 71,123,848 |       |   | $      | 1,030,721 |   |   | $ | 17,495,654 |   |   | $ | 602,160,876 |   |

----

|                    |   |        |        |   |           |   |        | Construction |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |
|------------------------------|--------|-------------|-------------|--------|----------------|--------|-------------|--------------|--------|--------|-----------------|--------|--------|------------|------------|--------|----------|--------|-------------|------------|--------|--------|-----------|--------|
| At December 31, 2010         |   | Commercial  |        |   | Residential    |   |        | and Land     |   |   | Home Equity     |   |   | Commercial |       |   | Consumer |   |        | Commercial |   |   |      |   |
|                         |   | Real Estate |        |   | First Mortgage |   |        | Development  |   |   | and Second Mtg. |   |   | Loans      |       |   | Loans    |   |        | Equipment  |   |   | Total     |   |
| Allowance for loan losses:   |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |
| Balance at January 1,        |   | $           | 2,661,371   |   |           | $      | 127,848     |         |   | $      | 1,696,396       |   |   | $          | 130,692    |   |     | $      | 2,109,513   |       |   | $      | 63,989    |   |   | $ | 681,505 |   |   | $ | 7,471,314 |   |
| Charge-offs                  |   |        | (525,992    | )      |           |   | (62,999     | )            |   |   | (2,248,967      | )      |   |       | (70,999    | )      |     |   | (568,992    | )          |   |   | (10,000   | )      |   |   | (255,996 | ) |   |   | (3,743,945 | ) |
| Recoveries                   |   |        | -           |   |           |   | -           |         |   |   | 1,041           |   |   |       | -          |   |     |   | -           |       |   |   | 7,290     |   |   |   | - |   |   |   | 8,331 |   |
| Provisions                   |   |        | 1,178,604   |   |           |   | 139,224     |         |   |   | 1,818,155       |   |   |       | 37,826     |   |     |   | 1,011,518   |       |   |   | (29,070   | )      |   |   | (222,810 | ) |   |   | 3,933,447 |   |
| Balance at December 31,      |   | $           | 3,313,983   |   |           | $      | 204,073     |         |   | $      | 1,266,625       |   |   | $          | 97,519     |   |     | $      | 2,552,039   |       |   | $      | 32,209    |   |   | $ | 202,699 |   |   | $ | 7,669,147 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 500,000     |   |           | $      | -           |         |   | $      | -               |   |   | $          | -          |   |     | $      | 1,449,179   |       |   | $      | -         |   |   | $ | 48,456 |   |   | $ | 1,997,635 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 2,813,983   |   |           | $      | 204,073     |         |   | $      | 1,266,625       |   |   | $          | 97,519     |   |     | $      | 1,102,860   |       |   | $      | 32,209    |   |   | $ | 154,243 |   |   | $ | 5,671,512 |   |
| Loan receivables:            |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance               |   | $           | 336,299,836 |   |           | $      | 136,048,577 |         |   | $      | 42,504,200      |   |   | $          | 24,379,664 |   |     | $      | 104,566,261 |       |   | $      | 1,273,080 |   |   | $ | 17,983,648 |   |   | $ | 663,055,266 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 20,800,730  |   |           | $      | 3,664,442   |         |   | $      | 12,221,463      |   |   | $          | 319,112    |   |     | $      | 19,991,537  |       |   | $      | 701       |   |   | $ | 319,770 |   |   | $ | 57,317,755 |   |
|                         |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |        |        |   |           |   |        |         |   |   |            |   |   |       |       |   |     |   |        |       |   |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $           | 315,499,106 |   |           | $      | 132,384,135 |         |   | $      | 30,282,737      |   |   | $          | 24,060,552 |   |     | $      | 84,574,724  |       |   | $      | 1,272,379 |   |   | $ | 17,663,878 |   |   | $ | 605,737,511 |   |

|                              |   | March 31, 2011 |       |   | December 31, 2010 |   |
|-----------------------------------|--------|----------------|------------|--------|-------------------|--------|
|                              |   |           |       |   | Number            |   |   |   |   |   | Number |   |
|                              |   | Dollars        |       |   | of Loans          |   |   | Dollars |   |   | of Loans |   |
|                              |   |           |       |   |              |   |   |   |   |   |   |   |
| Commercial real estate            |   | $              | 7,463,777  |   |              |   | 12 |   |   | $ | 8,244,683 |   |   |   | 12 |   |
| Residential first mortgages       |   |           | 1,356,473  |   |              |   | 6 |   |   |   | 1,746,786 |   |   |   | 6 |   |
| Construction and land development |   |           | -          |   |              |   | - |   |   |   | 983,867 |   |   |   | 1 |   |
| Home equity and second mortgage   |   |           | 198,454    |   |              |   | 4 |   |   |   | 232,644 |   |   |   | 5 |   |
| Commercial loans                  |   |           | 1,891,063  |   |              |   | 6 |   |   |   | 2,261,642 |   |   |   | 6 |   |
| Consumer loans                    |   |           | -          |   |              |   | - |   |   |   | 701 |   |   |   | 1 |   |
| Commercial equipment              |   |           | 176,593    |   |              |   | 3 |   |   |   | 48,456 |   |   |   | 1 |   |
|                              |   | $              | 11,086,360 |   |              |   | 31 |   |   | $ | 13,518,779 |   |   |   | 32 |   |

----

|                   |   |    |        |   |   |   |      |   |   |   | Greater |   |   |     |       |   | Total       |   |       | Loans > 90 |   |
|-----------------------------|--------|---------|-------------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|----------|------------|--------|-------------|--------|------------|---------------|--------|
|                        |   |    |        |   | 31-60  |   |      | 61-90  |   |   | than 90 |   |   | Total    |       |   | Loan        |   |       | Days and      |   |
|                        |   | Current |        |   | Days   |   |      | Days   |   |   | Days    |   |   | Past Due |       |   | Receivables |   |       | Accruing      |   |
| March 31, 2011              |   |    |        |   |   |   |      |   |   |   |    |   |   |     |       |   |        |   |       |          |   |   |   |
|                        |   |    |        |   |   |   |      |   |   |   |    |   |   |     |       |   |        |   |       |          |   |   |   |
| Commercial real estate      |   | $       | 334,429,870 |   |   | $      | 961,710   |   |   | $      | 215,724 |   |   | $        | 7,463,777  |   |        | $      | 8,641,211  |          |   | $ | 343,071,081 |   |   | $ | - |   |
| Residential first mortgages |   |    | 142,435,899 |   |   |   | 347,326   |   |   |   | -       |   |   |     | 1,356,473  |   |        |   | 1,703,799  |          |   |   | 144,139,698 |   |   |   | - |   |
| Construction and land dev.  |   |    | 36,204,608  |   |   |   | -         |   |   |   | -       |   |   |     | -          |   |        |   | -          |          |   |   | 36,204,608 |   |   |   | - |   |
| Home equity and second mtg. |   |    | 23,459,475  |   |   |   | 108,836   |   |   |   | 96,867  |   |   |     | 198,454    |   |        |   | 404,157    |          |   |   | 23,863,632 |   |   |   | - |   |
| Commercial loans            |   |    | 83,859,005  |   |   |   | 3,325,679 |   |   |   | 290,181 |   |   |     | 1,891,063  |   |        |   | 5,506,923  |          |   |   | 89,365,928 |   |   |   | - |   |
| Consumer loans              |   |    | 1,182,012   |   |   |   | 3,530     |   |   |   | -       |   |   |     | -          |   |        |   | 3,530      |          |   |   | 1,185,542 |   |   |   | - |   |
| Commercial equipment        |   |    | 17,494,225  |   |   |   | 133,621   |   |   |   | 36,888  |   |   |     | 176,593    |   |        |   | 347,102    |          |   |   | 17,841,327 |   |   |   | - |   |
| Total                       |   | $       | 639,065,094 |   |   | $      | 4,880,702 |   |   | $      | 639,660 |   |   | $        | 11,086,360 |   |        | $      | 16,606,722 |          |   | $ | 655,671,816 |   |   | $ | - |   |
|                        |   |    |        |   |   |   |      |   |   |   |    |   |   |     |       |   |        |   |       |          |   |   |   |   |   |   |   |   |
| December 31, 2010           |   |    |        |   |   |   |      |   |   |   |    |   |   |     |       |   |        |   |       |          |   |   |   |   |   |   |   |   |
|                        |   |    |        |   |   |   |      |   |   |   |    |   |   |     |       |   |        |   |       |          |   |   |   |   |   |   |   |   |
| Commercial real estate      |   | $       | 327,358,352 |   |   | $      | 696,801   |   |   | $      | -       |   |   | $        | 8,244,683  |   |        | $      | 8,941,484  |          |   | $ | 336,299,836 |   |   | $ | - |   |
| Residential first mortgages |   |    | 134,142,088 |   |   |   | 159,703   |   |   |   | -       |   |   |     | 1,746,786  |   |        |   | 1,906,489  |          |   |   | 136,048,577 |   |   |   | - |   |
| Construction and land dev.  |   |    | 41,520,333  |   |   |   | -         |   |   |   | -       |   |   |     | 983,867    |   |        |   | 983,867    |          |   |   | 42,504,200 |   |   |   | - |   |
| Home equity and second mtg. |   |    | 23,947,389  |   |   |   | 199,631   |   |   |   | -       |   |   |     | 232,644    |   |        |   | 432,275    |          |   |   | 24,379,664 |   |   |   | - |   |
| Commercial loans            |   |    | 102,221,510 |   |   |   | 83,109    |   |   |   | -       |   |   |     | 2,261,642  |   |        |   | 2,344,751  |          |   |   | 104,566,261 |   |   |   | - |   |
| Consumer loans              |   |    | 1,268,738   |   |   |   | 3,141     |   |   |   | 500     |   |   |     | 701        |   |        |   | 4,342      |          |   |   | 1,273,080 |   |   |   | - |   |
| Commercial equipment        |   |    | 17,935,192  |   |   |   | -         |   |   |   | -       |   |   |     | 48,456     |   |        |   | 48,456     |          |   |   | 17,983,648 |   |   |   | - |   |
| Total                       |   | $       | 648,393,602 |   |   | $      | 1,142,385 |   |   | $      | 500     |   |   | $        | 13,518,779 |   |        | $      | 14,661,664 |          |   | $ | 663,055,266 |   |   | $ | - |   |

----

----

| Credit Risk Profile by Internally Assigned Grade |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Commercial Real Estate |   | Construction and Land Dev. |   |
|                                             |   | 3/31/2011 |   |   | 12/31/2010 |   |   | 3/31/2011 |   |   | 12/31/2010 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrated                                          |   | $ | 1,021,249 |   |   | $ | 1,074,330 |   |   | $ | 133,501 |   |   | $ | - |   |
| Pass                                             |   |   | 321,572,184 |   |   |   | 317,579,637 |   |   |   | 30,118,521 |   |   |   | 30,274,737 |   |
| Special mention                                  |   |   | 4,740,410 |   |   |   | 3,628,052 |   |   |   | 1,593,550 |   |   |   | 1,585,035 |   |
| Substandard                                      |   |   | 15,737,238 |   |   |   | 14,017,818 |   |   |   | 4,359,036 |   |   |   | 10,644,428 |   |
| Doubtful                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                                            |   | $ | 343,071,081 |   |   | $ | 336,299,836 |   |   | $ | 36,204,608 |   |   | $ | 42,504,200 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Commercial Loans |   | Commercial Equipment |   |
|                                             |   | 3/31/2011 |   |   | 12/31/2010 |   |   | 3/31/2011 |   |   | 12/31/2010 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrated                                          |   | $ | 17,984 |   |   | $ | 50,035 |   |   | $ | 148,023 |   |   | $ | 169,492 |   |
| Pass                                             |   |   | 71,217,162 |   |   |   | 84,946,678 |   |   |   | 17,656,416 |   |   |   | 17,765,700 |   |
| Special mention                                  |   |   | 2,793,465 |   |   |   | 2,814,668 |   |   |   | 36,888 |   |   |   | - |   |
| Substandard                                      |   |   | 14,728,541 |   |   |   | 12,852,635 |   |   |   | - |   |   |   | - |   |
| Doubtful                                         |   |   | 500,000 |   |   |   | 3,793,470 |   |   |   | - |   |   |   | 48,456 |   |
| Loss                                             |   |   | 108,775 |   |   |   | 108,775 |   |   |   | - |   |   |   | - |   |
| Total                                            |   | $ | 89,365,928 |   |   | $ | 104,566,261 |   |   | $ | 17,841,327 |   |   | $ | 17,983,648 |   |

| Credit Risk Profile Based on Payment Activity |   |
|-----------------------------------------------|--------|
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   | Residential First Mortgages |   | Home Equity and Second Mtg. |   | Consumer Loans |   |
|                                          |   | 3/31/2011 |   |   | 12/31/2010 |   |   | 3/31/2011 |   |   | 12/31/2010 |   |   | 3/31/2011 |   |   | 12/31/2010 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performing                                    |   | $ | 142,783,225 |   |   | $ | 134,301,791 |   |   | $ | 23,665,178 |   |   | $ | 24,147,019 |   |   | $ | 1,185,542 |   |   | $ | 1,272,379 |   |
| Nonperforming                                 |   |   | 1,356,473 |   |   |   | 1,746,786 |   |   |   | 198,454 |   |   |   | 232,645 |   |   |   | - |   |   |   | 701 |   |
| Total                                         |   | $ | 144,139,698 |   |   | $ | 136,048,577 |   |   | $ | 23,863,632 |   |   | $ | 24,379,664 |   |   | $ | 1,185,542 |   |   | $ | 1,273,080 |   |

----

| March 31, 2011         |   | UnpaidContractualPrincipalBalance |       |   | RecordedInvestmentWith NoAllowance |   |      | RecordedInvestmentWithAllowance |   |   | Total RecordedInvestment |   |   | RelatedAllowance |       |   | AverageRecordedInvestment |   |      | Year to DateInterestIncomeRecognized |   |
|------------------------|--------|-----------------------------------|------------|--------|-----------------------------------------|--------|-----------|---------------------------------|--------|--------|-------------------------------|--------|--------|------------------|------------|--------|---------------------------|--------|-----------|------------------------------------------------|--------|
|                   |   |                              |       |   |                                    |   |      |                            |   |   |                          |   |   |             |       |   |                      |   |      |                                           |   |
| Commercial real estate |   | $                                 | 12,416,242 |   |                                    | $      | 5,475,444 |                            |   | $      | 6,533,149                     |   |   | $                | 12,008,593 |   |                      | $      | 514,829   |                                           |   | $ | 12,102,416 |   |   | $ | 115,762 |   |
| Commercial loans       |   |                              | 10,124,696 |   |                                    |   | 3,375,014 |                            |   |   | 5,574,201                     |   |   |             | 8,949,215  |   |                      |   | 1,375,209 |                                           |   |   | 9,851,544 |   |   |   | 129,855 |   |
| Commercial equipment   |   |                              | 271,083    |   |                                    |   | 271,083   |                            |   |   | -                             |   |   |             | 271,083    |   |                      |   | -         |                                           |   |   | 271,132 |   |   |   | 4,413 |   |
| Total                  |   | $                                 | 22,812,021 |   |                                    | $      | 9,121,541 |                            |   | $      | 12,107,350                    |   |   | $                | 21,228,891 |   |                      | $      | 1,890,038 |                                           |   | $ | 22,225,092 |   |   | $ | 250,030 |   |

| December 31, 2010 |   | UnpaidContractualPrincipalBalance |       |   | RecordedInvestmentWith NoAllowance |   |       | RecordedInvestmentWithAllowance |   |   | Total RecordedInvestment |   |   | RelatedAllowance |       |   | AverageRecordedInvestment |   |      | InterestIncomeRecognized |   |
|-----------------------------|--------|-----------------------------------|------------|--------|-----------------------------------------|--------|------------|---------------------------------|--------|--------|-------------------------------|--------|--------|------------------|------------|--------|---------------------------|--------|-----------|--------------------------|--------|
|                        |   |                              |       |   |                                    |   |       |                            |   |   |                          |   |   |             |       |   |                      |   |      |                     |   |
| Commercial real estate      |   | $                                 | 11,254,896 |   |                                    | $      | 5,624,780  |                            |   | $      | 5,222,466                     |   |   | $                | 10,847,246 |   |                      | $      | 500,000   |                     |   | $ | 8,710,501 |   |   | $ | 329,446 |   |
| Residential first mortgages |   |                              | 928,847    |   |                                    |   | 928,847    |                            |   |   | -                             |   |   |             | 928,847    |   |                      |   | -         |                     |   |   | 924,163 |   |   |   | 52,516 |   |
| Commercial loans            |   |                              | 9,292,145  |   |                                    |   | 3,195,567  |                            |   |   | 6,096,578                     |   |   |             | 9,292,145  |   |                      |   | 1,449,179 |                     |   |   | 9,308,552 |   |   |   | 464,956 |   |
| Commercial equipment        |   |                              | 319,769    |   |                                    |   | 271,313    |                            |   |   | 48,456                        |   |   |             | 319,769    |   |                      |   | 48,456    |                     |   |   | 300,533 |   |   |   | 13,836 |   |
| Total                       |   | $                                 | 21,795,657 |   |                                    | $      | 10,020,507 |                            |   | $      | 11,367,500                    |   |   | $                | 21,388,007 |   |                      | $      | 1,997,635 |                     |   | $ | 19,243,749 |   |   | $ | 860,754 |   |

----

|                        |   | March 31, 2011 |       |   | December 31, 2010 |   |
|-----------------------------|--------|--------------------------|------------|--------|-----------------------------|--------|
|                        |   | Dollars                  |       |   | Number of Loans   |   |   | Dollars |   |   | Number of Loans |   |
|                        |   |                     |       |   |                        |   |   |   |   |   |   |   |
| Commercial real estate      |   | $                        | 6,693,336  |   |                        |   | 6 |   |   | $ | 6,847,618 |   |   |   | 6 |   |
| Residential first mortgages |   |                     | -          |   |                        |   | - |   |   |   | 928,847 |   |   |   | 2 |   |
| Commercial loans            |   |                     | 3,375,014  |   |                        |   | 5 |   |   |   | 8,834,025 |   |   |   | 7 |   |
| Commercial equipment        |   |                     | 271,083    |   |                        |   | 4 |   |   |   | 271,313 |   |   |   | 4 |   |
|                        |   | $                        | 10,339,433 |   |                        |   | 15 |   |   | $ | 16,881,803 |   |   |   | 19 |   |

|   | 13. | NEW ACCOUNTING PRONOUNCEMENTS |
|--------|-----|-------------------------------|

|   | 14. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
|--------|-----|-------------------------------------|

----

|                                                                                  |   | March 31, 2011 |        |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                                  |   |           |        |   | Estimated         |   |   |   |   |   | Estimated |   |
|                                                                                  |   | Carrying       |        |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                                                                  |   | Amount         |        |   | Value             |   |   | Amount |   |   | Value |   |
| Assets                                                                                |   |           |        |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                             |   | $              | 17,512,579  |   |              | $      | 17,512,579 |   |   | $ | 9,823,436 |   |   | $ | 9,823,436 |   |
| Investment securities and stock in FHLB and FRB                                       |   |           | 150,802,468 |   |              |   | 150,433,522 |   |   |   | 168,250,141 |   |   |   | 167,654,621 |   |
| Loans receivable, net                                                                 |   |           | 647,378,198 |   |              |   | 640,127,000 |   |   |   | 654,449,936 |   |   |   | 662,813,000 |   |
| Foreclosed real estate                                                                |   |           | 11,039,380  |   |              |   | 11,039,380 |   |   |   | 10,469,302 |   |   |   | 10,469,302 |   |
|                                                                                  |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                                           |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Savings, NOW, and money market accounts                                               |   |           | 297,260,064 |   |              |   | 297,260,064 |   |   |   | 286,383,452 |   |   |   | 286,383,452 |   |
| Time certificates                                                                     |   |           | 424,747,680 |   |              |   | 430,451,000 |   |   |   | 438,198,874 |   |   |   | 444,601,000 |   |
| Long-term debt and other borrowed funds                                               |   |           | 61,065,449  |   |              |   | 58,889,000 |   |   |   | 71,440,466 |   |   |   | 69,517,422 |   |
| Guaranteed preferred beneficial interest in junior  subordinated securities |   |           | 12,000,000  |   |              |   | 2,400,000 |   |   |   | 12,000,000 |   |   |   | 2,400,000 |   |

----

----

| SELECTED FINANCIAL DATA                     |   |          |      |   |   |   |
|---------------------------------------------|--------|---------------|-----------|--------|--------|--------|
|                                        |   | Quarter ended |      |
|                                        |   | March 31,     |      |
|                                        |   | 2011          |      |   | 2010   |   |
|                                        |   |          |      |   |   |   |
| Condensed Income Statement                  |   |          |      |   |   |   |
| Interest and dividend income                |   | $             | 9,831,790 |   |   | $      | 9,963,537 |   |
| Interest expense                            |   |          | 3,222,317 |   |   |   | 3,478,901 |   |
| Net interest income                         |   |          | 6,609,473 |   |   |   | 6,484,636 |   |
| Provision for loan loss                     |   |          | 2,005,830 |   |   |   | 858,374 |   |
| Noninterest income                          |   |          | 770,327   |   |   |   | 761,225 |   |
| Noninterest expense                         |   |          | 5,111,224 |   |   |   | 4,238,409 |   |
| Income before income taxes                  |   |          | 262,746   |   |   |   | 2,149,078 |   |
| Income taxes                                |   |          | 21,248    |   |   |   | 784,654 |   |
| Net income                                  |   |          | 241,498   |   |   |   | 1,364,424 |   |
| Net income available to common shareholders |   |          | 29,765    |   |   |   | 1,152,691 |   |
|                                        |   |          |      |   |   |   |   |   |
| Per Common Share                            |   |          |      |   |   |   |   |   |
| Basic earnings                              |   | $             | 0.01      |   |   | $      | 0.39 |   |
| Diluted earnings                            |   | $             | 0.01      |   |   | $      | 0.38 |   |
| Cash dividends declared                     |   | $             | 0.40      |   |   | $      | 0.40 |   |

----

|                         |   | Quarter ended |      |   |   |   |      |     |   |
|------------------------------|--------|---------------|-----------|--------|--------|--------|-----------|----------|--------|
|                         |   | March 31,     |      |   |   |   |      |     |   |
|                         |   | 2011          |      |   | 2010   |   |      | $ Change |   |   | % Change |   |
| Interest and dividend income |   | $             | 9,831,790 |   |   | $      | 9,963,537 |     |   | $ | (131,747 | ) |   |   | (1.32 | )% |
| Interest expense             |   |          | 3,222,317 |   |   |   | 3,478,901 |     |   |   | (256,584 | ) |   |   | (7.38 | )% |
| Net interest income          |   |          | 6,609,473 |   |   |   | 6,484,636 |     |   |   | 124,837 |   |   |   | 1.93 | % |
| Provision for loan losses    |   |          | 2,005,830 |   |   |   | 858,374   |     |   |   | 1,147,456 |   |   |   | 133.68 | % |

|                                              |   | Quarter ended March 31, |    |   |   |   |    |     |   |
|---------------------------------------------------|--------|-------------------------|---------|--------|--------|--------|---------|----------|--------|
|                                              |   | 2011                    |    |   | 2010   |   |    | $ Change |   |   | % Change |   |
| NONINTEREST INCOME:                               |   |                    |    |   |   |   |    |     |   |   |   |   |
| Loan appraisal, credit, and miscellaneous charges |   | $                       | 158,098 |   |   | $      | 170,412 |     |   | $ | (12,314 | ) |   |   | (7.23 | )% |
| Income from bank owned life insurance             |   |                    | 159,695 |   |   |   | 104,746 |     |   |   | 54,949 |   |   |   | 52.46 | % |
| Service charges                                   |   |                    | 426,959 |   |   |   | 404,044 |     |   |   | 22,915 |   |   |   | 5.67 | % |
| Gain on loans held for sale                       |   |                    | 25,575  |   |   |   | 82,023  |     |   |   | (56,448 | ) |   |   | (68.82 | )% |
| Total noninterest income                          |   | $                       | 770,327 |   |   | $      | 761,225 |     |   | $ | 9,102 |   |   |   | 1.20 | % |

----

|                                               |   | Quarter ended March 31, |      |   |   |   |      |     |   |
|----------------------------------------------------|--------|-------------------------|-----------|--------|--------|--------|-----------|----------|--------|
|                                               |   | 2011                    |      |   | 2010   |   |      | $ Change |   |   | % Change |   |
| NONINTEREST EXPENSE:                               |   |                    |      |   |   |   |      |     |   |   |   |   |
| Salary and employee benefits                       |   | $                       | 2,751,474 |   |   | $      | 2,362,534 |     |   | $ | 388,940 |   |   |   | 16.46 | % |
| Occupancy                                          |   |                    | 417,391   |   |   |   | 427,644   |     |   |   | (10,253 | ) |   |   | (2.40 | )% |
| Advertising                                        |   |                    | 118,696   |   |   |   | 76,749    |     |   |   | 41,947 |   |   |   | 54.65 | % |
| Data processing                                    |   |                    | 282,753   |   |   |   | 246,140   |     |   |   | 36,613 |   |   |   | 14.87 | % |
| Professional fees                                  |   |                    | 217,088   |   |   |   | 158,839   |     |   |   | 58,249 |   |   |   | 36.67 | % |
| Depreciation of furniture, fixtures, and equipment |   |                    | 99,529    |   |   |   | 127,598   |     |   |   | (28,069 | ) |   |   | (22.00 | )% |
| Telephone communications                           |   |                    | 42,024    |   |   |   | 40,119    |     |   |   | 1,905 |   |   |   | 4.75 | % |
| Office supplies                                    |   |                    | 38,791    |   |   |   | 45,746    |     |   |   | (6,955 | ) |   |   | (15.20 | )% |
| FDIC Insurance                                     |   |                    | 326,319   |   |   |   | 352,106   |     |   |   | (25,787 | ) |   |   | (7.32 | )% |
| Valuation allowance on foreclosed real estate      |   |                    | 315,883   |   |   |   | -         |     |   |   | 315,883 |   |   |   | n/a |   |
| Other                                              |   |                    | 501,276   |   |   |   | 400,934   |     |   |   | 100,342 |   |   |   | 25.03 | % |
| Total noninterest expenses                         |   | $                       | 5,111,224 |   |   | $      | 4,238,409 |     |   | $ | 872,815 |   |   |   | 20.59 | % |

----

|                                                                                           |   | March 31, 2011 |        |   | December 31, 2010 |   |        | $ Change |   |   | % Change    |   |
|------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|-------------|----------|--------|--------|-------------|--------|
| Assets                                                                                         |   |           |        |   |              |   |        |     |   |   |        |   |
| Cash and due from banks                                                                        |   | $              | 14,526,264  |   |              | $      | 8,695,590   |     |   | $      | 5,830,674   |   |   |   | 67.05 | % |
| Federal Funds sold                                                                             |   |           | 2,145,000   |   |              |   | 615,000     |     |   |   | 1,530,000   |   |   |   | 248.78 | % |
| Interest-bearing deposits with banks                                                           |   |           | 841,315     |   |              |   | 512,846     |     |   |   | 328,469     |   |   |   | 64.05 | % |
| Securities available for sale (AFS), at fair value                                             |   |           | 30,792,374  |   |              |   | 34,946,225  |     |   |   | (4,153,851  | )      |   |   | (11.89 | )% |
| Securities held to maturity (HTM), at amortized cost                                           |   |           | 113,656,094 |   |              |   | 126,988,316 |     |   |   | (13,332,222 | )      |   |   | (10.50 | )% |
| Federal Home Loan Bank and Federal Reserve Bank stock - at cost                                |   |           | 6,354,000   |   |              |   | 6,315,600   |     |   |   | 38,400      |   |   |   | 0.61 | % |
| Loans receivable - net of allowance for loan losses of $7,281,777 and $7,669,147, respectively |   |           | 647,378,198 |   |              |   | 654,449,936 |     |   |   | (7,071,738  | )      |   |   | (1.08 | )% |
| Premises and equipment, net                                                                    |   |           | 12,147,339  |   |              |   | 12,132,141  |     |   |   | 15,198      |   |   |   | 0.13 | % |
| Foreclosed real estate                                                                         |   |           | 11,039,380  |   |              |   | 10,469,302  |     |   |   | 570,078     |   |   |   | 5.45 | % |
| Accrued interest receivable                                                                    |   |           | 2,990,963   |   |              |   | 2,784,396   |     |   |   | 206,567     |   |   |   | 7.42 | % |
| Investment in bank owned life insurance                                                        |   |           | 17,607,387  |   |              |   | 17,447,692  |     |   |   | 159,695     |   |   |   | 0.92 | % |
| Other assets                                                                                   |   |           | 12,404,561  |   |              |   | 10,579,058  |     |   |   | 1,825,503   |   |   |   | 17.26 | % |
|                                                                                           |   |           |        |   |              |   |        |     |   |   |        |   |   |   |   |   |
| Total Assets                                                                                   |   | $              | 871,882,875 |   |              | $      | 885,936,102 |     |   | $      | (14,053,227 | )      |   |   | (1.59 | )% |
|                                                                                           |   |           |        |   |              |   |        |     |   |   |        |   |   |   |   |   |
| Nonperforming loans (NPLs)                                                                     |   | $              | 11,086,360  |   |              | $      | 13,518,779  |     |   | $      | (2,432,419  | )      |   |   | (17.99 | )% |
| Nonperforming assets (NPLs + OREO)                                                             |   |           | 22,125,740  |   |              |   | 23,988,081  |     |   |   | (1,862,341  | )      |   |   | (7.76 | )% |
| Troubled debt restructures (TDRs) 1                                                            |   |           | 10,339,433  |   |              |   | 16,881,803  |     |   |   | (6,542,370  | )      |   |   | (38.75 | )% |
| Allowance for loan losses to total loans                                                       |   |           | 1.11        | %      |              |   | 1.16        | %        |   |   |        |   |   |   |   |   |
| Nonperforming loans to total loans                                                             |   |           | 1.69        | %      |              |   | 2.04        | %        |   |   |        |   |   |   |   |   |
| Allowance for loan losses to nonperforming loans                                               |   |           | 65.69       | %      |              |   | 56.73       | %        |   |   |        |   |   |   |   |   |
| Nonperforming assets (NPLs + OREO) to total assets                                             |   |           | 2.54        | %      |              |   | 2.71        | %        |   |   |        |   |   |   |   |   |
| Nonperforming assets + TDRs to total assets 1                                                  |   |           | 3.68        | %      |              |   | 4.58        | %        |   |   |        |   |   |   |   |   |

|                              |   | March 31, 2011 |        |   | %      |   |   | December 31, 2010 |   |   | %           |   |
|-----------------------------------|--------|----------------|-------------|--------|--------|--------|--------|-------------------|--------|--------|-------------|--------|
|                              |   |           |        |   |   |   |   |              |   |   |        |   |
| Commercial real estate            |   | $              | 343,071,081 |   |   |   | 52.32  | %                 |   | $      | 336,299,836 |   |   |   | 50.72 | % |
| Residential first mortgages       |   |           | 144,139,698 |   |   |   | 21.98  | %                 |   |   | 136,048,577 |   |   |   | 20.52 | % |
| Construction and land development |   |           | 36,204,608  |   |   |   | 5.52   | %                 |   |   | 42,504,200  |   |   |   | 6.41 | % |
| Home equity and second mortgage   |   |           | 23,863,632  |   |   |   | 3.64   | %                 |   |   | 24,379,664  |   |   |   | 3.68 | % |
| Commercial loans                  |   |           | 89,365,928  |   |   |   | 13.63  | %                 |   |   | 104,566,261 |   |   |   | 15.77 | % |
| Consumer loans                    |   |           | 1,185,542   |   |   |   | 0.18   | %                 |   |   | 1,273,080   |   |   |   | 0.19 | % |
| Commercial equipment              |   |           | 17,841,327  |   |   |   | 2.72   | %                 |   |   | 17,983,648  |   |   |   | 2.71 | % |
|                              |   |           | 655,671,816 |   |   |   | 100.00 | %                 |   |   | 663,055,266 |   |   |   | 100.00 | % |
| Less:                             |   |           |        |   |   |   |   |              |   |   |        |   |   |   |   |   |
| Deferred loan fees                |   |           | 1,011,841   |   |   |   | 0.15   | %                 |   |   | 936,183     |   |   |   | 0.14 | % |
| Allowance for loan loss           |   |           | 7,281,777   |   |   |   | 1.11   | %                 |   |   | 7,669,147   |   |   |   | 1.16 | % |
|                              |   |           | 8,293,618   |   |   |   |   |              |   |   | 8,605,330   |   |   |   |   |   |
|                              |   |           |        |   |   |   |   |              |   |   |        |   |   |   |   |   |
|                              |   | $              | 647,378,198 |   |   |   |   |              |   | $      | 654,449,936 |   |   |   |   |   |

----

|                              |   | March 31, 2011 |       |   | December 31, 2010 |   |
|-----------------------------------|--------|--------------------------|------------|--------|-----------------------------|--------|
|                              |   | Dollars                  |       |   | Number of Loans   |   |   | Dollars |   |   | Number of Loans |   |
|                              |   |                     |       |   |                        |   |   |   |   |   |   |   |
| Commercial real estate            |   | $                        | 7,463,777  |   |                        |   | 12 |   |   | $ | 8,244,683 |   |   |   | 12 |   |
| Residential first mortgages       |   |                     | 1,356,473  |   |                        |   | 6 |   |   |   | 1,746,786 |   |   |   | 6 |   |
| Construction and land development |   |                     | -          |   |                        |   | - |   |   |   | 983,867 |   |   |   | 1 |   |
| Home equity and second mortgage   |   |                     | 198,454    |   |                        |   | 4 |   |   |   | 232,644 |   |   |   | 5 |   |
| Commercial loans                  |   |                     | 1,891,063  |   |                        |   | 6 |   |   |   | 2,261,642 |   |   |   | 6 |   |
| Consumer loans                    |   |                     | -          |   |                        |   | - |   |   |   | 701 |   |   |   | 1 |   |
| Commercial equipment              |   |                     | 176,593    |   |                        |   | 3 |   |   |   | 48,456 |   |   |   | 1 |   |
|                              |   | $                        | 11,086,360 |   |                        |   | 31 |   |   | $ | 13,518,779 |   |   |   | 32 |   |

----

|                                                                       |   | March 31, 2011 |        |   | December 31, 2010 |   |        | $ Change |   |   | % Change    |   |
|----------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|-------------|----------|--------|--------|-------------|--------|
| Liabilities                                                                |   |           |        |   |              |   |        |     |   |   |        |   |
| Deposits                                                                   |   |           |        |   |              |   |        |     |   |   |        |   |
| Non-interest-bearing deposits                                              |   | $              | 64,000,231  |   |              | $      | 75,642,197  |     |   | $      | (11,641,966 | )      |   |   | (15.39 | )% |
| Interest-bearing deposits                                                  |   |           | 658,007,513 |   |              |   | 648,940,129 |     |   |   | 9,067,384   |   |   |   | 1.40 | % |
| Total deposits                                                             |   |           | 722,007,744 |   |              |   | 724,582,326 |     |   |   | (2,574,582  | )      |   |   | (0.36 | )% |
| Short-term borrowings                                                      |   |           | 453,090     |   |              |   | 816,422     |     |   |   | (363,332    | )      |   |   | (44.50 | )% |
| Long-term debt                                                             |   |           | 60,612,359  |   |              |   | 70,624,044  |     |   |   | (10,011,685 | )      |   |   | (14.18 | )% |
| Guaranteed preferred beneficial interest in junior subordinated debentures |   |           | 12,000,000  |   |              |   | 12,000,000  |     |   |   | -           |   |   |   | 0.00 | % |
| Accrued expenses and other liabilities                                     |   |           | 5,656,449   |   |              |   | 6,808,383   |     |   |   | (1,151,934  | )      |   |   | (16.92 | )% |
|                                                                       |   |           |        |   |              |   |        |     |   |   |        |   |   |   |   |   |
| Total Liabilities                                                          |   | $              | 800,729,642 |   |              | $      | 814,831,175 |     |   | $      | (14,101,533 | )      |   |   | (1.73 | )% |

|                                 |   | March 31, 2011 |       |   | December 31, 2010 |   |       | $ Change |   |   | % Change |   |
|--------------------------------------|--------|----------------|------------|--------|-------------------|--------|------------|----------|--------|--------|----------|--------|
|                                 |   |           |       |   |              |   |       |     |   |   |     |   |
| Stockholders' Equity                 |   |           |       |   |              |   |       |     |   |   |     |   |
| Perpetual Preferred Stock, Series A  |   | $              | 15,540,000 |   |              | $      | 15,540,000 |     |   | $      | -        |   |   |   | 0.00 | % |
| Perpetual Preferred Stock, Series B  |   |           | 777,000    |   |              |   | 777,000    |     |   |   | -        |   |   |   | 0.00 | % |
| Common stock - par value             |   |           | 30,211     |   |              |   | 30,026     |     |   |   | 185      |   |   |   | 0.62 | % |
| Additional paid in capital           |   |           | 17,252,791 |   |              |   | 16,962,460 |     |   |   | 290,331  |   |   |   | 1.71 | % |
| Retained earnings                    |   |           | 37,780,539 |   |              |   | 37,892,557 |     |   |   | (112,018 | )      |   |   | (0.30 | )% |
| Accumulated other comprehensive gain |   |           | 313,738    |   |              |   | 411,188    |     |   |   | (97,450  | )      |   |   | (23.70 | )% |
| Unearned ESOP shares                 |   |           | (541,046   | )      |              |   | (508,304   | )        |   |   | (32,742  | )      |   |   | 6.44 | % |
|                                 |   |           |       |   |              |   |       |     |   |   |     |   |   |   |   |   |
| Total Stockholders' Equity           |   | $              | 71,153,233 |   |              | $      | 71,104,927 |     |   | $      | 48,306   |   |   |   | 0.07 | % |

----

----

|                                     |   | Actual              |   |   | Required for CapitalAdequacy Purposes |   |   | To be Considered WellCapitalized UnderPrompt Corrective Action |   |
|------------------------------------------|--------|---------------------|--------|--------|------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|
|                                     |   | (in thousands) |   |
| At March 31, 2011         |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk weighted assets)  |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |
| The Company                              |   | $                   | 90,170 |   |                                                 |   | 13.13  | %                                                                                            |   | $ | 54,935 |   |   |   | 8.00 | % |   |   |   |   |   |   |
| The Bank                                 |   | $                   | 86,103 |   |                                                 |   | 12.63  | %                                                                                            |   | $ | 54,550 |   |   |   | 8.00 | % |   | $ | 68,188 |   |   |   | 10.00 | % |
|                                     |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital (to risk weighted assets) |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                              |   | $                   | 82,839 |   |                                                 |   | 12.06  | %                                                                                            |   | $ | 27,468 |   |   |   | 4.00 | % |   |   |   |   |   |   |   |   |
| The Bank                                 |   | $                   | 78,772 |   |                                                 |   | 11.55  | %                                                                                            |   | $ | 27,275 |   |   |   | 4.00 | % |   | $ | 40,913 |   |   |   | 6.00 | % |
|                                     |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital (to average assets)       |   |                |   |   |                                                 |   |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The Company                              |   | $                   | 82,839 |   |                                                 |   | 9.50   | %                                                                                            |   | $ | 34,882 |   |   |   | 4.00 | % |   |   |   |   |   |   |   |   |
| The Bank                                 |   | $                   | 78,772 |   |                                                 |   | 9.06   | %                                                                                            |   | $ | 34,786 |   |   |   | 4.00 | % |   | $ | 43,483 |   |   |   | 5.00 | % |

----

----

----

|   | (a) | Not applicable |
|--------|-----|----------------|

|   | (b) | Not applicable |
|--------|-----|----------------|

|   | (c) | The following table presents information regarding the Company’s stock repurchases during the three months ended March 31, 2011. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------|

|                  |   |      |   |   |       |   |   | (c)             |   |   |             |   |
|-----------------------|--------|-----------|--------|--------|------------|--------|--------|-----------------|--------|--------|------------------|--------|
|                  |   |      |   |   |       |   |   | Total Number    |   |   |             |   |
|                  |   |      |   |   |       |   |   | of Shares       |   |   | (d)              |   |
|                  |   |      |   |   |       |   |   | Purchased       |   |   | Maximum          |   |
|                  |   | (a)       |   |   |       |   |   | as Part of      |   |   | Number of Shares |   |
|                  |   | Total     |   |   | (b)        |   |   | Publicly        |   |   | that May Yet Be  |   |
|                  |   | Number of |   |   | Average    |   |   | Announced Plans |   |   | Purchased Under  |   |
|                  |   | Shares    |   |   | Price Paid |   |   | or              |   |   | the Plans or     |   |
| Period                |   | Purchased |   |   | per Share  |   |   | Programs        |   |   | Programs         |   |
|                  |   |      |   |   |       |   |   |            |   |   |             |   |
| January 1 - 31, 2011  |   |      | -      |   |       |   | -      |            |   |   | -                |   |   |   | 138,646 |   |
| February 1 - 28, 2011 |   |      | 7,666  |   |       |   | 17.93  |            |   |   | 7,666            |   |   |   | 130,980 |   |
| March 1 - 31, 2011    |   |      | 263    |   |       |   | 16.90  |            |   |   | 263              |   |   |   | 130,717 |   |
| Total                 |   |      | 7,929  |   |       |   | 17.89  |            |   |   | 7,929            |   |   |   | 130,717 |   |

----

----

----

|                    | TRI-COUNTY FINANCIAL CORPORATION |
|-------------------------|----------------------------------|
|                    |                             |   |
| Date: May 11, 2011 | By:                              | /s/ Michael L. Middleton |
|                    |                             | Michael L. Middleton |
|                    |                             | President and Chief Executive Officer |
|                    |                             |   |
| Date: May 11, 2011 | By:                              | /s/ William J. Pasenelli |
|                    |                             | William J. Pasenelli |
|                    |                             | Executive Vice President and Chief Financial Officer |

----