----

| [x]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT   OF 1934 |
|-------------------------------------------------------------------------------------------------------------|
| For the quarterly period ended March 31, 2011                                                               |
| [  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      |

| Virginia(State or other jurisdiction of incorporation or organization) | 54-1375874(I.R.S. Employer Identification No.) |
|------------------------------------------------------------------------|------------------------------------------------|

| 101 Hubbard StreetP. O. Box 90002Blacksburg, VA |   24062-9002 |
|-------------------------------------------------|------------------------|
| (Address of principal executive offices)        | (Zip Code)             |

| ClassCommon Stock, $1.25 Par Value | Outstanding at May 1, 20116,935,974 |
|------------------------------------|-------------------------------------|

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| Part I – Financial Information |                                                                                                                            | Page          |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                 |                                                                                                                            |          |
| Item 1                               | Financial Statements                                                                                                            | 3             |
|                                 |                                                                                                                            |          |
|                                 | Consolidated Balance Sheets, March 31, 2011 (Unaudited) and December 31, 2010                                                   | 3 - 4         |
|                                 |                                                                                                                            |          |
|                                 | Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010 (Unaudited)                                | 5 - 6         |
|                                 |                                                                                                                            |          |
|                                 | Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2011 and 2010 (Unaudited) | 7             |
|                                 |                                                                                                                            |          |
|                                 | Consolidated Statements of Cash Flows for the Three  Months Ended March 31, 2011 and 2010 (Unaudited)                 | 8 - 9         |
|                                 |                                                                                                                            |          |
|                                 | Notes to Consolidated Financial Statements (Unaudited)                                                                          | 10 - 26       |
|                                 |                                                                                                                            |          |
| Item 2                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                     | 27 - 36       |
|                                 |                                                                                                                            |          |
| Item 3                               | Quantitative and Qualitative Disclosures About Market Risk                                                            | 36            |
|                                 |                                                                                                                            |          |
| Item 4                               | Controls and Procedures                                                                                                         | 36            |
|                                 |                                                                                                                            |          |
| Part II – Other Information    |                                                                                                                            |          |
|                                 |                                                                                                                            |          |
| Item 1                               | Legal Proceedings                                                                                                               | 36            |
|                                 |                                                                                                                            |          |
| Item 1A                              | Risk Factors                                                                                                                    | 36            |
|                                 |                                                                                                                            |          |
| Item 2                               | Unregistered Sales of Equity Securities and Use of Proceeds                                                                     | 36            |
|                                 |                                                                                                                            |          |
| Item 3                               | Defaults Upon Senior Securities                                                                                                 | 36            |
|                                 |                                                                                                                            |          |
| Item 4                               | Reserved                                                                                                                        | 36            |
|                                 |                                                                                                                            |          |
| Item 5                               | Other Information                                                                                                               | 37            |
|                                 |                                                                                                                            |          |
| Item 6                               | Exhibits                                                                                                                        | 37            |
|                                 |                                                                                                                            |          |
| Signatures                           |                                                                                                                            | 37            |
|                                 |                                                                                                                            |          |
| Index of Exhibits                    |                                                                                                                            | 38 – 39 |
|                                 |                                                                                                                            |          |
| Certifications                       |                                                                                                                            | 40 - 42       |

----

|                                                                                                               |   | (Unaudited) |      |   |         |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|--------------|--------|
|                                                                                                               |   | March 31,   |      |   | December 31, |   |
| $ in thousands, except per share data                                                                              |   | 2011        |      |   | 2010         |   |
| Assets                                                                                                             |   |        |      |   |         |   |   |   |
| Cash and due from banks                                                                                            |   | $           | 11,800    |   |         | $      | 9,858 |   |
| Interest-bearing deposits                                                                                          |   |        | 55,674    |   |         |   | 69,400 |   |
| Securities available for sale, at fair value                                                                       |   |        | 190,844   |   |         |   | 184,907 |   |
| Securities held to maturity (fair value approximates $133,858 at March 31, 2011 and $129,913 at December 31, 2010) |   |        | 132,669   |   |         |   | 131,000 |   |
| Mortgage loans held for sale                                                                                       |   |        | ---       |   |         |   | 2,460 |   |
| Loans:                                                                                                             |   |        |      |   |         |   |   |   |
| Real estate construction loans                                                                                     |   |        | 48,671    |   |         |   | 46,169 |   |
| Real estate mortgage loans                                                                                         |   |        | 173,785   |   |         |   | 173,533 |   |
| Commercial and industrial loans                                                                                    |   |        | 280,607   |   |         |   | 269,818 |   |
| Loans to individuals                                                                                               |   |        | 85,816    |   |         |   | 87,868 |   |
| Total loans                                                                                                        |   |        | 588,879   |   |         |   | 577,388 |   |
| Less unearned income and deferred fees                                                                             |   |        | (977      | )      |         |   |  (945 | ) |
| Loans, net of unearned income and deferred fees                                                                    |   |        | 587,902   |   |         |   | 576,443 |   |
| Less allowance for loan losses                                                                                     |   |        | (8,245    | )      |         |   | (7,664 | ) |
| Loans, net                                                                                                         |   |        | 579,657   |   |         |   | 568,779 |   |
| Premises and equipment, net                                                                                        |   |        | 10,366    |   |         |   | 10,470 |   |
| Accrued interest receivable                                                                                        |   |        | 6,514     |   |         |   | 6,016 |   |
| Other real estate owned, net                                                                                       |   |        | 2,222     |   |         |   | 1,723 |   |
| Intangible assets and goodwill                                                                                     |   |        | 11,272    |   |         |   | 11,543 |   |
| Other assets                                                                                                       |   |        | 25,540    |   |         |   | 26,082 |   |
| Total assets                                                                                                       |   | $           | 1,026,558 |   |         | $      | 1,022,238 |   |
|                                                                                                               |   |        |      |   |         |   |   |   |
| Liabilities and Stockholders' Equity                                                                               |   |        |      |   |         |   |   |   |
| Noninterest-bearing demand deposits                                                                                |   | $           | 136,769   |   |         | $      | 131,540 |   |
| Interest-bearing demand deposits                                                                                   |   |        | 372,470   |   |         |   | 365,040 |   |
| Savings deposits                                                                                                   |   |        | 58,273    |   |         |   | 55,800 |   |
| Time deposits                                                                                                      |   |        | 318,383   |   |         |   | 332,203 |   |
| Total deposits                                                                                                     |   |        | 885,895   |   |         |   | 884,583 |   |
| Accrued interest payable                                                                                           |   |        | 260       |   |         |   | 257 |   |
| Other liabilities                                                                                                  |   |        | 6,738     |   |         |   | 8,211 |   |
| Total liabilities                                                                                                  |   |        | 892,893   |   |         |   | 893,051 |   |
| Commitments and contingencies                                                                                      |   |        | ---       |   |         |   | --- |   |

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|                                                                                                                                    |   |   |      |   |   |   |      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| Stockholders' Equity                                                                                                                    |   |   |      |   |   |   |      |   |
|         Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding |   | $      | ---       |   |   | $      | ---       |   |
| Common stock of $1.25 par value.                                                                                                        |   |   |      |   |   |   |      |   |
| Authorized 10,000,000 shares; issued and outstanding 6,935,974 shares at March 31, 2011 and 6,933,474 shares at December 31, 2010       |   |   | 8,670     |   |   |   | 8,667     |   |
| Retained earnings                                                                                                                       |   |   | 127,218   |   |   |   | 123,161   |   |
| Accumulated other comprehensive loss, net                                                                                               |   |   | (2,223    | )      |   |   | (2,641    | )      |
| Total stockholders' equity                                                                                                              |   |   | 133,665   |   |   |   | 129,187   |   |
| Total liabilities and stockholders' equity                                                                                              |   | $      | 1,026,558 |   |   | $      | 1,022,238 |   |

----

|                                                |   | March 31, |   |   | March 31, |   |
|-----------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| $ in thousands, except per share data               |   | 2011      |   |   | 2010      |   |
| Interest Income                                     |   |      |   |   |      |   |   |   |
| Interest and fees on loans                          |   | $         | 9,095  |   |      | $      | 9,176 |   |
| Interest on interest-bearing deposits               |   |      | 32     |   |      |   | 19 |   |
| Interest on securities – taxable              |   |      | 1,662  |   |      |   | 1,443 |   |
| Interest on securities – nontaxable           |   |      | 1,676  |   |      |   | 1,602 |   |
| Total interest income                               |   |      | 12,465 |   |      |   | 12,240 |   |
|                                                |   |      |   |   |      |   |   |   |
| Interest Expense                                    |   |      |   |   |      |   |   |   |
| Interest on time deposits of $100,000 or more       |   |      | 561    |   |      |   | 946 |   |
| Interest on other deposits                          |   |      | 1,818  |   |      |   | 2,033 |   |
| Total interest expense                              |   |      | 2,379  |   |      |   | 2,979 |   |
| Net interest income                                 |   |      | 10,086 |   |      |   | 9,261 |   |
| Provision for loan losses                           |   |      | 800    |   |      |   | 647 |   |
| Net interest income after provision for loan losses |   |      | 9,286  |   |      |   | 8,614 |   |
|                                                |   |      |   |   |      |   |   |   |
| Noninterest Income                                  |   |      |   |   |      |   |   |   |
| Service charges on deposit accounts                 |   |      | 612    |   |      |   | 714 |   |
| Other service charges and fees                      |   |      | 58     |   |      |   | 47 |   |
| Credit card fees                                    |   |      | 733    |   |      |   | 666 |   |
| Trust income                                        |   |      | 246    |   |      |   | 269 |   |
| BOLI income                                         |   |      | 184    |   |      |   | 185 |   |
| Other income                                        |   |      | 91     |   |      |   | 104 |   |
| Realized securities gains (losses), net             |   |      | 10     |   |      |   | (14 | ) |
| Total noninterest income                            |   |      | 1,934  |   |      |   | 1,971 |   |
|                                                |   |      |   |   |      |   |   |   |
| Noninterest Expense                                 |   |      |   |   |      |   |   |   |
| Salaries and employee benefits                      |   |      | 2,904  |   |      |   | 2,856 |   |
| Occupancy and furniture and fixtures                |   |      | 423    |   |      |   | 491 |   |
| Data processing and ATM                             |   |      | 444    |   |      |   | 357 |   |
| FDIC assessment                                     |   |      | 346    |   |      |   | 263 |   |
| Credit card processing                              |   |      | 586    |   |      |   | 508 |   |
| Intangible assets amortization                      |   |      | 271    |   |      |   | 271 |   |
| Net costs of other real estate owned                |   |      | 134    |   |      |   | 33 |   |
| Franchise taxes                                     |   |      | 242    |   |      |   | 239 |   |
| Other operating expenses                            |   |      | 734    |   |      |   | 766 |   |
| Total noninterest expense                           |   |      | 6,084  |   |      |   | 5,784 |   |
| Income before income taxes                          |   |      | 5,136  |   |      |   | 4,801 |   |
| Income tax expense                                  |   |      | 1,112  |   |      |   | 1,032 |   |
| Net Income                                          |   | $         | 4,024  |   |      | $      | 3,769 |   |

----

|                                                                |   |   |      |   |   |   |      |   |
|---------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|
| Basic net income per share                                          |   | $      | 0.58      |   |   | $      | 0.54      |   |
| Fully diluted net income per share                                  |   | $      | 0.58      |   |   | $      | 0.54      |   |
| Weighted average number of commonshares outstanding – basic   |   |   | 6,933,780 |   |   |   | 6,933,474 |   |
| Weighted average number of commonshares outstanding – diluted |   |   | 6,957,450 |   |   |   | 6,952,812 |   |
| Dividends declared per share                                        |   | $      | ---       |   |   | $      | ---       |   |

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| $ in thousands                                                            |   | Common Stock |   |   | Retained Earnings |   |    | Accumulated Other Comprehensive Income (Loss) |   |   | Comprehensive Income |   |   | Total  |   |
|---------------------------------------------------------------------------|--------|--------------|--------|--------|-------------------|--------|---------|-----------------------------------------------|--------|--------|----------------------|--------|--------|--------|--------|
| Balances at December 31, 2009                                             |   | $            | 8,667  |   |              | $      | 113,901 |                                          |   | $      | (492                 | )      |   |   |   |   | $ | 122,076 |   |
| Net income                                                                |   |         | ---    |   |              |   | 3,769   |                                          |   |   | ---                  |   |   | $      | 3,769  |   |   |   | 3,769 |   |
| Other comprehensive income, net of tax:                                   |   |         |   |   |              |   |    |                                          |   |   |                 |   |   |   |   |   |   |   |   |   |
| Unrealized gain on securities available for sale, net of income tax $350  |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   |   | 650    |   |   |   | --- |   |
| Reclass adjustment, net of tax $5                                         |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   |   | 9      |   |   |   | --- |   |
| Other comprehensive income, net of tax $355                               |   |         | ---    |   |              |   | ---     |                                          |   |   | 659                  |   |   |   | 659    |   |   |   | 659 |   |
| Comprehensive income                                                      |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   | $      | 4,428  |   |   |   | --- |   |
| Balances at March 31, 2010                                                |   | $            | 8,667  |   |              | $      | 117,670 |                                          |   | $      | 167                  |   |   |   |   |   |   | $ | 126,504 |   |
|                                                                      |   |         |   |   |              |   |    |                                          |   |   |                 |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2010                                             |   | $            | 8,667  |   |              | $      | 123,161 |                                          |   | $      | (2,641               | )      |   |   |   |   |   | $ | 129,187 |   |
| Net income                                                                |   |         | ---    |   |              |   | 4,024   |                                          |   |   | ---                  |   |   | $      | 4,024  |   |   |   | 4,024 |   |
| Stock options exercised                                                   |   |         | 3      |   |              |   | 33      |                                          |   |   | ---                  |   |   |   |   |   |   |   | 36 |   |
| Other comprehensive income, net of tax:                                   |   |         |   |   |              |   |    |                                          |   |   |                 |   |   |   |   |   |   |   |   |   |
| Unrealized gains on securities available for sale, net of income tax $228 |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   |   | 423    |   |   |   | --- |   |
| Reclass adjustment, net of tax $(3)                                       |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   |   | (5     | ) |   |   | --- |   |
| Other comprehensive income, net of tax $225                               |   |         | ---    |   |              |   | ---     |                                          |   |   | 418                  |   |   |   | 418    |   |   |   | 418 |   |
| Comprehensive income                                                      |   |         | ---    |   |              |   | ---     |                                          |   |   | ---                  |   |   | $      | 4,442  |   |   |   | --- |   |
| Balances at March 31, 2011                                                |   | $            | 8,670  |   |              | $      | 127,218 |                                          |   | $      | (2,223               | )      |   |   |   |   |   | $ | 133,665 |   |

----

|                                                                                           |   | March 31, |    |   | March 31, |   |
|------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|-----------|--------|
| $ in thousands                                                                                 |   | 2011      |    |   | 2010      |   |
| Cash Flows from Operating Activities                                                           |   |      |    |   |      |   |
| Net income                                                                                     |   | $         | 4,024   |   |      | $      | 3,769 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:              |   |      |    |   |      |   |   |   |
| Provision for loan losses                                                                      |   |      | 800     |   |      |   | 647 |   |
| Depreciation of bank premises and equipment                                                    |   |      | 209     |   |      |   | 223 |   |
| Amortization of intangibles                                                                    |   |      | 271     |   |      |   | 271 |   |
| Amortization of premiums and accretion of discounts, net                                       |   |      | 61      |   |      |   | 79 |   |
| (Gains) losses on sales and calls of securities available for sale, net                        |   |      | (8      | )      |      |   | 14 |   |
| (Gains) on calls of securities held to maturity, net                                           |   |      | (2      | )      |      |   | --- |   |
| Losses and write-downs on other real estate owned                                              |   |      | 100     |   |      |   | 29 |   |
| Net change in:                                                                                 |   |      |    |   |      |   |   |   |
| Mortgage loans held for sale                                                                   |   |      | 2,460   |   |      |   | (1,232 | ) |
| Accrued interest receivable                                                                    |   |      | (498    | )      |      |   | 64 |   |
| Other assets                                                                                   |   |      | 228     |   |      |   | (63 | ) |
| Accrued interest payable                                                                       |   |      | 3       |   |      |   | 56 |   |
| Other liabilities                                                                              |   |      | (1,368  | )      |      |   | 740 |   |
| Net cash provided by operating activities                                                      |   |      | 6,280   |   |      |   | 4,597 |   |
|                                                                                           |   |      |    |   |      |   |   |   |
| Cash Flows from Investing Activities                                                           |   |      |    |   |      |   |   |   |
| Net change interest-bearing deposits                                                           |   |      | 13,726  |   |      |   | (22,976 | ) |
| Proceeds from calls, principal payments, sales and maturities of securities available for sale |   |      | 10,659  |   |      |   | 13,782 |   |
| Proceeds from calls, principal payments and maturities of securities held to maturity          |   |      | 5,449   |   |      |   | 9,833 |   |
| Purchases of securities available for sale                                                     |   |      | (16,000 | )      |      |   | (6,359 | ) |
| Purchases of securities held to maturity                                                       |   |      | (7,138  | )      |      |   | (6,030 | ) |
| Collections of loan participations                                                             |   |      | 25      |   |      |   | 66 |   |
| Loan originations and principal collections, net                                               |   |      | (12,622 | )      |      |   | 671 |   |
| Proceeds from disposal of other real estate owned                                              |   |      | 295     |   |      |   | 210 |   |
| Recoveries on loans charged off                                                                |   |      | 25      |   |      |   | 24 |   |
| Additions to bank premises and equipment                                                       |   |      | (105    | )      |      |   | (324 | ) |
| Net cash used in investing activities                                                          |   |      | (5,686  | )      |      |   | (11,103 | ) |
|                                                                                           |   |      |    |   |      |   |   |   |
| Cash Flows from Financing Activities                                                           |   |      |    |   |      |   |   |   |
| Net change in time deposits                                                                    |   |      | (13,820 | )      |      |   | (5,188 | ) |
| Net change in other deposits                                                                   |   |      | 15,132  |   |      |   | 10,544 |   |
| Stock options exercised                                                                        |   |      | 36      |   |      |   | --- |   |
| Net cash provided by financing activities                                                      |   |      | 1,348   |   |      |   | 5,356 |   |
| Net change in cash and due from banks                                                          |   |      | 1,942   |   |      |   | (1,150 | ) |
| Cash and due from banks at beginning of period                                                 |   |      | 9,858   |   |      |   | 12,894 |   |
| Cash and due from banks at end of period                                                       |   | $         | 11,800  |   |      | $      | 11,744 |   |

----

| Supplemental Disclosures of Cash Flow Information   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest paid on deposits and borrowed funds        |   | $      | 2,376  |   |   | $      | 2,923  |   |
| Income taxes paid                                   |   | $      | ---    |   |   | $      | 576    |   |
|                                                |   |   |   |   |   |   |   |   |
| Supplemental Disclosure of Noncash Activities       |   |   |   |   |   |   |   |   |
| Loans charged against the allowance for loan losses |   | $      | 243    |   |   | $      | 456    |   |
| Loans transferred to other real estate owned        |   | $      | 894    |   |   | $      | 680    |   |
| Unrealized gains on securities available for sale   |   | $      | 643    |   |   | $      | 1,014  |   |

----

| Options                        |   | Shares |    |   | WeightedAverageExercisePrice |   |   | WeightedAverageRemainingContractualTerm |   |   | AggregateIntrinsicValue |   |
|--------------------------------|--------|--------|---------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------|--------|
| Outstanding at January 1, 2011 |   |   | 109,500 |   |                         | $      | 22.14  |                                    |   |   |                    |   |   |   |
| Exercised                      |   |   | 2,500   |   |                         |   | 14.825 |                                    |   |   |                    |   |   |   |
| Forfeited or expired           |   |   | ---     |   |                         |   | ---    |                                    |   |   |                    |   |   |   |
| Outstanding March 31, 2011     |   |   | 107,000 |   |                         | $      | 22.31  |                                    |   |   | 4.28                    |   |   | $ | 706 |   |
| Exercisable at March 31, 2011  |   |   | 107,000 |   |                         | $      | 22.31  |                                    |   |   | 4.28                    |   |   | $ | 706 |   |

----

| Consumer Real Estate        Equity lines        Closed-end consumer real estate        Consumer construction Consumer, Non-Real Estate        Credit cards        Consumer, general        Consumer overdraft Commercial & Industrial        Commercial & industrial Construction, Development and Land        Residential        Commercial | Commercial Real Estate        College housing        Office/Retail space        Nursing homes        Hotels        Municipalities        Medical professionals        Religious organizations        Convenience stores        Entertainment and sports        Nonprofits        Restaurants        General contractors        Other commercial real estate |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                    |   | Three Months endedMarch 31, |   |   | Year endedDecember 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|------------------------|--------|
|                                                                                                    |   | 2011                        |   |   | 2010                   |   |   | 2010 |   |
| Balance at beginning of period                                                                          |   | $                           | 7,664  |   |                   | $      | 6,926 |   |   | $ | 6,926 |   |
| Provision for loan losses                                                                               |   |                        | 800    |   |                   |   | 647 |   |   |   | 3,409 |   |
| Loans charged off                                                                                       |   |                        | (244   | )      |                   |   | (456 | ) |   |   | (2,810 | ) |
| Recoveries of loans previously charged off                                                              |   |                        | 25     |   |                   |   | 24 |   |   |   | 139 |   |
| Balance at the end of period                                                                            |   | $                           | 8,245  |   |                   | $      | 7,141 |   |   | $ | 7,664 |   |
| Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees |   |                        | 1.40   | %      |                   |   | 1.21 | % |   |   | 1.33 | % |
| Ratio of net charge-offs to average loans, net of unearned income and deferred fees(1)                  |   |                        | 0.15   | %      |                   |   | 0.30 | % |   |   | 0.46 | % |
| Ratio of allowance for loan losses to nonperforming loans(2)                                            |   |                        | 96.58  | %      |                   |   | 92.23 | % |   |   | 91.01 | % |

| (1)   | Net charge-offs are on an annualized basis. |
|-----------------|---------------------------------------------|

| (2)   | The Company defines nonperforming loans as total nonaccrual and restructured loans.  Loans 90 days past due and still accruing are excluded. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                      |   | Consumer Real Estate |   |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Other Land |   |   |  Unallocated |   |   | Total  |   |
|---------------------------|--------|----------------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Allowance for Loan Losses |   |
| Beginning Balance         |   | $                    | 1,059  |   |                     | $      | 586    |                   |   | $      | 4,033                       |   |   | $                                          | 1,108  |   |              | $      | 749    |   |   | $ | 129 |   |   | $ | 7,664 |   |
| Charge-offs               |   |                 | (36    | )      |                     |   | (90    | )                      |   |   | (118                        | )      |   |                                       | ---    |   |              |   | ---    |   |   |   | --- |   |   |   | (244 | ) |
| Recoveries                |   |                 | 7      |   |                     |   | 18     |                   |   |   | ---                         |   |   |                                       | ---    |   |              |   | ---    |   |   |   | --- |   |   |   | 25 |   |
| Provision for loan losses |   |                 | 72     |   |                     |   | (50    | )                      |   |   | 740                         |   |   |                                       | 113    |   |              |   | (59    | )      |   |   | (16 | ) |   |   | 800 |   |
| Ending Balance            |   | $                    | 1,102  |   |                     | $      | 464    |                   |   | $      | 4,655                       |   |   | $                                          | 1,221  |   |              | $      | 690    |   |   | $ | 113 |   |   | $ | 8,245 |   |

|                      |   | Consumer Real Estate |   |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Land |   |   |  Unallocated |   |   | Total  |   |
|---------------------------|--------|----------------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Allowance for Loan Losses |   |
| Beginning Balance         |   | $                    | 249    |   |                     | $      | 1,049  |                   |   | $      | 4,321                       |   |   | $                                    | 459    |   |              | $      | 562    |   |   | $ | 286 |   |   | $ | 6,926 |   |
| Charge-offs               |   |                 | (89    | )      |                     |   | (358   | )                      |   |   | (1,021                      | )      |   |                                 | (927   | )      |              |   | (415   | )      |   |   | --- |   |   |   | (2,810 | ) |
| Recoveries                |   |                 | 10     |   |                     |   | 67     |                   |   |   | 61                          |   |   |                                 | 1      |   |              |   | ---    |   |   |   | --- |   |   |   | 139 |   |
| Provision for loan losses |   |                 | 889    |   |                     |   | (172   | )                      |   |   | 672                         |   |   |                                 | 1,575  |   |              |   | 602    |   |   |   | (157 | ) |   |   | 3,409 |   |
| Ending Balance            |   | $                    | 1,059  |   |                     | $      | 586    |                   |   | $      | 4,033                       |   |   | $                                    | 1,108  |   |              | $      | 749    |   |   | $ | 129 |   |   | $ | 7,664 |   |

|                                                      |   | Consumer Real Estate |   |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Other Land |   |   |  Unallocated |   |   | Total  |   |
|-----------------------------------------------------------|--------|----------------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Allowance for loans individually evaluated for impairment |   | $                    | 30     |   |                     | $      | ---    |                   |   | $      | 626                         |   |   | $                                          | 558    |   |              | $      | 42     |   |   | $ | --- |   |   | $ | 1,256 |   |
| Allowance for loans collectively evaluated for impairment |   |                 | 1,072  |   |                     |   | 464    |                   |   |   | 4,029                       |   |   |                                       | 663    |   |              |   | 648    |   |   |   | 113 |   |   |   | 6,989 |   |
| Total allowance for loan losses                           |   | $                    | 1,102  |   |                     | $      | 464    |                   |   | $      | 4,655                       |   |   | $                                          | 1,221  |   |              | $      | 690    |   |   | $ | 113 |   |   | $ | 8,245 |   |

----

|                                                      |   | Consumer Real Estate |   |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Other Land |   |   |  Unallocated |   |   | Total  |   |
|-----------------------------------------------------------|--------|----------------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Allowance for loans individually evaluated for impairment |   | $                    | 27     |   |                     | $      | ---    |                   |   | $      | 565                         |   |   | $                                          | 508    |   |              | $      | 100    |   |   | $ | --- |   |   | $ | 1,200 |   |
| Allowance for loans collectively evaluated for impairment |   |                 | 1,032  |   |                     |   | 586    |                   |   |   | 3,468                       |   |   |                                       | 600    |   |              |   | 649    |   |   |   | 129 |   |   |   | 6,464 |   |
| Total allowance for loan losses                           |   | $                    | 1,059  |   |                     | $      | 586    |                   |   | $      | 4,033                       |   |   | $                                          | 1,108  |   |              | $      | 749    |   |   | $ | 129 |   |   | $ | 7,664 |   |

|                                        |   | Consumer Real Estate |    |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Other Land |   |   |  Unallocated |   |   | Total  |   |
|---------------------------------------------|--------|----------------------|---------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Loans individually evaluated for impairment |   | $                    | 614     |   |                     | $      | ---    |                   |   | $      | 5,172                       |   |   | $                                          | 608    |   |              | $      | 1,536  |   |   | $ | --- |   |   | $ | 7,930 |   |
| Loans collectively evaluated for impairment |   |                 | 115,438 |   |                     |   | 30,566 |                   |   |   | 350,893                     |   |   |                                       | 38,597 |   |              |   | 44,478 |   |   |   | --- |   |   |   | 579,972 |   |
| Total loans                                 |   | $                    | 116,052 |   |                     | $      | 30,566 |                   |   | $      | 356,065                     |   |   | $                                          | 39,205 |   |              | $      | 46,014 |   |   | $ | --- |   |   | $ | 587,902 |   |

|                                        |   | Consumer Real Estate |    |   | Consumer Non-Real Estate |   |   | Commercial Real Estate |   |   | Commercial & Industrial |   |   | Construction, Development & Other Land |   |   |  Unallocated |   |   | Total  |   |
|---------------------------------------------|--------|----------------------|---------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|
| Loans individually evaluated for impairment |   | $                    | 505     |   |                     | $      | ---    |                   |   | $      | 5,151                       |   |   | $                                          | 698    |   |              | $      | 2,437  |   |   | $ | --- |   |   | $ | 8,791 |   |
| Loans collectively evaluated for impairment |   |                 | 108,855 |   |                     |   | 35,679 |                   |   |   | 343,780                     |   |   |                                       | 36,374 |   |              |   | 42,964 |   |   |   | --- |   |   |   | 567,652 |   |
| Total loans                                 |   | $                    | 109,360 |   |                     | $      | 35,679 |                   |   | $      | 348,931                     |   |   | $                                          | 37,072 |   |              | $      | 45,401 |   |   | $ | --- |   |   | $ | 576,443 |   |

|                                                                                                           |   | March 31, |   |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                                                                                           |   | 2011      |   |   | 2010         |   |   | 2010 |   |
| Nonperforming assets:                                                                                          |   |      |   |   |         |   |   |   |   |
| Nonaccrual loans                                                                                               |   | $         | 7,653  |   |         | $      | 7,743 |   |   | $ | 1,938 |   |
| Restructured loans not in nonaccrual                                                                           |   |      | 884    |   |         |   | --- |   |   |   | 6,483 |   |
| Total nonperforming loans                                                                                      |   |      | 8,537  |   |         |   | 7,743 |   |   |   | 8,421 |   |
| Other real estate owned, net                                                                                   |   |      | 2,222  |   |         |   | 2,567 |   |   |   | 1,723 |   |
| Total nonperforming assets                                                                                     |   | $         | 10,759 |   |         | $      | 10,310 |   |   | $ | 10,144 |   |
| Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned |   |      | 1.83   | %      |         |   | 1.75 | % |   |   | 1.75 | % |

----

|                                                                                                          |   | March 31, |   |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                                                                                          |   | 2011      |   |   | 2010         |   |   | 2010 |   |
| Loans past due 90 days or more and still accruing                                                             |   | $         | 1,078  |   |         | $      | 2,217 |   |   | $ | 1,336 |   |
| Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees |   |      | 0.18   | %      |         |   | 0.38 | % |   |   | 0.23 | % |
| Impaired loans:                                                                                               |   |      |   |   |         |   |   |   |   |   |   |   |
| Total impaired loans                                                                                          |   | $         | 7,930  |   |         | $      | 7,743 |   |   | $ | 8,791 |   |
| Impaired loans with a valuation allowance                                                                     |   | $         | 7,084  |   |         | $      | 7,693 |   |   | $ | 7,676 |   |
| Valuation allowance                                                                                           |   |      | 1,256  |   |         |   | 2,438 |   |   |   | 1,200 |   |
| Impaired loans, net of allowance                                                                              |   | $         | 5,828  |   |         | $      | 5,255 |   |   | $ | 6,476 |   |
| Impaired loans with no valuation allowance                                                                    |   | $         | 846    |   |         | $      | 50 |   |   | $ | 1,115 |   |
| Average recorded investment in impaired loans(1)                                                              |   | $         | 7,690  |   |         | $      | 7,712 |   |   | $ | 7,526 |   |
| Income recognized on impaired loans                                                                           |   | $         | 20     |   |         | $      | --- |   |   | $ | 17 |   |
| Amount of income recognized on a cash basis                                                                   |   | $         | ---    |   |         | $      | --- |   |   | $ | --- |   |

|                               |   | Average Recorded Investment in ImpairedLoans |   |   | Unpaid Principal Balance of Impaired Loans |   |   | (A)Total Recorded Investment in Impaired Loans |   |   | Recorded Investment in (A) for Which There is No Related Allowance |   |   | Recorded Investment in (A) for Which There is a Related Allowance |   |   | Related Allowance for Impaired Loans |   |   |  Interest Income Recognized |   |
|------------------------------------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|--------|------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|----------------------------------|--------|
| Consumer Real Estate               |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |
| Closed-end Consumer Real Estate    |   | $                                            | 542    |   |                                       | $      | 614    |                                           |   | $      | 614                                                                |   |   | $                                                                 | 75     |   |                                 | $      | 539    |                             |   | $ | 30 |   |   | $ | 1 |   |
|                               |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial Real Estate             |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Hotels                             |   |                                         | 3,496  |   |                                       |   | 3,502  |                                           |   |   | 3,502                                                              |   |   |                                                              | 285    |   |                                 |   | 3,217  |                             |   |   | 113 |   |   |   | --- |   |
| Medical Professionals              |   |                                         | 52     |   |                                       |   | 79     |                                           |   |   | 79                                                                 |   |   |                                                              | ---    |   |                                 |   | 79     |                             |   |   | 79 |   |   |   | 5 |   |
| College Housing                    |   |                                         | 121    |   |                                       |   | 82     |                                           |   |   | 82                                                                 |   |   |                                                              | ---    |   |                                 |   | 82     |                             |   |   | --- |   |   |   | --- |   |
| Undeveloped Land                   |   |                                         | 254    |   |                                       |   | 252    |                                           |   |   | 254                                                                |   |   |                                                              | 254    |   |                                 |   | ---    |                             |   |   | --- |   |   |   | 3 |   |
| Other Commercial Real Estate       |   |                                         | 1,159  |   |                                       |   | 1,257  |                                           |   |   | 1,259                                                              |   |   |                                                              | ---    |   |                                 |   | 1,259  |                             |   |   | 434 |   |   |   | 10 |   |
|                               |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial & Industrial        |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial & Industrial        |   |                                         | 608    |   |                                       |   | 608    |                                           |   |   | 608                                                                |   |   |                                                              | ---    |   |                                 |   | 608    |                             |   |   | 558 |   |   |   | --- |   |
|                               |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Construction, Development and Land |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Residential                        |   |                                         | 1,458  |   |                                       |   | 1,536  |                                           |   |   | 1,536                                                              |   |   |                                                              | 358    |   |                                 |   | 1,178  |                             |   |   | 42 |   |   |   | 1 |   |
|                               |   |                                         |   |   |                                       |   |   |                                           |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Total                              |   | $                                            | 7,690  |   |                                       | $      | 7,930  |                                           |   | $      | 7,934                                                              |   |   | $                                                                 | 972    |   |                                 | $      | 6,962  |                             |   | $ | 1,256 |   |   | $ | 20 |   |

----

|                               |   | Average Recorded Investment in ImpairedLoans |   |   | Unpaid Principal Balance of Impaired Loans |   |   | (A)Total Recorded Investment in Impaired Loan |   |   | Recorded Investment in (A) for Which There is No Related Allowance |   |   | Recorded Investment in (A) for Which There is a Related Allowance |   |   | Related Allowance for Impaired Loans |   |   |  Interest Income Recognized |   |
|------------------------------------|--------|----------------------------------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|----------------------------------|--------|
| Consumer Real Estate               |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |
| Closed-end Consumer Real Estate    |   | $                                            | 337    |   |                                       | $      | 505    |                                          |   | $      | 505                                                                |   |   | $                                                                 | ---    |   |                                 | $      | 505    |                             |   | $ | 26 |   |   | $ | --- |   |
|                               |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial Real Estate             |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Office & Retail                |   |                                         | 253    |   |                                       |   | ---    |                                          |   |   | ---                                                                |   |   |                                                              | ---    |   |                                 |   | ---    |                             |   |   | --- |   |   |   | --- |   |
| Hotel                              |   |                                         | 2,767  |   |                                       |   | 3,509  |                                          |   |   | 3,509                                                              |   |   |                                                              | 287    |   |                                 |   | 3,222  |                             |   |   | 267 |   |   |   | --- |   |
| Convenience stores                 |   |                                         | 49     |   |                                       |   | 577    |                                          |   |   | 592                                                                |   |   |                                                              | 592    |   |                                 |   | ---    |                             |   |   | --- |   |   |   | 15 |   |
| Other commercial real estate       |   |                                         | 337    |   |                                       |   | 1,065  |                                          |   |   | 1,066                                                              |   |   |                                                              | ---    |   |                                 |   | 1,066  |                             |   |   | 299 |   |   |   | 1 |   |
|                               |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial & Industrial        |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Commercial & Industrial        |   |                                         | 1,183  |   |                                       |   | 698    |                                          |   |   | 698                                                                |   |   |                                                              | ---    |   |                                 |   | 698    |                             |   |   | 508 |   |   |   | --- |   |
|                               |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Construction, Development and Land |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Residential                        |   |                                         | 2,579  |   |                                       |   | 2,185  |                                          |   |   | 2,185                                                              |   |   |                                                              | ---    |   |                                 |   | 2,185  |                             |   |   | 100 |   |   |   | --- |   |
| Commercial                         |   |                                         | 21     |   |                                       |   | 252    |                                          |   |   | 253                                                                |   |   |                                                              | 253    |   |                                 |   | ---    |                             |   |   | --- |   |   |   | 1 |   |
|                               |   |                                         |   |   |                                       |   |   |                                          |   |   |                                                               |   |   |                                                              |   |   |                                 |   |   |                             |   |   |   |   |   |   |   |   |
| Total                              |   | $                                            | 7,526  |   |                                       | $      | 8,791  |                                          |   | $      | 8,808                                                              |   |   | $                                                                 | 1,132  |   |                                 | $      | 7,676  |                             |   | $ | 1,200 |   |   | $ | 17 |   |

----

| March 31, 2011                     |   |                        |   |   |                     |   |   |                                |   |   |
|------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|-------------------------------------|--------|--------|
|                               |   | 30 – 89 Days Past Due |   |   | 90 or More Days Past Due |   |   | 90 Days Past Due and Still Accruing |   |   | Nonaccruals (Including Impaired Nonaccruals) |   |
| Consumer Real Estate               |   |                        |   |   |                     |   |   |                                |   |   |   |   |
| Equity Lines                       |   | $                           | 30     |   |                     | $      | ---    |                                |   | $      | --- |   |   | $ | --- |   |
| Closed-ended Consumer Real Estate  |   |                        | 948    |   |                     |   | 1,514  |                                |   |   | 321 |   |   |   | 1,193 |   |
| Consumer Construction              |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Consumer, Non-Real Estate          |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Credit Cards                       |   |                        | 24     |   |                     |   | 28     |                                |   |   | 28 |   |   |   | --- |   |
| Consumer General                   |   |                        | 246    |   |                     |   | 65     |                                |   |   | 65 |   |   |   | --- |   |
| Consumer Overdraft                 |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial Real Estate             |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| College Housing                    |   |                        | 681    |   |                     |   | 182    |                                |   |   | --- |   |   |   | 182 |   |
| Office/Retail                      |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Nursing Homes                      |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Hotels                             |   |                        | 624    |   |                     |   | 526    |                                |   |   | --- |   |   |   | 3,502 |   |
| Municipalities                     |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Medical Professionals              |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Religious Organizations            |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Convenience Stores                 |   |                        | 38     |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Entertainment and Sports           |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Nonprofits                         |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Restaurants                        |   |                        | 332    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| General Contractors                |   |                        | ---    |   |                     |   | 66     |                                |   |   | 43 |   |   |   | 163 |   |
| Other Commercial Real Estate       |   |                        | 1,159  |   |                     |   | 1,191  |                                |   |   | 582 |   |   |   | 609 |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial and Industrial          |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial and Industrial          |   |                        | 14     |   |                     |   | 507    |                                |   |   | 39 |   |   |   | 468 |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Construction, Development and Land |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Residential                        |   |                        | ---    |   |                     |   | 1,301  |                                |   |   | --- |   |   |   | 1,536 |   |
| Commercial                         |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Total                              |   | $                           | 4,096  |   |                     | $      | 5,380  |                                |   | $      | 1,078 |   |   | $ | 7,653 |   |

----

| December 31, 2010                  |   |                        |   |   |                     |   |   |                                |   |   |
|------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|-------------------------------------|--------|--------|
|                               |   | 30 – 89 Days Past Due |   |   | 90 or More Days Past Due |   |   | 90 Days Past Due and Still Accruing |   |   | Nonaccruals (Including Impaired Nonaccruals) |   |
| Consumer Real Estate               |   |                        |   |   |                     |   |   |                                |   |   |   |   |
| Equity Lines                       |   | $                           | 69     |   |                     | $      | ---    |                                |   | $      | --- |   |   | $ | --- |   |
| Closed-ended Consumer Real Estate  |   |                        | 1,868  |   |                     |   | 1,178  |                                |   |   | 612 |   |   |   | 783 |   |
| Consumer Construction              |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Consumer, Non-Real Estate          |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Credit Cards                       |   |                        | 67     |   |                     |   | 42     |                                |   |   | 29 |   |   |   | --- |   |
| Consumer General                   |   |                        | 518    |   |                     |   | 45     |                                |   |   | 37 |   |   |   | --- |   |
| Consumer Overdraft                 |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial Real Estate             |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| College Housing                    |   |                        | 224    |   |                     |   | 262    |                                |   |   | --- |   |   |   | --- |   |
| Office/Retail                      |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Nursing Homes                      |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Hotels                             |   |                        | ---    |   |                     |   | 802    |                                |   |   | --- |   |   |   | 3,509 |   |
| Municipalities                     |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Medical Professionals              |   |                        | ---    |   |                     |   | 181    |                                |   |   | --- |   |   |   | --- |   |
| Religious Organizations            |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Convenience Stores                 |   |                        | 9      |   |                     |   | 577    |                                |   |   | 577 |   |   |   | --- |   |
| Entertainment and Sports           |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Nonprofits                         |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Restaurants                        |   |                        | ---    |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| General Contractors                |   |                        | ---    |   |                     |   | 85     |                                |   |   | --- |   |   |   | --- |   |
| Other Commercial Real Estate       |   |                        | 792    |   |                     |   | 136    |                                |   |   | --- |   |   |   | 715 |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial and Industrial          |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Commercial and Industrial          |   |                        | 740    |   |                     |   | 609    |                                |   |   | 81 |   |   |   | 879 |   |
|                               |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Construction, Development and Land |   |                        |   |   |                     |   |   |                                |   |   |   |   |   |   |   |   |
| Residential                        |   |                        | ---    |   |                     |   | 2,185  |                                |   |   | --- |   |   |   | 2,185 |   |
| Commercial                         |   |                        | 25     |   |                     |   | ---    |                                |   |   | --- |   |   |   | --- |   |
| Total                              |   | $                           | 4,312  |   |                     | $      | 6,102  |                                |   | $      | 1,336 |   |   | $ | 8,071 |   |

----

|                               |   | Pass   |    |   | Special Mention |   |   | Classified(Excluding Impaired) |   |
|------------------------------------|--------|--------|---------|--------|-----------------|--------|--------|--------------------------------|--------|
| Consumer Real Estate               |   |   |    |   |            |   |   |                           |   |
| Equity Lines                       |   | $      | 16,286  |   |            | $      | 20     |                           |   | $ | 25 |   |
| Closed-end Consumer Real Estate    |   |   | 93,083  |   |            |   | 620    |                           |   |   | 2,413 |   |
| Consumer Construction              |   |   | 2,991   |   |            |   | ---    |                           |   |   | --- |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Consumer, Non-Real Estate          |   |   |    |   |            |   |   |                           |   |   |   |   |
| Credit Cards                       |   |   | 6,418   |   |            |   | ---    |                           |   |   | 24 |   |
| Consumer General                   |   |   | 23,594  |   |            |   | 89     |                           |   |   | 165 |   |
| Consumer Overdraft                 |   |   | 276     |   |            |   | ---    |                           |   |   | --- |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial Real Estate             |   |   |    |   |            |   |   |                           |   |   |   |   |
| College Housing                    |   |   | 87,392  |   |            |   | 459    |                           |   |   | 708 |   |
| Office/Retail                      |   |   | 68,910  |   |            |   | 3,500  |                           |   |   | 270 |   |
| Nursing Homes                      |   |   | 13,801  |   |            |   | ---    |                           |   |   | --- |   |
| Hotels                             |   |   | 21,805  |   |            |   | 1,870  |                           |   |   | 621 |   |
| Municipalities                     |   |   | 16,693  |   |            |   | ---    |                           |   |   | --- |   |
| Medical Professionals              |   |   | 16,410  |   |            |   | ---    |                           |   |   | --- |   |
| Religious Organizations            |   |   | 17,374  |   |            |   | ---    |                           |   |   | --- |   |
| Convenience Stores                 |   |   | 9,858   |   |            |   | 38     |                           |   |   | --- |   |
| Entertainment and Sports           |   |   | 7,631   |   |            |   | ---    |                           |   |   | --- |   |
| Nonprofits                         |   |   | 6,070   |   |            |   | ---    |                           |   |   | --- |   |
| Restaurants                        |   |   | 6,581   |   |            |   | ---    |                           |   |   | 152 |   |
| General Contractors                |   |   | 4,728   |   |            |   | 59     |                           |   |   | 1,423 |   |
| Other Commercial Real Estate       |   |   | 63,490  |   |            |   | ---    |                           |   |   | 1,051 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial and Industrial          |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial and Industrial          |   |   | 38,474  |   |            |   | 59     |                           |   |   | 64 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Construction, Development and Land |   |   |    |   |            |   |   |                           |   |   |   |   |
| Residential                        |   |   | 16,550  |   |            |   | ---    |                           |   |   | 2,400 |   |
| Commercial                         |   |   | 25,392  |   |            |   | ---    |                           |   |   | 136 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Total                              |   | $      | 563,807 |   |            | $      | 6,714  |                           |   | $ | 9,452 |   |

----

|                               |   | Pass   |    |   | Special Mention |   |   | Classified(Excluding Impaired) |   |
|------------------------------------|--------|--------|---------|--------|-----------------|--------|--------|--------------------------------|--------|
| Consumer Real Estate               |   |   |    |   |            |   |   |                           |   |
| Equity Lines                       |   | $      | 15,735  |   |            | $      | ---    |                           |   | $ | 119 |   |
| Closed-ended Consumer Real Estate  |   |   | 85,313  |   |            |   | 731    |                           |   |   | 2,969 |   |
| Consumer Construction              |   |   | 3,988   |   |            |   | ---    |                           |   |   | --- |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Consumer, Non-Real Estate          |   |   |    |   |            |   |   |                           |   |   |   |   |
| Credit Cards                       |   |   | 6,446   |   |            |   | ---    |                           |   |   | 14 |   |
| Consumer General                   |   |   | 28,730  |   |            |   | 392    |                           |   |   | 94 |   |
| Consumer Overdraft                 |   |   | 3       |   |            |   | ---    |                           |   |   | --- |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial Real Estate             |   |   |    |   |            |   |   |                           |   |   |   |   |
| College Housing                    |   |   | 88,110  |   |            |   | 461    |                           |   |   | 1,016 |   |
| Office/Retail                      |   |   | 60,540  |   |            |   | 3,500  |                           |   |   | 848 |   |
| Nursing Homes                      |   |   | 28,018  |   |            |   | ---    |                           |   |   | --- |   |
| Hotel                              |   |   | 10,689  |   |            |   | 1,878  |                           |   |   | 625 |   |
| Municipalities                     |   |   | 16,979  |   |            |   | ---    |                           |   |   | --- |   |
| Medical Professionals              |   |   | 17,111  |   |            |   | ---    |                           |   |   | 181 |   |
| Religious Organizations            |   |   | 12,643  |   |            |   | ---    |                           |   |   | --- |   |
| Convenience Stores                 |   |   | 9,010   |   |            |   | 9      |                           |   |   | --- |   |
| Entertainment and Sports           |   |   | 7,694   |   |            |   | ---    |                           |   |   | --- |   |
| Nonprofit                          |   |   | 6,421   |   |            |   | ---    |                           |   |   | --- |   |
| Restaurants                        |   |   | 6,740   |   |            |   | ---    |                           |   |   | 153 |   |
| General Contractors                |   |   | 6,175   |   |            |   | ---    |                           |   |   | 240 |   |
| Other Commercial Real Estate       |   |   | 63,679  |   |            |   | 111    |                           |   |   | 951 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial and Industrial          |   |   |    |   |            |   |   |                           |   |   |   |   |
| Commercial and Industrial          |   |   | 34,826  |   |            |   | 129    |                           |   |   | 1,419 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Construction, Development and Land |   |   |    |   |            |   |   |                           |   |   |   |   |
| Residential                        |   |   | 25,760  |   |            |   | ---    |                           |   |   | 2,633 |   |
| Commercial                         |   |   | 14,405  |   |            |   | ---    |                           |   |   | 164 |   |
|                               |   |   |    |   |            |   |   |                           |   |   |   |   |
| Total                              |   | $      | 549,015 |   |            | $      | 7,211  |                           |   | $ | 11,426 |   |

----

|                              |   | March 31, 2011 |    |
|-----------------------------------|--------|----------------|---------|
|                              |   | AmortizedCosts |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValues |   |
| Available for sale:               |   |           |    |   |   |   |   |   |   |   |   |   |
| U.S. Treasury                     |   | $              | 2,014   |   |   | $ | 158 |   |   | $ | --- |   |   | $ | 2,172 |   |
| U.S. Government agencies          |   |           | 99,624  |   |   |   | 397 |   |   |   | 2,588 |   |   |   | 97,433 |   |
| Mortgage-backed securities        |   |           | 9,643   |   |   |   | 599 |   |   |   | --- |   |   |   | 10,242 |   |
| States and political subdivisions |   |           | 58,475  |   |   |   | 1,529 |   |   |   | 177 |   |   |   | 59,827 |   |
| Corporate                         |   |           | 16,890  |   |   |   | 741 |   |   |   | --- |   |   |   | 17,631 |   |
| Federal Home Loan Bank stock      |   |           | 1,677   |   |   |   | --- |   |   |   | --- |   |   |   | 1,677 |   |
| Federal Reserve Bank stock        |   |           | 92      |   |   |   | --- |   |   |   | --- |   |   |   | 92 |   |
| Other securities                  |   |           | 1,935   |   |   |   | --- |   |   |   | 165 |   |   |   | 1,770 |   |
| Total                             |   | $              | 190,350 |   |   | $ | 3,424 |   |   | $ | 2,930 |   |   | $ | 190,844 |   |

|                              |   | March 31, 2011 |    |
|-----------------------------------|--------|----------------|---------|
|                              |   | AmortizedCosts |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValues |   |
| Held to maturity:                 |   |           |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies          |   | $              | 14,070  |   |   | $ | 297 |   |   | $ | 161 |   |   | $ | 14,206 |   |
| Mortgage-backed securities        |   |           | 1,079   |   |   |   | 93 |   |   |   | --- |   |   |   | 1,172 |   |
| States and political subdivisions |   |           | 114,861 |   |   |   | 1,924 |   |   |   | 978 |   |   |   | 115,807 |   |
| Corporate                         |   |           | 2,659   |   |   |   | 38 |   |   |   | 24 |   |   |   | 2,673 |   |
| Total                             |   | $              | 132,669 |   |   | $ | 2,352 |   |   | $ | 1,163 |   |   | $ | 133,858 |   |

|                              |   | March 31, 2011      |    |
|-----------------------------------|--------|---------------------|---------|
|                              |   | Less Than 12 Months |    |   | 12 Months or More |   |
|                              |   | FairValue           |    |   | UnrealizedLoss |   |   | FairValue |   |   | UnrealizedLoss |   |
| Temporarily impaired securities:  |   |                |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies          |   | $                   | 82,825  |   |   | $ | 2,749 |   |   | $ | --- |   |   | $ | --- |   |
| States and political subdivisions |   |                | 35,483  |   |   |   | 983 |   |   |   | 2,614 |   |   |   | 172 |   |
| Corporate                         |   |                | 976     |   |   |   | 24 |   |   |   | --- |   |   |   | --- |   |
| Other securities                  |   |                | 186     |   |   |   | 3 |   |   |   | 142 |   |   |   | 162 |   |
| Total                             |   | $                   | 119,470 |   |   | $ | 3,759 |   |   | $ | 2,756 |   |   | $ | 334 |   |

----

|                              |   | December 31, 2010   |    |
|-----------------------------------|--------|---------------------|---------|
|                              |   | Less Than 12 Months |    |   | 12 Months or More |   |
|                              |   | FairValue           |    |   | UnrealizedLoss |   |   | FairValue |   |   | UnrealizedLoss |   |
| Temporarily impaired securities:  |   |                |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies          |   | $                   | 64,850  |   |   | $ | 3,127 |   |   | $ | --- |   |   | $ | --- |   |
| States and political subdivisions |   |                | 65,640  |   |   |   | 2,605 |   |   |   | 2,528 |   |   |   | 258 |   |
| Corporate                         |   |                | 969     |   |   |   | 31 |   |   |   | --- |   |   |   | --- |   |
| Other securities                  |   |                | ---     |   |   |   | --- |   |   |   | 247 |   |   |   | 246 |   |
| Total                             |   | $                   | 131,459 |   |   | $ | 5,763 |   |   | $ | 2,775 |   |   | $ | 504 |   |

----

----

|                                         |   | Pension Benefits             |   |
|----------------------------------------------|--------|------------------------------|--------|
|                                         |   | Three Months ended March 31, |   |
|                                         |   | 2011                         |   |   | 2010 |   |
| Service cost                                 |   | $                            | 109    |   |   | $ | 100 |   |
| Interest cost                                |   |                         | 176    |   |   |   | 172 |   |
| Expected return on plan assets               |   |                         | (203   | ) |   |   | (152 | ) |
| Amortization of prior service cost           |   |                         | (25    | ) |   |   | (25 | ) |
| Amortization of net obligation at transition |   |                         | ---    |   |   |   | (3 | ) |
| Recognized net actuarial loss                |   |                         | 73     |   |   |   | 62 |   |
| Net periodic benefit cost                    |   | $                            | 130    |   |   | $ | 154 |   |

|   | Level 1 – |   | Valuation is based on quoted prices in active markets for identical assets and liabilities.                                                                                                                                                                                                                                                                        |
|--------|-----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Level 2 – |   | Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the market. |
|   | Level 3 – |   | Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.                                                                                                                                                                                                                           |

----

|                                      |   |                             |    |   | Fair Value Measurements at March 31, 2011 Using            |   |
|-------------------------------------------|--------|----------------------------------|---------|--------|------------------------------------------------------------|--------|
| Description                               |   | Balance as of March 31,2011 |    |   | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
| U.S. Treasury                             |   | $                                | 2,172   |   |                                                       | $      | --- |   |   | $ | 2,172 |   |   | $ | --- |   |
| U.S. Government agencies and corporations |   |                             | 97,433  |   |                                                       |   | --- |   |   |   | 97,433 |   |   |   | --- |   |
| States and political subdivisions         |   |                             | 59,827  |   |                                                       |   | --- |   |   |   | 59,827 |   |   |   | --- |   |
| Mortgage-backed securities                |   |                             | 10,242  |   |                                                       |   | --- |   |   |   | 10,242 |   |   |   | --- |   |
| Corporate debt securities                 |   |                             | 17,631  |   |                                                       |   | --- |   |   |   | 17,631 |   |   |   | --- |   |
| Other securities                          |   |                             | 1,770   |   |                                                       |   | --- |   |   |   | 1,770 |   |   |   | --- |   |
| Total securities available for sale       |   | $                                | 190,844 |   |                                                       | $      | --- |   |   | $ | 190,844 |   |   | $ | --- |   |

|                                      |   |                                |    |   | Fair Value Measurements at December 31, 2010 Using         |   |
|-------------------------------------------|--------|-------------------------------------|---------|--------|------------------------------------------------------------|--------|
| Description                               |   | Balance as of December 31,2010 |    |   | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
| U.S. Treasury                             |   | $                                   | 2,183   |   |                                                       | $      | --- |   |   | $ | 2,183 |   |   | $ | --- |   |
| U.S. Government agencies and corporations |   |                                | 88,152  |   |                                                       |   | --- |   |   |   | 88,152 |   |   |   | --- |   |
| States and political subdivisions         |   |                                | 61,682  |   |                                                       |   | --- |   |   |   | 61,682 |   |   |   | --- |   |
| Mortgage-backed securities                |   |                                | 11,379  |   |                                                       |   | --- |   |   |   | 11,379 |   |   |   | --- |   |
| Corporate debt securities                 |   |                                | 17,680  |   |                                                       |   | --- |   |   |   | 17,680 |   |   |   | --- |   |
| Other securities                          |   |                                | 2,062   |   |                                                       |   | --- |   |   |   | 2,062 |   |   |   | --- |   |
| Total securities available for sale       |   | $                                   | 183,138 |   |                                                       | $      | --- |   |   | $ | 183,138 |   |   | $ | --- |   |

----

|              |                                      |    |   | Carrying Value                                             |   |
|-------------------|-------------------------------------------|---------|--------|------------------------------------------------------------|--------|
| Date              | Description                               | Balance |   | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |   | SignificantUnobservable Inputs(Level 3) |   |
|              | Assets:                                   |    |   |                                                       |   |   |   |   |   |   |   |   |   |
| March 31, 2011    | Impaired loans net of valuation allowance |    | $      | 5,706                                                      |   |   | $ | --- |   |   | $ | --- |   |   | $ | 5,706 |   |
| December 31, 2010 | Impaired loans net of valuation allowance |    |   | 6,476                                                      |   |   |   | --- |   |   |   | --- |   |   |   | 6,476 |   |

|              |                                               |    |   | Carrying Value                                             |   |
|-------------------|----------------------------------------------------|---------|--------|------------------------------------------------------------|--------|
| Date              | Description                                        | Balance |   | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   | SignificantOtherObservableInputs(Level 2) |   | SignificantUnobservable Inputs(Level 3) |   |
|              | Assets:                                            |    |   |                                                       |   |   |   |   |   |   |   |   |   |
| March 31, 2011    | Other real estate owned net of valuation allowance |    | $      | 590                                                        |   |   | $ | --- |   |   | $ | --- |   |   | $ | 590 |   |
| December 31, 2010 | Other real estate owned net of valuation allowance |    |   | 535                                                        |   |   |   | --- |   |   |   | --- |   |   |   | 535 |   |

----

|                         |   | March 31, 2011 |    |   | December 31, 2010         |   |
|------------------------------|--------|----------------|---------|--------|---------------------------|--------|
|                         |   | CarryingAmount |    |   | Estimated Fair Value |   |   | CarryingAmount |   |   | Estimated Fair Value |   |
| Financial assets:            |   |           |    |   |                      |   |   |   |   |   |   |   |
| Cash and due from banks      |   | $              | 11,800  |   |                      | $      | 11,800 |   |   | $ | 9,858 |   |   | $ | 9,858 |   |
| Interest-bearing deposits    |   |           | 55,674  |   |                      |   | 55,674 |   |   |   | 69,400 |   |   |   | 69,400 |   |
| Securities                   |   |           | 323,513 |   |                      |   | 324,702 |   |   |   | 315,907 |   |   |   | 314,820 |   |
| Mortgage loans held for sale |   |           | ---     |   |                      |   | --- |   |   |   | 2,460 |   |   |   | 2,460 |   |
| Loans, net                   |   |           | 579,657 |   |                      |   | 546,764 |   |   |   | 568,779 |   |   |   | 539,152 |   |
| Accrued interest receivable  |   |           | 6,514   |   |                      |   | 6,514 |   |   |   | 6,016 |   |   |   | 6,016 |   |
| Financial liabilities:       |   |           |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                     |   | $              | 885,895 |   |                      |   | 882,278 |   |   | $ | 884,583 |   |   | $ | 880,290 |   |
| Accrued interest payable     |   |           | 260     |   |                      |   | 260 |   |   |   | 257 |   |   |   | 257 |   |

----

| ·  | monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency and the Federal Reserve Board, and the impact of any policies or programs implemented pursuant to the Emergency Economic Stabilization Act of 2008 (EESA) and other financial reform legislation, |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | the effects of increased regulation of financial service companies and banks as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                 |   | March 31,2011 |   |   | December 31,2010 |   |
|--------------------------------------|--------|---------------|--------|--------|------------------|--------|
| Return on average assets             |   |          | 1.60   | %      |             |   | 1.57 | % |
| Return on average equity             |   |          | 12.44  | %      |             |   | 12.07 | % |
| Basic net earnings per share         |   | $             | 0.58   |   |             | $      | 2.25 |   |
| Fully diluted net earnings per share |   | $             | 0.58   |   |             | $      | 2.24 |   |
| Net interest margin (1)              |   |          | 4.68   | %      |             |   | 4.52 | % |
| Noninterest margin (2)               |   |          | 1.66   | %      |             |   | 1.49 | % |

| (1)   | Net interest margin: Year-to-date tax-equivalent net interest income divided by year-to-date average earning assets. |
|-----------------|----------------------------------------------------------------------------------------------------------------------|

| (2)   | Noninterest margin: Noninterest expense (excluding the provision for bad debts and income taxes) less noninterest income (excluding securities gains and losses) divided by average year-to-date assets. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|         |   | March 31, 2011 |      |   | December 31, 2010 |   |      | Percent Change |   |   |
|--------------|--------|----------------|-----------|--------|-------------------|--------|-----------|----------------|--------|--------|
| Securities   |   | $              | 323,513   |   |              | $      | 315,907   |           |   |   | 2.41 |   | % |
| Loans, net   |   |           | 579,657   |   |              |   | 568,779   |           |   |   | 1.91 |   | % |
| Deposits     |   |           | 885,895   |   |              |   | 884,583   |           |   |   | 0.15 |   | % |
| Total assets |   |           | 1,026,558 |   |              |   | 1,022,238 |           |   |   | 0.42 |   | % |

|                                                                                                           |   | March 31, 2011 |   |   | March 31, 2010 |   |   | December 31, 2010 |   |   |
|----------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|--------|-------------------|--------|--------|
| Nonperforming loans                                                                                            |   | $              | 8,537  |   |           | $      | 7,743  |              |   | $      | 8,421 |   |   |
| Loans past due 90 days or more, and still accruing                                                             |   |           | 1,078  |   |           |   | 2,217  |              |   |   | 1,336 |   |   |
| Other real estate owned                                                                                        |   |           | 2,222  |   |           |   | 2,567  |              |   |   | 1,723 |   |   |
| Allowance for loan losses to loans                                                                             |   |           | 1.40   | %      |           |   | 1.21   | %                 |   |   | 1.33 |   | % |
| Net charge-off ratio                                                                                           |   |           | 0.15   | %      |           |   | 0.30   | %                 |   |   | 0.46 |   | % |
| Ratio of nonperforming assets to loans, net of unearned income and deferred fees, plus other real estate owned |   |           | 1.83   | %      |           |   | 1.75   | %                 |   |   | 1.75 |   | % |
| Ratio of allowance for loan losses to nonperforming loans                                                      |   |           | 96.58  | %      |           |   | 92.23  | %                 |   |   | 91.01 |   | % |

----

|                                         |   | March 31, 2011 |    |   | March 31, 2010 |   |
|----------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                         |   | AverageBalance |    |   |  Interest |   |   | AverageYield/Rate |   |   | AverageBalance |   |   |  Interest |   |   | AverageYield/Rate |   |
| Interest-earning assets:                     |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net (1)(2)(3)                         |   | $              | 585,162 |   |           | $      | 9,159 |   |   |   | 6.35 | % |   | $ | 588,940 |   |   | $ | 9,275 |   |   |   | 6.39 | % |
| Taxable securities                           |   |           | 153,501 |   |           |   | 1,662 |   |   |   | 4.39 | % |   |   | 127,032 |   |   |   | 1,443 |   |   |   | 4.61 | % |
| Nontaxable securities (1)(4)                 |   |           | 166,799 |   |           |   | 2,592 |   |   |   | 6.30 | % |   |   | 158,816 |   |   |   | 2,483 |   |   |   | 6.34 | % |
| Interest-bearing deposits                    |   |           | 54,089  |   |           |   | 32 |   |   |   | 0.24 | % |   |   | 34,866 |   |   |   | 19 |   |   |   | 0.22 | % |
| Total interest-earning assets                |   | $              | 959,551 |   |           | $      | 13,445 |   |   |   | 5.68 | % |   | $ | 909,654 |   |   | $ | 13,220 |   |   |   | 5.89 | % |
| Interest-bearing liabilities:                |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand deposits             |   | $              | 368,191 |   |           | $      | 979 |   |   |   | 1.08 | % |   | $ | 305,194 |   |   | $ | 786 |   |   |   | 1.04 | % |
| Savings deposits                             |   |           | 56,184  |   |           |   | 11 |   |   |   | 0.08 | % |   |   | 52,549 |   |   |   | 12 |   |   |   | 0.09 | % |
| Time deposits                                |   |           | 323,237 |   |           |   | 1,389 |   |   |   | 1.74 | % |   |   | 365,364 |   |   |   | 2,181 |   |   |   | 2.42 | % |
| Total interest-bearing liabilities           |   | $              | 747,612 |   |           | $      | 2,379 |   |   |   | 1.29 | % |   | $ | 723,107 |   |   | $ | 2,979 |   |   |   | 1.67 | % |
| Net interest income and interest rate spread |   |           |    |   |           | $      | 11,066 |   |   |   | 4.39 | % |   |   |   |   |   | $ | 10,241 |   |   |   | 4.22 | % |
| Net yield on average interest-earning assets |   |           |    |   |           |   |   |   |   |   | 4.68 | % |   |   |   |   |   |   |   |   |   |   | 4.57 | % |

| (1)   | Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a Federal income tax rate of 35% in the two three-month periods presented. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Included in interest income are loan fees of $205 and $182 for the three months ended March 31, 2011 and 2010, respectively. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Nonaccrual loans are included in average balances for yield computations. |
|-----------------|---------------------------------------------------------------------------|

| (4)   | Daily averages are shown at amortized cost. |
|-----------------|---------------------------------------------|

----

|                               |   | Three Months ended |   |   |           |   |   |
|------------------------------------|--------|--------------------|--------|--------|----------------|--------|--------|
|                               |   | March 31, 2011     |   |   | March 31, 2010 |   |   | Percent Change |   |   |
| Service charges on deposits        |   | $                  | 612    |   |           | $      | 714    |   |   |   | (14.29 | ) | % |
| Other service charges and fees     |   |               | 58     |   |           |   | 47     |   |   |   | 23.40 |   | % |
| Credit card fees                   |   |               | 733    |   |           |   | 666    |   |   |   | 10.06 |   | % |
| Trust fees                         |   |               | 246    |   |           |   | 269    |   |   |   | (8.55 | ) | % |
| BOLI income                        |   |               | 184    |   |           |   | 185    |   |   |   | (0.54 | ) | % |
| Other income                       |   |               | 91     |   |           |   | 104    |   |   |   | (12.50 | ) | % |
| Realized securities gains (losses) |   |               | 10     |   |           |   | (14    | ) |   |   | (171.43 | ) | % |

|                                 |   | Three Months ended |   |   |           |   |   |
|--------------------------------------|--------|--------------------|--------|--------|----------------|--------|--------|
|                                 |   | March 31, 2011     |   |   | March 31, 2010 |   |   | Percent Change |   |   |
| Salaries and employee benefits       |   | $                  | 2,904  |   |           | $      | 2,856  |   |   |   | 1.68 |   | % |
| Occupancy, furniture and fixtures    |   |               | 423    |   |           |   | 491    |   |   |   | (13.85 | ) | % |
| Data processing and ATM              |   |               | 444    |   |           |   | 357    |   |   |   | 24.37 |   | % |
| FDIC assessment                      |   |               | 346    |   |           |   | 263    |   |   |   | 31.56 |   | % |
| Credit card processing               |   |               | 586    |   |           |   | 508    |   |   |   | 15.35 |   | % |
| Intangibles amortization             |   |               | 271    |   |           |   | 271    |   |   |   | --- |   | % |
| Net costs of other real estate owned |   |               | 134    |   |           |   | 33     |   |   |   | 306.06 |   | % |
| Franchise taxes                      |   |               | 242    |   |           |   | 239    |   |   |   | 1.26 |   | % |
| Other operating expenses             |   |               | 734    |   |           |   | 766    |   |   |   | (4.18 | ) | % |

----

| Assets                                     |   | March 31, 2011 |      |   | December 31, 2010 |   |    | Percent Change |   |   |
|--------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|---------|----------------|--------|--------|
| Interest-bearing deposits                  |   | $              | 54,089    |   |              | $      | 55,477  |           |   |   | (2.50 | ) | % |
| Securities available for sale              |   |           | 187,510   |   |              |   | 161,504 |           |   |   | 16.10 |   | % |
| Securities held to maturity                |   |           | 132,322   |   |              |   | 128,028 |           |   |   | 3.35 |   | % |
| Mortgage loans held for sale               |   |           | 696       |   |              |   | 1,339   |           |   |   | (48.02 | ) | % |
| Real estate construction loans             |   |           | 48,231    |   |              |   | 47,262  |           |   |   | 2.05 |   | % |
| Real estate mortgage loans                 |   |           | 173,279   |   |              |   | 169,856 |           |   |   | 2.02 |   | % |
| Commercial and industrial loans            |   |           | 276,534   |   |              |   | 276,829 |           |   |   | (0.11 | ) | % |
| Loans to individuals                       |   |           | 87,400    |   |              |   | 91,657  |           |   |   | (4.64 | ) | % |
| Total Assets                               |   |           | 1,016,979 |   |              |   | 989,952 |           |   |   | 2.73 |   | % |
|                                       |   |           |      |   |              |   |    |           |   |   |   |   |   |
| Liabilities and stockholders’ equity |   |           |      |   |              |   |    |           |   |   |   |   |   |
| Noninterest-bearing demand deposits        |   | $              | 129,682   |   |              | $      | 122,818 |           |   |   | 5.59 |   | % |
| Interest-bearing demand deposits           |   |           | 368,191   |   |              |   | 322,705 |           |   |   | 14.10 |   | % |
| Savings deposits                           |   |           | 56,184    |   |              |   | 54,543  |           |   |   | 3.01 |   | % |
| Time deposits                              |   |           | 323,237   |   |              |   | 352,887 |           |   |   | (8.40 | ) | % |
| Stockholders’ equity                 |   |           | 131,191   |   |              |   | 129,003 |           |   |   | 1.70 |   | % |

----

|                            |   | March 31, 2011 |    |   | December 31, 2010 |   |    |   Percent Change |   |   |
|---------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|-----------------------|--------|--------|
| Commercial and industrial loans |   | $              | 280,607 |   |              | $      | 269,818 |                  |   |   | 4.00 |   | % |
| Real estate construction loans  |   |           | 48,671  |   |              |   | 46,169  |                  |   |   | 5.42 |   | % |
| Real estate mortgage loans      |   |           | 173,785 |   |              |   | 173,533 |                  |   |   | 0.15 |   | % |
| Loans to individuals            |   |           | 85,816  |   |              |   | 87,868  |                  |   |   | (2.34 | ) | % |
| Total loans                     |   | $              | 588,879 |   |              | $      | 577,388 |                  |   |   | 1.99 |   | % |

|                                |   | March 31, 2011 |    |   | December 31, 2010 |   |    |  Percent Change |   |   |
|-------------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|----------------------|--------|--------|
| Noninterest-bearing demand deposits |   | $              | 136,769 |   |              | $      | 131,540 |                 |   |   | 3.98 |   | % |
| Interest-bearing demand deposits    |   |           | 372,470 |   |              |   | 365,040 |                 |   |   | 2.04 |   | % |
| Saving deposits                     |   |           | 58,273  |   |              |   | 55,800  |                 |   |   | 4.43 |   | % |
| Time deposits                       |   |           | 318,383 |   |              |   | 332,203 |                 |   |   | (4.16 | ) | % |
| Total deposits                      |   | $              | 885,895 |   |              | $      | 884,583 |                 |   |   | 0.15 |   | % |
|                                |   |           |    |   |              |   |    |                 |   |   |   |   |   |

----

----

Item 1A.Risk Factors

Item 4.Reserved

----

| DATE: May 9, 2011 | /s/ JAMES G. RAKES                                                               |
|-------------------|----------------------------------------------------------------------------------------------------------------|
|              | James G. RakesPresident andChief Executive Officer(Authorized Officer)                                         |
|              |                                                                                                           |
| DATE May 9, 2011  | /s/ DAVID K. SKEENS                                                              |
|              | David K. SkeensTreasurer andChief Financial Officer(Principal Financial Officer)(Principal Accounting Officer) |

----

| Exhibit No.  |  Description                                                                                                              | Page No. inSequential System                                                                                                               |
|--------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)         | Amended and Restated Articles of Incorporation of National Bankshares, Inc.                                                    | (incorporated herein by reference to Exhibit 3.1 of the Form 8K for filed on March 16, 2006)                                               |
| 3(ii)        | Amended By-laws of National Bankshares, Inc.                                                                                   | (incorporated herein by reference to Exhibit 3(ii) of the Annual Report on Form 10K for fiscal year ended December 31, 2007)               |
| 4(i)         | Specimen copy of certificate for National Bankshares, Inc. common stock                                                        | (incorporated herein by reference to Exhibit 4(a) of the Annual Report on Form 10K for fiscal year ended December 31, 1993)                |
| *10(iii)(A)  | National Bankshares, Inc. 1999 Stock Option Plan                                                                               | (incorporated herein by reference to Exhibit 4.3 of the Form S-8, filed as Registration No. 333-79979 with the Commission on June 4, 1999) |
| *10(iii)(A)  | Executive Employment Agreement dated December 17, 2008, between National Bankshares, Inc. and James G. Rakes                   | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008)      |
| *10(iii)(A)  | Employee Lease Agreement dated August 14, 2002, between National Bankshares, Inc. and The National Bank of Blacksburg          | (incorporated herein by reference to Exhibit 10 (iii) (A) of Form 10Q for the period ended September 30, 2002)                             |
| *10(iii)(A)  | Executive Employment Agreement dated December 17, 2008, between National Bankshares, Inc. and F. Brad Denardo                  | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008)      |
| *10(iii)(A)  | Executive Employment Agreement dated December 17, 2008, between National Bankshares, Inc. and Marilyn B. Buhyoff               | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008)      |
| *10(iii)(A)  | Salary Continuation Agreement dated February 8, 2006, between The National Bank of Blacksburg and James G. Rakes               | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on February 8, 2006)                                          |
| *10(iii)(A)  | Salary Continuation Agreement dated February 8, 2006, between The National Bank of Blacksburg and F. Brad Denardo              | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on February 8, 2006)                                          |
| *10(iii)(A)  | Salary Continuation Agreement dated February 8, 2006, betweenNational Bankshares, Inc. and Marilyn B. Buhyoff                  | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on February 8, 2006)                                          |
| *10(iii)(A)  | First Amendment, dated December 19, 2007, to The National Bank of Blacksburg Salary Continuation Agreement for James G. Rakes  | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on December 19, 2007)                                         |
| *10(iii)(A)  | First Amendment, dated December 19, 2007, to The National Bank of Blacksburg Salary Continuation Agreement for F. Brad Denardo | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on December 19, 2007)                                         |
| *10(iii)(A)  | First Amendment, dated December 19, 2007, to National Bankshares, Inc. Salary Continuation Agreement for Marilyn B. Buhyoff    | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on December 19, 2007)                                         |
| *10(viii)(A) | Second Amendment, dated June 12, 2008, to The National Bank of Blacksburg Salary Continuation Agreement for F. Brad Denardo    | (incorporated herein by reference to Exhibit 10(iii)(A) of the Form 8K filed on June 12, 2008)                                             |

----

| *10(viii)(A) | Second Amendment, dated December 17, 2008, to The National Bank of Blacksburg Salary Continuation Agreement for James G. Rakes     | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008) |
|--------------|------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
| *10(viii)(A) | Second Amendment, dated December 17, 2008, to The National Bank of Blacksburg Salary Continuation Agreement for Marilyn B. Buhyoff | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008) |
| *10(viii)(A) | Third Amendment, dated December 17, 2008, to The National Bank of Blacksburg Salary Continuation Agreement for F. Brad Denardo     | (incorporated herein by reference to Exhibit 10(iii)(A) of the Annual Report on Form 10K for the fiscal year ended December 31, 2008) |
| 31(i)        | Section 906 Certification of Chief Executive Officer                                                                               | (included herewith)                                                                                                                   |
| 31(ii)       | Section 906 Certification of Chief Financial Officer                                                                               | (included herewith)                                                                                                                   |
| 32(i)        | 18 U.S.C. Section 1350 Certification of Chief Executive Officer                                                                    | (included herewith)                                                                                                                   |
| 32(ii)       | 18 U.S.C. Section 1350 Certification of Chief Financial Officer                                                                    | (included herewith)                                                                                                                   |

----

| /s/ JAMES G. RAKES                                       |
|----------------------------------------------------------------------------------------|
| James G. RakesPresident and Chief Executive Officer(Principal Executive Officer)  |

----

| 1.   | I have reviewed this quarterly report on Form 10-Q of National Bankshares, Inc.; |
|----------------|----------------------------------------------------------------------------------|

| /s/ DAVID K. SKEENS                                |
|----------------------------------------------------------------------------------|
| David K. SkeensTreasurer andChief Financial Officer(Principal Financial Officer) |

----

| /s/ JAMES G. RAKES                                            |
|---------------------------------------------------------------------------------------------|
| James G. RakesPresident and Chief Executive Officer(Principal Executive Officer)May 9, 2011 |

| /s/ DAVID K. SKEENS                                           |
|---------------------------------------------------------------------------------------------|
| David K. SkeensTreasurer andChief Financial Officer(Principal Financial Officer)May 9, 2011 |

----