**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**Form      10-QSB**

| x | Quarterly                report under section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 For                the quarterly period ended March 31, 2007  |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| o | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For                the transition period from ______ to                ______                       |

| Florida                                                                                     |   | 65-0840545                                                     |
|---------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|
| (State                or Other Jurisdiction ofIncorporation                or Organization) |   | (IRS                EmployerIdentification                No.) |

----

| Part                I. Financial Information                                                      |                                                                                                   |
|---------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
|                                                                                              |                                                                                                   |   |
| Item                1. Financial Statements (unaudited)                                           |                                                                                                   |
|                                                                                              |                                                                                                   |   |
|                                                                                              | Consolidated                Balance Sheets as of March 31, 2007 and December 31, 2006                  | 3 |
|                                                                                              |                                                                                                   |   |
|                                                                                              | Consolidated                Statements of Income for the Three Months Ended                            |   |
|                                                                                              | March                31, 2007 and 2006                                                                 | 4 |
|                                                                                              |                                                                                                   |   |
|                                                                                              | Consolidated                Statements of Cash Flows for the Three Months Ended                        |   |
|                                                                                              | March                31, 2007 and 2006                                                                 | 5 |
|                                                                                              |                                                                                                   |   |
|                                                                                              | Consolidated                Statements of Changes in Shareholders' Equity for the                Three |   |
|                                                                                              | Months                Ended March 31, 2007 and 2006                                                    | 6 |
|                                                                                              |                                                                                                   |   |
|                                                                                              | Notes                to Consolidated Financial Statements                                              | 7-10 |
|                                                                                              |                                                                                                   |   |
| Item                2. Management's Discussion and Analysis or Plan of                Operations  | 11-13                                                                                                  |
|                                                                                              |                                                                                                   |   |
| Item                3. Controls and Procedures                                                    | 14                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Part                II. Other Information                                                         |                                                                                                   |
|                                                                                              |                                                                                                   |
| Item                1. Legal Proceedings                                                          | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Item                2. Unregistered Sales of Equity Securities and Use of                Proceeds | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Item                3. Defaults Upon Senior Securities                                            | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Item                4. Submission of Matters to a Vote of Security Holders                        | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Item                5. Other Information                                                          | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |
| Item                6. Exhibits                                                                   | 15                                                                                                     |
|                                                                                              |                                                                                                   |   |

----

**PART      I - FINANCIAL INFORMATION**

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

**HORIZON      BANCORPORATION, INC.**

|                                                                                                                                                                                                                          |   | March                31, 2007(Unaudited) |        | December                31,2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-------------|---------------------------------|--------|
| **ASSETS**                                                                                                                                                                                                                    |   |                                     |        |                            |   |
|    Cash and cash equivalents                                                                                                                                                                    |   |                                     |        |                            |   |
|         Cash and due from banks                                                                                                                                   |   | $                                        | 2,168,475   |                            | $      | 4,672,956 |   |
|         Federal funds sold                                                                                                                                                  |   |                                     | 1,367,000   |                            |   | -----0---- |   |
|             Total cash and cash equivalents                                                                                                   |   |                                     | 3,535,475   |                            |   | 4,672,956 |   |
|    Securities:                                                                                                                                                                                                 |   |                                     |        |                            |   |   |   |
|      Held to maturity, at amortized cost                                                                                                                                    |   |                                     | 12,383,865  |                            |   | 6,539,698 |   |
|      Available-for-sale at fair value                                                                                                                                                 |   |                                     | 16,003,163  |                            |   | 17,018,928 |   |
|    Loans, net                                                                                                                                                                                             |   |                                     | 138,333,442 |                            |   | 136,229,170 |   |
|    Premises and equipment, net                                                                                                                                                                  |   |                                     | 2,098,905   |                            |   | 2,116,015 |   |
|    Other assets                                                                                                                                                                                           |   |                                     | 1,840,560   |                            |   | 1,696,568 |   |
|                                                                                                                                                                                                                          |   |                                     |        |                            |   |   |   |
|                                                                                                                                                                                                                          |   | $                                        | 174,195,410 |                            | $      | 168,273,335 |   |
|                                                                                                                                                                                                                          |   |                                     |        |                            |   |   |   |
| **LIABILITIES AND SHAREHOLDERS' EQUITY**                                                                                                                                                                       |   |                                     |        |                            |   |   |   |
| Liabilities                                                                                                                                                                                                                   |   |                                     |        |                            |   |   |   |
|    Deposits                                                                                                                                                                                                    |   |                                     |        |                            |   |   |   |
|         Noninterest-bearing                                                                                                                                                           |   | $                                        | 12,646,541  |                            | $      | 10,384,537 |   |
|         Interest-bearing                                                                                                                                                              |   |                                     | 135,179,190 |                            |   | 129,146,962 |   |
|             Total deposits                                                                                                                                   |   |                                     | 147,825,731 |                            |   | 139,531,499 |   |
|    Federal Home Loan Bank borrowings                                                                                                                                                       |   |                                     | 13,000,000  |                            |   | 15,500,000 |   |
|    Dividends Payable                                                                                                                                                                                      |   |                                     | -----0----- |                            |   | 180,815 |   |
|    Other liabilities                                                                                                                                                                                      |   |                                     | 459,684     |                            |   | 491,404 |   |
|          Total liabilities                                                                                                                                                  |   |                                     | 161,285,415 |                            |   | 155,703,718 |   |
|                                                                                                                                                                                                                          |   |                                     |        |                            |   |   |   |
|                                                                                                                                                                                                                          |   |                                     |        |                            |   |   |   |
| Shareholders' equity                                                                                                                                                                                                     |   |                                     |        |                            |   |   |   |
|    Preferred stock,  $.01 par value 1,000,000 shares authorized; none    outstanding                                                          |   |                                     | -           |                            |   | - |   |
|    Common stock, $.01 par value 25,000,000 shares authorized; 1,808,219                                                                                           |   |                                     |        |                            |   |   |   |
|       Issued and outstanding at March 31, 2007 and 1,808,152 issued and outstanding at  December 31, 2006  |   |                                     | 18,082      |                            |   | 18,082 |   |
|    Additional paid in capital                                                                                                                                                                   |   |                                     | 10,233,974  |                            |   | 10,223,103 |   |
|    Retained earnings                                                                                                                                                                                      |   |                                     | 2,769,675   |                            |   | 2,468,651 |   |
|    Accumulated other comprehensive income (loss), net of tax                                                                                                                |   |                                     | (111,736    | )                               |   | (140,219 | ) |
|        Total shareholders' equity                                                                                                                                                |   |                                     | 12,909,995  |                            |   | 12,569,617 |   |
|                                                                                                                                                                                                                          |   |                                     |        |                            |   |   |   |
|                                                                                                                                                                                                                          |   | $                                        | 174,195,410 |                            | $      | 168,273,335 |   |

----

**HORIZON      BANCORPORATION, INC.**

|                                                                                       |   | For the              three months ended March 31,  |      |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|-----------|
|                                                                                       |   | 2007                                                    |      | 2006 |   |
| **Interest income**                                                                   |   |                                                    |      |   |   |
|    Interest and  fees on loans                     |   | $                                                       | 2,687,158 |   | $ | 2,317,820 |   |
|    Interest on investment securities                         |   |                                                    | 356,873   |   |   | 287,804 |   |
|    Interest on federal funds                            |   |                                                    | 30,752    |   |   | 19,131 |   |
|          Total interest income      |   |                                                    | 3,074,783 |   |   | 2,624,755 |   |
| **Interest expense**                                                                  |   |                                                    |      |   |   |   |   |
|    Interest on deposits                                           |   |                                                    | 1,517,062 |   |   | 1,044,619 |   |
|    Interest on borrowings                                         |   |                                                    | 132,663   |   |   | 88,856 |   |
|        Total interest expense                 |   |                                                    | 1,649,725 |   |   | 1,133,475 |   |
| **Net interest income**                                                          |   |                                                    | 1,425,058 |   |   | 1,491,280 |   |
| Provision for loan losses                                                   |   |                                                    | 30,000    |   |   | 30,000 |   |
| **Net interest income after provision for loan losses** |   |                                                    | 1,395,058 |   |   | 1,461,280 |   |
| Noninterest income                                                                    |   |                                                    |      |   |   |   |   |
|    Gain/(loss) on sales of loans                        |   |                                                    | ----0---- |   |   | ----0---- |   |
|    Gain/(loss) on sale of foreclosed assts    |   |                                                    | (2,591    | ) |   | ----0---- |   |
|    Gain on sale of assets                               |   |                                                    | (271      | ) |   | 4,000 |   |
|    Service charges on deposit accounts                  |   |                                                    | 23,361    |   |   | 27,812 |   |
|    Miscellaneous, other                                                |   |                                                    | 21,317    |   |   | 23,663 |   |
|        Total noninterest income               |   |                                                    | 41,816    |   |   | 55,475 |   |
| Noninterest expense                                                                   |   |                                                    |      |   |   |   |   |
|    Compensation and employee benefits                        |   |                                                    | 516,702   |   |   | 429,101 |   |
|    Building & equipment expense                          |   |                                                    | 163,991   |   |   | 162,440 |   |
|    Professional fees                                                   |   |                                                    | 110,781   |   |   | 51,323 |   |
|    Data processing & software expense               |   |                                                    | 92,115    |   |   | 96,678 |   |
|    Other noninterest expense                                      |   |                                                    | 157,940   |   |   | 122,607 |   |
|        Total noninterest expense              |   |                                                    | 1,041,529 |   |   | 862,149 |   |
| **Income before income taxes **                                        |   |                                                    | 395,345   |   |   | 654,606 |   |
| Income tax expense                                                          |   |                                                    | 94,321    |   |   | 251,883 |   |
| **Net Income**                                                                        |   | $                                                       | 301,024   |   | $ | 402,723 |   |
| Basic earnings per share                                          |   | $                                                       | 0.17      |   | $ | 0.22 |   |
| Diluted earnings per share                                             |   |                                                    | 0.16      |   |   | 0.21 |   |

----

**HORIZON      BANCORPORATION, INC.**

|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|------------|------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                    |   | For                  the three months ended March 31, 2007 |       | For                  the three months ended March 31, 2006 |   |
| **Cash flows from operating activities**                                                                                                                                                                            |   |                                                       |       |                                                       |   |
|        Net cash provided by operating activities                                                                                                                            |   | $                                                          | 8,047      |                                                       | $      | 631,320 |   |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
| **Cash flows from investing activities**                                                                                                                                                                            |   |                                                       |       |                                                       |   |   |   |
|    Proceeds from sale of foreclosed assets                                                                                                                                                      |   |                                                       | 12,500     |                                                       |   |   |   |
|    Proceeds from sale of loans                                                                                                                                                                       |   |                                                       | ----0----  |                                                       |   | ----0---- |   |
|    Purchase of securities held to maturity                                                                                                                                                      |   |                                                       |       |                                                       |   |   |   |
|    Purchase of securities available for sale                                                                                                                                                    |   |                                                       | (5,844,643 | )                                                          |   | (846,738 | ) |
|    Proceeds from maturities and principal repayments                                                                                                                                            |   |                                                       | (153,644   | )                                                          |   | ----0---- |   |
|       of securities available for sale                                                                                                                                                |   |                                                       | 1,100,391  |                                                       |   | 222,226 |   |
|    Sale/(Purchase) of Federal Home Loan Bank Stock                                                                                                                                         |   |                                                       | 112,500    |                                                       |   | (22,500 | ) |
|    Loan originations, net                                                                                                                                                                                      |   |                                                       | (2,134,272 | )                                                          |   | (5,273,637 | ) |
|    Property and equipment expenditures, net                                                                                                                                                          |   |                                                       | (33,396    | )                                                          |   | (82,862 | ) |
|        Net cash provided (used) by investing activities                                                                                                                |   |                                                       | (6,940,564 | )                                                          |   | (6,003,511 | ) |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
| **Cash flows from financing activities**                                                                                                                                                                            |   |                                                       |       |                                                       |   |   |   |
|    Increase in deposits                                                                                                                                                                                        |   |                                                       | 8,294,232  |                                                       |   | 2,041,798 |   |
|    Increase in Federal Home Loan Bank borrowings                        |   |                                                       |       |                                                       |   | 2,000,000 |   |
|    Pay down of Federal Home Loan Bank borrowings                                                                                                                                      |   |                                                       | (2,500,000 | )                                                          |   | -----0----- |   |
|    Proceeds from exercise of stock options/warrants                                                                                                                                             |   |                                                       | 804        |                                                       |   | 38,012 |   |
|        Net cash provided by financing activities                                                                                                                            |   |                                                       | 5,795,036  |                                                       |   | 4,079,810 |   |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
| Net change in cash and cash equivalents                                                                                                                                                                   |   |                                                       | (1,137,481 | )                                                          |   | (1,292,381 | ) |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
| Cash and cash equivalents at beginning of period                                                                                                                                                     |   |                                                       | 4,672,956  |                                                       |   | 7,174,308 |   |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
| **Cash and cash equivalents at end of period**                                                                                                                                                       |   | $                                                          | 3,535,475  |                                                       | $      | 5,881,927 |   |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |
|                                                                                                                                                                                                                                    |   |                                                       |       |                                                       |   |   |   |

----

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

|                                                                                                                                 |   | Common                    Stock |      | Paid                    in   |   | Retained |   | AccumulatedOtherComprehensive |       |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|------------------------------|--------|----------|--------|-------------------------------|------------|--------|--------|
|                                                                                                                                 |   | Shares                          |      | Par                    Value |   | Capital  |   | Earnings                      |       | Income |   | Total |   |
| Balance,                    December 31, 2005                                                                                        |   |                            | 1,797,619 |                         | $      | 17,976   |   | $                             | 10,150,543 |   | $      | 803,895 |   | $ | (85,838 | ) | $ | 10,886,576 |   |
| Comprehensive                    Income:Net                    income, three-month period ended March 31, 2006                       |   |                            |      |                         |   |     |   |                          |       |   |   | 402,723 |   |   | -                    - |   |   | 402,723 |   |
| Net                    unrealized loss on securities, three-month period ended March                    31,                    2006  |   |                            |      |                         |   |     |   |                          |       |   |   | -                    - |   |   | (93,303 | ) |   | (93,303 | ) |
| Total                    comprehensive income                                                                                        |   |                            |      |                         |   |     |   |                          |       |   |   | 402,723 |   |   | (93,303 | ) |   | 309,420 |   |
| Exercise                    of warrants/options                                                                                      |   |                            | 5,993     |                         |   | 60       |   |                          | 37,952     |   |   |   |   |   |   |   |   | 38,012 |   |
| Balance,                    March 31, 2006                                                                                           |   |                            | 1,803,612 |                         | $      | 18,036   |   | $                             | 10,188,495 |   | $      | 1,206,618 |   | $ | (179,141 | ) | $ | 11,234,008 |   |
| --------------------------------------------                                                                                         |   |                            |           |                         |   |          |   |                          |            |   |   |  |   |   |  |   |   |  |   |
| Balance,                    December 31, 2006                                                                                        |   |                            | 1,808,152 |                         | $      | 18,082   |   | $                             | 10,223,103 |   | $      | 2,468,651 |   | $ | (140,219 | ) | $ | 12,569,617 |   |
| Comprehensive                    Income:Net                    income, three-month period ended March 31, 2007                       |   |                            |      |                         |   |     |   |                          |       |   |   | 301,024 |   |   | -                    - |   |   | 301,024 |   |
| Net                    unrealized loss on securities, three-month period ended March                    31,                    2007= |   |                            |      |                         |   |     |   |                          |       |   |   | -                    - |   |   | 28,483 |   |   | 28,483 |   |
| Total                    comprehensive income                                                                                        |   |                            |      |                         |   |     |   |                          |       |   |   | 301,024 |   |   | 28,483 |   |   | 329,507 |   |
| Exercise                    of warrants/options                                                                                      |   |                            | 67        |                         |   | 0        |   |                          | 804        |   |   |   |   |   |   |   |   | 804 |   |
| Stock                    based compensation                                                                                          |   |                            |           |                         |   |     |   |                          | 10,067     |   |   |   |   |   |   |   |   | 10,067 |   |
| Balance,                    March 31, 2007                                                                                           |   |                            | 1,808,219 |                         | $      | 18,082   |   | $                             | 10,233,974 |   | $      | 2,769,675 |   | $ | (111,736 | ) | $ | 12,909,995 |   |

----

**NOTE      1 - BASIS OF PRESENTATION**

**NOTE      2 - SUMMARY OF ORGANIZATION**

**NOTE      3 - LOANS RECEIVABLE**

|                                                 |   | March                31,2007 |        | December                31,2006 |   |
|------------------------------------------------------|--------|------------------------------|-------------|---------------------------------|--------|
| Real estate - commercial              |   | $                            | 59,993,439  |                            | $      | 60,270,972 |   |
| Real estate - construction            |   |                         | 5,123,470   |                            |   | 4,060,769 |   |
| Real estate - residential        |   |                         | 41,409,668  |                            |   | 41,016,077 |   |
| Commercial                                           |   |                         | 29,996,325  |                            |   | 28,539,544 |   |
| Consumer                                        |   |                         | 3,309,617   |                            |   | 3,912,652 |   |
| Loans, gross                                    |   |                         | 139,832,519 |                            |   | 137,800,014 |   |
| Deduct allowance for loan losses |   |                         | (1,499,077  | )                               |   | (1,570,844 | ) |
|                                                 |   |                         |        |                            |   |   |   |
|       Loans, net  |   | $                            | 138,333,442 |                            | $      | 136,229,170 |   |

----

**HORIZON      BANCORPORATION, INC.**

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

|                                          |   | 2007   |      | 2006   |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|
|                                          |   |   |      |   |   |
| Balance                at beginning of period |   | $      | 1,570,844 |   | $      | 1,273,524 |   |
| Provision                for loan losses      |   |   | 30,000    |   |   | 30,000 |   |
| Loans                charged-off              |   |   | (122,573  | )      |   | (38,838 | ) |
| Recoveries                                    |   |   | 20,806    |   |   | ----0---- |   |
|                                          |   |   |      |   |   |   |   |
| Balance                at end of period       |   | $      | 1,499,077 |   | $      | 1,264,686 |   |

**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 |   | $                            | 7,156,395 |                           | $      | (48,942                   | )      | $ | 478,145 |   | $ | (2,800 | ) | $ | 7,634,540 |   | $ | (51,742 | ) |
|      Total              |   | $                            | 7,156,395 |                           | $      | (48,942                   | )      | $ | 478,145 |   | $ | (2,800 | ) | $ | 7,634,540 |   | $ | (51,742 | ) |

----

**NOTE      5 - SECURITIES AVAILABLE FOR SALE**

|                                                        |   | Less                Than     |          | Over                           |   |                      |   |
|-------------------------------------------------------------|--------|------------------------------|---------------|--------------------------------|--------|---------------------------|--------|
|                                                        |   | Twelve                Months |          | Twelve                Months   |   | Total                     |   |
|                                                        |   | FairValue                    |          | Unrealized                Loss |   | Fair                Value |   | Unrealized                Loss |   | Fair                Value |   | Unrealized                Loss |   |
| Collateralized                Mortgage obligations          |   | $                            | -------0----- |                           | $      | ------0----               |   | $ | 3,395,694 |   | $ | (111,544 | ) | $ | 3,395,694 |   | $ | (111,544 | ) |
| Mortgage                backed    securities |   |                         | 1,315,675     |                           |   | (9,888                    | )      |   | 286,236 |   |   | (10,443 | ) |   | 1,601,911 |   |   | (20,331 | ) |
| U.S.                Agency securities                       |   |                         | ------0-----  |                           |   | ------0-----              |   |   | 2,065,578 |   |   | (44,422 | ) |   | 2,065,578 |   |   | (44,422 | ) |
| Other                securities                             |   |                         | 993,680       |                           |   | (6,320                    | )      |   | 503,030 |   |   | (5,517 | ) |   | 1,496,710 |   |   | (11,837 | ) |
|      Total                         |   | $                            | 2,309,355     |                           | $      | (16,208                   | )      | $ | 6,250,538 |   | $ | (171,926 | ) | $ | 8,559,893 |   | $ | (188,134 | ) |

**NOTE      6 - EARNINGS PER SHARE**

|                                                                                             |   | Three                Months Ended March 31, 2007 |         | Three                Months Ended March 31, 2006 |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------------|--------------------------------------------------|--------|
| Basic earnings per share                                                          |   |                                             |         |                                             |   |
|   Net income applicable to common stock                  |   | $                                                | 301,024      |                                             | $      | 402,723 |   |
|                                                                                             |   |                                             |         |                                             |   |   |   |
|   Weighted average shares outstanding                              |   |                                             | 1,808,161    |                                             |   | 1,801,246 |   |
|                                                                                             |   |                                             |    |                                             |   |    |   |
| Basic earnings per share                                                          |   | $                                                | 0..17        |                                             | $      | 0..22 |   |
|                                                                                             |   |                                             |         |                                             |   |   |   |
| Diluted earnings per share                                                        |   |                                             |    |                                             |   |    |   |
|   Net income applicable to common stock                  |   | $                                                | 301,024      |                                             | $      | 402,723 |   |
|                                                                                             |   |                                             |         |                                             |   |   |   |
| Weighted average shares outstanding                                          |   |                                             | 1,808,161    |                                             |   | 1,801,246 |   |
| Dilutive effect of assumed exercise of stock options/warrants |   |                                             | 113,010      |                                             |   | 107,691 |   |
| Diluted average shares outstanding                                                |   |                                             | 1,921,171    |                                             |   | 1,908,937 |   |
|                                                                                             |   |                                             |    |                                             |   |    |   |
| Diluted earnings per share                                                        |   | $                                                | 0.16         |                                             | $      | 0.21 |   |

----

**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 or Plan of      Operations**

**Forward      Looking Statements**

**Overview**

**Earnings      Performance**

**Results      of Operations**

----

|                                                                                  |   | Three                months ended March 31, |    |
|---------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                                  |   | 2007                                        |    | 2006 |   |
|                                                                                  |   | AverageVolume                               |    | Interest |   | Yield/Cost |   | AverageVolume |   | Interest |   | Yield/Cost |   |
|                                                                                  |   |                                        |    |
| ASSETS                                                                                |   |                                        |    |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                         |   |                                        |    |   |   |   |   |   |   |   |   |   |   |
|   Federal funds sold                                              |   | $                                           | 2,157   |   | $ | 31 |   |   | 5.75 | % | $ | 1,009 |   | $ | 19 |   |   | 4.38 | % |
|   Securities                                                                |   |                                        | 25,372  |   |   | 357 |   |   | 5.63 |   |   | 19,821 |   |   | 288 |   |   | 5.81 |   |
|   Loans receivable                                                     |   |                                        | 138,983 |   |   | 2,687 |   |   | 7.73 |   |   | 126,237 |   |   | 2,317 |   |   | 7.34 |   |
|     Total interest-earning assets                       |   | $                                           | 166,512 |   |   | 3,075 |   |   | 7.39 |   | $ | 147,067 |   |   | 2,624 |   |   | 7.14 |   |
|                                                                                  |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                      |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                    |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Transactional accounts                                               |   | $                                           | 37,542  |   |   | 326 |   |   | 3.47 |   | $ | 43,628 |   |   | 307 |   |   | 2.81 |   |
|   Savings deposits                                                     |   |                                        | 10,135  |   |   | 103 |   |   | 4.07 |   |   | 4,968 |   |   | 29 |   |   | 2.33 |   |
|   Time deposits                                                        |   |                                        | 87,039  |   |   | 1,088 |   |   | 5.00 |   |   | 71,611 |   |   | 708 |   |   | 3.95 |   |
|   Other borrowings                                                     |   |                                        | 13,239  |   |   | 133 |   |   | 4.02 |   |   | 9,461 |   |   | 89 |   |   | 3.76 |   |
|     Total interest-bearing liabilities                  |   | $                                           | 147,955 |   |   | 1,650 |   |   | 4.46 |   | $ | 129,668 |   |   | 1,133 |   |   | 3.50 |   |
| Interest rate spread                                                        |   |                                        |    |   |   |   |   |   | 2.93 | % |   |   |   |   |   |   |   | 3.64 | % |
| Net interest income and net interest   Margin |   |                                        |         |   | $ | 1,425 |   |   | 3.42 | % |   |  |   | $ | 1,491 |   |   | 4.06 | % |

----

**Liquidity      and Capital Resources**

|                                                        |   | Bank'sMarch                  31, 2007 |   | Minimum                  RegulatoryRequirement |   |
|-------------------------------------------------------------|--------|---------------------------------------|--------|------------------------------------------------|--------|
| Leverage                  ratio                             |   |                                  | 7.4    | %                                              |   | 4.0 | % |
| Total                  Risk                  weighted ratio |   |                                  | 10.9   | %                                              |   | 8.0 | % |

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**Item      3: Controls and Procedures**

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**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 Security Holders**

**Item      5. Other Information**

**Item      6. Exhibits**

| 31.1 | Certification                of Principal Executive Officer                                                                                                                                                       |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification                of Principal Financial Officer                                                                                                                                                       |
| 32.1 | Certification                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 the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002 |

----

**SIGNATURES**

|   |                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                         |
|   |                                                                                                                         |
|   |                                                                                                                         |
|   | /s/                Charles S. Conoley                                                                                        |
|   | Charles                S. Conoley                                                                                            |
|   | President                and Chief Executive Officer                                                                         |
|   | (Principal                Executive Officer)                                                                                 |
|   |                                                                                                                         |
|   |                                                                                                                         |
|   | /s/                Kathleen M. Jepson                                                                                        |
|   | Kathleen                M. Jepson                                                                                            |
|   | Senior                Vice President and Chief Financial Officer (Principal                Financial and Accounting Officer) |