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First Ottawa Bancshares, Inc. 10-K

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|                                                                                         |   |   |
|----------------------------------------------------------------------------------------------|--------|--------|
| SELECTED CONSOLIDATED FINANCIAL INFORMATION                                                  |   | 1      |
|                                                                                         |   |   |
| MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |   | 2      |
|                                                                                         |   |   |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                      |   | 14     |
|                                                                                         |   |   |
| REPORT OF PREDECESSOR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                          |   | 15     |
|                                                                                         |   |   |
| FINANCIAL STATEMENTS                                                                         |   |   |
|                                                                                         |   |   |
| CONSOLIDATED BALANCE SHEETS                                                                  |   | 16     |
|                                                                                         |   |   |
| CONSOLIDATED STATEMENTS OF OPERATIONS                                                        |   | 17     |
|                                                                                         |   |   |
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY                                        |   | 18     |
|                                                                                         |   |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                        |   | 19     |
|                                                                                         |   |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                   |   | 20     |

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SELECTED CONSOLIDATED FINANCIAL INFORMATION

|                                                          |   | Year Ended December 31, |    |
|---------------------------------------------------------------|--------|-------------------------|---------|
|                                                          |   | 2010                    |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Statement of Income Data:                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest and dividend income                            |   | $                       | 11,210  |   |   | $ | 12,372 |   |   | $ | 13,961 |   |   | $ | 15,231 |   |   | $ | 15,274 |   |
| Total interest expense                                        |   |                    | 2,262   |   |   |   | 3,237 |   |   |   | 4,807 |   |   |   | 6,282 |   |   |   | 6,361 |   |
| Net interest income                                           |   |                    | 8,948   |   |   |   | 9,135 |   |   |   | 9,154 |   |   |   | 8,949 |   |   |   | 8,913 |   |
| Provision for loan losses                                     |   |                    | 5,740   |   |   |   | 1,330 |   |   |   | 170 |   |   |   | 180 |   |   |   | 180 |   |
| Noninterest income                                            |   |                    | 2,796   |   |   |   | 3,269 |   |   |   | 1,044 |   |   |   | 2,349 |   |   |   | 2,430 |   |
| Noninterest expense                                           |   |                    | 9,932   |   |   |   | 8,761 |   |   |   | 7,740 |   |   |   | 7,934 |   |   |   | 8,075 |   |
| Income (loss) before income taxes                             |   |                    | (3,928  | ) |   |   | 2,313 |   |   |   | 2,288 |   |   |   | 3,184 |   |   |   | 3,088 |   |
| Provision (benefit) for income taxes                          |   |                    | (1,826  | ) |   |   | 479 |   |   |   | 435 |   |   |   | 769 |   |   |   | 753 |   |
|                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                             |   | $                       | (2,102  | ) |   | $ | 1,834 |   |   | $ | 1,853 |   |   | $ | 2,415 |   |   | $ | 2,335 |   |
|                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per Share Data:                                               |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) – basic                               |   | $                       | (3.25   | ) |   | $ | 2.84 |   |   | $ | 2.87 |   |   | $ | 3.72 |   |   | $ | 3.59 |   |
| Net income (loss) – diluted                             |   |                    | (3.25   | ) |   |   | 2.83 |   |   |   | 2.86 |   |   |   | 3.71 |   |   |   | 3.59 |   |
| Cash dividends declared                                       |   |                    | .80     |   |   |   | 1.54 |   |   |   | 3.00 |   |   |   | 3.00 |   |   |   | 3.00 |   |
| Book value at end of year (1)                                 |   |                    | 36.29   |   |   |   | 40.14 |   |   |   | 38.60 |   |   |   | 38.72 |   |   |   | 38.08 |   |
|                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected Financial Ratios:                                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average assets (1)                                  |   |                    | (.73    | )% |   |   | .64 | % |   |   | .67 | % |   |   | .87 | % |   |   | .82 | % |
| Return on average equity (1)                                  |   |                    | (8.19   | ) |   |   | 7.18 |   |   |   | 7.32 |   |   |   | 9.58 |   |   |   | 9.43 |   |
| Dividend payout ratio                                         |   |                    | N/A     |   |   |   | 54.24 |   |   |   | 104.40 |   |   |   | 80.65 |   |   |   | 83.57 |   |
| Average equity to average assets (1)                          |   |                    | 8.86    |   |   |   | 8.96 |   |   |   | 9.11 |   |   |   | 9.09 |   |   |   | 8.71 |   |
| Net interest margin (tax equivalent)                          |   |                    | 3.90    |   |   |   | 3.88 |   |   |   | 3.91 |   |   |   | 3.78 |   |   |   | 3.63 |   |
| Allowance for loan losses to total loans at the end of period |   |                    | 2.39    |   |   |   | 1.56 |   |   |   | 1.01 |   |   |   | .96 |   |   |   | .91 |   |
| Nonperforming loans to total loans at the end of period (2)   |   |                    | 6.28    |   |   |   | 6.29 |   |   |   | 1.92 |   |   |   | .76 |   |   |   | .42 |   |
| Net loans charged off to average total loans                  |   |                    | 3.31    |   |   |   | .41 |   |   |   | .09 |   |   |   | .03 |   |   |   | .04 |   |
|                                                          |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance Sheet Data:                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                  |   | $                       | 285,795 |   |   | $ | 283,701 |   |   | $ | 275,181 |   |   | $ | 269,231 |   |   | $ | 278,053 |   |
| Total earning assets                                          |   |                    | 253,925 |   |   |   | 243,366 |   |   |   | 236,287 |   |   |   | 243,718 |   |   |   | 253,259 |   |
| Average assets                                                |   |                    | 289,496 |   |   |   | 285,055 |   |   |   | 275,772 |   |   |   | 275,777 |   |   |   | 282,729 |   |
| Gross loans, including loans held for sale                    |   |                    | 141,675 |   |   |   | 149,485 |   |   |   | 159,592 |   |   |   | 165,805 |   |   |   | 160,938 |   |
| Allowance for loan losses                                     |   |                    | 3,363   |   |   |   | 2,334 |   |   |   | 1,612 |   |   |   | 1,588 |   |   |   | 1,463 |   |
| Total deposits                                                |   |                    | 258,595 |   |   |   | 251,229 |   |   |   | 240,730 |   |   |   | 240,377 |   |   |   | 250,341 |   |
| Shareholders’ equity                                    |   |                    | 22,967  |   |   |   | 25,978 |   |   |   | 24,669 |   |   |   | 24,606 |   |   |   | 23,509 |   |

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| (1) | Excludes unrealized gain (loss) on securities available for sale. |
|-----|-------------------------------------------------------------------|

| (2) | Includes loans 90 days past due and still accruing interest, loans on nonaccrual, and/or loans considered to be troubled debt restructurings that are not performing under the modified terms of the loan agreement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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|                                                  |   |  2010 - 2009   |    |   | 2009 – 2008  |   |
|-------------------------------------------------------|--------|---------------------|---------|--------|-------------------------|--------|
|                                                  |   | Increase (Decrease) |    |   | Increase (Decrease)     |   |
|                                                  |   |                |    |   | Change                  |   |   | Change |   |   |   |   |   | Change |   |   | Change |   |
|                                                  |   | Total               |    |   | Due to                  |   |   | Due to |   |   | Total |   |   | Due to |   |   | Due to |   |
| INTEREST INCOME                                       |   | Change              |    |   | Volume                  |   |   | Rate |   |   | Change |   |   | Volume |   |   | Rate |   |
|                                                  |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                 |   | $                   | (532    | )      |                    | $      | (399 | ) |   | $ | (133 | ) |   | $ | (1,700 | ) |   | $ | (777 | ) |   | $ | (923 | ) |
| Interest bearing deposits                             |   |                | 153     |   |                    |   | 253 |   |   |   | (100 | ) |   |   | 477 |   |   |   | 590 |   |   |   | (113 | ) |
| Securities                                            |   |                | (946    | )      |                    |   | (447 | ) |   |   | (499 | ) |   |   | (162 | ) |   |   | (6 | ) |   |   | (156 | ) |
| Federal funds sold                                    |   |                | (2      | )      |                    |   | — |   |   |   | (2 | ) |   |   | (201 | ) |   |   | (18 | ) |   |   | (183 | ) |
| Total interest income                                 |   |                | (1,327  | )      |                    |   | (593 | ) |   |   | (734 | ) |   |   | (1,586 | ) |   |   | (211 | ) |   |   | (1,375 | ) |
|                                                  |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                      |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and money market                                  |   |                | (161    | )      |                    |   | 14 |   |   |   | (175 | ) |   |   | (617 | ) |   |   | 74 |   |   |   | (691 | ) |
| Savings                                               |   |                | (30     | )      |                    |   | 4 |   |   |   | (34 | ) |   |   | (34 | ) |   |   | 5 |   |   |   | (39 | ) |
| Time deposits                                         |   |                | (723    | )      |                    |   | (123 | ) |   |   | (600 | ) |   |   | (874 | ) |   |   | (336 | ) |   |   | (538 | ) |
| Repurchase agreements                                 |   |                | — |   |                    |   | — |   |   |   | — |   |   |   | (1 | ) |   |   | — |   |   |   | (1 | ) |
| Borrowings                                            |   |                | (60     | )      |                    |   | (65 | ) |   |   | 5 |   |   |   | (43 | ) |   |   | (44 | ) |   |   | 1 |   |
| Federal funds purchased                               |   |                | (1      | )      |                    |   | — |   |   |   | (1 | ) |   |   | — |   |   |   | 1 |   |   |   | (1 | ) |
| Total interest expense                                |   |                | (975    | )      |                    |   | (170 | ) |   |   | (805 | ) |   |   | (1,569 | ) |   |   | (300 | ) |   |   | (1,269 | ) |
|                                                  |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest earnings                                 |   |                | (352    | )      |                    |   | (423 | ) |   |   | 71 |   |   |   | (17 | ) |   |   | 89 |   |   |   | (106 | ) |
| Tax equivalent adjustment                             |   |                | 165     |   |                    |   | — |   |   |   | 165 |   |   |   | (2 | ) |   |   | — |   |   |   | (2 | ) |
|                                                  |   |                |    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest earnings after tax equivalent adjustment |   | $                   | (187    | )      |                    | $      | (423 | ) |   | $ | 236 |   |   | $ | (19 | ) |   | $ | 89 |   |   | $ | (108 | ) |

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|                                                                     |   |  2010  |    |   | 2009     |   |    | 2008    |   |
|--------------------------------------------------------------------------|--------|-------------|---------|--------|----------|--------|---------|---------|--------|
|                                                                     |   | Average     |    |   |     |   |    | Average |   |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| ASSETS                                                                   |   | Balance (4) |    |   | Interest |   |    | Rate    |   |   | Balance (4) |   |   | Interest |   |   | Rate |   |   | Balance (4) |   |   | Interest |   |   | Rate |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1) (3)                                                            |   | $           | 142,474 |   |     | $      | 8,748   |    |   |   | 6.14 | % |   | $ | 148,967 |   |   | $ | 9,280 |   |   |   | 6.23 | % |   | $ | 161,440 |   |   | $ | 10,980 |   |   |   | 6.80 | % |
| Interest bearing deposits                                                |   |        | 45,442  |   |     |   | 1,127   |    |   |   | 2.48 |   |   |   | 35,250 |   |   |   | 974 |   |   |   | 2.76 |   |   |   | 13,883 |   |   |   | 497 |   |   |   | 3.58 |   |
| Securities (2) (5)                                                       |   |        | 52,054  |   |     |   | 1,757   |    |   |   | 3.47 |   |   |   | 65,300 |   |   |   | 2,703 |   |   |   | 4.14 |   |   |   | 65,447 |   |   |   | 2,865 |   |   |   | 4.38 |   |
| Federal funds sold                                                       |   |        | — |   |     |   | — |    |   |   | — |   |   |   | 849 |   |   |   | 2 |   |   |   | .24 |   |   |   | 8,545 |   |   |   | 203 |   |   |   | 2.38 |   |
| Interest–earning assets                                            |   |        | 239,970 |   |     |   | 11,632  |    |   |   | 4.88 |   |   |   | 250,366 |   |   |   | 12,959 |   |   |   | 5.18 |   |   |   | 249,315 |   |   |   | 14,545 |   |   |   | 5.83 |   |
| Noninterest–earning assets (6)                                     |   |        | 49,526  |   |     |   |    |    |   |   |   |   |   |   | 34,689 |   |   |   |   |   |   |   |   |   |   |   | 26,457 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average assets                                                           |   | $           | 289,496 |   |     |   |    |    |   |   |   |   |   | $ | 285,055 |   |   |   |   |   |   |   |   |   |   | $ | 275,772 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                               |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and money market                                                     |   | $           | 123,801 |   |     | $      | 239     |    |   |   | .19 | % |   | $ | 116,570 |   |   | $ | 400 |   |   |   | .34 | % |   | $ | 95,138 |   |   | $ | 1,017 |   |   |   | 1.07 | % |
| Savings                                                                  |   |        | 26,450  |   |     |   | 50      |    |   |   | .19 |   |   |   | 24,118 |   |   |   | 80 |   |   |   | .34 |   |   |   | 22,739 |   |   |   | 115 |   |   |   | .51 |   |
| Time deposits                                                            |   |        | 75,558  |   |     |   | 1,903   |    |   |   | 2.52 |   |   |   | 80,426 |   |   |   | 2,626 |   |   |   | 3.27 |   |   |   | 90,715 |   |   |   | 3,500 |   |   |   | 3.86 |   |
| Repurchase agreements                                                    |   |        | — |   |     |   | — |    |   |   |   |   |   |   | — |   |   |   | — |   |   |   |   |   |   |   | 76 |   |   |   | 1 |   |   |   | 1.32 |   |
| Federal funds purchased                                                  |   |        | — |   |     |   | — |    |   |   |   |   |   |   | 208 |   |   |   | 1 |   |   |   | .48 |   |   |   | 29 |   |   |   | 1 |   |   |   | 3.45 |   |
| Borrowings                                                               |   |        | 2,148   |   |     |   | 70      |    |   |   | 3.26 |   |   |   | 4,148 |   |   |   | 130 |   |   |   | 3.13 |   |   |   | 5,557 |   |   |   | 173 |   |   |   | 3.11 |   |
| Interest–bearing liabilities                                       |   |        | 227,957 |   |     |   | 2,262   |    |   |   | .99 |   |   |   | 225,470 |   |   |   | 3,237 |   |   |   | 1.44 |   |   |   | 214,254 |   |   |   | 4,807 |   |   |   | 2.24 |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income (2)                                                  |   |        |    |   |     |   | 9,370   |    |   |   |   |   |   |   |   |   |   |   | 9,722 |   |   |   |   |   |   |   |   |   |   |   | 9,738 |   |   |   |   |   |
| Net yield on interest–earning assets                               |   |        |    |   |     |   |    |    |   |   | 3.90 |   |   |   |   |   |   |   |   |   |   |   | 3.88 |   |   |   |   |   |   |   |   |   |   |   | 3.91 |   |
| Interest–bearing liabilities to earning assets ratio               |   |        |    |   |     |   |    |    |   |   | 94.99 |   |   |   |   |   |   |   |   |   |   |   | 90.06 |   |   |   |   |   |   |   |   |   |   |   | 85.94 |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest–bearing liabilities                                    |   |        | 35,889  |   |     |   |    |    |   |   |   |   |   |   | 34,035 |   |   |   |   |   |   |   |   |   |   |   | 36,544 |   |   |   |   |   |   |   |   |   |
|                                                                     |   |        |    |   |     |   |    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                               |   |        | 25,650  |   |     |   |    |    |   |   |   |   |   |   | 25,550 |   |   |   |   |   |   |   |   |   |   |   | 24,974 |   |   |   |   |   |   |   |   |   |
| Average liabilities and shareholders’ equity                       |   | $           | 289,496 |   |     |   |    |    |   |   |   |   |   | $ | 285,055 |   |   |   |   |   |   |   |   |   |   | $ | 275,772 |   |   |   |   |   |   |   |   |   |
| Tax equivalent adjustment                                                |   |        |    |   |     |   | 422     |    |   |   |   |   |   |   |   |   |   |   | 587 |   |   |   |   |   |   |   |   |   |   |   | 584 |   |   |   |   |   |
| Net interest income as reported in the consolidated statements of income |   |        |    |   |     | $      | 8,948   |    |   |   |   |   |   |   |   |   |   | $ | 9,135 |   |   |   |   |   |   |   |   |   |   | $ | 9,154 |   |   |   |   |   |

| (1) | Interest income on loans includes loan origination and other fees of $349 for 2010, $292 for 2009, and $301 for 2008. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| (2) | Loan and securities income is reflected on a fully tax–equivalent basis utilizing a 34% rate for municipal securities and tax–exempt loans. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Non–accrual loans are included in average loans. |
|-----|--------------------------------------------------------|

| (4) | Average balances are derived from the average daily balances. |
|-----|---------------------------------------------------------------|

| (5) | Rate information is calculated based upon average amortized cost. |
|-----|-------------------------------------------------------------------|

----

|                |   |   | 2010 Net Income        |   |
|---------------------|--------|--------|------------------------|--------|
|                |   |   |                   |   |   |   |   |   | Percentage |   |
|                |   |   | Amount                 |   |   | Change |   |   | Change |   |
|                |   |   | (Dollars in Thousands) |   |
|                |   |   |                   |   |
|  +100 bp       |   |   | $                      | 1,460  |   |   | $ | (69 | ) |   |   | (4.5 | )% |
|   Base         |   |   |                   | 1,529  |   |   |   |   |   |   |   |   |   |
|  –100 bp |   |   |                   | 1,200  |   |   |   | (329 | ) |   |   | (21.5 | )% |

|                |   |   | 2009 Net Income        |   |
|---------------------|--------|--------|------------------------|--------|
|                |   |   |                   |   |   |   |   |   | Percentage |   |
|                |   |   | Amount                 |   |   | Change |   |   | Change |   |
|                |   |   | (Dollars in Thousands) |   |
|                |   |   |                   |   |
|  +100 bp       |   |   | $                      | 1,746  |   |   | $ | 26 |   |   |   | 1.6 | % |
|   Base         |   |   |                   | 1,720  |   |   |   |   |   |   |   |   |   |
|  –100 bp |   |   |                   | 1,338  |   |   |   | (382 | ) |   |   | (22.2 | )% |

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|                             |   |   |   |   | Less Than |   |   |              |   |   |              |   |   | After   |    |
|----------------------------------|--------|--------|--------|--------|-----------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|---------|---------|
|                             |   | Total  |   |   | 1 Year    |   |   | 1 – 3 Years |   |   | 3 – 5 Years |   |   | 5 Years |    |
|                             |   |   |   |   |      |   |   |              |   |   |              |   |   |    |    |
| Lines of credit(1)               |   | $      | 19,870 |   |      | $      | 11,800 |              |   | $      | 2,760             |   |   | $       | 1,814   |   |   | $ | 3,496 |   |
| Data processing contract payable |   |   | 631    |   |      |   | 223    |              |   |   | 408               |   |   |    | — |   |   |   | — |   |
| FHLB Advances                    |   |   | 2,000  |   |      |   | 2,000  |              |   |   | —           |   |   |    | — |   |   |   | — |   |
| Standby letters of credit(1)     |   |   | 165    |   |      |   | 153    |              |   |   | 12                |   |   |    | — |   |   |   | — |   |
|                             |   |   |   |   |      |   |   |              |   |   |              |   |   |    |    |   |   |   |   |   |
|                             |   | $      | 22,666 |   |      | $      | 14,176 |              |   | $      | 3,180             |   |   | $       | 1,814   |   |   | $ | 3,496 |   |

----

----

Report of Independent Registered Public Accounting Firm

----

|  |  |
|--|--|

----

Report of Independent Registered Public Accounting Firm

|  |  |
|--|--|

----

CONSOLIDATED BALANCE SHEETS

----

|                                                                       |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Assets                                                                     |   |   |    |   |   |   |
|                                                                       |   |   |    |   |   |   |
| Cash and due from banks                                                    |   | $      | 2,044   |   |   | $      | 1,977 |   |
| Interest-bearing deposits in financial institutions                        |   |   | 15,043  |   |   |   | 15,944 |   |
| Cash and cash equivalents                                                  |   |   | 17,087  |   |   |   | 17,921 |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Interest-bearing time deposits with financial institutions                 |   |   | 54,837  |   |   |   | 41,011 |   |
| Securities available for sale                                              |   |   | 50,749  |   |   |   | 56,373 |   |
| Loans held for sale                                                        |   |   | 895     |   |   |   | 46 |   |
| Loans, net of allowance for loan losses of $3,363 and $2,334, respectively |   |   | 137,417 |   |   |   | 147,105 |   |
| Premises and equipment, net                                                |   |   | 7,771   |   |   |   | 7,484 |   |
| Goodwill                                                                   |   |   | 2,446   |   |   |   | 2,446 |   |
| Core deposit  intangible, net                                    |   |   | 361     |   |   |   | 507 |   |
| Other real estate owned                                                    |   |   | 3,005   |   |   |   | 1,898 |   |
| Cash surrender value of life insurance                                     |   |   | 3,679   |   |   |   | 3,508 |   |
| Accrued interest receivable and other assets                               |   |   | 7,548   |   |   |   | 5,402 |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Total assets                                                               |   | $      | 285,795 |   |   | $      | 283,701 |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Liabilities and Shareholders’ Equity                                 |   |   |    |   |   |   |   |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Liabilities                                                                |   |   |    |   |   |   |   |   |
| Deposits                                                                   |   | $      | 258,595 |   |   | $      | 251,229 |   |
| Borrowings                                                                 |   |   | 2,000   |   |   |   | 4,000 |   |
|  Other liabilities                                                    |   |   | 2,233   |   |   |   | 2,494 |   |
| Total liabilities                                                          |   |   | 262,828 |   |   |   | 257,723 |   |
| Commitments and Contingencies                                              |   |   |    |   |   |   |   |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Shareholders’ Equity                                                 |   |   |    |   |   |   |   |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Preferred stock, $1 par value Authorized and unissued - 20,000 shares      |   |   | — |   |   |   | — |   |
| Common stock, $1 par value, 1,000,000 shares authorized and 753,734 issued |   |   | 754     |   |   |   | 754 |   |
| Additional paid–in capital                                           |   |   | 4,736   |   |   |   | 4,603 |   |
| Retained earnings                                                          |   |   | 24,253  |   |   |   | 26,871 |   |
| Treasury stock, at cost – 107,746 shares                             |   |   | (6,299  | )      |   |   | (6,299 | ) |
| Accumulated other comprehensive income (loss)                              |   |   | (477    | )      |   |   | 49 |   |
| Total shareholders’ equity                                           |   |   | 22,967  |   |   |   | 25,978 |   |
|                                                                       |   |   |    |   |   |   |   |   |
| Total liabilities and shareholders’ equity                           |   | $      | 285,795 |   |   | $      | 283,701 |   |

|                                                                                        |
|---------------------------------------------------------------------------------------------|
| The accompanying notes are an integral part of the consolidated financial statements.  |

----

CONSOLIDATED STATEMENTS OF OPERATIONS

----

|                                                         |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Interest and Dividend Income                                 |   |   |    |   |   |   |
| Loans, including fees                                        |   | $      | 8,689   |   |   | $      | 9,225 |   |
| Securities available for sale:                               |   |   |    |   |   |   |   |   |
| Taxable                                                      |   |   | 708     |   |   |   | 987 |   |
| Exempt from federal tax                                      |   |   | 686     |   |   |   | 1,098 |   |
| Federal funds sold                                           |   |   | — |   |   |   | 2 |   |
| Interest–bearing deposits with financial institutions  |   |   | 1,059   |   |   |   | 974 |   |
| Other                                                        |   |   | 68      |   |   |   | 86 |   |
| Total interest and dividend income                           |   |   | 11,210  |   |   |   | 12,372 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Interest Expense                                             |   |   |    |   |   |   |   |   |
| Deposits                                                     |   |   | 2,192   |   |   |   | 3,106 |   |
| Federal funds purchased                                      |   |   | — |   |   |   | 1 |   |
| Borrowings                                                   |   |   | 70      |   |   |   | 130 |   |
| Total interest expense                                       |   |   | 2,262   |   |   |   | 3,237 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Net Interest Income                                          |   |   | 8,948   |   |   |   | 9,135 |   |
| Provision for loan losses                                    |   |   | 5,740   |   |   |   | 1,330 |   |
| Net Interest Income After Provision for Loan Losses          |   |   | 3,208   |   |   |   | 7,805 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Noninterest Income                                           |   |   |    |   |   |   |   |   |
| Service fees                                                 |   |   | 708     |   |   |   | 843 |   |
| Trust and farm management fees                               |   |   | 570     |   |   |   | 503 |   |
| Net realized gains on sales of available for sale securities |   |   | 342     |   |   |   | 979 |   |
| Mortgage servicing income, net                               |   |   | 503     |   |   |   | 305 |   |
| Other                                                        |   |   | 673     |   |   |   | 639 |   |
| Total noninterest income                                     |   |   | 2,796   |   |   |   | 3,269 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Noninterest Expense                                          |   |   |    |   |   |   |   |   |
| Salaries and employee benefits                               |   |   | 4,505   |   |   |   | 4,601 |   |
| Occupancy and equipment                                      |   |   | 1,306   |   |   |   | 1,234 |   |
| Data processing fees                                         |   |   | 556     |   |   |   | 485 |   |
| Insurance                                                    |   |   | 585     |   |   |   | 708 |   |
| Professional fees                                            |   |   | 494     |   |   |   | 470 |   |
| Amortization of core deposit intangible                      |   |   | 146     |   |   |   | 146 |   |
| Other real estate owned, net                                 |   |   | 1,305   |   |   |   | 194 |   |
| Other                                                        |   |   | 1,035   |   |   |   | 923 |   |
| Total noninterest expense                                    |   |   | 9,932   |   |   |   | 8,761 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Income (Loss) Before Income Tax                              |   |   | (3,928  | )      |   |   | 2,313 |   |
| Income tax expense (benefit)                                 |   |   | (1,826  | )      |   |   | 479 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Net Income (Loss)                                            |   | $      | (2,102  | )      |   | $      | 1,834 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Earnings (Loss) Per Share – Basic                      |   | $      | (3.25   | )      |   | $      | 2.84 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Earnings (Loss) Per Share – Diluted                    |   | $      | (3.25   | )      |   | $      | 2.83 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Average Shares Outstanding                                   |   |   | 645,988 |   |   |   | 645,623 |   |

| The accompanying notes are an integral part of the consolidated financial statements.  |
|---------------------------------------------------------------------------------------------|

----

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

----

|                                   |   | CommonStock |    |   | AdditionalPaid–inCapital |   |   | RetainedEarnings |   |   | TreasuryStock |   |   | AccumulatedOtherComprehensiveIncome(Loss) |   |   | Total  |   |
|----------------------------------------|--------|-------------|---------|--------|--------------------------------|--------|--------|------------------|--------|--------|---------------|--------|--------|-------------------------------------------|--------|--------|--------|--------|
| Balances, January 1, 2009              |   | $           | 753     |   |                           | $      | 4,408  |             |   | $      | 26,031        |   |   | $                                         | (6,299 | )      |   | $      | (224 | ) |   | $ | 24,669 |   |
| Comprehensive income                   |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net income                             |   |        |    |   |                           |   |   |             |   |   | 1,834         |   |   |                                      |   |   |   |   |   |   |   |   | 1,834 |   |
| Other comprehensive income, net of tax |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains on securities         |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   | 162 |   |   |   | 162 |   |
| Net gain relating to benefit liability |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   | 111 |   |   |   | 111 |   |
| Comprehensive income                   |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 2,107 |   |
| Cash dividends ($1.54 per share)       |   |        |    |   |                           |   |   |             |   |   | (994          | )      |   |                                      |   |   |   |   |   |   |   |   | (994 | ) |
| Stock options vested                   |   |        |    |   |                           |   | 117    |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 117 |   |
| Shares granted                         |   |        | — |   |                           |   | 9      |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 9 |   |
| Stock options exercised                |   |        | 1       |   |                           |   | 69     |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 70 |   |
|                                   |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Balances, December 31, 2009            |   |        | 754     |   |                           |   | 4,603  |             |   |   | 26,871        |   |   |                                      | (6,299 | )      |   |   | 49 |   |   |   | 25,978 |   |
| Comprehensive loss                     |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net loss                               |   |        |    |   |                           |   |   |             |   |   | (2,102        | )      |   |                                      |   |   |   |   |   |   |   |   | (2,102 | ) |
| Other comprehensive loss, net of tax   |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Unrealized losses on securities        |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   | (601 | ) |   |   | (601 | ) |
| Net gain relating to benefit liability |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   | 75 |   |   |   | 75 |   |
| Comprehensive loss                     |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | (2,628 | ) |
| Cash dividends ($.80 per share)        |   |        |    |   |                           |   |   |             |   |   | (516          | )      |   |                                      |   |   |   |   |   |   |   |   | (516 | ) |
| Stock options vested                   |   |        |    |   |                           |   | 133    |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 133 |   |
|                                   |   |        |    |   |                           |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Balances, December 31, 2010            |   | $           | 754     |   |                           | $      | 4,736  |             |   | $      | 24,253        |   |   | $                                         | (6,299 | )      |   | $      | (477 | ) |   | $ | 22,967 |   |

|                                                                                        |
|---------------------------------------------------------------------------------------------|
| The accompanying notes are an integral part of the consolidated financial statements.  |

----

CONSOLIDATED STATEMENTS OF CASH FLOWS

----

|                                                                           |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Operating Activities                                                           |   |   |    |   |   |   |
| Net income (loss)                                                              |   | $      | (2,102  | )      |   | $      | 1,834 |   |
| Items not requiring (providing) cash                                           |   |   |    |   |   |   |   |   |
| Provision for loan losses                                                      |   |   | 5,740   |   |   |   | 1,330 |   |
| Premium amortization on securities, net                                        |   |   | 401     |   |   |   | 399 |   |
| Derivative valuation adjustment                                                |   |   | 3       |   |   |   | 95 |   |
| Depreciation and amortization                                                  |   |   | 636     |   |   |   | 537 |   |
| Loans originated for sale                                                      |   |   | (28,793 | )      |   |   | (20,254 | ) |
| Proceeds from sale of loans                                                    |   |   | 28,638  |   |   |   | 20,868 |   |
| Gains on sales of securities, net                                              |   |   | (342    | )      |   |   | (979 | ) |
| Gains on sales of loans held for sale                                          |   |   | (694    | )      |   |   | (431 | ) |
| Writedowns and loss on sales of other real estate owned                        |   |   | 961     |   |   |   | 34 |   |
| Stock options vested                                                           |   |   | 133     |   |   |   | 117 |   |
| Grant of incentive stock options                                               |   |   | — |   |   |   | 9 |   |
| Change in                                                                      |   |   |    |   |   |   |   |   |
| Interest receivable and other assets                                           |   |   | (2,054  | )      |   |   | (1,626 | ) |
| Interest payable and other liabilities                                         |   |   | 86      |   |   |   | (231 | ) |
| Net cash provided by operating activities                                      |   |   | 2,613   |   |   |   | 1,702 |   |
|                                                                           |   |   |    |   |   |   |   |   |
| Investing Activities                                                           |   |   |    |   |   |   |   |   |
| Purchases of securities available for sale                                     |   |   | (43,788 | )      |   |   | (46,587 | ) |
| Proceeds from maturities, calls, and paydowns of securities available for sale |   |   | 33,325  |   |   |   | 21,595 |   |
| Proceeds from sales of securities available for sale                           |   |   | 15,117  |   |   |   | 27,269 |   |
| Purchases of interest-bearing time deposits                                    |   |   | (34,535 | )      |   |   | (49,121 | ) |
| Proceeds from maturities of interest-bearing time deposits                     |   |   | 20,706  |   |   |   | 22,869 |   |
| Net change in loans                                                            |   |   | 537     |   |   |   | 6,556 |   |
| Proceeds from sales of other real estate owned                                 |   |   | 1,343   |   |   |   | 1,138 |   |
| Net purchases of premises and equipment                                        |   |   | (769    | )      |   |   | (660 | ) |
| Net cash used in investing activities                                          |   |   | (8,064  | )      |   |   | (16,941 | ) |
|                                                                           |   |   |    |   |   |   |   |   |
| Financing Activities                                                           |   |   |    |   |   |   |   |   |
|  Net change in deposits                                                   |   |   | 7,366   |   |   |   | 10,499 |   |
| Repayment of borrowings                                                        |   |   | (2,000  | )      |   |   | (2,000 | ) |
| Stock options exercised                                                        |   |   | — |   |   |   | 70 |   |
| Dividends paid                                                                 |   |   | (749    | )      |   |   | (1,883 | ) |
| Net cash provided by  financing activities                           |   |   | 4,617   |   |   |   | 6,686 |   |
|                                                                           |   |   |    |   |   |   |   |   |
| Net Change in Cash and Cash Equivalents                                        |   |   | (834    | )      |   |   | (8,553 | ) |
|                                                                           |   |   |    |   |   |   |   |   |
| Cash and Cash Equivalents, Beginning of Year                                   |   |   | 17,921  |   |   |   | 26,474 |   |
|                                                                           |   |   |    |   |   |   |   |   |
| Cash and Cash Equivalents, End of Year                                         |   | $      | 17,087  |   |   | $      | 17,921 |   |
|                                                                           |   |   |    |   |   |   |   |   |
| Additional Cash Flows Information                                              |   |   |    |   |   |   |   |   |
| Interest paid                                                                  |   | $      | 2,357   |   |   | $      | 3,494 |   |
| Income tax paid, net of refunds                                                |   |   | 305     |   |   |   | 715 |   |
| Transfers from loans to other real estate owned                                |   |   | 3,610   |   |   |   | 2,760 |   |

|                                                                                        |
|---------------------------------------------------------------------------------------------|
| The accompanying notes are an integral part of the consolidated financial statements.  |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

----

----

----

----

----

----

----

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----

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| ● | Creates a Financial Services Oversight Council to identify emerging systemic risks and improve interagency cooperation; |
|---------|-------------------------------------------------------------------------------------------------------------------------|

| ● | Creates a Consumer Financial Protection Agency authorized to promulgate and enforce consumer protection regulations relating to financial products, which would affect both banks and non-bank finance companies; |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Establishes strengthened capital standards for banks and bank holding companies, and disallows trust preferred securities from being included in the Tier 1 capital determination for certain financial institutions; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Enhances regulation of financial markets, including derivatives and securitization markets; |
|---------|---------------------------------------------------------------------------------------------|

| ● | Contains a series of provisions covering mortgage loan origination standards affecting, among other things, originator compensation, minimum repayment standards and prepayments; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Grants the Board of Governors of the Federal Reserve System the power to regulate debit card interchange fees; |
|---------|----------------------------------------------------------------------------------------------------------------|

| ● | Prohibits certain trading activities by banks; |
|---------|------------------------------------------------|

| ● | Permanently increases the maximum standard FDIC deposit insurance amount to $250,000; and |
|---------|-------------------------------------------------------------------------------------------|

| ● | Creates an Office of National Insurance with the U.S. Department of Treasury. |
|---------|-------------------------------------------------------------------------------|

----

----

| 2011   |   | $      | 20,223 |   |
|--------|--------|--------|--------|--------|
| 2012   |   |   | 16,146 |   |
| 2013   |   |   | 10,005 |   |
| 2014   |   |   | 4,030  |   |
| 2015   |   |   | 4,433  |   |
|   |   |   |   |   |
| Total  |   | $      | 54,837 |   |

|                                                                     |   | AmortizedCost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | FairValue |   |
|--------------------------------------------------------------------------|--------|---------------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|-----------|--------|
| December 31, 2010                                                        |   |          |   |   |                   |   |   |                    |   |   |      |   |
|                                                                     |   |          |   |   |                   |   |   |                    |   |   |      |   |   |   |   |   |
| U. S. Treasury                                                           |   | $             | 3,564  |   |                   | $      | 14     |                    |   | $      | —   |   |   | $ | 3,578 |   |
| Federal agencies                                                         |   |          | 25,693 |   |                   |   | 174    |                    |   |   | (322      | )      |   |   | 25,545 |   |
| State and municipal                                                      |   |          | 18,087 |   |                   |   | 275    |                    |   |   | (394      | )      |   |   | 17,968 |   |
| Mortgage–backed securities and collateralized mortgage obligations |   |          | 1,717  |   |                   |   | 96     |                    |   |   | —   |   |   |   | 1,813 |   |
| Corporate obligations                                                    |   |          | 1,807  |   |                   |   | 24     |                    |   |   | —   |   |   |   | 1,831 |   |
| Marketable equity securities                                             |   |          | 15     |   |                   |   | 2      |                    |   |   | (3        | )      |   |   | 14 |   |
|                                                                     |   |          |   |   |                   |   |   |                    |   |   |      |   |   |   |   |   |
| Total securities                                                         |   | $             | 50,883 |   |                   | $      | 585    |                    |   | $      | (719      | )      |   | $ | 50,749 |   |

|                                                                     |   | AmortizedCost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | FairValue |   |
|--------------------------------------------------------------------------|--------|---------------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|-----------|--------|
| December 31, 2009                                                        |   |          |   |   |                   |   |   |                    |   |   |      |   |
|                                                                     |   |          |   |   |                   |   |   |                    |   |   |      |   |   |   |   |   |
| U. S. Treasury                                                           |   | $             | 5,182  |   |                   | $      | 16     |                    |   | $      | —   |   |   | $ | 5,198 |   |
| Federal agencies                                                         |   |          | 23,732 |   |                   |   | 183    |                    |   |   | (38       | )      |   |   | 23,877 |   |
| State and municipal                                                      |   |          | 23,332 |   |                   |   | 526    |                    |   |   | (27       | )      |   |   | 23,831 |   |
| Mortgage–backed securities and collateralized mortgage obligations |   |          | 3,325  |   |                   |   | 115    |                    |   |   | —   |   |   |   | 3,440 |   |
| Marketable equity securities                                             |   |          | 25     |   |                   |   | 4      |                    |   |   | (2        | )      |   |   | 27 |   |
|                                                                     |   |          |   |   |                   |   |   |                    |   |   |      |   |   |   |   |   |
| Total securities                                                         |   | $             | 55,596 |   |                   | $      | 844    |                    |   | $      | (67       | )      |   | $ | 56,373 |   |

----

----

|                                                                                |   | AmortizedCost |   |   | FairValue |   |
|-------------------------------------------------------------------------------------|--------|---------------|--------|--------|-----------|--------|
|                                                                                |   |          |   |   |      |   |   |   |
| Within one year                                                                     |   | $             | 7,730  |   |      | $      | 7,765 |   |
| One to five years                                                                   |   |          | 35,045 |   |      |   | 35,056 |   |
| Five to ten years                                                                   |   |          | 4,991  |   |      |   | 4,911 |   |
| After ten years                                                                     |   |          | 1,385  |   |      |   | 1,190 |   |
|                                                                                |   |          | 49,151 |   |      |   | 48,922 |   |
| Mortgage–backed securities  and collateralized mortgage obligations |   |          | 1,717  |   |      |   | 1,813 |   |
| Marketable equity securities                                                        |   |          | 15     |   |      |   | 14 |   |
|                                                                                |   |          |   |   |      |   |   |   |
| Totals                                                                              |   | $             | 50,883 |   |      | $      | 50,749 |   |

|         |   | 2010   |    |   | 2009   |   |
|--------------|--------|--------|---------|--------|--------|--------|
|         |   |   |    |   |   |   |   |   |
| Proceeds     |   | $      | 15,117  |   |   | $      | 27,269 |   |
| Gross gains  |   |   | 342     |   |   |   | 980 |   |
| Gross losses |   |   | — |   |   |   | 1 |   |
| Tax expense  |   |   | 116     |   |   |   | 333 |   |

----

----

|                                  |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |   |
|---------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
| Description ofSecurities              |   | FairValue           |   |   | UnrealizedLosses  |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                  |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                     |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Federal agencies                      |   | $                   | 14,189 |   |              | $      | (322   | )         |   | $ | — |   |   | $ | — |   |   | $ | 14,189 |   |   | $ | (322 | ) |
| State and municipal                   |   |                | 6,018  |   |              |   | (389   | )         |   |   | 299 |   |   |   | (5 | ) |   |   | 6,317 |   |   |   | (394 | ) |
| Marketable equity securities          |   |                | 2      |   |              |   | (3     | )         |   |   | — |   |   |   | — |   |   |   | 2 |   |   |   | (3 | ) |
|                                  |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total temporarily impaired securities |   | $                   | 20,209 |   |              | $      | (714   | )         |   | $ | 299 |   |   | $ | (5 | ) |   | $ | 20,508 |   |   | $ | (719 | ) |
|                                  |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                     |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal agencies                      |   | $                   | 9,814  |   |              | $      | (38    | )         |   | $ | — |   |   | $ | — |   |   | $ | 9,814 |   |   | $ | (38 | ) |
| State and municipal                   |   |                | 4,867  |   |              |   | (26    | )         |   |   | 52 |   |   |   | (1 | ) |   |   | 4,919 |   |   |   | (27 | ) |
| Marketable equity securities          |   |                | 8      |   |              |   | (2     | )         |   |   | — |   |   |   | — |   |   |   | 8 |   |   |   | (2 | ) |
|                                  |   |                |   |   |              |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total temporarily impaired securities |   | $                   | 14,689 |   |              | $      | (66    | )         |   | $ | 52 |   |   | $ | (1 | ) |   | $ | 14,741 |   |   | $ | (67 | ) |

|                              |   | 2010   |    |   | 2009   |   |
|-----------------------------------|--------|--------|---------|--------|--------|--------|
|  Commercial:                 |   |   |    |   |   |   |
| Real estate                       |   | $      | 41,970  |   |   | $      | 43,636 |   |
| Non-real estate                   |   |   | 28,336  |   |   |   | 27,258 |   |
| Construction and land development |   |   | 10,388  |   |   |   | 14,242 |   |
| Agricultural                      |   |   | 26,982  |   |   |   | 25,444 |   |
| Residential                       |   |   | 30,669  |   |   |   | 36,087 |   |
| Consumer                          |   |   | 2,435   |   |   |   | 2,772 |   |
|                              |   |   |    |   |   |   |   |   |
| Total                             |   | $      | 140,780 |   |   | $      | 149,439 |   |

----

----

|                                  |   | 2010                   |   |   | 2009                       |   |
|---------------------------------------|--------|------------------------|--------|--------|----------------------------|--------|
|                                  |   | Commercial Real Estate |   |   | Commercial Non-Real Estate |   |   |  Construction and Land Development |   |   | Agricultural |   |   | Residential |   |   | Consumer |   |   | Unallocated |   |   | Total |   |   | Total |   |
|                                  |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans:                          |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                      | 4,483  |   |                       | $      | 5,949 |   |   | $ | 7,922 |   |   | $ | 534 |   |   | $ | 1,486 |   |   | $ | 3 |   |   |   |   |   | $ | 20,377 |   |   |   |   |
| Collectively evaluated for impairment |   |                   | 37,487 |   |                       |   | 22,387 |   |   |   | 2,466 |   |   |   | 26,448 |   |   |   | 29,183 |   |   |   | 2,432 |   |   |   |   |   |   | 120,403 |   |   |   |   |
|                                  |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances, December 31                 |   | $                      | 41,970 |   |                       | $      | 28,336 |   |   | $ | 10,388 |   |   | $ | 26,982 |   |   | $ | 30,669 |   |   | $ | 2,435 |   |   |   |   |   | $ | 140,780 |   |   | $ | 149,439 |   |
|                                  |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:            |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances, January 1                   |   | $                      | 906    |   |                       | $      | 553 |   |   | $ | 380 |   |   | $ | 83 |   |   | $ | 310 |   |   | $ | 32 |   |   | $ | 70 |   |   | $ | 2,334 |   |   | $ | 1,612 |   |
| Provision for losses                  |   |                   | 2,270  |   |                       |   | 177 |   |   |   | 2,877 |   |   |   | 13 |   |   |   | 456 |   |   |   | (14 | ) |   |   | (39 | ) |   |   | 5,740 |   |   |   | 1,330 |   |
| Recoveries on loans                   |   |                   | 89     |   |                       |   | 24 |   |   |   | — |   |   |   | — |   |   |   | 38 |   |   |   | 19 |   |   |   | — |   |   |   | 170 |   |   |   | 76 |   |
| Loans charged off                     |   |                   | (1,750 | )      |                       |   | (177 | ) |   |   | (2,624 | ) |   |   | (17 | ) |   |   | (307 | ) |   |   | (6 | ) |   |   | — |   |   |   | (4,881 | ) |   |   | (684 | ) |
| Balances, December 31                 |   | $                      | 1,515  |   |                       | $      | 577 |   |   | $ | 633 |   |   | $ | 79 |   |   | $ | 497 |   |   | $ | 31 |   |   | $ | 31 |   |   | $ | 3,363 |   |   | $ | 2,334 |   |
|                                  |   |                   |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                      | 48     |   |                       | $      | 4 |   |   | $ | 377 |   |   | $ | — |   |   | $ | 97 |   |   | $ | — |   |   | $ | — |   |   | $ | 526 |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                      | 1,467  |   |                       | $      | 573 |   |   | $ | 256 |   |   | $ | 79 |   |   | $ | 400 |   |   | $ | 31 |   |   | $ | 31 |   |   | $ | 2,837 |   |   |   |   |   |

----

----

|                              |   | UnpaidPrincipalBalance |          |   | RecordedInvestment |   |          | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |    |
|-----------------------------------|--------|------------------------|---------------|--------|--------------------|--------|---------------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|---------|
|                              |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |
|                              |   | December 31, 2010      |          |
| With an allowance recorded:       |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |
| Commercial:                       |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |
| Real estate                       |   | $                      | 114           |   |               | $      | 114           |             |   | $      | 48                        |   |   | $                        | 53      |   |   | $ | — |   |
| Non-real estate                   |   |                   | 1,905         |   |               |   | 1,905         |             |   |   | 4                         |   |   |                     | 404     |   |   |   | 2 |   |
| Construction and land development |   |                   | —       |   |               |   | —       |             |   |   | 377                       |   |   |                     | 379     |   |   |   | — |   |
| Agricultural                      |   |                   | —       |   |               |   | —       |             |   |   | —                   |   |   |                     | — |   |   |   | — |   |
| Residential                       |   |                   | 286           |   |               |   | 286           |             |   |   | 97                        |   |   |                     | 64      |   |   |   | 2 |   |
| Consumer                          |   |                   | —       |   |               |   |  — |             |   |   | —                   |   |   |                     | — |   |   |   | — |   |
| Total                             |   | $                      | 2,305         |   |               | $      | 2,305         |             |   | $      | 526                       |   |   | $                        | 900     |   |   | $ | 4 |   |
|                              |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| With no related allowance:        |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
|    Commercial:     |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real estate                       |   | $                      | 3,631         |   |               | $      | 2,033         |             |   | $      | —                   |   |   | $                        | 1,278   |   |   | $ | 6 |   |
| Non-real estate                   |   |                   | 206           |   |               |   | 206           |             |   |   | —                   |   |   |                     | 129     |   |   |   | — |   |
| Construction and land development |   |                   | 6,032         |   |               |   | 4,003         |             |   |   | —                   |   |   |                     | 3,321   |   |   |   | — |   |
| Agricultural                      |   |                   | 579           |   |               |   | 359           |             |   |   | —                   |   |   |                     | 72      |   |   |   | — |   |
| Residential                       |   |                   | —       |   |               |   | —       |             |   |   | —                   |   |   |                     | 65      |   |   |   | — |   |
| Consumer                          |   |                   |  — |   |               |   | —       |             |   |   | —                   |   |   |                     | — |   |   |   | — |   |
| Total                             |   | $                      | 10,448        |   |               | $      | 6,601         |             |   | $      | —                   |   |   | $                        | 4,865   |   |   | $ | 6 |   |
|                              |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Total:                            |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
|    Commercial:     |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Real estate                       |   | $                      | 3,745         |   |               | $      | 2,147         |             |   | $      | 48                        |   |   | $                        | 1,331   |   |   | $ | 6 |   |
| Non-real estate                   |   |                   | 2,111         |   |               |   | 2,111         |             |   |   | 4                         |   |   |                     | 533     |   |   |   | 2 |   |
| Construction and land development |   |                   | 6,032         |   |               |   | 4,003         |             |   |   | 377                       |   |   |                     | 3,700   |   |   |   | — |   |
| Agricultural                      |   |                   | 579           |   |               |   | 359           |             |   |   | —                   |   |   |                     | 72      |   |   |   | — |   |
| Residential                       |   |                   | 286           |   |               |   | 286           |             |   |   | 97                        |   |   |                     | 129     |   |   |   | 2 |   |
| Consumer                          |   |                   | —  |   |               |   | —       |             |   |   | —                   |   |   |                     | — |   |   |   | — |   |
| Total                             |   | $                      | 12,753        |   |               | $      | 8,906         |             |   | $      | 526                       |   |   | $                        | 5,765   |   |   | $ | 10 |   |
|                              |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
|                              |   | December 31, 2009      |          |
|                              |   |                   |          |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| With an allowance recorded        |   | $                      | 93            |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| With no related allowance         |   |                   | 8,821         |   |               |   |          |             |   |   |                      |   |   |                     |    |   |   |   |   |   |
| Total impaired loans              |   | $                      | 8,914         |   |               |   |          |             |   | $      | 39                        |   |   | $                        | 5,552   |   |   | $ | 322 |   |

----

----

|                             |   | 30-59DaysPast Due |    |   | 60-89DaysPast Due |   |    | Greaterthan 90Days |   |   | TotalPastDue |   |   | Current |   |   | TotalLoans |   |    | Loans Past Due Greater than 90 Days, Still Accruing |   |   | Loans on Nonaccrual |   |
|----------------------------------|--------|-------------------|---------|--------|-------------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|---------|--------|--------|------------|--------|---------|-----------------------------------------------------|--------|--------|---------------------|--------|
|                             |   |              |    |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |    |                                                |   |   |                |   |
|                             |   | December 31, 2010 |    |
|                             |   |              |    |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |    |                                                |   |   |                |   |
| Commercial:                      |   |              |    |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |    |                                                |   |   |                |   |
| Real estate                      |   | $                 | 872     |   |              | $      | — |               |   | $      | 1,717        |   |   | $       | 2,589  |   |       | $      | 39,381  |                                                |   | $      | 41,970              |   |   | $ | 143 |   |   | $ | 1,854 |   |
| Non-real estate                  |   |              | 248     |   |              |   | — |               |   |   | 2,058        |   |   |    | 2,306  |   |       |   | 26,030  |                                                |   |   | 28,336              |   |   |   | — |   |   |   | 2,107 |   |
| Construction and landdevelopment |   |              | — |   |              |   | — |               |   |   | 4,363        |   |   |    | 4,363  |   |       |   | 6,025   |                                                |   |   | 10,388              |   |   |   | — |   |   |   | 4,363 |   |
| Agricultural                     |   |              | — |   |              |   | — |               |   |   | 204          |   |   |    | 204    |   |       |   | 26,778  |                                                |   |   | 26,982              |   |   |   | 204 |   |   |   | — |   |
| Residential                      |   |              | 580     |   |              |   | 313     |               |   |   | 169          |   |   |    | 1,062  |   |       |   | 29,607  |                                                |   |   | 30,669              |   |   |   | 169 |   |   |   | — |   |
| Consumer                         |   |              | 5       |   |              |   | — |               |   |   | —      |   |   |    | 5      |   |       |   | 2,430   |                                                |   |   | 2,435               |   |   |   | — |   |   |   | — |   |
|                             |   |              |    |   |              |   |    |               |   |   |         |   |   |    |   |   |       |   |    |                                                |   |   |                |   |   |   |   |   |   |   |   |   |
| Total                            |   | $                 | 1,705   |   |              | $      | 313     |               |   | $      | 8,511        |   |   | $       | 10,529 |   |       | $      | 130,251 |                                                |   | $      | 140,780             |   |   | $ | 516 |   |   | $ | 8,324 |   |

----

----

|          |   | Commercial Real Estate |   |   | Commercial Non-Real Estate |   |   | Construction and Land Development |   |   | Agricultural |   |   | Residential |   |   | Consumer |   |   | Total  |   |
|---------------|--------|------------------------|--------|--------|----------------------------|--------|--------|-----------------------------------|--------|--------|--------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|          |   |                   |   |   |                       |   |   |                              |   |   |         |   |   |        |   |   |     |   |   |   |   |
| Performing    |   | $                      | 39,973 |   |                       | $      | 26,229 |                              |   | $      | 6,025        |   |   | $           | 26,778 |   |     | $      | 30,500 |   |   | $ | 2,435 |   |   | $ | 131,940 |   |
| Nonperforming |   |                   | 1,997  |   |                       |   | 2,107  |                              |   |   | 4,363        |   |   |        | 204    |   |     |   | 169    |   |   |   | — |   |   |   | 8,840 |   |
|          |   |                   |   |   |                       |   |   |                              |   |   |         |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Total         |   | $                      | 41,970 |   |                       | $      | 28,336 |                              |   | $      | 10,388       |   |   | $           | 26,982 |   |     | $      | 30,669 |   |   | $ | 2,435 |   |   | $ | 140,780 |   |

----

----

|                   |   | 2010   |   |   | 2009   |   |
|------------------------|--------|--------|--------|--------|--------|--------|
|                   |   |   |   |   |   |   |
| Balance at January 1   |   | $      | 4,819  |   |   | $      | 4,084 |   |
| New loans              |   |   | 2,294  |   |   |   | 1,893 |   |
| Repayments             |   |   | (2,403 | )      |   |   | (1,158 | ) |
| Other                  |   |   | (48    | )      |   |   | — |   |
|                   |   |   |   |   |   |   |   |   |
| Balance at December 31 |   | $      | 4,662  |   |   | $      | 4,819 |   |

|                 |   | 2010   |   |   | 2009   |   |
|----------------------|--------|--------|--------|--------|--------|--------|
|                 |   |   |   |   |   |   |
| Total loans serviced |   | $      | 42,065 |   |   | $      | 31,745 |   |

|                             |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| Balances, January 1              |   | $      | 286    |   |   | $      | 267 |   |
| Servicing rights capitalized     |   |   | 288    |   |   |   | 145 |   |
| Amortization of servicing rights |   |   | (191   | )      |   |   | (126 | ) |
|                             |   |   |   |   |   |   |   |   |
| Balances, December 31            |   | $      | 383    |   |   | $      | 286 |   |

----

----

|                            |   | 2010   |    |   | 2009   |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|
| Cost                            |   |   |    |   |   |   |
| Land                            |   | $      | 1,884   |   |   | $      | 1,884 |   |
| Buildings and land improvements |   |   | 8,805   |   |   |   | 8,118 |   |
| Equipment                       |   |   | 5,113   |   |   |   | 4,948 |   |
| Construction in progress        |   |   | — |   |   |   | 83 |   |
| Total cost                      |   |   | 15,802  |   |   |   | 15,033 |   |
| Accumulated depreciation        |   |   | (8,031  | )      |   |   | (7,549 | ) |
|                            |   |   |    |   |   |   |   |   |
| Net                             |   | $      | 7,771   |   |   | $      | 7,484 |   |

|                                                  |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                  |   |   |   |   |   |   |
| Beginning of year                                     |   | $      | 1,898  |   |   | $      | 310 |   |
| Transfers from loans                                  |   |   | 3,610  |   |   |   | 2,760 |   |
| Initial adjustment in carrying value                  |   |   | (199   | )      |   |   | — |   |
| Sales of other real estate owned                      |   |   | (1,343 | )      |   |   | (1,138 | ) |
| Loss on sales of other real estate owned              |   |   | (142   | )      |   |   | (34 | ) |
| Writedowns on other real estate owned                 |   |   | (819   | )      |   |   | — |   |
|                                                  |   |   |   |   |   |   |   |   |
| End of year                                           |   | $      | 3,005  |   |   | $      | 1,898 |   |
|                                                  |   |   |   |   |   |   |   |   |
| Expenses related to other real estate owned included: |   |   |   |   |   |   |   |   |

|                              |   |   | 2010   |   |   | 2009   |    |
|-----------------------------------|--------|--------|--------|--------|--------|--------|---------|
|                              |   |   |   |   |   |   |    |   |
| Loss on sales                     |   | $      | 142    |   |   | $      | 34      |   |
| Writedowns                        |   |   | 819    |   |   |   | — |   |
| Operating expenses, net of income |   |   | 344    |   |   |   | 160     |   |
|                              |   |   |   |   |   |   |    |   |
| Total                             |   | $      | 1,305  |   |   | $      | 194     |   |

----

----

|                                                     |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                     |   |   |    |   |   |   |   |   |
| Noninterest–bearing demand                         |   | $      | 36,206  |   |   | $      | 34,851 |   |
| Interest–bearing demand                            |   |   | 101,890 |   |   |   | 93,322 |   |
| Savings                                                  |   |   | 26,559  |   |   |   | 25,787 |   |
| Money market savings                                     |   |   | 19,147  |   |   |   | 20,912 |   |
| Certificates and other time deposits of $100,000 or more |   |   | 31,523  |   |   |   | 28,553 |   |
| Other certificates and time deposits                     |   |   | 43,270  |   |   |   | 47,804 |   |
|                                                     |   |   |    |   |   |   |   |   |
| Total deposits                                           |   | $      | 258,595 |   |   | $      | 251,229 |   |

| 2011       |   | $      | 45,210 |   |
|------------|--------|--------|--------|--------|
| 2012       |   |   | 10,863 |   |
| 2013       |   |   | 9,915  |   |
| 2014       |   |   | 5,773  |   |
| 2015       |   |   | 2,920  |   |
| Thereafter |   |   | 112    |   |
|       |   |   |   |   |
|       |   | $      | 74,793 |   |

----

----

|                         |   | 2010   |    |   | 2009   |   |
|------------------------------|--------|--------|---------|--------|--------|--------|
|                         |   |   |    |   |   |   |
| Change in benefit obligation |   |   |    |   |   |   |
| Beginning benefit obligation |   | $      | 1,680   |   |   | $      | 1,803 |   |
| Interest cost                |   |   | 96      |   |   |   | 101 |   |
| Actuarial loss               |   |   | 49      |   |   |   | 45 |   |
| Settlements                  |   |   | — |   |   |   | (177 | ) |
| Benefits paid                |   |   | (99     | )      |   |   | (92 | ) |
|                         |   |   |    |   |   |   |   |   |
| Ending benefit obligation    |   | $      | 1,726   |   |   | $      | 1,680 |   |

| Change in plan assets |   |   |    |   |   |   |
|-----------------------|--------|--------|---------|--------|--------|--------|
| Beginning fair value  |   | $      | 1,356   |   |   | $      | 1,378 |   |
| Actual return         |   |   | 202     |   |   |   | 163 |   |
| Employer contribution |   |   | 32      |   |   |   | 84 |   |
| Settlements           |   |   | — |   |   |   | (177 | ) |
| Benefits paid         |   |   | (99     | )      |   |   | (92 | ) |
|                  |   |   |    |   |   |   |   |   |
| Ending fair value     |   | $      | 1,491   |   |   | $      | 1,356 |   |
|                  |   |   |    |   |   |   |   |   |
| Funded status         |   | $      | (235    | )      |   | $      | (324 | ) |

|              |   | Pension Benefits |   |
|-------------------|--------|------------------|--------|
|              |   | 2010             |   |   | 2009 |   |
|              |   |             |   |   |   |   |
| Other liabilities |   | $                | (235   | ) |   | $ | (324 | ) |

|     |   | Pension Benefits |   |
|----------|--------|------------------|--------|
|     |   | 2010             |   |   | 2009 |   |
|     |   |             |   |   |   |   |   |   |
| Net loss |   | $                | 589    |   |   | $ | 703 |   |

|                           |   | 2010   |   |   | 2009   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |   |   |
| Accumulated benefit obligation |   | $      | 1,726  |   |   | $      | 1,680 |   |
| Fair value of plan assets      |   |   | 1,491  |   |   |   | 1,356 |   |

----

----

|                                    |   | 2010   |   |   | 2009   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
| Components of net periodic benefit cost |   |   |   |   |   |   |
| Interest cost                           |   | $      | 96     |   |   | $      | 101 |   |
| Return on plan assets                   |   |   | (92    | )      |   |   | (84 | ) |
| Amortization                            |   |   | 53     |   |   |   | 65 |   |
|                                    |   |   |   |   |   |   |   |   |
| Net expense                             |   | $      | 57     |   |   | $      | 82 |   |

|                              |   | Pension Benefits |    |
|-----------------------------------|--------|------------------|---------|
|                              |   | 2010             |    |   | 2009 |   |
| Amounts arising during the period |   |             |    |   |   |   |
| Net (gain) loss                   |   | $                | (114    | ) |   | $ | (169 | ) |
| Net amortization                  |   |             | — |   |   |   | (50 | ) |

|                                              |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Assumptions used to determine benefit obligations |   |   |   |   |   |   |
| Discount rate                                     |   |   | 5.75   | %      |   |   | 5.75 | % |
| Expected return on plan assets                    |   |   | 7.0    |   |   |   | 7.0 |   |
|                                              |   |   |   |   |   |   |   |   |
| Assumptions used to determine benefit costs       |   |   |   |   |   |   |   |   |
| Discount rate                                     |   |   | 5.75   | %      |   |   | 5.75 | % |
| Expected return on plan assets                    |   |   | 7.0    |   |   |   | 7.0 |   |

|       |   | PensionBenefits |   |
|------------|--------|-----------------|--------|
| 2011       |   | $               | 122    |   |
| 2012       |   |            | 117    |   |
| 2013       |   |            | 113    |   |
| 2014       |   |            | 114    |   |
| 2015       |   |            | 117    |   |
| Thereafter |   |            | 612    |   |

----

----

|                         |   | 2010   |    |   | 2009   |   |
|------------------------------|--------|--------|---------|--------|--------|--------|
|                         |   |   |    |   |   |   |   |   |
| Equity mutual funds          |   |   | 71.3    | %      |   |   | 69.2 | % |
| Fixed income mutual funds    |   |   | 20.9    |   |   |   | 12.8 |   |
| GNMA pool                    |   |   | — |   |   |   | .2 |   |
| Money market funds and other |   |   | 7.8     |   |   |   | 8.9 |   |
| Time Certificates of Deposit |   |   | — |   |   |   | 8.9 |   |

|                    |   | Quoted Prices in |   |   |        |   |    |         |   |   |       |   |
|-------------------------|--------|------------------|--------|--------|-------------|--------|---------|--------------|--------|--------|------------|--------|
|                    |   | Active Markets   |   |   | Significant |   |    | Significant  |   |   |       |   |
|                    |   | for Identical    |   |   | Observable  |   |    | Unobservable |   |   |       |   |
|                    |   | Assets           |   |   | Inputs      |   |    | Inputs       |   |   | Total      |   |
| Asset Category          |   | (Level 1)        |   |   | (Level 2)   |   |    | (Level 3)    |   |   | Fair Value |   |
|                    |   |             |   |   |        |   |    |         |   |   |       |   |
| Cash                    |   | $                | 86     |   |        | $      | — |         |   | $      | —    |   |   | $ | 86 |   |
|                    |   |             |   |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Mutual funds:           |   |             |   |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Fixed income            |   |             | 193    |   |        |   | — |         |   |   | —    |   |   |   | 193 |   |
| Large U.S. equities     |   |             | 453    |   |        |   | — |         |   |   | —    |   |   |   | 453 |   |
| Small/Mid U.S. equities |   |             | 605    |   |        |   | — |         |   |   | —    |   |   |   | 605 |   |
| International equities  |   |             | 125    |   |        |   | — |         |   |   | —    |   |   |   | 125 |   |
|                    |   |             |   |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Money market funds      |   |             | 29     |   |        |   | — |         |   |   | —    |   |   |   | 29 |   |
|                    |   |             |   |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Total                   |   | $                | 1,491  |   |        | $      | — |         |   | $      | —    |   |   | $ | 1,491 |   |

----

----

|                     |   | Quoted Prices in |    |   |        |   |    |         |   |   |       |   |
|--------------------------|--------|------------------|---------|--------|-------------|--------|---------|--------------|--------|--------|------------|--------|
|                     |   | Active Markets   |    |   | Significant |   |    | Significant  |   |   |       |   |
|                     |   | for Identical    |    |   | Observable  |   |    | Unobservable |   |   |       |   |
|                     |   | Assets           |    |   | Inputs      |   |    | Inputs       |   |   | Total      |   |
| Asset Category           |   | (Level 1)        |    |   | (Level 2)   |   |    | (Level 3)    |   |   | Fair Value |   |
|                     |   |             |    |   |        |   |    |         |   |   |       |   |
| Cash                     |   | $                | 23      |   |        | $      | — |         |   | $      | —    |   |   | $ | 23 |   |
|                     |   |             |    |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Certificates of deposit  |   |             | 120     |   |        |   | — |         |   |   | —    |   |   |   | 120 |   |
| U.S. agencies securities |   |             | — |   |        |   | 3       |         |   |   | —    |   |   |   | 3 |   |
|                     |   |             |    |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Mutual funds:            |   |             |    |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Fixed income             |   |             | 174     |   |        |   | — |         |   |   | —    |   |   |   | 174 |   |
| Large U.S. equities      |   |             | 437     |   |        |   | — |         |   |   | —    |   |   |   | 437 |   |
| Small/Mid U.S. equities  |   |             | 391     |   |        |   | — |         |   |   | —    |   |   |   | 391 |   |
| International equities   |   |             | 112     |   |        |   | — |         |   |   | —    |   |   |   | 112 |   |
|                     |   |             |    |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Money market funds       |   |             | 96      |   |        |   | — |         |   |   | —    |   |   |   | 96 |   |
|                     |   |             |    |   |        |   |    |         |   |   |       |   |   |   |   |   |
| Total                    |   | $                | 1,353   |   |        | $      | 3       |         |   | $      | —    |   |   | $ | 1,356 |   |

----

----

|                                                                 |   | 2010               |    |
|----------------------------------------------------------------------|--------|--------------------|---------|
|   Options                                                  |   |   Shares |    |   | Weighted–AverageExercise Price |   |   | Weighted–AverageRemainingContractualTerm |   |   | AggregateIntrinsicValue (1) |   |
|                                                                 |   |               |    |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding, beginning of year                                       |   |               | 61,040  |   |   | $ | 70.30 |   |   |   |   |   |   |   |
| Granted                                                              |   |               | 14,400  |   |   |   |  59.04 |   |   |   |   |   |   |   |
| Exercised                                                            |   |               | — |   |   |   |   |   |   |   |   |   |   |   |
| Forfeited or  expired                                      |   |               | (1,000  | ) |   |   | 71.59 |   |   |   |   |   |   |   |
|                                                                 |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding, end of year                                             |   |               | 74,440  |   |   |   | 68.10 |   |   |   | 6.5 |   |   | $ | — |   |
|                                                                 |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at year end                                      |   |               | 43,215  |   |   |   | 70.36 |   |   |   | 5.1 |   |   | $ | — |   |
|                                                                 |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted–average fair value of options granted during the year |   |               |    |   |   | $ | 13.71 |   |   |   |   |   |   |   |   |   |

| (1) | The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2010.  At December 31, 2010, the average exercise price of outstanding and exercisable options exceeded the market value of the underlying stock.  This amount changes based on changes in the market value of the Company’s stock.  The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                 |   | 2009               |   |
|----------------------------------------------------------------------|--------|--------------------|--------|
|   Options                                                  |   |   Shares |   |   | Weighted–AverageExercise Price |   |   | Weighted–AverageRemainingContractualTerm |   |   | AggregateIntrinsicValue |   |
|                                                                 |   |               |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding, beginning of year                                       |   |               | 50,829 |   |   | $ | 72.21 |   |   |   |   |   |   |   |
| Granted                                                              |   |               | 12,400 |   |   |   | 62.87 |   |   |   |   |   |   |   |
| Exercised                                                            |   |               | (989   | ) |   |   | 70.51 |   |   |   |   |   |   |   |
| Forfeited or  expired                                      |   |               | (1,200 | ) |   |   | 72.67 |   |   |   |   |   |   |   |
|                                                                 |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding, end of year                                             |   |               | 61,040 |   |   |   | 70.30 |   |   |   | 6.8 |   |   | $ | 136 |   |
|                                                                 |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at year end                                      |   |               | 31,965 |   |   |   | 69.27 |   |   |   | 5.6 |   |   | $ | 62 |   |
|                                                                 |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted–average fair value of options granted during the year |   |               |   |   |   | $ | 8.96 |   |   |   |   |   |   |   |   |   |

----

----

|                       |           |   |        | Options Outstanding |        |      |      |      | Options Exercisable |        |
|----------------------------|----------------|--------|-------------|---------------------|-------------|-----------|-----------|-----------|---------------------|-------------|
|                       |           |   |        |                |        | Weighted  |      |      |                |        |   |   |   |   |   |
|                       |           |   |        |                |        | Average   |      | Weighted  |                |        |   |   |   | Weighted |   |
|                       |           |   |        |                |        | Remaining |      | Average   |                |        |   |   |   | Average |   |
| Range of                   |           |   | Number      |                | Contractual |      | Exercise  |      |                | Number      |   |   | Exercise |   |
| Exercise Prices            |           |   | Outstanding |                | Life        |      | Price     |      |                | Exercisable |   |   | Price |   |
|                       |           |   |        |                |        |      |      |      |                |        |   |   |   |   |   |
|                       | $              | 56.00  |        |                |        | 4,626     |      | 2.4 Years |                | $           | 56.00 |   |   |   | 4,626 |   |   | $ | 56.00 |   |
|                       |           | 62.00  |        |                |        | 6,826     |      | 3.4 Years |                |        | 62.00 |   |   |   | 6,826 |   |   |   | 62.00 |   |
|                       |           | 70.00  |        |                |        | 6,188     |      | 4.2 Years |                |        | 70.00 |   |   |   | 6,188 |   |   |   | 70.00 |   |
|                       |           | 76.00  |        |                |        | 9,700     |      | 5.2 Years |                |        | 76.00 |   |   |   | 9,700 |   |   |   | 76.00 |   |
|                       |           | 77.00  |        |                |        | 9,700     |      | 6.2 Years |                |        | 77.00 |   |   |   | 7,275 |   |   |   | 77.00 |   |
|                       |           | 78.13  |        |                |        | 11,400    |      | 7.2 Years |                |        | 78.13 |   |   |   | 5,700 |   |   |   | 78.13 |   |
|                       |           | 62.87  |        |                |        | 11,600    |      | 8.2 Years |                |        | 62.87 |   |   |   | 2,900 |   |   |   | 62.87 |   |
|                       | 55.23 to 59.84 |   |        |                | 14,400      |      | 9.3 Years |      |                | 59.04       |   |   |   | — |   |   |   | — |   |
|                       |           |   |        |                |        |      |      |      |                |        |   |   |   |   |   |   |   |   |   |   |
| Outstanding at end of year |           |   |        | 74,440              |        | 6.5 Years |      |      | 68.10               |        |   |   | 43,215 |   |   |   | 70.36 |   |

|                                 |   |      |    |   | Weighted Average |   |
|--------------------------------------|--------|-----------|---------|--------|------------------|--------|
|                                 |   | Number of |    |   | Grant Date Fair  |   |
|                                 |   | Shares    |    |   | Value            |   |
|                                 |   |      |    |   |             |   |
| Nonvested options, December 31, 2009 |   |      | 28,425  |   |             | $      | 10.31 |   |
|                                 |   |      |    |   |             |   |   |   |
| Granted                              |   |      | 14,400  |   |             | $      | 13.71 |   |
| Vested                               |   |      | (11,000 | )      |             | $      | 11.00 |   |
| Forfeited/expired                    |   |      | (600    | )      |             | $      | 10.00 |   |
|                                 |   |      |    |   |             |   |   |   |
| Nonvested options, December 31, 2010 |   |      | 31,225  |   |             | $      | 11.64 |   |

|                                                        |   | March 10, |   |   | September 14, |   |   | March 11, |   |
|-------------------------------------------------------------|--------|-----------|--------|--------|---------------|--------|--------|-----------|--------|
|                                                        |   | 2010      |   |   | 2010          |   |   | 2009      |   |
| Risk–free interest rates                              |   |      | 3.11   | %      |          |   | 2.70   | %         |   |   | 2.53 | % |
| Dividend yields                                             |   |      | 2.42   | %      |          |   | 2.77   | %         |   |   | 4.77 | % |
| Volatility factors of expected market price of common stock |   |      | 25.03  | %      |          |   | 24.90  | %         |   |   | 24.48 | % |
| Weighted–average expected life of the options         |   | 7 years   |   |   | 9 years       |   |   | 8 years   |   |

----

----

|                                                           |   | Year Ended December 31, 2010 |    |
|----------------------------------------------------------------|--------|------------------------------|---------|
|                                                           |   | Loss                         |    |   | Weighted-Average Shares |   |   | Per Share Amount |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |
| Net loss                                                       |   | $                            | (2,102  | ) |   |   | 645,988 |   |   |   |   |
| Basic loss per share                                           |   |                         |    |   |   |   |   |   |   |   |   |
| Loss applicable to common shareholders                         |   |                         |    |   |   |   |   |   |   | $ | (3.25 | ) |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |
| Effect of dilutive securities                                  |   |                         |    |   |   |   |   |   |   |   |   |   |
| Stock options                                                  |   |                         | — |   |   |   | 439 |   |   |   |   |   |
| Diluted loss per share                                         |   |                         |    |   |   |   |   |   |   |   |   |   |
| Loss applicable to common shareholders and assumed conversions |   | $                            | (2,102  | ) |   |   | 646,427 |   |   | $ | (3.25 | ) |

|                                                            |   | Year Ended December 31, 2009 |    |
|-----------------------------------------------------------------|--------|------------------------------|---------|
|                                                            |   | Income                       |    |   | Weighted-Average Shares |   |   | Per Share Amount |   |
|                                                            |   |                         |    |   |   |   |   |   |   |   |   |
| Net income                                                      |   | $                            | 1,834   |   |   |   | 645,623 |   |   |   |   |
| Basic earnings per share                                        |   |                         |    |   |   |   |   |   |   |   |   |
| Income available to common shareholders                         |   |                         |    |   |   |   |   |   |   | $ | 2.84 |   |
|                                                            |   |                         |    |   |   |   |   |   |   |   |   |   |
| Effect of dilutive securities                                   |   |                         |    |   |   |   |   |   |   |   |   |   |
| Stock options                                                   |   |                         | — |   |   |   | 1,845 |   |   |   |   |   |
| Diluted earnings per share                                      |   |                         |    |   |   |   |   |   |   |   |   |   |
| Income available to common shareholders and assumed conversions |   | $                            | 1,834   |   |   |   | 647,468 |   |   | $ | 2.83 |   |

----

----

|                               |   | 2010   |   |   | 2009   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|
| Income tax expense (benefit)       |   |   |   |   |   |   |
| Currently payable (receivable)     |   |   |   |   |   |   |
| Federal                            |   | $      | (485   | )      |   | $      | 496 |   |
| State                              |   |   | 224    |   |   |   | 190 |   |
| Deferred                           |   |   | (1,565 | )      |   |   | (207 | ) |
|                               |   |   |   |   |   |   |   |   |
| Total income tax expense (benefit) |   | $      | (1,826 | )      |   | $      | 479 |   |

| Reconciliation of federal statutory to actual tax expense (benefit) |   |   |   |   |   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Federal statutory income tax at 34%                                 |   | $      | (1,336 | )      |   | $      | 787 |   |
| Tax–exempt income                                             |   |   | (254   | )      |   |   | (384 | ) |
| Effect of state income taxes and other items, net                   |   |   | (236   | )      |   |   | 76 |   |
|                                                                |   |   |   |   |   |   |   |   |
| Actual tax expense (benefit)                                        |   | $      | (1,826 | )      |   | $      | 479 |   |
|                                                                |   |   |   |   |   |   |   |   |
| Effective tax rate                                                  |   |   | (46.5  | )%     |   |   | 20.7 | % |

|                                               |   | 2010   |   |   | 2009   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Assets                                             |   |   |   |   |   |   |
| Unrealized losses on securities available for sale |   | $      | 45     |   |   | $      | — |   |
| Allowance for loan losses                          |   |   | 1,085  |   |   |   | 748 |   |
| Deferred compensation                              |   |   | 404    |   |   |   | 363 |   |
| Change in defined benefit pension plan losses      |   |   | 102    |   |   |   | 133 |   |
| Other real estate owned                            |   |   | 453    |   |   |   | 23 |   |
| Federal net operating loss carryforward            |   |   | 88     |   |   |   | — |   |
| Alternative minimum tax credit                     |   |   | 472    |   |   |   | — |   |
| Core deposit intangible                            |   |   | 303    |   |   |   | 283 |   |
| General business credit                            |   |   | 139    |   |   |   | 24 |   |
| Capital loss carryforward                          |   |   | 58     |   |   |   | 58 |   |
| State net operating loss carryforward              |   |   | 233    |   |   |   | — |   |
| Other                                              |   |   | 187    |   |   |   | 70 |   |
| Total assets                                       |   |   | 3,569  |   |   |   | 1,702 |   |

----

----

|                                              |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Liabilities                                       |   |   |    |   |   |   |
| Unrealized gains on securities available for sale |   | $      | — |   |   | $      | (265 | ) |
| FHLB stock                                        |   |   | (124    | )      |   |   | (117 | ) |
| Depreciation                                      |   |   | (468    | )      |   |   | (464 | ) |
| Mortgage servicing rights                         |   |   | (167    | )      |   |   | (118 | ) |
| Goodwill                                          |   |   | (508    | )      |   |   | (414 | ) |
| State income tax                                  |   |   | (176    | )      |   |   | (38 | ) |
| Other                                             |   |   | (56     | )      |   |   | (60 | ) |
| Total liabilities                                 |   |   | (1,499  | )      |   |   | (1,476 | ) |
|                                              |   |   |    |   |   |   |   |   |
|                                              |   | $      | 2,070   |   |   | $      | 226 |   |

----

----

|                      |   | 2010   |   |   | 2009   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |   |   |
| Unfunded commitments      |   | $      | 21,836 |   |   | $      | 21,161 |   |
| Standby letters of credit |   |   | 165    |   |   |   | 472 |   |

|   | Level 1 | Quoted prices in active markets for identical assets or liabilities |
|--------|---------|---------------------------------------------------------------------|

|   | Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                                                                     |   |       |   |   | Fair Value Measurements Using                               |   |
|------------------------------------------------------------------------------------------|--------|------------|--------|--------|-------------------------------------------------------------|--------|
|                                                                                     |   | Fair Value |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Recurring basis:                                                                         |   |       |   |   |                                                        |   |   |   |   |   |   |   |
|     Assets:                                                          |   |       |   |   |                                                        |   |   |   |   |   |   |   |
|        Available for sale securities:                 |   |       |   |   |                                                        |   |   |   |   |   |   |   |
| U.S. Treasury                                                                            |   | $          | 3,578  |   |                                                        | $      | — |   |   | $ | 3,578 |   |   | $ | — |   |
| Federal agencies                                                                         |   |       | 25,545 |   |                                                        |   | — |   |   |   | 25,545 |   |   |   | — |   |
| State and municipal                                                                      |   |       | 17,968 |   |                                                        |   | — |   |   |   | 17,968 |   |   |   | — |   |
| Mortgage–backed  securities and collateralized mortgage obligations |   |       | 1,813  |   |                                                        |   | — |   |   |   | 1,813 |   |   |   | — |   |
| Corporate obligations                                                                    |   |       | 1,831  |   |                                                        |   | — |   |   |   | 1,831 |   |   |   | — |   |
| Equities                                                                                 |   |       | 14     |   |                                                        |   | 14 |   |   |   | — |   |   |   | — |   |
| Interest rate swap agreements – customer CDs                                       |   |       | 1,093  |   |                                                        |   | — |   |   |   | 1,093 |   |   |   | — |   |
| Total assets                                                                             |   | $          | 51,842 |   |                                                        | $      | 14 |   |   | $ | 51,828 |   |   | $ | — |   |
|                                                                                     |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|      Liabilities:                                                    |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Written call options - customer CDs                                                      |   | $          | (1,093 | )      |                                                        | $      | — |   |   | $ | (1,093 | ) |   | $ | — |   |
|                                                                                     |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Nonrecurring basis:                                                                      |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                                                           |   | $          | 1,779  |   |                                                        | $      | — |   |   | $ | — |   |   | $ | 1,779 |   |

----

----

|                                                                                |   |       |   |   | Fair Value Measurements Using                               |   |
|-------------------------------------------------------------------------------------|--------|------------|--------|--------|-------------------------------------------------------------|--------|
|                                                                                |   | Fair Value |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Recurring basis:                                                                    |   |       |   |   |                                                        |   |   |   |   |   |   |   |
|     Assets:                                                     |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|         Available for sale securities:      |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury                                                                       |   | $          | 5,198  |   |                                                        | $      | — |   |   | $ | 5,198 |   |   | $ | — |   |
| Federal agencies                                                                    |   |       | 23,877 |   |                                                        |   | — |   |   |   | 23,877 |   |   |   | — |   |
| State and municipal                                                                 |   |       | 23,831 |   |                                                        |   | — |   |   |   | 23,831 |   |   |   | — |   |
| Mortgage–backed  securities and collateralized mortgage obligations |   |       | 3,440  |   |                                                        |   | — |   |   |   | 3,440 |   |   |   | — |   |
| Equities                                                                            |   |       | 27     |   |                                                        |   | 27 |   |   |   | — |   |   |   | — |   |
| Interest rate swap agreements – customer CDs                                  |   |       | 835    |   |                                                        |   | — |   |   |   | 835 |   |   |   | — |   |
| Total assets                                                                        |   | $          | 57,208 |   |                                                        | $      | 27 |   |   | $ | 57,181 |   |   | $ | — |   |
|                                                                                |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
|     Liabilities:                                                |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Written call options - customer CDs                                                 |   | $          | (835   | )      |                                                        | $      | — |   |   | $ | (835 | ) |   | $ | — |   |
|                                                                                |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Nonrecurring basis:                                                                 |   |       |   |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                                                      |   | $          | 54     |   |                                                        | $      | — |   |   | $ | — |   |   | $ | 54 |   |

----

----

|                                   |   | 2010           |    |   | 2009      |   |
|----------------------------------------|--------|----------------|---------|--------|-----------|--------|
|                                   |   | CarryingAmount |    |   | FairValue |   |   | CarryingAmount |   |   | FairValue |   |
| Assets                                 |   |           |    |   |      |   |   |   |   |   |   |   |
| Cash and cash equivalents              |   | $              | 17,087  |   |      | $      | 17,087 |   |   | $ | 17,921 |   |   | $ | 17,921 |   |
| Interest-bearing time deposits         |   |           | 54,837  |   |      |   | 55,805 |   |   |   | 41,011 |   |   |   | 41,781 |   |
| Securities available for sale          |   |           | 50,749  |   |      |   | 50,749 |   |   |   | 56,373 |   |   |   | 56,373 |   |
| Loans held for sale                    |   |           | 895     |   |      |   | 895 |   |   |   | 46 |   |   |   | 46 |   |
| Loans, net                             |   |           | 137,417 |   |      |   | 136,121 |   |   |   | 147,105 |   |   |   | 145,690 |   |
| Cash surrender value of life insurance |   |           | 3,679   |   |      |   | 3,679 |   |   |   | 3,508 |   |   |   | 3,508 |   |
| Accrued interest receivable            |   |           | 1,397   |   |      |   | 1,397 |   |   |   | 1,361 |   |   |   | 1,361 |   |
|                                   |   |           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                            |   |           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits with no stated maturities     |   |           | 183,802 |   |      |   | 183,802 |   |   |   | 174,872 |   |   |   | 174,872 |   |
| Time deposits                          |   |           | 74,793  |   |      |   | 76,499 |   |   |   | 76,357 |   |   |   | 77,705 |   |
| Borrowings                             |   |           | 2,000   |   |      |   | 2,005 |   |   |   | 4,000 |   |   |   | 4,061 |   |
| Accrued interest payable               |   |           | 332     |   |      |   | 332 |   |   |   | 427 |   |   |   | 427 |   |

----

----

|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   | To Be Well  |   |
|----------------------------------------------|--------|--------|--------|--------|-------------|--------|--------|------------------------|--------|--------|--------------|--------|--------|-------------|--------|
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   | Capitalized |   |
|                                         |   |   |   |   |        |   |   | Minimum                |   |   | Under Prompt |   |
|                                         |   |   |   |   |        |   |   | Capital                |   |   | Corrective   |   |
|                                         |   | Actual |   |   | Requirement |   |   | Action Provisions      |   |
| As of December 31, 2010                      |   | Amount |   |   | Ratio       |   |   | Amount                 |   |   | Ratio        |   |   | Amount      |   |   | Ratio |   |
|                                         |   |   |   |   |        |   |   | (Amounts in Thousands) |   |   |         |   |   |        |   |
| Total capital to risk weighted assets:       |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |
| Consolidated                                 |   | $      | 22,269 |   |        |   | 12.7   | %                      |   | $      | 14,054       |   |   |        | 8.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 22,048 |   |        |   | 12.6   |                   |   |   | 14,001       |   |   |        | 8.0    |   |   | $ | 17,502 |   |   |   | 10.0 | % |
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Tier I capital to risk weighted assets: |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                 |   | $      | 20,067 |   |        |   | 11.4   | %                      |   | $      | 7,027        |   |   |        | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 19,846 |   |        |   | 11.3   |                   |   |   | 7,001        |   |   |        | 4.0    |   |   | $ | 10,501 |   |   |   | 6.0 | % |
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Tier I capital to average assets:            |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                 |   | $      | 20,067 |   |        |   | 6.6    | %                      |   | $      | 12,176       |   |   |        | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 19,846 |   |        |   | 6.5    |                   |   |   | 12,171       |   |   |        | 4.0    |   |   | $ | 15,214 |   |   |   | 5.0 | % |

----

----

|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   | To Be Well  |   |
|----------------------------------------------|--------|--------|--------|--------|-------------|--------|--------|------------------------|--------|--------|--------------|--------|--------|-------------|--------|
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   | Capitalized |   |
|                                         |   |   |   |   |        |   |   | Minimum                |   |   | Under Prompt |   |
|                                         |   |   |   |   |        |   |   | Capital                |   |   | Corrective   |   |
|                                         |   | Actual |   |   | Requirement |   |   | Action Provisions      |   |
| As of December 31, 2009                      |   | Amount |   |   | Ratio       |   |   | Amount                 |   |   | Ratio        |   |   | Amount      |   |   | Ratio |   |
|                                         |   |   |   |   |        |   |   | (Amounts in Thousands) |   |   |         |   |   |        |   |
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |
| Total capital to risk weighted assets:  |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |
| Consolidated                                 |   | $      | 25,133 |   |        |   | 14.3   | %                      |   | $      | 14,041       |   |   |        | 8.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 24,807 |   |        |   | 14.2   |                   |   |   | 14,024       |   |   |        | 8.0    |   |   | $ | 17,529 |   |   |   | 10.0 | % |
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Tier I capital to risk weighted assets: |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                 |   | $      | 22,939 |   |        |   | 13.1   | %                      |   | $      | 7,021        |   |   |        | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 22,614 |   |        |   | 12.9   |                   |   |   | 7,012        |   |   |        | 4.0    |   |   | $ | 10,518 |   |   |   | 6.0 | % |
|                                         |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Tier I capital to average assets:            |   |   |   |   |        |   |   |                   |   |   |         |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                 |   | $      | 22,939 |   |        |   | 8.1    | %                      |   | $      | 11,387       |   |   |        | 4.0    | % |   |   | N/A |   |   |   | N/A |   |
| First National Bank of Ottawa           |   |   | 22,614 |   |        |   | 8.0    |                   |   |   | 11,378       |   |   |        | 4.0    |   |   | $ | 14,223 |   |   |   | 5.0 | % |

|                                                         |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Other comprehensive income (loss)                            |   |   |   |   |   |   |
| Unrealized holding gains (losses) arising during the year    |   | $      | (670   | )      |   | $      | 1,224 |   |
| Reclassification adjustment for gains realized in net income |   |   | (241   | )      |   |   | (979 | ) |
| Net gains  relating to benefit liability           |   |   | 114    |   |   |   | 169 |   |
| Tax effect                                                   |   |   | 271    |   |   |   | (141 | ) |
|                                                         |   |   |   |   |   |   |   |   |
| Net change in other comprehensive income (loss)              |   | $      | (526   | )      |   | $      | 273 |   |

|                                                        |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Net unrealized gain (loss) on securities available for sale |   | $      | (134   | )      |   | $      | 777 |   |
| Net loss relating to benefit liability                      |   |   | (589   | )      |   |   | (703 | ) |
| Tax effect                                                  |   |   | 246    |   |   |   | (25 | ) |
|                                                        |   |   |   |   |   |   |   |   |
| Accumulated other comprehensive income (loss)               |   | $      | (477   | )      |   | $      | 49 |   |

----

----

| Condensed Balance Sheets                         |   |
|--------------------------------------------------|--------|
|                                             |   |
|                                             |   | 2010 |   |   | 2009 |   |
| Assets                                           |   |   |   |   |   |   |
| Cash on deposit with Bank                        |   | $ | 294 |   |   | $ | 502 |   |
| Securities available for sale                    |   |   | 12 |   |   |   | 19 |   |
| Investment in common stock of Bank               |   |   | 22,745 |   |   |   | 25,654 |   |
| Other assets                                     |   |   | 84 |   |   |   | 204 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total assets                                     |   | $ | 23,135 |   |   | $ | 26,379 |   |
|                                             |   |   |   |   |   |   |   |   |
| Liabilities                                      |   |   |   |   |   |   |   |   |
| Dividends payable                                |   | $ | 168 |   |   | $ | 401 |   |
|                                             |   |   |   |   |   |   |   |   |
| Shareholders’ Equity                       |   |   | 22,967 |   |   |   | 25,978 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity |   | $ | 23,135 |   |   | $ | 26,379 |   |

| Condensed Statements of Income                                            |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |   |
|                                                                      |   | 2010 |   |   | 2009 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Income - dividends from Bank                                              |   | $ | 549 |   |   | $ | 1,067 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Expenses                                                                  |   |   | 354 |   |   |   | 219 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Income before income tax and equity in undistributed income of subsidiary |   |   | 195 |   |   |   | 848 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Income tax benefit                                                        |   |   | 84 |   |   |   | 29 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Income before equity in undistributed income of subsidiary                |   |   | 279 |   |   |   | 877 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Equity in undistributed income (loss) of subsidiary                       |   |   | (2,381 | ) |   |   | 957 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Net Income (loss)                                                         |   | $ | (2,102 | ) |   | $ | 1,834 |   |

----

----

| Condensed Statements of Cash Flows                  |   |
|-----------------------------------------------------|--------|
|                                                |   |
|                                                |   | 2010 |   |   | 2009 |   |
| Operating Activities                                |   |   |   |   |   |   |
| Net income (loss)                                   |   | $ | (2,102 | ) |   | $ | 1,834 |   |
| Items not requiring (providing) cash                |   |   |   |   |   |   |   |   |
| Equity in earnings (loss) of Bank                   |   |   | 1,832 |   |   |   | (2,024 | ) |
| Grant of incentive stock options                    |   |   | — |   |   |   | 9 |   |
| Stock options vested                                |   |   | 133 |   |   |   | 117 |   |
| Change in other assets                              |   |   | (10 | ) |   |   | (1 | ) |
| Net cash used in operating activities               |   |   | (147 | ) |   |   | (65 | ) |
|                                                |   |   |   |   |   |   |   |   |
| Investing Activities                                |   |   |   |   |   |   |   |   |
| Dividends received from Bank                        |   |   | 549 |   |   |   | 1,067 |   |
| Purchase of securities available for sale           |   |   | — |   |   |   | (20 | ) |
| Proceeds from sale of securities available for sale |   |   | 10 |   |   |   | — |   |
| Impairment loss on other assets                     |   |   | 129 |   |   |   | — |   |
| Net cash provided by financing activities           |   |   | 688 |   |   |   | 1,047 |   |
|                                                |   |   |   |   |   |   |   |   |
| Financing Activities                                |   |   |   |   |   |   |   |   |
| Stock options exercised                             |   |   | — |   |   |   | 70 |   |
| Dividends paid                                      |   |   | (749 | ) |   |   | (1,883 | ) |
| Net cash used in financing activities               |   |   | (749 | ) |   |   | (1,813 | ) |
|                                                |   |   |   |   |   |   |   |   |
| Net Change in Cash and Cash Equivalents             |   |   | (208 | ) |   |   | (831 | ) |
|                                                |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents, Beginning of Year        |   |   | 502 |   |   |   | 1,333 |   |
|                                                |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents, End of Year              |   | $ | 294 |   |   | $ | 502 |   |

----

----

|           |   |     |   |   |     |   |   |         |   |   |      |   |   |       |   |   | Net    |   |   |   |   |   |    |   |
|----------------|--------|----------|--------|--------|----------|--------|--------|--------------|--------|--------|-----------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
|           |   | Interest |   |   | Interest |   |   | Net Interest |   |   |      |   |   | Securities |   |   | Income |   |   | Basic  |   |   | Diluted |   |
|           |   | Income   |   |   | Expense  |   |   | Income       |   |   | Provision |   |   | Gains      |   |   | (Loss) |   |   | EPS    |   |   | EPS     |   |
|           |   |     |   |   |     |   |   |         |   |   |      |   |   |       |   |   |   |   |   |   |   |   |    |   |
| 2010           |   |     |   |   |     |   |   |         |   |   |      |   |   |       |   |   |   |   |   |   |   |   |    |   |
| First quarter  |   | $        | 2,860  |   |     | $      | 615    |         |   | $      | 2,245     |   |   | $          | 270    |   |   | $      | 26     |   |   | $      | 308     |   |   | $ | 0.48 |   |   | $ | 0.48 |   |
| Second quarter |   |     | 2,787  |   |     |   | 579    |         |   |   | 2,208     |   |   |       | 270    |   |   |   | 52     |   |   |   | 138     |   |   |   | 0. 21 |   |   |   | 0. 21 |   |
| Third quarter  |   |     | 2,836  |   |     |   | 558    |         |   |   | 2,278     |   |   |       | 270    |   |   |   | 263    |   |   |   | 397     |   |   |   | 0. 62 |   |   |   | 0. 61 |   |
| Fourth quarter |   |     | 2,727  |   |     |   | 510    |         |   |   | 2,217     |   |   |       | 4,930  |   |   |   | 1      |   |   |   | (2,945  | )      |   |   | (4.56 | ) |   |   | (4.55 | ) |
|           |   |     |   |   |     |   |   |         |   |   |      |   |   |       |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2009           |   |     |   |   |     |   |   |         |   |   |      |   |   |       |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| First quarter  |   | $        | 3,230  |   |     | $      | 944    |         |   | $      | 2,286     |   |   | $          | 270    |   |   | $      | 231    |   |   | $      | 553     |   |   | $ | 0.86 |   |   | $ | 0.86 |   |
| Second quarter |   |     | 3,039  |   |     |   | 855    |         |   |   | 2,184     |   |   |       | 120    |   |   |   | 4      |   |   |   | 475     |   |   |   | 0.73 |   |   |   | 0.73 |   |
| Third quarter  |   |     | 3,153  |   |     |   | 763    |         |   |   | 2,390     |   |   |       | 120    |   |   |   | 3      |   |   |   | 491     |   |   |   | 0.76 |   |   |   | 0.76 |   |
| Fourth quarter |   |     | 2,950  |   |     |   | 675    |         |   |   | 2,275     |   |   |       | 820    |   |   |   | 741    |   |   |   | 315     |   |   |   | 0.49 |   |   |   | 0.49 |   |

----

----

----