| x    |   | Quarterly Report Pursuant To Section              13 or 15              (d) of the Securities              Exchange Act of 1934        |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                        |
|                |   | For                the Quarter Ended September 30,                2007                                                                      |
|                |   |                                                                                                                                        |
|                |   | Or                                                                                                                                          |
|                |   |                                                                                                                                        |
| o         |   | Transition Report Pursuant To Section              13 or              15 (d) of the Securities              Exchange Act of 1934  |

|  Florida                                                                                      |   |                   65-0840545                                |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
|  (State                or Other Jurisdiction of                Incorporation or Organization) |   |  (IRS                Employer Identification                No.) |

----

| Part I.                   | Financial                Information  |                                                                                                                                                             |
|--------------------------------|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 1.                          | Financial                Statements                (unaudited)                                                                                         |   |
|                           |                                       |                                                                                                                                                             |   |
|                           |                                       | Consolidated                  Balance Sheets as of September 30, 2007 and December 31,                  2006                                                     | 3 |
|                           |                                       |                                                                                                                                                             |   |
|                           |                                       | Consolidated                    Statements of Income and Comprehensive Income for the Three and                    Nine Months Ended September 30, 2007 and 2006 | 4 |
|                           |                                       |                                                                                                                                                             |   |
|                           |                                       | Consolidated                    Statements of Cash Flows for the Nine Months Ended September 30,                    2007 and 2006                                | 5 |
|                           |                                       |                                                                                                                                                             |   |
|                           |                                       | Consolidated                  Statements of Changes in Shareholders' Equity as of September 30,                  2007 and                  2006                  | 6 |
|                           |                                       |                                                                                                                                                             |   |
|                           |                                       | Notes                  to Consolidated Financial Statements                                                                                                      | 7-10 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 2.                          | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                                          | 11-15 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 3.                          | Controls                  and Procedures                                                                                                                         | 15 |
|                           |                                       |                                                                                                                                                             |   |
| Part                  II  |                                       | Other                    Information                                                                                                                             |   |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 1.                               | Legal                  Proceedings                                                                                                                               | 16 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 2.                          | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                                     | 16 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 3.                          | Defaults                  Upon Senior Securities                                                                                                                 | 16 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 4.                          | Submission                  of Matters to a Vote of Shareholders                                                                                                 | 16 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 5.                          | Other                  Information                                                                                                                               | 16 |
|                           |                                       |                                                                                                                                                             |   |
|                           | Item 6.                          | Exhibits                                                                                                                                                         | 16 |

----

**PART      I - FINANCIAL INFORMATION**

**Item      1.  Financial Statements**
**.**

**HORIZON      BANCORPORATION, INC.**

|                                                                                                                            |   |   | September                30, 2007                 (Unaudited) |   |   | December                31,2006 |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|--------|---------------------------------|--------|
| **ASSETS**                                                                                                                           |   |   |                                                               |   |   |                            |   |
| Cash                and cash equivalents                                                                                             |   |   |                                                               |   |   |                            |   |
| Cash                and due from banks                                                                                               |   | $      | 3,001,149                                                          |   | $      | 4,672,956                       |   |
| Federal                funds sold                                                                                                    |   |   | 465,000                                                            |   |   | -----0----                      |   |
| Total                cash and cash equivalents                                                                                       |   |   | 3,466,149                                                          |   |   | 4,672,956                       |   |
| Securities:                                                                                                                          |   |   |                                                               |   |   |                            |   |
| Held                to maturity, at amortized cost                                                                                   |   |   | 13,091,949                                                         |   |   | 6,539,698                       |   |
| Available-for-sale                at fair value                                                                                      |   |   | 19,487,508                                                         |   |   | 17,018,928                      |   |
| Loans,                net                                                                                                            |   |   | 145,221,938                                                        |   |   | 136,229,170                     |   |
| Premises                and equipment, net                                                                                           |   |   | 2,047,926                                                          |   |   | 2,116,015                       |   |
| Other                real estate owned                                                                                               |   |   | 1,119,411                                                          |   |   | ----0----                       |   |
| Other                assets                                                                                                          |   |   | 2,161,029                                                          |   |   | 1,696,568                       |   |
|                                                                                                                                 |   |   |                                                               |   |   |                            |   |
|                                                                                                                                 |   | $      | 186,595,910                                                        |   | $      | 168,273,335                     |   |
|                                                                                                                                 |   |   |                                                               |   |   |                            |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                              |   |   |                                                               |   |   |                            |   |
| Liabilities                                                                                                                          |   |   |                                                               |   |   |                            |   |
| Deposits                                                                                                                             |   |   |                                                               |   |   |                            |   |
| Noninterest-bearing                                                                                                                  |   | $      | 10,951,767                                                         |   | $      | 10,384,537                      |   |
| Interest-bearing                                                                                                                     |   |   | 131,571,484                                                        |   |   | 129,146,962                     |   |
| Total                deposits                                                                                                        |   |   | 142,523,251                                                        |   |   | 139,531,499                     |   |
| Federal                Home Loan Bank borrowings                                                                                     |   |   | 29,100,000                                                         |   |   | 15,500,000                      |   |
| Fed                Funds Purchased                                                                                                   |   |   | 1,000,000                                                          |   |   | ----0----                       |   |
| Dividends                Payable                                                                                                     |   |   | ----0----                                                          |   |   | 180,815                         |   |
| Other                liabilities                                                                                                     |   |   | 419,358                                                            |   |   | 491,404                         |   |
| Total                liabilities                                                                                                     |   |   | 173,042,609                                                        |   |   | 155,703,718                     |   |
|                                                                                                                                 |   |   |                                                               |   |   |                            |   |
|                                                                                                                                 |   |   |                                                               |   |   |                            |   |
| Shareholders'                equity                                                                                                  |   |   |                                                               |   |   |                            |   |
| Preferred                stock, $.01 par value 1,000,000 shares authorized; none                outstanding                          |   |   | ---0----                                                           |   |   | ----0----                       |   |
| Common                stock, $.01 par value 25,000,000 shares authorized; 1,808,219                                                  |   |   |                                                               |   |   |                            |   |
| issued                and outstanding at September 30, 2007 and 1,808,152 issued and outstanding                at December 31, 2006 |   |   | 18,082                                                             |   |   | 18,082                          |   |
| Additional                paid in capital                                                                                            |   |   | 10,270,379                                                         |   |   | 10,223,103                      |   |
| Retained                earnings                                                                                                     |   |   | 3,538,484                                                          |   |   | 2,468,651                       |   |
| Accumulated                other comprehensive income (loss), net of tax                                                             |   |   | (273,644                                                           | )      |   | (140,219                        | )      |
| Total                shareholders' equity                                                                                            |   |   | 13,553,301                                                         |   |   | 12,569,617                      |   |
|                                                                                                                                 |   |   |                                                               |   |   |                            |   |
|                                                                                                                                 |   | $      | 186,595,910                                                        |   | $      | 168,273,335                     |   |

----

**HORIZON      BANCORPORATION, INC,.**

|                                                                   |   |   | Three                Months Ended September 30,  |   |   | Nine                Months Ended September 30,  |   |
|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
|                                                                   |   |   | 2007                                             |   |   | 2006                                            |   |   | 2007  |   |   | 2006  |   |
| **Interest                income**                                |   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Loans,                including fees                                   |   | $      | 2                ,881,525                             |   | $      | 2,806,071                                            |   | $ | 8,315,482 |   | $ | 7,625,939 |   |
| Investment                securities                                   |   |   | 421,884                                               |   |   | 304,218                                              |   |   | 1,208,541 |   |   | 896,343 |   |
| Federal                funds sold and overnight accounts               |   |   | 12,244                                                |   |   | 6,516                                                |   |   | 41,555 |   |   | 32,911 |   |
| Total                interest income                                   |   |   | 3,315,653                                             |   |   | 3,116,805                                            |   |   | 9,565,578 |   |   | 8,555,193 |   |
| **Interest                expense**                                    |   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Deposits                                                               |   |   | 1,565,729                                             |   |   | 1,367,658                                            |   |   | 4,596,029 |   |   | 3,611,576 |   |
| Other                borrowings                                        |   |   | 255,356                                               |   |   | 206,569                                              |   |   | 599,561 |   |   | 428,347 |   |
| Total                interest expense                                  |   |   | 1,821,085                                             |   |   | 1,574,227                                            |   |   | 5,195,590 |   |   | 4,039,923 |   |
| **Net                interest income**                                 |   |   | 1,494,568                                             |   |   | 1,542,578                                            |   |   | 4,369,988 |   |   | 4,515,270 |   |
| Provision                for loan losses                               |   |   | 30,000                                                |   |   | 80,000                                               |   |   | 90,000 |   |   | 140,000 |   |
| **Net                interest income after provision for loan losses** |   |   | 1,464,568                                             |   |   | 1,462,578                                            |   |   | 4,279,988 |   |   | 4,375,270 |   |
| Noninterest                income                                      |   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Gain                on sales of loans                                  |   |   | ----0-----                                            |   |   | -----0-----                                          |   |   | 46,125 |   |   | ------0----- |   |
| Gain                on sale of servicing                               |   |   | ----0-----                                            |   |   | 206,832                                              |   |   | 54,447 |   |   | 206,832 |   |
| Gain/(loss)                on sale of foreclosed assets                |   |   | ----0-----                                            |   |   | -----0----                                           |   |   | (2,591 | ) |   | -----0----- |   |
| Gain                on sale of other assets, net                       |   |   | ----0-----                                            |   |   | 490                                                  |   |   | (271 | ) |   | 4,490 |   |
| Service                charges on deposit accounts                     |   |   | 22,547                                                |   |   | 26,592                                               |   |   | 68,487 |   |   | 77,915 |   |
| Miscellaneous                , other                                   |   |   | 22,197                                                |   |   | 18,403                                               |   |   | 71,359 |   |   | 62,582 |   |
| Total                noninterest income                                |   |   | 44,744                                                |   |   | 252,317                                              |   |   | 237,556 |   |   | 351,819 |   |
| Noninterest                expense                                     |   |   |                                                  |   |   |                                                 |   |   |   |   |   |   |   |
| Compensation                and employee benefits                      |   |   | 529,764                                               |   |   | 488,592                                              |   |   | 1,586,069 |   |   | 1,363,664 |   |
| Building                & equipment expense                        |   |   | 177,922                                               |   |   | 170,839                                              |   |   | 518,561 |   |   | 496,948 |   |
| Professional                fees                                       |   |   | 41,547                                                |   |   | 86,225                                               |   |   | 211,510 |   |   | 226,617 |   |
| Data                processing & software expense                  |   |   | 89,042                                                |   |   | 81,653                                               |   |   | 263,888 |   |   | 269,501 |   |
| Other                noninterest expense                               |   |   | 182,221                                               |   |   | 151,578                                              |   |   | 503,090 |   |   | 404,726 |   |
| Total                noninterest expense                               |   |   | 1,020,496                                             |   |   | 978,887                                              |   |   | 3,083,118 |   |   | 2,761,456 |   |
| **Income                before income taxes**                          |   |   | 488,816                                               |   |   | 736,008                                              |   |   | 1,434,426 |   |   | 1,965,633 |   |
| Income                tax expense                                      |   |   | 131,399                                               |   |   | 276,561                                              |   |   | 364,593 |   |   | 734,800 |   |
| **Net                Income**                                          |   | $      | 357,417                                               |   | $      | 459,447                                              |   | $ | 1,069,833 |   | $ | 1,230,833 |   |
| Basic                earnings per share                                |   | $      | 0.20                                                  |   | $      | 0.25                                                 |   | $ | 0.59 |   | $ | 0.68 |   |
| Diluted                earnings per share                              |   | $      | 0.19                                                  |   | $      | 0.24                                                 |   | $ | 0.56 |   |   | 0.64 |   |

----

**HORIZON      BANCORPORATION, INC,.**

|                                                                        |   |   | For                the nine months ended September                30, 2007  |   |   | For                the nine months ended                September                30, 2006 |   |
|------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|
| **Cash                flows from operating activities**                |   |   |                                                                             |   |   |                                                                                      |   |
| Net                cash provided by operating activities               |   | $      | 594,901                                                                          |   | $      | 1,630,829                                                                                 |   |
| **Cash                flows from investing activities**                |   |   |                                                                             |   |   |                                                                                      |   |
| Proceeds                from sale of foreclosed assets                 |   |   | 12,500                                                                           |   |   | -----0-----                                                                               |   |
| Proceeds                from sale of loans                             |   |   | 1,579,000                                                                        |   |   | -----0-----                                                                               |   |
| Purchase                of securities held to maturity                 |   |   | (6,554,643                                                                       | )      |   | (2,700,519                                                                                | )      |
| Purchase                of securities available for sale               |   |   | (4,739,631                                                                       | )      |   | ----0----                                                                                 |   |
| Proceeds                from maturity and pay-downs of securities ,AFS |   |   | 2,685,191                                                                        |   |   | 1,638,919                                                                                 |   |
| Purchase                Federal Home Loan Bank Stock                   |   |   | (610,592                                                                         | )      |   | (463,800                                                                                  | )      |
| Loan                originations, net                                  |   |   | (11,680,607                                                                      | )      |   | (20,321,545                                                                               | )      |
| Property                and equipment expenditures, net                |   |   | (85,482                                                                          | )      |   | (152,074                                                                                  | )      |
| Net                cash used by investing activities                   |   |   | (19,394,264                                                                      | )      |   | (21,999,019                                                                               | )      |
| **Cash                flows from financing activities**                |   |   |                                                                             |   |   |                                                                                      |   |
| Increase                in deposits                                    |   |   | 2,991,752                                                                        |   |   | 2,168,073                                                                                 |   |
| Increase                in Federal Home Loan Bank borrowings           |   |   | 13,600,000                                                                       |   |   | 10,500,000                                                                                |   |
| Increase                in Fed Funds Purchased                         |   |   | 1,000,000                                                                        |   |   | 2,975,000                                                                                 |   |
| Proceeds                from exercise of stock options/warrants        |   |   | 804                                                                              |   |   | 84,556                                                                                    |   |
| Net                cash provided by financing activities               |   |   | 17,592,556                                                                       |   |   | 15,727,629                                                                                |   |
|                                                                   |   |   |                                                                             |   |   |                                                                                      |   |
| Net                change in cash and cash equivalents                 |   |   | (1,206,807                                                                       | )      |   | (4,640,561                                                                                | )      |
|                                                                   |   |   |                                                                             |   |   |                                                                                      |   |
| Cash                and cash equivalents at beginning of period        |   |   | 4,672,956                                                                        |   |   | 7,174,308                                                                                 |   |
|                                                                   |   |   |                                                                             |   |   |                                                                                      |   |
| **Cash                and cash equivalents at end of period**          |   | $      | 3,466,149                                                                        |   | $      | 2,533,747                                                                                 |   |

----

**HORIZON      BANCORPORATION, INC,**
**.**
** **

|                                                                                                                                                                | Common                Stock          | Paid                inCapital        | RetainedEarnings                     | AccumulatedOtherComprehensiveIncome |               |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|-------------------------------------|--------------------|
|                                                                                                                                                                | Shares                               | Par                Value             | Total                                |
| Balance,                December 31, 2005                                                                                                                           | 1,797,619                            | $17,976                              | $10,150,543                          | $803,895                            | $(85,838)          | $10,886,576 |
| Comprehensive                Income:Net                income, nine-month period ended September 30, 2006                                                           | -                -                   | -                -                   | -                -                   | 1,230,833                           | -                - | 1,230,833 |
| Net                unrealized loss on securities, nine-month period ended September                30,                2006Total                comprehensive income | -                --                - | -                --                - | -                --                - |  -                -1,230,833   | (86,790)(86,790)   | (86,790)1,144,043 |
| Exercise                of warrants & stock options                                                                                                             | 10,393                               | $104                                 | $52,458                              |                                |               | $52,562 |
| Stock                Based Compensation                                                                                                                             |                                 |                                 | $32,400                              |                                |               | $32,400 |
| Balance,                September 30, 2006                                                                                                                          | 1,808,012                            | $                18,080              | $10,235,401                          | $2,034,728                          | ($172,628)         | $12,115,581 |
| --------------------------------------------                                                                                                                        |                                 |                                 |                                 |                                |               |   |
| Balance,                December 31, 2006                                                                                                                           | 1,808,152                            | $18,082                              | $10,223,103                          | $2,468,651                          | $(140,219)         | $12,569,617 |
| Comprehensive                Income:Net                income, nine-month period ended September                30, 2007                                            | -                -                   | -                -                   | -                -                   | 1,069,833                           | -                - | 1,069,833 |
| Net                unrealized loss on securities, nine-month                period ended September 30, 2007Total                comprehensive income                | -                --                - | -                --                - | -                --                - |  -                -1,069,833   | (133,425)(133,425) | (133,425)936,408 |
| Exercise                of warrants & stock options                                                                                                             | 67                                   | $-0-                                 | $                804                 |                                |               | $804 |
| Stock                Based Compensation                                                                                                                             |                                 |                                 | 46,472                               |                                |               | 46,472 |
| Balance,                September 30, 2007                                                                                                                          | 1,808,219                            | $                18,082              | $10,270,379                          | $3,538,484                          | ($273,644)         | $13,553,301 |

----

**NOTE      1 - BASIS OF PRESENTATION**

**NOTE      2 - SUMMARY OF ORGANIZATION**

**NOTE      3 - LOANS RECEIVABLE**

|                                            |   |   | September                30, 2007  |   |   | December                31,2006 |   |
|-------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|---------------------------------|--------|
| Real                estate - commercial         |   | $      | 62,856,611                              |   | $      | 60,270,972                      |   |
| Real                estate - construction       |   |   | 6,685,605                               |   |   | 4,060,769                       |   |
| Real                estate - residential        |   |   | 42,519,127                              |   |   | 41,016,077                      |   |
| Commercial                                      |   |   | 31,112,541                              |   |   | 28,539,544                      |   |
| Consumer                                        |   |   | 3,375,003                               |   |   | 3,912,652                       |   |
| Loans,                gross                     |   |   | 146,548,887                             |   |   | 137,800,014                     |   |
| Deduct                allowance for loan losses |   |   | (1,326,949                              | )      |   | (1,570,844                      | )      |
|                                            |   |   |                                    |   |   |                            |   |
| Loans,                net                       |   | $      | 145,221,938                             |   | $      | 136,229,170                     |   |

----

**HORIZON      BANCORPORATION, INC,.**

**NOTE      3 - LOANS RECEIVABLE (Continued)**

|                                          |   |   | 2007        |   |   | 2006      |   |
|-----------------------------------------------|--------|--------|-------------|--------|--------|-----------|--------|
|                                          |   |   |        |   |   |      |   |
| Balance                at beginning of period |   | $      | 1,539,823   |   | $      | 1,294,686 |   |
| Provision                for loan losses      |   |   | 30,000      |   |   | 80,000    |   |
| Loans                charged-off              |   |   | (242,874    | )      |   | (23,658   | )      |
| Recoveries                                    |   |   | -----0----- |   |   | 23,658    |   |
|                                          |   |   |        |   |   |      |   |
| Balance                at end of period       |   | $      | 1,326,949   |   | $      | 1,374,686 |   |

|                                          |   |   | 2007      |   |   | 2006                      |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|---------------------------|--------|
|                                          |   |   |      |   |   |                      |   |
| Balance                at beginning of period |   | $      | 1,570,844 |   | $      | 1,273,524                 |   |
| Provision                for loan losses      |   |   | 90,000    |   |   | 140,000                   |   |
| Loans                charged-off              |   |   | (365,447  | )      |   | (62,496                   | )      |
| Recoveries                                    |   |   | 31,552    |   |   | 23,658                    |   |
|                                          |   |   |      |   |   |                      |   |
| Balance                at end of period       |   | $      | 1,326,949 |   | $      | 1                ,374,686 |   |

**NOTE      4 - SECURITIES HELD-TO-MATURITY**

|                                                      | Less                Than     |   | Over                           |   |                      |
|-----------------------------------------------------------|------------------------------|--------|--------------------------------|--------|---------------------------|
|                                                      | Twelve                Months |   | Twelve                Months   |   | Total                     |
|                                                      | FairValue                    |   | Unrealized                Loss |   | Fair                Value |   | Unrealized                Loss |   | Fair                Value |   | Unrealized                Loss |
| State,                County and                Municipal | $10,793,988                  |   | $(320,841)                     |   | $                472,754  |   | $                (7,366)  |   | $11,266,742 |   | $(328,207) |
| Other                corporate securities                 | $                950,000     |   | $                (50,000)      |   | $                ----0--- |   | $----0--- |   | $950,000 |   | $                (50.000) |
|      Total                       | $11,743,988                  |   | $(370,841)                     |   | $472,754                  |   | $                (7,366) |   | $12,216,742 |   | $(378.207) |

----

**NOTE      5 - SECURITIES AVAILABLE FOR SALE**

|                                               |   |                                           |                            |                                     |   |           |
|----------------------------------------------------|--------|------------------------------------------------|---------------------------------|-------------------------------------|--------|----------------|
|                                               |   | Less                  Than Twelve Months  |                            | Over                  Twelve Months |   | Total          |
|                                               |   |                                           | Fair                Value  |                                |   | UnrealizedLoss |   |   |   | Fair                Value |   |   | Unrealized                Loss |   |   |   | FairValue |   |   | UnrealizedLoss |   |
| Collateralized                Mortgage obligations |   | $                                              | 625,470                         |                                | $      | (33,219        | ) |   | $ | 3,252,529 |   | $ | (155,679 | ) |   | $ | 3,877,999 |   | $ | (188,898 | ) |
| Mortgage                backed securities          |   |                                           | 2,999,842                       |                                |   | (83,864        | ) |   |   | 264,730 |   |   | (13,444 | ) |   |   | 3,264,572 |   |   | (97,308 | ) |
| U.S.                Agency securities              |   |                                           | -----0-----                     |                                |   | ----0----      |   |   |   | 2,080,747 |   |   | (29,253 | ) |   |   | 2,080,747 |   |   | (29,253 | ) |
| Other                securities                    |   |                                           | 3,916,980                       |                                |   | (89,818        | ) |   |   | 498,400 |   |   | (10,100 | ) |   |   | 4,415,380 |   |   | (99,918 | ) |
|      Total                |   | $                                              | 7,542,292                       |                                | $      | (206,901       | ) |   | $ | 6,096,406 |   | $ | (208,476 | ) |   | $ | 13,638,698 |   | $ | (415,377 | ) |

**NOTE      6 - EARNINGS PER SHARE**

|                                                                         |   |   | Three                Months Ended September 30, 2007  |   |   | Three                Months Ended September 30, 2006 |   |
|------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
| Basic                earnings per share                                      |   |   |                                                       |   |   |                                                 |   |
| Net                income applicable to common stock                         |   | $      | 357,417                                                    |   | $      | 459,447                                              |   |
|                                                                         |   |   |                                                       |   |   |                                                 |   |
| Weighted                average shares outstanding                           |   |   | 1,808,219                                                  |   |   | 1,808,012                                            |   |
|                                                                         |   |   |                                                       |   |   |                                                 |   |
| Basic                earnings per share                                      |   | $      | 0.20                                                       |   | $      | 0.25                                                 |   |
|                                                                         |   |   |                                                       |   |   |                                                 |   |
| Diluted                earnings per share                                    |   |   |                                                       |   |   |                                                 |   |
| Net                income applicable to common stock                         |   | $      | 357,417                                                    |   | $      | 459,447                                              |   |
|                                                                         |   |   |                                                       |   |   |                                                 |   |
| Weighted                average shares outstanding                           |   |   | 1,808,219                                                  |   |   | 1,808,012                                            |   |
| Dilutive                effect of assumed exercise of stock options/warrants |   |   | 105,404                                                    |   |   | 114,698                                              |   |
| Diluted                average shares outstanding                            |   |   | 1,913,623                                                  |   |   | 1,922,710                                            |   |
|                                                                         |   |   |                                                       |   |   |                                                 |   |
| Diluted                earnings per share                                    |   | $      | 0.19                                                       |   | $      | 0.24                                                 |   |

----

**NOTE      6 - EARNINGS PER SHARE (Continued)**

|                                                                         |   |   | Nine                Months EndedSeptember 30,2007  |   |   | Nine                Months Ended September 30,2006 |   |
|------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
| Basic                earnings per share                                      |   |   |                                                    |   |   |                                               |   |
| Net                income applicable to common stock                         |   | $      | 1,069,833                                               |   | $      | 1,230,833                                          |   |
|                                                                         |   |   |                                                    |   |   |                                               |   |
| Weighted                average shares outstanding                           |   |   | 1,808,200                                               |   |   | 1,805,024                                          |   |
|                                                                         |   |   |                                                    |   |   |                                               |   |
| Basic                earnings per share                                      |   | $      | 0.59                                                    |   | $      | 0.68                                               |   |
|                                                                         |   |   |                                                    |   |   |                                               |   |
| Diluted                earnings per share                                    |   |   |                                                    |   |   |                                               |   |
| Net                income applicable to common stock                         |   | $      | 1,069,833                                               |   | $      | 1,230,833                                          |   |
|                                                                         |   |   |                                                    |   |   |                                               |   |
| Weighted                average shares outstanding                           |   |   | 1,808,200                                               |   |   | 1,805,024                                          |   |
| Dilutive                effect of assumed exercise of stock options/warrants |   |   | 109,327                                                 |   |   | 112,758                                            |   |
| Diluted                average shares outstanding                            |   |   | 1,917,527                                               |   |   | 1,917,782                                          |   |
|                                                                         |   |   |                                                    |   |   |                                               |   |
| Diluted                earnings per share                                    |   | $      | 0.56                                                    |   | $      | 0.64                                               |   |

**NOTE      7 - RECENT ACCOUNTING PRONOUNCEMENTS**

*Accounting      for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109.      *
*Accounting      for Income Taxes*

*Fair      Value Measurements. *

----

**Item      2:   Management's Discussion and Analysis of Financial Condition and      Results of Operations**

**FORWARD      LOOKING STATEMENTS**

**OVERVIEW**

**EARNINGS      PERFORMANCE**

**RESULTS      OF OPERATIONS**

----

|                                                       |   |   | Three                months ended September 30,  |   |
|------------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
|                                                       |   |   | 2007                                             |   |   | 2006  |   |
|                                                            |   |   | Average                Volume                         |   |   | Interest |   |   | Yield/Cost |   |   | AverageVolume |   |   | Interest |   |   | Yield/Cost |   |
| ASSETS                                                     |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                          |   | $      | 457                                                   |   | $ | 6 |   |   | 5.25 | % | $ | 575 |   | $ | 7 |   |   | 4.87 | % |
| Securities                                                 |   |   | 31,038                                                |   |   | 428 |   |   | 5.52 |   |   | 20,820 |   |   | 304 |   |   | 5.84 |   |
| Loans                receivable                            |   |   | 147,649                                               |   |   | 2,882 |   |   | 7.81 |   |   | 140,591 |   |   | 2,806 |   |   | 7.98 |   |
| Total                interest-earning assets               |   |   | 179,144                                               |   |   | 3,316 |   |   | 7.40 |   |   | 161,986 |   |   | 3,117 |   |   | 7.70 |   |
| Non-earning                assets                          |   |   | 4,471                                                 |   |   |   |   |   |   |   |   | 4,774 |   |   |   |   |   |   |   |
| Total                assets                                |   | $      | 183,615                                               |   |   |   |   |   |   |   | $ | 166,760 |   |   |   |   |   |   |   |
|                                                       |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS’ EQUITY  |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:               |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional                accounts                      |   | $      | 28,282                                                |   |   | 133 |   |   | 1.88 |   | $ | 37,216 |   |   | 329 |   |   | 3.54 |   |
| Savings                deposits                            |   |   | 14,045                                                |   |   | 159 |   |   | 4.53 |   |   | 9,925 |   |   | 113 |   |   | 4.55 |   |
| Time                deposits                               |   |   | 90,413                                                |   |   | 1,274 |   |   | 5.64 |   |   | 79,338 |   |   | 925 |   |   | 4.66 |   |
| Other                borrowings                            |   |   | 26,677                                                |   |   | 255 |   |   | 3.82 |   |   | 17,221 |   |   | 207 |   |   | 4.81 |   |
| Total                interest-bearing liabilities          |   |   | 159,417                                               |   |   | 1,821 |   |   | 4.57 |   |   | 143,700 |   |   | 1,574 |   |   | 4.38 |   |
| Noninterest-bearing                liabilities             |   |   | 11,162                                                |   |   |   |   |   |   |   |   | 11,785 |   |   |   |   |   |   |   |
| Stockholders'                equity                        |   |   | 13,036                                                |   |   |   |   |   |   |   |   | 11,275 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders' equity  |   | $      | 183,615                                               |   |   |   |   |   |   |   | $ | 166,760 |   |   |   |   |   |   |   |
| Interest                rate spread                        |   |   |                                                  |   |   |   |   |   | 2.83 | % |   |   |   |   |   |   |   | 3.32 | % |
| Net                interest income and net interest Margin |   |   |                                                       |   | $ | 1,495 |   |   | 3.34 | % |   |  |   | $ | 1,543 |   |   | 3.81 | % |
|                                                  |   |   |
|                                                       |   |        |                                                       |
|                                                       |   |   | Nine                months ended September 30,   |   |
|                                                       |   |   | 2007                                             |   |   | 2006  |   |
|                                                       |   |   | Average                Volume                    |   |   | Interest |   |   | Yield/Cost |   |   | AverageVolume |   |   | Interest |   |   | Yield/Cost |   |
|                                                       |   |   |
| ASSETS                                                     |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                          |   | $      | 899                                                   |   | $ | 42 |   |   | 6.23 | % | $ | 860 |   | $ | 33 |   |   | 5.12 | % |
| Securities                                                 |   |   | 28,740                                                |   |   | 1,209 |   |   | 5.61 |   |   | 20,484 |   |   | 896 |   |   | 5.83 |   |
| Loans                receivable                            |   |   | 143,119                                               |   |   | 8,315 |   |   | 7.75 |   |   | 132,448 |   |   | 7,626 |   |   | 7.68 |   |
| Total                interest-earning assets               |   |   | 172,758                                               |   |   | 9,566 |   |   | 7.38 |   |   | 153,792 |   |   | 8,555 |   |   | 7.42 |   |
| Non-earning                assets                          |   |   | 4,577                                                 |   |   |   |   |   |   |   |   | 5,324 |   |   |   |   |   |   |   |
| Total                assets                                |   | $      | 177,335                                               |   |   |   |   |   |   |   | $ | 159,116 |   |   |   |   |   |   |   |
|                                                       |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS’ EQUITY  |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:               |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transactional                accounts                      |   | $      | 33,408                                                |   |   | 733 |   |   | 2.93 |   | $ | 39,987 |   |   | 947 |   |   | 3.16 |   |
| Savings                deposits                            |   |   | 11,433                                                |   |   | 362 |   |   | 4.22 |   |   | 6,491 |   |   | 172 |   |   | 3.53 |   |
| Time                deposits                               |   |   | 88,932                                                |   |   | 3,501 |   |   | 5.25 |   |   | 76,450 |   |   | 2,493 |   |   | 4.35 |   |
| Other                borrowings                            |   |   | 19,825                                                |   |   | 600 |   |   | 4.04 |   |   | 12,876 |   |   | 428 |   |   | 4.43 |   |
| Total                interest-bearing liabilities          |   |   | 153,598                                               |   |   | 5,196 |   |   | 4.51 |   |   | 135,804 |   |   | 4,040 |   |   | 3.97 |   |
| Noninterest-bearing                liabilities             |   |   | 11,034                                                |   |   |   |   |   |   |   |   | 12,380 |   |   |   |   |   |   |   |
| Stockholders'                equity                        |   |   | 12,703                                                |   |   |   |   |   |   |   |   | 10,932 |   |   |   |   |   |   |   |
| Total                liabilities and stockholders' equity  |   | $      | 177,335                                               |   |   |   |   |   |   |   | $ | 159,116 |   |   |   |   |   |   |   |
| Interest                rate spread                        |   |   |                                                  |   |   |   |   |   | 2.87 | % |   |   |   |   |   |   |   | 3.45 |   |
| Net                interest income and net interest Margin |   |   |                                                       |   | $ | 4,370 |   |   | 3.37 | % |   |  |   | $ | 4,515 |   |   | 3.91 | % |

----

**LIQUIDITY      AND CAPITAL RESOURCES**

|                                     | Bank'sSeptember                30 , 2007 | Minimum                RegulatoryRequirement |
|------------------------------------------|------------------------------------------|----------------------------------------------|
| Leverage                ratio            | 7.4%                                     | 4.0%                                         |
| Risk                weighted ratio  | 10.9%                               | 8.0%                                    |

----

**ASSET      QUALITY**

----

|                                                                                          |  **For                the Nine Months                EndedSeptember 30,**  | **For                the                Twelve****Months Ended December,                31**  |
|-----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
|                                                                                          | **2007 **                                                                  | ** 2006**                                                                                | ** 2006**  |
|                                                                                          |                                                                                 |                                                                                               |   |
| End                of period loans (net of deferred fees)                                     | $                146,549                                                             | $                143,749                                                                           | $                137,800 |
| End                of period allowance for loan losses                                        | $                1,327                                                               | $                1,375                                                                             | $                1,571 |
| %age                of allowance for loan losses to total loans                               | 0.91%                                                                                | 0.96%                                                                                              | 1.14% |
| Average                loans for the period                                                   | $                143,118                                                             | $                140,591                                                                           | $                134,397 |
| Net                charge-offs as a percentage of average loans for                the period | .23%                                                                                 | (0.03)%                                                                                            | (0.09)% |
| Nonperforming                assets                                                           |                                                                                 |                                                                                               |   |
| Nonaccrual                loans                                                               | $                3,134                                                               | $                1,507                                                                             | $                1,707 |
| Loans                past due 90 days or more and still accruing                              | $                4                                                                   | $                ----0----                                                                         | $                158 |
| Other                real estate                                                              | $                1,120                                                               | $                ----0----                                                                         | $                ----0---- |
|                                                                                          | $                4,258                                                               | $                1,507                                                                             | $                1,865 |
| Nonperforming                assets to period end loans                                       | 2.91%                                                                                | 1.05%                                                                                              | 1.35% |
| Nonperforming                assets to period end total assets                                | 2.28%                                                                                | 0.89%                                                                                              | 1.11% |

**Item      3: Controls and Procedures**

----

**PART      II. OTHER INFORMATION**

**Item      1. Legal Proceedings**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

**Item      3. Defaults Upon Senior Securities**

**Item      4. Submission of Matters to a Vote of Shareholders**

**Item      5. Other Information**

**Item      6. Exhibits**

|   |   |
|--------|--------|

| (a)                Exhibits |                                                                                                                                                                                                |
|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                                  | Certification                of Principal Executive Officer                                                                                                                                         |
| 31.2                                  | Certification                of Principal Financial Officer                                                                                                                                         |
| 32.1                                  | Certification                of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as                Adopted                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  |
| 32.2                                  | Certification                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as                Adopted                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  |

----

| Date: November 14, 2007  | /s/ Charles S.              Conoley                              |
|-------------------------------|-----------------------------------------------------------------------|
|                          | Charles S. Conoley                                                    |
|                          | President and Chief Executive              Officer               |
|                          |                                                                  |
| Date: November 14, 2007  | /s/ Kathleen M.              Jepson                              |
|                          | Kathleen M. Jepson                                               |
|                          | Senior Vice President              and Chief Financial Officer   |
|                          | (Principal Financial and Accounting              Officer)   |

----