----

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| LETTER TO SHAREHOLDERS                                                                                                                                                                                 |   |                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                   |   |                                                                 |   |
| In perhaps one of the more                                                                                                                                                                             |   | time, consumer loan and residential mortgage loan                    |
|    ironic aspects of our work                                                                                                                                                                |   | balances declined.                                                   |
|     at Indiana Bank and                                                                                                                                                                 |   |                                                                 |
|     Trust, we prepare this                                                                                                                                                              |   | Retail deposits grew throughout 2010, increasing by                  |
|     annual report each year                                                                                                                                                             |   | more than $8 million at year-end due to growth in non-               |
|     in the depths of winter,                                                                                                                                                            |   | interest checking, interest-bearing checking and money               |
|    looking back with some                                                                                                                                                                    |   | market products.  The low interest rate environment        |
|  satisfaction at the brightest                                                                                                                                                                    |   | helped move our customers away from certificates                     |
| results of our recent work and pragmatically analyzing                                                                                                                                                 |   | of deposit to more liquid, interest-bearing transaction              |
| the challenges we encountered during the past year.                                                                                                                                                    |   | accounts.  Throughout the year, we focused on              |
| Part of the process, of course, also entails looking for                                                                                                                                               |   | improving the mix of assets within the loan portfolio and            |
| every sign of better economic times in the sunnier,                                                                                                                                                    |   | the retail deposit portfolio.  Overall, our balance sheet  |
| warmer months ahead.                                                                                                                                                                                   |   | showed improvement as restructuring drove an increase                |
|                                                                                                                                                                                                   |   |                                                                 |   | in net interest margin from 2.93 percent to 3.33 percent. |
| This year the irony is compounded by the fact that,                                                                                                                                                    |   | Net interest income rose by $4.7 million, a 17 percent               |
| while our region has endured one of the stormiest,                                                                                                                                                     |   | increase.  For the year, total assets grew by $33 million. |
| coldest winters in memory, we are seeing the first small                                                                                                                                               |   |                                                                 |
| indicators of moderation in the economic storm that                                                                                                                                                    |   | Throughout 2010 the depressed state of the economy                   |
| has battered out national and regional economies for                                                                                                                                                   |   | at large was reflected in the level of non-performing                |
| the past four years.  This is not to say we are ready to                                                                                                                                     |   | assets, although the total remained consistent with                  |
| forecast an early return to a more agreeable economic                                                                                                                                                  |   | 2009, a cautiously optimistic sign.  Net charge-offs       |
| The essential mission of community banks is to provideleadership in finding local solutions for local problems.                                                                                        |
| climate, but these positive indicators are enough to                                                                                                                                                   |   | exceeded $5 million, prompting us to increase the                    |
| support some level of cautious optimism in the early                                                                                                                                                   |   | allowance for loan losses by $1.5 million.  At the same    |
| months of 2011.  Like all American, we welcome any                                                                                                                                           |   | time, however, we saw a steady improvement in                        |
| sign of positive change.                                                                                                                                                                               |   | quarterly pre-tax, pre-provision earnings to $4.5 million            |
|                                                                                                                                                                                                   |   |                                                                 |   | in the fourth quarter. |
| Highlights of Indiana Bank and Trust Company’s                                                                                                                                                   |   |                                                                 |
| performance in 2010 reflect the economy’s highs and                                                                                                                                              |   | With the combination of the $1.5 million addition to                 |
| lows and its impact on our business.  We witnessed                                                                                                                                           |   | the loan-loss reserve and increased tangible capital                 |
| encouraging growth in our commercial and commercial                                                                                                                                                    |   | of $3.7 million, risk-based capital increased to $114.4              |
| mortgage loan portfolios, for example, but at the same                                                                                                                                                 |   | million.  Our capital ratio of 13 percent places Indiana   |
|                                                                                                                                                                                                   |   |                                                                 |   |   |

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|                                                               |                                                                                   |                                            |   |                                                               |
|--------------------------------------------------------------------|----------------------------------------------------------------------------------------|-------------------------------------------------|--------|--------------------------------------------------------------------|
| Community Bancorp in what regulators consider the                  |                                                                                   |                                            |   | modest signs of recovery appearing throughout our                  |
| “well capitalized” category of financial institutions. |                                                                                   |                                            |   | home state of Indiana.                                             |
| Other positive indicators in 2010 included an                      |                                                                                   |                                            |   |                                                               |
| improvement in our efficiency ratio, demonstrating                 |                                                                                   |                                            |   | The most troublesome aspect of the recession – loss          |
| that internal cost reduction actions taken over the past           |                                                                                   |                                            |   | of employment – has been particularly devastating in         |
| 18 months have been beneficial to the overall efficiency           |                                                                                   |                                            |   | Indiana and the Midwest.  Tens of thousands of           |
| of the bank, and an increase in book value per share of            |                                                                                   |                                            |   | manufacturing jobs have simply disappeared, many of                |
| approximately 5 percent.                                           |                                                                                   |                                            |   | them never to return.  Our state posted the 13th highest |
|                                                               |                                                                                   |                                            |   | rate of job loss in the nation in 2009, but last year we           |
| For the year, net income reached $5.6 million, or                  |                                                                                   |                                            |   | received national media attention by posting the fifth             |
| $1.32 diluted earnings per common share, reversing a               |                                                                                   |                                            |   | fastest rate of job recovery among all states.  Indiana  |
| comparable net loss a year earlier.                                |                                                                                   |                                            |   | added about 50,000 jobs last year, a two percent                   |
|                                                               |                                                                                   |                                            |   | increase, and economists predict similar growth this               |
| And so, overall, 2010 was a better year for Indiana                |                                                                                   |                                            |   | year – but they add that at least two more years will        |
| Community Bancorp than the challenging year before,                |                                                                                   |                                            |   | pass before employment returns to pre-recession levels.            |
| which, combined with other encouraging signs in the                |                                                                                   |                                            |   |                                                               |
| overall economy, gives us some reason to be                        |                                                                                   |                                            |   | For many Hoosier, the housing market is as                         |
| guardedly optimistic about prospects for                           |                                                                                   |  important an economic indicator as        |
| still more improvement in 2011.                                    |      employment.  While forecasts for 2011          |
|                                                               |       are encouraging, with housing starts               |
| It is true that hope springs eternal                               |         increasing perhaps more than           |
| in both meteorology and banking,                                   |         25 percent over last year, there       |
| and with good reason:  both are                          |          remains a ten-month inventory of |
| cyclical activities, in the best and                               |        homes on the market compared                 |
| worst sense.  We know downturns                          |     to the more typical five- to six-                              |
| are inevitable in each, and yet we                                 |                                                                                   | month levers of the past.  Under even |
| also know that we must constantly work                             |                                                                                   |                                            |   |                                                               |   |  the most optimistic forecasts, new home |
| to prepare for the better times we know will                       |                                                                                   |                                            |   | construction will remain below pre-recession levels                |
| eventually come out way.                                           |                                                                                   |                                            |   | and sales prices of existing homes will rise only slightly         |
|                                                               |                                                                                   |                                            |   | this year.                                                         |
| Community bankers play an important role in this                   |                                                                                   |                                            |   |                                                               |
| process.  One of our primary responsibilities is to      |                                                                                   |                                            |   | As we look around our south-central sector of Indiana,             |
| study global and national economic activity and                    |                                                                                   |                                            |   | we see a growing number of indications of better                   |
| interpret its impact at the regional and local level.              |                                                                                   |                                            |   | economic weather ahead.  Cummins, Inc., the largest      |
| As 2010 came to an end, we were encouraged to see                  |                                                                                   |                                            |   | employer in our area, demonstrated good progress in                |
|                                                               |                                                                                   |                                            |   |                                                               |

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|                                                                  |                                                                       |                                                                        |   |                                                             |
|-----------------------------------------------------------------------|----------------------------------------------------------------------------|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------|
| recovering from the national economic downturn and                    |                                                                       |                                                                        |   | A recently enacted legislative change is creating                |
| now plans to add hundreds of new jobs in Columbus                     |                                                                       |                                                                        |   | additional differentiation between community banks               |
| and Seymour.  Many retailers in our area shared in          |                                                                       |                                                                        |   | and large, multi-state banks.  The assessment schedule |
| the sales growth reported throughout the nation last                  |                                                                       |                                                                        |   | of the Federal Deposit Insurance Corporation, which              |
| fall, and there are encouraging signs of investment                   |                                                                       |                                                                        |   | has traditionally been based solely on the size of a             |
| and job creation in other sectors of our                              |                                                                       |     bank’s deposits, is now based on total assets |
| regional economy.  But we also see the                      |       minus tangible equity.                 |
| same inertia in the housing market                                    |                                                                       |
| forecast for other regions, and                                       |       We understand that many of             |
| we acknowledge that new job                                           |        our small business clients have  |
| creations must necessarily come                                       |        limited opportunities to improve |
| in fields other than traditionally                                    |       their balance sheets, and that         |
| large sources of employment such                                      |     not everyone has the ability to                    |
| as manufacturing and construction.                                    |                                                                       | emerge from the experiences of                                              |
|                                                                  |                                                                       |                                                                        |   |                                                             |   | a major downturn at the same time. |
| As community bankers, we understand                                   |                                                                       |                                                                        |   | Throughout this recession we have worked                         |
| the importance of our leadership role in helping others               |                                                                       |                                                                        |   | individually with our customers to help them set                 |
| find opportunities and solutions for problems in good                 |                                                                       |                                                                        |   | realistic expectations and to chart a practical course for       |
| times and bad.  We appreciate the advantage we              |                                                                       |                                                                        |   | building their financial futures.                                |
| maintain over multi-state financial institutions that are             |                                                                       |                                                                        |   |                                                             |
| unable to react effectively to local issues.  The essential |                                                                       |                                                                        |   | For more than 100 years the cornerstone of our                   |
| mission of community banks is to provide leadership in                |                                                                       |                                                                        |   | business has been, and will remain, our commitment               |
| finding local solutions for local problems.                           |                                                                       |                                                                        |   | to provide practical and effective financial products,           |
|                                                                  |                                                                       |                                                                        |   | services, counsel and communication.  As we continue   |
| This year, we are fortunate to have several new tools                 |                                                                       |                                                                        |   | to work with our customers to begin the long-awaited             |
| to help us accomplish that mission.  The small-business     |                                                                       |                                                                        |   | transition to a more agreeable economic climate, we              |
| lending program created by the Obama administration                   |                                                                       |                                                                        |   | pledge to remain opportunistic but realistic, positive           |
| last year, for example, is to provide $30 billion in                  |                                                                       |                                                                        |   | but pragmatic, and – no matter what the prevailing         |
| capital to smaller banks to increase business lending.                |                                                                       |                                                                        |   | conditions – unwavering advocates for their success.       |
| This program is designed to double the size of the                    |                                                                       |                                                                        |   |                                                             |
| Small Business Administration’s largest loan programs,          |                                                                       |                                                                        |   |                                                             |
| support state programs for small business lending                     |                                                                       |                                                                        |   |
| and create tax cuts for small businesses, all helpful in              |                                                                       |                                                                        |   | John K. Keach, Jr.                                               |
| our efforts to create effective partnerships with small               |                                                                       |                                                                        |   | Chairman of the Board                                            |
| businesses in our region.                                             |                                                                       |                                                                        |   | and Chief Executive Officer                                      |
|                                                                  |                                                                       |                                                                        |   |                                                             |

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|                                                |   |                       Year                   Ended |      |   |                       Year                    Ended |   |      |                       Year                    Ended |      |   |  YearEnded |   |      | YearEnded |    |
|-----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|--------|-----------------|--------|-----------|-----------|---------|
|                                                |   |              Dec 2010                                                                                                                                                                          |      |   | Dec 2009                                                                                                                                                                                                                                                    |   |      | Dec 20087                                                                                                                                                                                                                                                   |      |   | Dec 2007        |   |      | Dec 2006  |    |
| Selected Balance Sheet Data:                        |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |
| Total assets                                        |   | $                                                                                                                                                                                                                                                          | 1,043,318 |   |                                                                                                                                                                                                                                                        | $      | 1,010,323 |                                                                                                                                                                                                                                                        |      | $      | 969,373         |   |      | $         | 908,806 |   |   | $ | 904,467 |   |
| Cash and cash equivalents                           |   |                                                                                                                                                                                                                                                       | 13,063    |   |                                                                                                                                                                                                                                                        |   | 52,061    |                                                                                                                                                                                                                                                        |      |   | 22,586          |   |      |      | 40,552  |   |   |   | 106,063 |   |
| Loans held for sale                                 |   |                                                                                                                                                                                                                                                       | 7,666     |   |                                                                                                                                                                                                                                                        |   | 6,075     |                                                                                                                                                                                                                                                        |      |   | 2,856           |   |      |      | 7,112   |   |   |   | 6,925 |   |
| Securities available for sale                       |   |                                                                                                                                                                                                                                                       | 226,465   |   |                                                                                                                                                                                                                                                        |   | 149,633   |                                                                                                                                                                                                                                                        |      |   | 91,096          |   |      |      | 62,306  |   |   |   | 56,887 |   |
| Securities held to maturity                         |   |                                                                                                                                                                                                                                                       | -         |   |                                                                                                                                                                                                                                                        |   | 3,674     |                                                                                                                                                                                                                                                        |      |   | 4,467           |   |      |      | 1,557   |   |   |   | 1,635 |   |
| Portfolio loans, net                                |   |                                                                                                                                                                                                                                                       | 732,795   |   |                                                                                                                                                                                                                                                        |   | 724,668   |                                                                                                                                                                                                                                                        |      |   | 792,146         |   |      |      | 742,874 |   |   |   | 675,662 |   |
| Deposits                                            |   |                                                                                                                                                                                                                                                       | 853,343   |   |                                                                                                                                                                                                                                                        |   | 840,305   |                                                                                                                                                                                                                                                        |      |   | 710,639         |   |      |      | 707,551 |   |   |   | 727,159 |   |
| Borrowings                                          |   |                                                                                                                                                                                                                                                       | 80,836    |   |                                                                                                                                                                                                                                                        |   | 70,464    |                                                                                                                                                                                                                                                        |      |   | 150,103         |   |      |      | 114,833 |   |   |   | 84,131 |   |
| Shareholders' equity                                |   |                                                                                                                                                                                                                                                       | 88,649    |   |                                                                                                                                                                                                                                                        |   | 84,924    |                                                                                                                                                                                                                                                        |      |   | 92,012          |   |      |      | 67,454  |   |   |   | 71,281 |   |
|                                                |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |   |   |   |   |   |
| Selected Operations Data:                           |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |   |   |   |   |   |
| Total interest income                               |   | $                                                                                                                                                                                                                                                          | 45,864    |   |                                                                                                                                                                                                                                                        | $      | 47,091    |                                                                                                                                                                                                                                                        |      | $      | 51,338          |   |      | $         | 55,201  |   |   | $ | 50,355 |   |
| Total interest expense                              |   |                                                                                                                                                                                                                                                       | 13,630    |   |                                                                                                                                                                                                                                                        |   | 19,553    |                                                                                                                                                                                                                                                        |      |   | 22,549          |   |      |      | 27,661  |   |   |   | 24,644 |   |
| Net interest income                                 |   |                                                                                                                                                                                                                                                       | 32,234    |   |                                                                                                                                                                                                                                                        |   | 27,538    |                                                                                                                                                                                                                                                        |      |   | 28,789          |   |      |      | 27,540  |   |   |   | 25,711 |   |
| Provision for loan losses                           |   |                                                                                                                                                                                                                                                       | 7,179     |   |                                                                                                                                                                                                                                                        |   | 16,218    |                                                                                                                                                                                                                                                        |      |   | 4,292           |   |      |      | 1,361   |   |   |   | 850 |   |
| Net interest income after provision for loan losses |   |                                                                                                                                                                                                                                                       | 25,055    |   |                                                                                                                                                                                                                                                        |   | 11,320    |                                                                                                                                                                                                                                                        |      |   | 24,497          |   |      |      | 26,179  |   |   |   | 24,861 |   |
| Gain on sale of loans                               |   |                                                                                                                                                                                                                                                       | 2,107     |   |                                                                                                                                                                                                                                                        |   | 2,630     |                                                                                                                                                                                                                                                        |      |   | 1,446           |   |      |      | 1,497   |   |   |   | 1,430 |   |
| Gain/(loss) on securities                           |   |                                                                                                                                                                                                                                                       | 768       |   |                                                                                                                                                                                                                                                        |   | 2,046     |                                                                                                                                                                                                                                                        |      |   | -               |   |      |      | -       |   |   |   | (1,956 | ) |
| Gain on sale of mortgage servicing                  |   |                                                                                                                                                                                                                                                       | -         |   |                                                                                                                                                                                                                                                        |   | -         |                                                                                                                                                                                                                                                        |      |   | -               |   |      |      | -       |   |   |   | 1,957 |   |
| Other non interest income                           |   |                                                                                                                                                                                                                                                       | 8,756     |   |                                                                                                                                                                                                                                                        |   | 8,002     |                                                                                                                                                                                                                                                        |      |   | 10,494          |   |      |      | 11,357  |   |   |   | 10,872 |   |
| Non interest expenses                               |   |                                                                                                                                                                                                                                                       | 28,898    |   |                                                                                                                                                                                                                                                        |   | 33,403    |                                                                                                                                                                                                                                                        |      |   | 28,834          |   |      |      | 29,774  |   |   |   | 27,906 |   |
| Income (loss) before income taxes                   |   |                                                                                                                                                                                                                                                       | 7,788     |   |                                                                                                                                                                                                                                                        |   | (9,405    | )                                                                                                                                                                                                                                                           |      |   | 7,603           |   |      |      | 9,259   |   |   |   | 9,258 |   |
| Income tax provision (benefit)                      |   |                                                                                                                                                                                                                                                       | 2,146     |   |                                                                                                                                                                                                                                                        |   | (3,556    | )                                                                                                                                                                                                                                                           |      |   | 2,600           |   |      |      | 3,136   |   |   |   | 2,817 |   |
| Net Income (Loss)                                   |   | $                                                                                                                                                                                                                                                          | 5,642     |   |                                                                                                                                                                                                                                                        | $      | (5,849    | )                                                                                                                                                                                                                                                           |      | $      | 5,003           |   |      | $         | 6,123   |   |   | $ | 6,441 |   |
|                                                |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |   |   |   |   |   |
|                                                |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |   |   |   |   |   |
| Basic earnings (loss) per common share              |   | $                                                                                                                                                                                                                                                          | 1.32      |   |                                                                                                                                                                                                                                                        | $      | (2.09     | )                                                                                                                                                                                                                                                           |      | $      | 1.47            |   |      | $         | 1.75    |   |   | $ | 1.74 |   |
| Diluted earnings (loss) per common share            |   | $                                                                                                                                                                                                                                                          | 1.32      |   |                                                                                                                                                                                                                                                        | $      | (2.09     | )                                                                                                                                                                                                                                                           |      | $      | 1.47            |   |      | $         | 1.72    |   |   | $ | 1.70 |   |
| Cash dividends per common share                     |   | $                                                                                                                                                                                                                                                          | 0.04      |   |                                                                                                                                                                                                                                                        | $      | 0.26      |                                                                                                                                                                                                                                                        |      | $      | 0.64            |   |      | $         | 0.80    |   |   | $ | 0.79 |   |
| Selected Financial and Statistical Data:            |   |                                                                                                                                                                                                                                                       |      |   |                                                                                                                                                                                                                                                        |   |      |                                                                                                                                                                                                                                                        |      |   |            |   |      |      |    |   |   |   |   |   |
| Return on average assets                            |   |                                                                                                                                                                                                                                                       | 0.54      | %      |                                                                                                                                                                                                                                                        |   | (0.57     | %)                                                                                                                                                                                                                                                          |      |   | 0.54            | %      |      |      | 0.70    | % |   |   | 0.75 | % |
| Return on average shareholders' equity              |   |                                                                                                                                                                                                                                                       | 6.45      | %      |                                                                                                                                                                                                                                                        |   | (6.48     | %)                                                                                                                                                                                                                                                          |      |   | 7.11            | %      |      |      | 8.88    | % |   |   | 9.00 | % |
| Interest rate spread during the period              |   |                                                                                                                                                                                                                                                       | 3.30      | %      |                                                                                                                                                                                                                                                        |   | 2.86      | %                                                                                                                                                                                                                                                           |      |   | 3.29            | %      |      |      | 3.38    | % |   |   | 3.24 | % |
| Net interest margin on average earning assets       |   |                                                                                                                                                                                                                                                       | 3.33      | %      |                                                                                                                                                                                                                                                        |   | 2.93      | %                                                                                                                                                                                                                                                           |      |   | 3.35            | %      |      |      | 3.45    | % |   |   | 3.29 | % |
| Average shareholders' equity to average assets      |   |                                                                                                                                                                                                                                                       | 8.35      | %      |                                                                                                                                                                                                                                                        |   | 8.83      | %                                                                                                                                                                                                                                                           |      |   | 7.55            | %      |      |      | 7.89    | % |   |   | 8.31 | % |
| Efficiency ratio                                    |   |                                                                                                                                                                                                                                                       | 65.88     | %      |                                                                                                                                                                                                                                                        |   | 71.74     | %                                                                                                                                                                                                                                                           |  (1) |   | 70.07           | %      |  (2) |      | 71.26   | % |  (3) |   | 73.41 | % |
| Nonperforming loans to total loans                  |   |                                                                                                                                                                                                                                                       | 4.02      | %      |                                                                                                                                                                                                                                                        |   | 2.95      | %                                                                                                                                                                                                                                                           |      |   | 3.03            | %      |      |      | 1.51    | % |   |   | 0.54 | % |
| Nonperforming assets to total assets                |   |                                                                                                                                                                                                                                                       | 3.30      | %      |                                                                                                                                                                                                                                                        |   | 3.41      | %                                                                                                                                                                                                                                                           |      |   | 2.86            | %      |      |      | 1.29    | % |   |   | 0.46 | % |
| Loss allowance to nonperforming loans               |   |                                                                                                                                                                                                                                                       | 48.60     | %      |                                                                                                                                                                                                                                                        |   | 60.16     | %                                                                                                                                                                                                                                                           |      |   | 35.30           | %      |      |      | 60.87   | % |   |   | 175.90 | % |
| Loss allowance to total loans                       |   |                                                                                                                                                                                                                                                       | 1.95      | %      |                                                                                                                                                                                                                                                        |   | 1.78      | %                                                                                                                                                                                                                                                           |      |   | 1.07            | %      |      |      | 0.92    | % |   |   | 0.95 | % |
| Common stock dividend payout ratio                  |   |                                                                                                                                                                                                                                                       | 2.39      | %      |                                                                                                                                                                                                                                                        |   | (14.93    | %)                                                                                                                                                                                                                                                          |      |   | 42.95           | %      |      |      | 45.30   | % |   |   | 45.23 | % |
| Loan servicing portfolio                            |   | $                                                                                                                                                                                                                                                          | 107,330   |   |                                                                                                                                                                                                                                                        | $      | 111,634   |                                                                                                                                                                                                                                                        |      | $      | 94,647          |   |      | $         | 54,283  |   |   | $ | 36,977 |   |
| Allowance for loan losses                           |   | $                                                                                                                                                                                                                                                          | 14,606    |   |                                                                                                                                                                                                                                                        | $      | 13,113    |                                                                                                                                                                                                                                                        |      | $      | 8,589           |   |      | $         | 6,972   |   |   | $ | 6,598 |   |
| Number of full service offices                      |   |                                                                                                                                                                                                                                                       | 19        |   |                                                                                                                                                                                                                                                        |   | 19        |                                                                                                                                                                                                                                                        |      |   | 19              |   |      |      | 20      |   |   |   | 19 |   |

----

----

----

|                                                                                                       |   | Year Ended     |      |   | Year Ended |   |   | Year Ended        |   |
|------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|------------|--------|--------|-------------------|--------|
|                                                                                                       |   | Dec 2010       |      |   | Dec 2009   |   |   | Dec 2008          |   |
|                                                                                                       |   | AverageBalance |      |   | Interest   |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | Interest |   |   | AverageYield/Rage |   |   | AverageBalance |   |   | Interest |   |   | AverageYield/Rage |   |
| Assets:                                                                                                    |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                   |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage loans                                                                                 |   | $              | 98,450    |   |       | $      | 4,625  |              |   |   | 4.70 | % |   | $ | 115,140 |   |   | $ | 6,192 |   |   |   | 5.38 | % |   | $ | 135,601 |   |   | $ | 8,516 |   |   |   | 6.28 | % |
| Commercial & commercial mortgage loans                                                                 |   |           | 525,235   |   |       |   | 30,154 |              |   |   | 5.74 | % |   |   | 530,359 |   |   |   | 30,192 |   |   |   | 5.69 | % |   |   | 508,465 |   |   |   | 31,406 |   |   |   | 6.18 | % |
| Second and home equity loans                                                                               |   |           | 94,611    |   |       |   | 4,581  |              |   |   | 4.84 | % |   |   | 98,608 |   |   |   | 4,992 |   |   |   | 5.06 | % |   |   | 101,185 |   |   |   | 6,186 |   |   |   | 6.11 | % |
| Other consumer loans                                                                                       |   |           | 13,143    |   |       |   | 1,079  |              |   |   | 8.21 | % |   |   | 17,815 |   |   |   | 1,452 |   |   |   | 8.15 | % |   |   | 23,892 |   |   |   | 1,890 |   |   |   | 7.91 | % |
| Securities                                                                                                 |   |           | 216,839   |   |       |   | 5,366  |              |   |   | 2.47 | % |   |   | 137,576 |   |   |   | 4,164 |   |   |   | 3.03 | % |   |   | 69,030 |   |   |   | 2,878 |   |   |   | 4.17 | % |
| Short-term investments                                                                                     |   |           | 19,600    |   |       |   | 59     |              |   |   | 0.30 | % |   |   | 41,971 |   |   |   | 99 |   |   |   | 0.24 | % |   |   | 21,452 |   |   |   | 462 |   |   |   | 2.15 | % |
| Total interest-earning assets (1)                                                                          |   |           | 967,878   |   |       | $      | 45,864 |              |   |   | 4.74 | % |   |   | 941,469 |   |   | $ | 47,091 |   |   |   | 5.00 | % |   |   | 859,625 |   |   | $ | 51,338 |   |   |   | 5.97 | % |
| Allowance for loan losses                                                                                  |   |           | (14,689   | )      |       |   |   |              |   |   |   |   |   |   | (10,090 | ) |   |   |   |   |   |   |   |   |   |   | (7,591 | ) |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                    |   |           | 12,525    |   |       |   |   |              |   |   |   |   |   |   | 12,913 |   |   |   |   |   |   |   |   |   |   |   | 13,587 |   |   |   |   |   |   |   |   |   |
| Bank premises and equipment                                                                                |   |           | 15,980    |   |       |   |   |              |   |   |   |   |   |   | 15,011 |   |   |   |   |   |   |   |   |   |   |   | 15,457 |   |   |   |   |   |   |   |   |   |
| Other assets                                                                                               |   |           | 67,175    |   |       |   |   |              |   |   |   |   |   |   | 62,190 |   |   |   |   |   |   |   |   |   |   |   | 50,866 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                               |   | $              | 1,048,869 |   |       |   |   |              |   |   |   |   |   | $ | 1,021,493 |   |   |   |   |   |   |   |   |   |   | $ | 931,944 |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                                                                |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                              |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                  |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transaction accounts                                                                                       |   | $              | 547,286   |   |       | $      | 3,594  |              |   |   | 0.66 | % |   | $ | 445,580 |   |   | $ | 3,914 |   |   |   | 0.88 | % |   | $ | 380,230 |   |   | $ | 3,848 |   |   |   | 1.01 | % |
| Certificate accounts                                                                                       |   |           | 332,720   |   |       |   | 8,635  |              |   |   | 2.60 | % |   |   | 339,152 |   |   |   | 10,949 |   |   |   | 3.23 | % |   |   | 322,275 |   |   |   | 12,876 |   |   |   | 4.00 | % |
| FHLB advances                                                                                              |   |           | 53,499    |   |       |   | 1,089  |              |   |   | 2.04 | % |   |   | 112,290 |   |   |   | 4,278 |   |   |   | 3.81 | % |   |   | 122,921 |   |   |   | 5,059 |   |   |   | 4.12 | % |
| Other borrowings                                                                                           |   |           | 15,609    |   |       |   | 312    |              |   |   | 2.00 | % |   |   | 15,464 |   |   |   | 412 |   |   |   | 2.66 | % |   |   | 15,464 |   |   |   | 766 |   |   |   | 4.95 | % |
| Total interest-bearing liabilities                                                                         |   |           | 949,114   |   |       | $      | 13,630 |              |   |   | 1.44 | % |   |   | 912,486 |   |   | $ | 19,553 |   |   |   | 2.14 | % |   |   | 840,890 |   |   | $ | 22,549 |   |   |   | 2.68 | % |
| Other liabilities                                                                                          |   |           | 12,225    |   |       |   |   |              |   |   |   |   |   |   | 18,799 |   |   |   |   |   |   |   |   |   |   |   | 20,695 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                          |   |           | 961,339   |   |       |   |   |              |   |   |   |   |   |   | 931,285 |   |   |   |   |   |   |   |   |   |   |   | 861,585 |   |   |   |   |   |   |   |   |   |
| Total shareholders’ equity                                                                           |   |           | 87,530    |   |       |   |   |              |   |   |   |   |   |   | 90,208 |   |   |   |   |   |   |   |   |   |   |   | 70,359 |   |   |   |   |   |   |   |   |   |
| Total Liabilities and     Shareholders’     Equity |   | $              | 1,048,869 |   |       |   |   |              |   |   |   |   |   | $ | 1,021,493 |   |   |   |   |   |   |   |   |   |   | $ | 931,944 |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                                                                        |   |           |      |   |       | $      | 32,234 |              |   |   |   |   |   |   |   |   |   | $ | 27,538 |   |   |   |   |   |   |   |   |   |   | $ | 28,789 |   |   |   |   |   |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Rate Spread                                                                                   |   |           |      |   |       |   |   |              |   |   | 3.30 | % |   |   |   |   |   |   |   |   |   |   | 2.86 | % |   |   |   |   |   |   |   |   |   |   | 3.29 | % |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Earning Assets                                                                                         |   | $              | 18,764    |   |       |   |   |              |   |   |   |   |   | $ | 28,983 |   |   |   |   |   |   |   |   |   |   | $ | 18,735 |   |   |   |   |   |   |   |   |   |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Margin (2)                                                                                    |   |           |      |   |       |   |   |              |   |   | 3.33 | % |   |   |   |   |   |   |   |   |   |   | 2.93 | % |   |   |   |   |   |   |   |   |   |   | 3.35 | % |
|                                                                                                       |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average Interest-earning                                                                                   |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets to Average                                                                                          |   |           |      |   |       |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing Liabilities                                                                               |   |           | 101.98    | %      |       |   |   |              |   |   |   |   |   |   | 103.18 | % |   |   |   |   |   |   |   |   |   |   | 102.23 | % |   |   |   |   |   |   |   |   |

| (1) | Average balances are net of non-performing loans. |
|-----|---------------------------------------------------|

| (2) | Net interest income divided by the average balance of interest-earning assets. |
|-----|--------------------------------------------------------------------------------|

----

|                                                                                               |   | Year Ended            |   |   | Year Ended            |   |
|----------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                                                                               |   | Dec 2010 vs. Dec 2009 |   |   | Dec 2009 vs. Dec 2008 |   |
|                                                                                               |   | Increase/(Decrease)   |   |   | Increase/(Decrease)   |   |
|                                                                                               |   | Due toRate            |   |   | Due toVolume          |   |   | TotalChange |   |   | Due toRate |   |   | Due toVolume |   |   | TotalChange |   |
| Interest Income on Interest-Earning Assets:                                                        |   |                  |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgage loans                                                                         |   | $                     | (730   | )      |                  | $      | (837 | ) |   | $ | (1,567 | ) |   | $ | (1,134 | ) |   | $ | (1,190 | ) |   | $ | (2,324 | ) |
| Commercial & commercial mortgage loans                                                         |   |                  | 270    |   |                  |   | (308 | ) |   |   | (38 | ) |   |   | (2,695 | ) |   |   | 1,481 |   |   |   | (1,214 | ) |
| Second and home equity loans                                                                       |   |                  | (213   | )      |                  |   | (198 | ) |   |   | (411 | ) |   |   | (1,040 | ) |   |   | (154 | ) |   |   | (1,194 | ) |
| Other consumer loans                                                                               |   |                  | 11     |   |                  |   | (384 | ) |   |   | (373 | ) |   |   | 59 |   |   |   | (497 | ) |   |   | (438 | ) |
| Securities                                                                                         |   |                  | (556   | )      |                  |   | 1,758 |   |   |   | 1,202 |   |   |   | (490 | ) |   |   | 1,776 |   |   |   | 1,286 |   |
| Short-term investments                                                                             |   |                  | 42     |   |                  |   | (82 | ) |   |   | (40 | ) |   |   | 4,813 |   |   |   | (5,176 | ) |   |   | (363 | ) |
|        Total                                                    |   |                  | (1,176 | )      |                  |   | (51 | ) |   |   | (1,227 | ) |   |   | (487 | ) |   |   | (3,760 | ) |   |   | (4,247 | ) |
|                                                                                               |   |                  |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense on Interest-Bearing Liabilities:                                                  |   |                  |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                          |   |                  |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Transaction accounts                                           |   |                  | (3,328 | )      |                  |   | 3,008 |   |   |   | (320 | ) |   |   | (219 | ) |   |   | 285 |   |   |   | 66 |   |
|              Certificate accounts |   |                  | (2,110 | )      |                  |   | (204 | ) |   |   | (2,314 | ) |   |   | (2,649 | ) |   |   | 722 |   |   |   | (1,927 | ) |
| FHLB advances                                                                                      |   |                  | (1,501 | )      |                  |   | (1,688 | ) |   |   | (3,189 | ) |   |   | (361 | ) |   |   | (420 | ) |   |   | (781 | ) |
| Other borrowings                                                                                   |   |                  | (104   | )      |                  |   | 4 |   |   |   | (100 | ) |   |   | (354 | ) |   |   | - |   |   |   | (354 | ) |
|        Total                                                    |   |                  | (7,043 | )      |                  |   | 1,120 |   |   |   | (5,923 | ) |   |   | (3,583 | ) |   |   | 587 |   |   |   | (2,996 | ) |
|                                                                                               |   |                  |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Change in Net Interest Income                                                                  |   | $                     | 5,867  |   |                  | $      | (1,171 | ) |   | $ | 4,696 |   |   | $ | 3,096 |   |   | $ | (4,347 | ) |   | $ | (1,251 | ) |

----

----

----

----

----

| As Of                        |   | Dec 2010                    |   |   | Dec 2009                    |   |   |                                          |   |
|------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------------------------|--------|
|   Changes in Rates |   | Net InterestIncome % Change |   |   | Net InterestIncome % Change |   |   | Interest RateRisk ManagementPolicy Guidelines |   |
| + 300 basis points           |   |                        | (3.53  | )      |                        |   | (5.00  | )                                             |   |   | (20.00 | ) |
| + 200 basis points           |   |                        | .83    |   |                        |   | (3.04  | )                                             |   |   | (15.00 | ) |
| + 100 basis points           |   |                        | 4.74   |   |                        |   | (1.35  | )                                             |   |   | (7.50 | ) |
|  - 100 basis points     |   |                        | (2.51  | )      |                        |   | (3.11  | )                                             |   |   | (7.50 | ) |
|  - 200 basis points     |   |                        | (4.40  | )      |                        |   | (8.86  | )                                             |   |   | (15.00 | ) |
|  - 300 basis points     |   |                        | (5.68  | )      |                        |   | (11.70 | )                                             |   |   | (20.00 | ) |

----

----

| As of                                             |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |   | Dec 2007 |   |   | Dec 2006 |   |
|---------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Non-accruing loans:                               |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |
| Residential mortgage loans                        |   | $        | 1,412  |   |     | $      | 3,093  |     |   | $      | 2,349    |   |   | $        | 2,284  |   |   | $ | 1,637 |   |
| Commercial and commercial mortgage loans          |   |     | 18,082 |   |     |   | 15,892 |     |   |   | 19,352   |   |   |     | 7,622  |   |   |   | 903 |   |
| Second and home equity loans                      |   |     | 678    |   |     |   | 798    |     |   |   | 696      |   |   |     | 466    |   |   |   | 200 |   |
| Other consumer loans                              |   |     | 106    |   |     |   | 106    |     |   |   | 137      |   |   |     | 144    |   |   |   | 112 |   |
| Total                                             |   |     | 20,278 |   |     |   | 19,889 |     |   |   | 22,534   |   |   |     | 10,516 |   |   |   | 2,852 |   |
| 90 days past due and still accruing loans:        |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Residential mortgage loans                        |   |     | 92     |   |     |   | 131    |     |   |   | 481      |   |   |     | 64     |   |   |   | 459 |   |
| Commercial and commercial mortgage loans          |   |     | -      |   |     |   | 1,279  |     |   |   | 37       |   |   |     | -      |   |   |   | - |   |
| Total                                             |   |     | 92     |   |     |   | 1,410  |     |   |   | 518      |   |   |     | 64     |   |   |   | 459 |   |
| Troubled debt restructured                        |   |     | 9,684  |   |     |   | 499    |     |   |   | 1,282    |   |   |     | 874    |   |   |   | 440 |   |
| Total non-performing loans                        |   |     | 30,054 |   |     |   | 21,798 |     |   |   | 24,334   |   |   |     | 11,454 |   |   |   | 3,751 |   |
| Real estate owned                                 |   |     | 4,389  |   |     |   | 12,627 |     |   |   | 3,379    |   |   |     | 311    |   |   |   | 436 |   |
|                                              |   |     |   |   |     |   |   |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Total Non-Performing Assets                       |   | $        | 34,443 |   |     | $      | 34,425 |     |   | $      | 27,713   |   |   | $        | 11,765 |   |   | $ | 4,187 |   |
| Non-performing assets to total assets             |   |     | 3.30   | %      |     |   | 3.41   | %        |   |   | 2.86     | %      |   |     | 1.29   | % |   |   | 0.46 | % |
| Non-performing loans to total loans               |   |     | 4.02   | %      |     |   | 2.95   | %        |   |   | 3.03     | %      |   |     | 1.51   | % |   |   | 0.54 | % |
| Allowance for loan losses to non-performing loans |   |     | 48.60  | %      |     |   | 60.16  | %        |   |   | 35.30    | %      |   |     | 60.87  | % |   |   | 175.90 | % |

----

| As Of                                    |   | Dec 2010 |   |   | Dec 2009 |   |    | Dec 2008 |   |   | Dec 2007 |   |   | Dec 2006 |   |
|------------------------------------------|--------|----------|--------|--------|----------|--------|---------|----------|--------|--------|----------|--------|--------|----------|--------|
| Balance at beginning of period           |   | $        | 13,113 |   |     | $      | 8,589   |     |   | $      | 6,972    |   |   | $        | 6,598  |   |   | $ | 6,753 |   |
| Provision for loan losses                |   |     | 7,179  |   |     |   | 16,218  |     |   |   | 4,292    |   |   |     | 1,361  |   |   |   | 850 |   |
| Loan charge-offs:                        |   |     |   |   |     |   |    |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Residential mortgage loans               |   |     | (697   | )      |     |   | (473    | )        |   |   | (499     | )      |   |     | (136   | ) |   |   | (84 | ) |
| Commercial and commercial mortgage loans |   |     | (4,447 | )      |     |   | (10,124 | )        |   |   | (1,561   | )      |   |     | (698   | ) |   |   | (470 | ) |
| Second and home equity loans             |   |     | (502   | )      |     |   | (874    | )        |   |   | (339     | )      |   |     | (24    | ) |   |   | (67 | ) |
| Other consumer loans                     |   |     | (439   | )      |     |   | (568    | )        |   |   | (642     | )      |   |     | (608   | ) |   |   | (706 | ) |
| Total charge-offs                        |   |     | (6,085 | )      |     |   | (12,039 | )        |   |   | (3,041   | )      |   |     | (1,466 | ) |   |   | (1,327 | ) |
| Recoveries:                              |   |     |   |   |     |   |    |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Residential mortgage loans               |   |     | 126    |   |     |   | 31      |     |   |   | 34       |   |   |     | 14     |   |   |   | 14 |   |
| Commercial and commercial mortgage loans |   |     | 81     |   |     |   | 121     |     |   |   | 58       |   |   |     | 178    |   |   |   | 115 |   |
| Second and home equity loans             |   |     | 34     |   |     |   | 15      |     |   |   | 45       |   |   |     | 22     |   |   |   | 2 |   |
| Other consumer loans                     |   |     | 158    |   |     |   | 178     |     |   |   | 229      |   |   |     | 265    |   |   |   | 191 |   |
| Total recoveries                         |   |     | 399    |   |     |   | 345     |     |   |   | 366      |   |   |     | 479    |   |   |   | 322 |   |
| Net charge-offs                          |   |     | (5,686 | )      |     |   | (11,694 | )        |   |   | (2,675   | )      |   |     | (987   | ) |   |   | (1,005 | ) |
|                                     |   |     |   |   |     |   |    |     |   |   |     |   |   |     |   |   |   |   |   |   |
| Balance at End of Period                 |   | $        | 14,606 |   |     | $      | 13,113  |     |   | $      | 8,589    |   |   | $        | 6,972  |   |   | $ | 6,598 |   |
| Net charge-offs to average loans         |   |     | 0.78   | %      |     |   | 1.52    | %        |   |   | 0.35     | %      |   |     | 0.14   | % |   |   | 0.15 | % |
| Allowance for loan losses to total loans |   |     | 1.95   | %      |     |   | 1.78    | %        |   |   | 1.07     | %      |   |     | 0.92   | % |   |   | 0.95 | % |

| As Of                                    |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |   | Dec 2007 |   |   | Dec 2006 |   |
|------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Residential mortgage loans               |   | $        | 799    |   |     | $      | 910    |     |   | $      | 741      |   |   | $        | 1,153  |   |   | $ | 1,355 |   |
| Commercial and commercial mortgage loans |   |     | 12,640 |   |     |   | 10,564 |     |   |   | 6,493    |   |   |     | 4,374  |   |   |   | 3,856 |   |
| Second and home equity loans             |   |     | 858    |   |     |   | 1,152  |     |   |   | 821      |   |   |     | 762    |   |   |   | 640 |   |
| Other consumer loans                     |   |     | 309    |   |     |   | 487    |     |   |   | 534      |   |   |     | 683    |   |   |   | 747 |   |
| Total Allowance for Loan Losses          |   | $        | 14,606 |   |     | $      | 13,113 |     |   | $      | 8,589    |   |   | $        | 6,972  |   |   | $ | 6,598 |   |

----

|                                                     |   |        Less Than1 year |    |   | 1-3 years |   |    | 4-5 years |   |   |      Greater Than5 years |   |   | Total  |   |
|----------------------------------------------------------|--------|------------------------------------------------------|---------|--------|-----------|--------|---------|-----------|--------|--------|----------------------------------------------|--------|--------|--------|--------|
| Contractually obligated payments due by period:          |   |                                                 |    |   |      |   |    |      |   |   |                                         |   |   |   |   |
|   Certificates of deposit                      |   | $                                                    | 172,181 |   |      | $      | 110,402 |      |   | $      | 34,624                                       |   |   | $      | 1,952  |   |   | $ | 319,159 |   |
|   Long term debt                               |   |                                                 | -       |   |      |   | 33,879  |      |   |   | 19,405                                       |   |   |   | -      |   |   |   | 53,284 |   |
|   Long term compensation obligations           |   |                                                 | 262     |   |      |   | 431     |      |   |   | 510                                          |   |   |   | 2,103  |   |   |   | 3,306 |   |
| Commitments to extend credit:                            |   |                                                 |    |   |      |   |    |      |   |   |                                         |   |   |   |   |   |   |   |   |   |
|   Commercial mortgage and commercial loans (1) |   |                                                 | 76,505  |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 76,505 |   |
|   Residential mortgage loans                   |   |                                                 | 14,519  |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 14,519 |   |
|   Revolving home equity lines of credit        |   |                                                 | 38,944  |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 38,944 |   |
|   Other                                        |   |                                                 | 16,436  |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 16,436 |   |
|   Standby letters of credit                    |   |                                                 | 5,100   |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 5,100 |   |
| Commitments to sell loans:                               |   |                                                 |    |   |      |   |    |      |   |   |                                         |   |   |   |   |   |   |   |   |   |
|   Residential mortgage loans                   |   |                                                 | 15,562  |   |      |   | -       |      |   |   | -                                            |   |   |   | -      |   |   |   | 15,562 |   |
| Total                                                    |   | $                                                    | 339,509 |   |      | $      | 144,712 |      |   | $      | 54,539                                       |   |   | $      | 4,055  |   |   | $ | 542,815 |   |

| 1)   | Commercial mortgage and commercial loan commitments to extend credit are presented net of the portion of participation interests due to investors. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Year Ended December                    |   | Amount |   |
|----------------------------------------|--------|--------|--------|
|      2011     |   | $      | 601    |   |
|      2012     |   |   | 521    |   |
|      2013     |   |   | 530    |   |
|      2014     |   |   | 531    |   |
|      2015     |   |   | 543    |   |
|     Thereafter     |   |   | 3,551  |   |
| Total Minimum Operating Lease Payments |   | $      | 6,277  |   |

----

----

| ·   | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                              |   | December 31, 2010 |      |   | December 31, 2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|------------------------|--------|
| Assets:                                                                                                                           |   |                   |      |   |                   |   |
|     Cash and due from banks                                                                                   |   | $                      | 12,927    |   |                   | $      | 10,808 |   |
|     Interest bearing demand deposits                                                                          |   |                   | 136       |   |                   |   | 41,253 |   |
| Cash and cash equivalents                                                                                                         |   |                   | 13,063    |   |                   |   | 52,061 |   |
|                                                                                                                              |   |                   |      |   |                   |   |   |   |
| Interest bearing time deposits                                                                                                    |   |                   | -         |   |                   |   | 410 |   |
| Securities available for sale at fair value (amortized cost $227,331 and $149,031)                                                |   |                   | 226,465   |   |                   |   | 149,633 |   |
| Securities held to maturity at amortized cost (fair value $0 and $3,392)                                                          |   |                   | -         |   |                   |   | 3,674 |   |
| Loans held for sale (fair value $7,827 and $6,213)                                                                                |   |                   | 7,666     |   |                   |   | 6,075 |   |
| Portfolio loans:                                                                                                                  |   |                   |      |   |                   |   |   |   |
|     Commercial and commercial mortgage loans                                                                  |   |                   | 550,686   |   |                   |   | 527,946 |   |
|     Residential mortgage loans                                                                                |   |                   | 92,796    |   |                   |   | 97,551 |   |
|     Second and home equity loans                                                                              |   |                   | 92,557    |   |                   |   | 97,071 |   |
|     Other consumer loans                                                                                      |   |                   | 11,614    |   |                   |   | 15,312 |   |
| Total portfolio loans                                                                                                             |   |                   | 747,653   |   |                   |   | 737,880 |   |
| Unearned income                                                                                                                   |   |                   | (252      | )      |                   |   | (99 | ) |
| Allowance for loan losses                                                                                                         |   |                   | (14,606   | )      |                   |   | (13,113 | ) |
| Portfolio loans, net                                                                                                              |   |                   | 732,795   |   |                   |   | 724,668 |   |
| Premises and equipment                                                                                                            |   |                   | 16,228    |   |                   |   | 15,151 |   |
| Accrued interest receivable                                                                                                       |   |                   | 3,785     |   |                   |   | 3,533 |   |
| Other assets                                                                                                                      |   |                   | 43,316    |   |                   |   | 55,118 |   |
| Total Assets                                                                                                                      |   | $                      | 1,043,318 |   |                   | $      | 1,010,323 |   |
|                                                                                                                              |   |                   |      |   |                   |   |   |   |
| Liabilities and Shareholders’ Equity:                                                                                       |   |                   |      |   |                   |   |   |   |
| Liabilities:                                                                                                                      |   |                   |      |   |                   |   |   |   |
| Deposits:                                                                                                                         |   |                   |      |   |                   |   |   |   |
| Demand                                                                                                                            |   | $                      | 86,425    |   |                   | $      | 80,938 |   |
| Interest checking                                                                                                                 |   |                   | 177,613   |   |                   |   | 170,226 |   |
| Savings                                                                                                                           |   |                   | 45,764    |   |                   |   | 42,520 |   |
| Money market                                                                                                                      |   |                   | 224,382   |   |                   |   | 207,089 |   |
| Certificates of deposit                                                                                                           |   |                   | 313,854   |   |                   |   | 339,025 |   |
| Retail deposits                                                                                                                   |   |                   | 848,038   |   |                   |   | 839,798 |   |
| Public fund certificates                                                                                                          |   |                   | 5,305     |   |                   |   | 507 |   |
| Wholesale deposits                                                                                                                |   |                   | 5,305     |   |                   |   | 507 |   |
| Total deposits                                                                                                                    |   |                   | 853,343   |   |                   |   | 840,305 |   |
|                                                                                                                              |   |                   |      |   |                   |   |   |   |
| FHLB advances                                                                                                                     |   |                   | 53,284    |   |                   |   | 55,000 |   |
| Short term borrowings                                                                                                             |   |                   | 12,088    |   |                   |   | - |   |
| Junior subordinated debt                                                                                                          |   |                   | 15,464    |   |                   |   | 15,464 |   |
| Other liabilities                                                                                                                 |   |                   | 20,490    |   |                   |   | 14,630 |   |
| Total liabilities                                                                                                                 |   |                   | 954,669   |   |                   |   | 925,399 |   |
|                                                                                                                              |   |                   |      |   |                   |   |   |   |
| Commitments and Contingencies                                                                                                     |   |                   |      |   |                   |   |   |   |
|                                                                                                                              |   |                   |      |   |                   |   |   |   |
| Shareholders' equity:                                                                                                             |   |                   |      |   |                   |   |   |   |
| No par preferred stock; Authorized:  2,000,000 shares                                                                   |   |                   |      |   |                   |   |   |   |
| Issued and outstanding:  21,500 and 21,500 shares; Liquidation     preference $1,000 per share |   |                   | 21,156    |   |                   |   | 21,054 |   |
| No par common stock; Authorized:  15,000,000 shares                                                                     |   |                   |      |   |                   |   |   |   |
| Issued and outstanding:  3,385,079 and 3,358,079 shares                                                                 |   |                   | 21,230    |   |                   |   | 21,060 |   |
| Retained earnings, restricted                                                                                                     |   |                   | 47,192    |   |                   |   | 42,862 |   |
| Accumulated other comprehensive loss, net                                                                                         |   |                   | (929      | )      |                   |   | (52 | ) |
| Total shareholders' equity                                                                                                        |   |                   | 88,649    |   |                   |   | 84,924 |   |
| Total Liabilities and Shareholders' Equity                                                                                        |   | $                      | 1,043,318 |   |                   | $      | 1,010,323 |   |

----

|                                                |   | Year Ended |      |   | Year Ended |   |      | Year Ended |   |
|-----------------------------------------------------|--------|------------|-----------|--------|------------|--------|-----------|------------|--------|
|                                                |   | Dec 2010   |      |   | Dec 2009   |   |      | Dec 2008   |   |
| Interest Income:                                    |   |       |      |   |       |   |      |       |   |
| Short term investments                              |   | $          | 59        |   |       | $      | 99        |       |   | $ | 462 |   |
| Securities                                          |   |       | 5,366     |   |       |   | 4,164     |       |   |   | 2,878 |   |
| Commercial and commercial mortgage loans            |   |       | 30,154    |   |       |   | 30,192    |       |   |   | 31,406 |   |
| Residential mortgage loans                          |   |       | 4,625     |   |       |   | 6,192     |       |   |   | 8,516 |   |
| Second and home equity loans                        |   |       | 4,581     |   |       |   | 4,992     |       |   |   | 6,186 |   |
| Other consumer loans                                |   |       | 1,079     |   |       |   | 1,452     |       |   |   | 1,890 |   |
| Total interest income                               |   |       | 45,864    |   |       |   | 47,091    |       |   |   | 51,338 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Interest Expense:                                   |   |       |      |   |       |   |      |       |   |   |   |   |
| Checking and savings accounts                       |   |       | 1,908     |   |       |   | 1,679     |       |   |   | 981 |   |
| Money market accounts                               |   |       | 1,686     |   |       |   | 2,235     |       |   |   | 2,867 |   |
| Certificates of deposit                             |   |       | 8,625     |   |       |   | 10,733    |       |   |   | 12,265 |   |
| Total interest on retail deposits                   |   |       | 12,219    |   |       |   | 14,647    |       |   |   | 16,113 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Brokered deposits                                   |   |       | -         |   |       |   | 139       |       |   |   | 426 |   |
| Public funds                                        |   |       | 10        |   |       |   | 77        |       |   |   | 185 |   |
| Total interest on wholesale deposits                |   |       | 10        |   |       |   | 216       |       |   |   | 611 |   |
| Total interest on deposits                          |   |       | 12,229    |   |       |   | 14,863    |       |   |   | 16,724 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| FHLB advances                                       |   |       | 1,089     |   |       |   | 4,278     |       |   |   | 5,059 |   |
| Other borrowings                                    |   |       | 1         |   |       |   | 1         |       |   |   | 1 |   |
| Junior subordinated debt                            |   |       | 311       |   |       |   | 411       |       |   |   | 765 |   |
| Total interest expense                              |   |       | 13,630    |   |       |   | 19,553    |       |   |   | 22,549 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Net interest income                                 |   |       | 32,234    |   |       |   | 27,538    |       |   |   | 28,789 |   |
| Provision for loan losses                           |   |       | 7,179     |   |       |   | 16,218    |       |   |   | 4,292 |   |
| Net interest income after provision for loan losses |   |       | 25,055    |   |       |   | 11,320    |       |   |   | 24,497 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Non Interest Income:                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Gain on sale of loans                               |   |       | 2,107     |   |       |   | 2,630     |       |   |   | 1,446 |   |
| Gain on sale of securities available for sale       |   |       | 768       |   |       |   | 2,046     |       |   |   | - |   |
| Other than temporary impairment losses              |   |       | (215      | )      |       |   | (221      | )          |   |   | (437 | ) |
| Investment advisory services                        |   |       | -         |   |       |   | -         |       |   |   | 1,371 |   |
| Service fees on deposit accounts                    |   |       | 6,389     |   |       |   | 6,347     |       |   |   | 6,791 |   |
| Loan servicing income, net of impairment            |   |       | 473       |   |       |   | 530       |       |   |   | 551 |   |
| Net gain/(loss) on real estate owned                |   |       | (288      | )      |       |   | (480      | )          |   |   | 68 |   |
| Trust and asset management fees                     |   |       | 1,097     |   |       |   | 711       |       |   |   | 538 |   |
| Increase in cash surrender value of life insurance  |   |       | 560       |   |       |   | 487       |       |   |   | 515 |   |
| Miscellaneous                                       |   |       | 740       |   |       |   | 628       |       |   |   | 1,097 |   |
| Total non interest income                           |   |       | 11,631    |   |       |   | 12,678    |       |   |   | 11,940 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Non Interest Expenses:                              |   |       |      |   |       |   |      |       |   |   |   |   |
| Compensation and employee benefits                  |   |       | 14,738    |   |       |   | 14,257    |       |   |   | 15,843 |   |
| Occupancy and equipment                             |   |       | 3,918     |   |       |   | 3,854     |       |   |   | 4,159 |   |
| Service bureau expense                              |   |       | 1,954     |   |       |   | 1,891     |       |   |   | 1,917 |   |
| FDIC insurance expense                              |   |       | 2,071     |   |       |   | 1,785     |       |   |   | 286 |   |
| Marketing                                           |   |       | 804       |   |       |   | 777       |       |   |   | 1,241 |   |
| Professional fees                                   |   |       | 726       |   |       |   | 799       |       |   |   | 919 |   |
| Loan expenses                                       |   |       | 976       |   |       |   | 1,559     |       |   |   | 696 |   |
| REO expenses                                        |   |       | 628       |   |       |   | 191       |       |   |   | 114 |   |
| Communication expense                               |   |       | 620       |   |       |   | 688       |       |   |   | 847 |   |
| Goodwill impairment                                 |   |       | -         |   |       |   | 1,394     |       |   |   | - |   |
| FHLB advances prepayment fee                        |   |       | -         |   |       |   | 3,813     |       |   |   | - |   |
| Miscellaneous                                       |   |       | 2,463     |   |       |   | 2,395     |       |   |   | 2,812 |   |
| Total non interest expenses                         |   |       | 28,898    |   |       |   | 33,403    |       |   |   | 28,834 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Income (loss) before income taxes                   |   |       | 7,788     |   |       |   | (9,405    | )          |   |   | 7,603 |   |
| Income tax provision (benefit)                      |   |       | 2,146     |   |       |   | (3,556    | )          |   |   | 2,600 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Net Income (Loss)                                   |   | $          | 5,642     |   |       | $      | (5,849    | )          |   | $ | 5,003 |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
|                                                |   |       |      |   |       |   |      |       |   |   |   |   |
| Basic Earnings (Loss)  per Common Share   |   | $          | 1.32      |   |       | $      | (2.09     | )          |   | $ | 1.47 |   |
| Diluted Earnings (Loss) per Common Share            |   | $          | 1.32      |   |       | $      | (2.09     | )          |   | $ | 1.47 |   |
| Basic weighted average number of shares             |   |       | 3,358,079 |   |       |   | 3,358,079 |       |   |   | 3,359,666 |   |
| Dilutive weighted average number of shares          |   |       | 3,358,728 |   |       |   | 3,358,079 |       |   |   | 3,365,131 |   |
| Dividends per share                                 |   | $          | 0.04      |   |       | $      | 0.26      |       |   | $ | 0.64 |   |

----

|                                                                                                                                                                                                                  |   | CommonSharesOutstanding |      |   |    PreferredStock |   |   |    CommonStock |   |   |  RetainedEarnings |   |   | AccumulatedOtherComprehensiveIncome (Loss) |   |   | TotalShareholders'Equity |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|--------------------------------------------|--------|--------|--------------------------|--------|
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |
| Balance at December 2007                                                                                                                                                                                              |   |                    | 3,369,965 |   |                        | $      | -      |                     |   | $      | 20,305                 |   |   | $                                          | 48,089 |   |                     | $      | (940 | ) |   | $ | 67,454 |   |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                                                                                 |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                                                            |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | 5,003  |   |                     |   |   |   |   |   | 5,003 |   |
| Change in unrealized loss on securities available for sale, net of reclassification adjustment for realized losses of $264 and tax effect of $138                                                                     |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |    246 |   |   |   |    246 |   |
|         Change in supplemental retirement plan                obligations, net of tax of $58  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   | 89 |   |   |   | 89 |   |
| Total comprehensive income                                                                                                                                                                                            |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   | 5,338 |   |
| Preferred stock issued                                                                                                                                                                                                |   |                    |      |   |                        |   | 21,500 |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   | 21,500 |   |
| Discount on preferred stock                                                                                                                                                                                           |   |                    |      |   |                        |   | (543   | )                        |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   | (543 | ) |
| Amortization of discount on preferred stock                                                                                                                                                                           |   |                    |      |   |                        |   | 5      |                     |   |   |                   |   |   |                                       | (5     | )      |                     |   |   |   |   |   | - |   |
| Common stock warrants issued                                                                                                                                                                                          |   |                    |      |   |                        |   |   |                     |   |   | 543                    |   |   |                                       |   |   |                     |   |   |   |   |   | 543 |   |
| Common stock repurchased                                                                                                                                                                                              |   |                    | (11,886   | )      |                        |   |   |                     |   |   | (18                    | )      |   |                                       | (268   | )      |                     |   |   |   |   |   | (286 | ) |
| Common stock compensation expense                                                                                                                                                                                     |   |                    |      |   |                        |   |   |                     |   |   | 155                    |   |   |                                       |   |   |                     |   |   |   |   |   | 155 |   |
| Common stock cash dividends ($.640 per share)                                                                                                                                                                         |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (2,149 | )      |                     |   |   |   |   |   | (2,149 | ) |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Balance at December 2008                                                                                                                                                                                              |   |                    | 3,358,079 |   |                        |   | 20,962 |                     |   |   | 20,985                 |   |   |                                       | 50,670 |   |                     |   | (605 | ) |   |   | 92,012 |   |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                                                                                 |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                              |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (5,849 | )      |                     |   |   |   |   |   | (5,849 | ) |
| Change in unrealized gain on securities available for sale, net of reclassification adjustment for realized gains of $1,236 and tax effect of $160                                                                    |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |    303 |   |   |   |    303 |   |
|         Change in supplemental retirement plan                obligations, net of tax of $164 |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   | 250 |   |   |   | 250 |   |
| Total comprehensive income                                                                                                                                                                                            |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   | (5,296 | ) |
| Amortization of discount on preferred stock                                                                                                                                                                           |   |                    |      |   |                        |   | 92     |                     |   |   |                   |   |   |                                       | (92    | )      |                     |   |   |   |   |   | - |   |
| Preferred stock cash dividends                                                                                                                                                                                        |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (994   | )      |                     |   |   |   |   |   | (994 | ) |
| Common stock compensation expense                                                                                                                                                                                     |   |                    |      |   |                        |   |   |                     |   |   | 75                     |   |   |                                       |   |   |                     |   |   |   |   |   | 75 |   |
| Common stock cash dividends ($.260 per share)                                                                                                                                                                         |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (873   | )      |                     |   |   |   |   |   | (873 | ) |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Balance at December 2009                                                                                                                                                                                              |   |                    | 3,358,079 |   |                        |   | 21,054 |                     |   |   | 21,060                 |   |   |                                       | 42,862 |   |                     |   | (52 | ) |   |   | 84,924 |   |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                                                                                 |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Net income                                                                                                                                                                                                            |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | 5,642  |   |                     |   |   |   |   |   | 5,642 |   |
| Change in unrealized gain on securities available for sale, net of reclassification adjustment for realized gains of $334 and tax effect of $587                                                                      |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   | (881 | ) |   |   | (881 | ) |
|         Change in supplemental retirement plan                obligations, net of tax of $3   |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   | 4 |   |   |   | 4 |   |
| Total comprehensive income                                                                                                                                                                                            |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   | 4,765 |   |
|                                                                                                                                                                                                                  |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Restricted stock non vested shares issued                                                                                                                                                                             |   |                    | 27,000    |   |                        |   |   |                     |   |   |                   |   |   |                                       |   |   |                     |   |   |   |   |   |   |   |
| Amortization of discount on preferred stock                                                                                                                                                                           |   |                    |      |   |                        |   | 102    |                     |   |   |                   |   |   |                                       | (102   | )      |                     |   |   |   |   |   | - |   |
| Preferred stock cash dividends                                                                                                                                                                                        |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (1,075 | )      |                     |   |   |   |   |   | (1,075 | ) |
| Restricted stock compensation expense                                                                                                                                                                                 |   |                    |      |   |                        |   |   |                     |   |   | 146                    |   |   |                                       |   |   |                     |   |   |   |   |   | 146 |   |
| Common stock compensation expense                                                                                                                                                                                     |   |                    |      |   |                        |   |   |                     |   |   | 24                     |   |   |                                       |   |   |                     |   |   |   |   |   | 24 |   |
| Common stock cash dividends ($.040 per share)                                                                                                                                                                         |   |                    |      |   |                        |   |   |                     |   |   |                   |   |   |                                       | (135   | )      |                     |   |   |   |   |   | (135 | ) |
| Balance at December 2010                                                                                                                                                                                              |   |                    | 3,385,079 |   |                        | $      | 21,156 |                     |   | $      | 21,230                 |   |   | $                                          | 47,192 |   |                     | $      | (929 | ) |   | $ | 88,649 |   |

----

|                                                                       |   | Year Ended |     |   | Year Ended |   |     | Year Ended |   |
|----------------------------------------------------------------------------|--------|-----------------|----------|--------|-----------------|--------|----------|-----------------|--------|
|                                                                       |   | Dec 2010        |     |   | Dec 2009        |   |     | Dec 2008        |   |
| Cash Flows From / (Used In) Operating Activities:                          |   |            |     |   |            |   |     |            |   |
| Net income (loss)                                                          |   | $               | 5,642    |   |            | $      | (5,849   | )               |   | $ | 5,003 |   |
| Adjustments to reconcile net income to net cash from operating activities: |   |            |     |   |            |   |     |            |   |   |   |   |
| Accretion of discounts, amortization and depreciation                      |   |            | 5,041    |   |            |   | 2,565    |            |   |   | 1,352 |   |
| Goodwill impairment                                                        |   |            | -        |   |            |   | 1,394    |            |   |   | - |   |
| Provision for loan losses                                                  |   |            | 7,179    |   |            |   | 16,218   |            |   |   | 4,292 |   |
| Stock based compensation expense                                           |   |            | 170      |   |            |   | 75       |            |   |   | 155 |   |
| Benefit for deferred income taxes                                          |   |            | (177     | )      |            |   | (2,293   | )               |   |   | (834 | ) |
| Net gain from sale of loans                                                |   |            | (2,107   | )      |            |   | (2,630   | )               |   |   | (1,446 | ) |
| Gain on securities                                                         |   |            | (768     | )      |            |   | (2,046   | )               |   |   | - |   |
| Other than temporary impairment losses                                     |   |            | 215      |   |            |   | 221      |            |   |   | 437 |   |
| Net (gain)/loss from real estate owned                                     |   |            | 288      |   |            |   | 480      |            |   |   | (68 | ) |
| Loan fees deferred, net                                                    |   |            | 169      |   |            |   | 33       |            |   |   | 175 |   |
| Proceeds from sale of loans held for sale                                  |   |            | 90,039   |   |            |   | 185,909  |            |   |   | 130,589 |   |
| Origination of loans held for sale                                         |   |            | (89,523  | )      |            |   | (186,498 | )               |   |   | (124,887 | ) |
| (Increase)/decrease in accrued interest and other assets                   |   |            | 3,258    |   |            |   | (8,244   | )               |   |   | 921 |   |
| Increase/(decrease) in other liabilities                                   |   |            | 1,956    |   |            |   | (1,740   | )               |   |   | (1,381 | ) |
| Net Cash From / (Used In) Operating Activities                             |   |            | 21,382   |   |            |   | (2,405   | )               |   |   | 14,308 |   |
|                                                                       |   |            |     |   |            |   |     |            |   |   |   |   |
| Cash Flows From / (Used In) Investing Activities:                          |   |            |     |   |            |   |     |            |   |   |   |   |
| Net principal received/(disbursed) on loans                                |   |            | (16,894  | )      |            |   | 55,946   |            |   |   | (50,799 | ) |
| Net change in interest bearing time deposits                               |   |            | 410      |   |            |   | -        |            |   |   | - |   |
| Proceeds from:                                                             |   |            |     |   |            |   |     |            |   |   |   |   |
| Maturities/repayments of securities held to maturity                       |   |            | 415      |   |            |   | 1,008    |            |   |   | 255 |   |
| Maturities/repayments of securities available for sale                     |   |            | 122,432  |   |            |   | 47,908   |            |   |   | 29,891 |   |
| Sale of securities available for sale                                      |   |            | 159,626  |   |            |   | 138,424  |            |   |   | 8,959 |   |
| Real estate owned and other assets                                         |   |            | 10,117   |   |            |   | 1,475    |            |   |   | 1,255 |   |
| Sale of Federal Home Loan Bank stock                                       |   |            | 822      |   |            |   | -        |            |   |   | - |   |
| Purchases of:                                                              |   |            |     |   |            |   |     |            |   |   |   |   |
| Loans                                                                      |   |            | (748     | )      |            |   | (16,113  | )               |   |   | (7,195 | ) |
| Securities held to maturity                                                |   |            | (50      | )      |            |   | (770     | )               |   |   | (100 | ) |
| Securities available for sale                                              |   |            | (355,481 | )      |            |   | (243,675 | )               |   |   | (70,744 | ) |
| Return of joint ventures                                                   |   |            | -        |   |            |   | 671      |            |   |   | - |   |
| Cash paid for brokerage business                                           |   |            | -        |   |            |   | -        |            |   |   | (100 | ) |
| Cash received from sale of brokerage business                              |   |            | -        |   |            |   | -        |            |   |   | 650 |   |
| Acquisition of premises and equipment                                      |   |            | (2,745   | )      |            |   | (1,529   | )               |   |   | (1,216 | ) |
| Disposal of premises and equipment                                         |   |            | 256      |   |            |   | 375      |            |   |   | 126 |   |
| Net Cash Used In Investing Activities                                      |   |            | (81,840  | )      |            |   | (16,280  | )               |   |   | (89,018 | ) |
|                                                                       |   |            |     |   |            |   |     |            |   |   |   |   |
| Cash Flows From / (Used In) Financing Activities:                          |   |            |     |   |            |   |     |            |   |   |   |   |
| Net increase in deposits                                                   |   |            | 13,038   |   |            |   | 129,666  |            |   |   | 3,088 |   |
| Proceeds from advances from FHLB                                           |   |            | 83,012   |   |            |   | -        |            |   |   | 85,000 |   |
| Repayment of advances from FHLB                                            |   |            | (83,012  | )      |            |   | (74,926  | )               |   |   | (54,423 | ) |
| Prepayment penalty on modification of FHLB advances                        |   |            | (2,456   | )      |            |   | -        |            |   |   | - |   |
| Net proceeds from/(net repayment of) overnight borrowings                  |   |            | 12,088   |   |            |   | (4,713   | )               |   |   | 4,693 |   |
| Preferred stock and warrants issued                                        |   |            | -        |   |            |   | -        |            |   |   | 21,500 |   |
| Repurchase of common stock                                                 |   |            | -        |   |            |   | -        |            |   |   | (286 | ) |
| Payment of dividends on preferred stock                                    |   |            | (1,075   | )      |            |   | (994     | )               |   |   | - |   |
| Payment of dividends on common stock                                       |   |            | (135     | )      |            |   | (873     | )               |   |   | (2,828 | ) |
| Net Cash From Financing Activities                                         |   |            | 21,460   |   |            |   | 48,160   |            |   |   | 56,744 |   |
|                                                                       |   |            |     |   |            |   |     |            |   |   |   |   |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                       |   |            | (38,998  | )      |            |   | 29,475   |            |   |   | (17,966 | ) |
| Cash and cash equivalents, beginning of period                             |   |            | 52,061   |   |            |   | 22,586   |            |   |   | 40,552 |   |
| Cash and Cash Equivalents, End of Period                                   |   | $               | 13,063   |   |            | $      | 52,061   |            |   | $ | 22,586 |   |
|                                                                       |   |            |     |   |            |   |     |            |   |   |   |   |
| Supplemental Information:                                                  |   |            |     |   |            |   |     |            |   |   |   |   |
| Cash paid for interest                                                     |   | $               | 13,723   |   |            | $      | 19,705   |            |   | $ | 22,762 |   |
| Cash paid for income taxes, net of refunds                                 |   | $               | 618      |   |            | $      | 900      |            |   | $ | 3,130 |   |
| Non Cash Items:                                                            |   |            |     |   |            |   |     |            |   |   |   |   |
| Assets acquired through foreclosure                                        |   | $               | 2,167    |   |            | $      | 11,394   |            |   | $ | 4,255 |   |
| Transfer to securities available for sale from held to maturity            |   | $               | 3,273    |   |            | $      | -        |            |   | $ | - |   |
| Securities trades not settled                                              |   | $               | 3,904    |   |            | $      | -        |            |   | $ | - |   |
| Acquisition of broker dealer within accounts payable                       |   | $               | -        |   |            | $      | -        |            |   | $ | 100 |   |
| Securities received as a redemption in kind                                |   | $               | -        |   |            | $      | -        |            |   | $ | 3,027 |   |

----

| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------|

----

----

----

|                                              |   | Year EndedDec 2010 |      |   | Year EndedDec 2009 |   |      | Year EndedDec 2008 |   |
|---------------------------------------------------|--------|--------------------|-----------|--------|--------------------|--------|-----------|--------------------|--------|
| Basic Earnings per Common Share:                  |   |               |      |   |               |   |      |               |   |
| Weighted average common shares                    |   |               | 3,358,079 |   |               |   | 3,358,079 |               |   |   | 3,359,666 |   |
|                                              |   |               |      |   |               |   |      |               |   |   |   |   |
| Diluted Earnings per Common Share:                |   |               |      |   |               |   |      |               |   |   |   |   |
| Weighted average common shares                    |   |               | 3,358,079 |   |               |   | 3,358,079 |               |   |   | 3,359,666 |   |
| Dilutive effect of stock options/restricted stock |   |               | 649       |   |               |   | -         |               |   |   | 5,465 |   |
| Weighted average common and incremental shares    |   |               | 3,358,728 |   |               |   | 3,358,079 |               |   |   | 3,365,131 |   |

| As Of                 |   | Dec 2010 |    |   | Dec 2009 |   |    | Dec 2008 |   |
|-----------------------|--------|----------|---------|--------|----------|--------|---------|----------|--------|
| Anti-dilutive options |   |     | 280,422 |   |     |   | 300,965 |     |   |   | 294,813 |   |

|                                               |   | Year EndedDec 2010 |   |   | Year EndedDec 2009 |   |   | Year EndedDec 2008 |   |
|----------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| Net income (loss)                                  |   | $                  | 5,642  |   |               | $      | (5,849 | )                  |   | $ | 5,003 |   |
| Less preferred stock dividend earned               |   |               | 1,090  |   |               |   | 1,090  |               |   |   | 59 |   |
| Less restricted stock dividend                     |   |               | 1      |   |               |   | -      |               |   |   | - |   |
| Less amortization of preferred stock discount      |   |               | 102    |   |               |   | 92     |               |   |   | 5 |   |
| Net income (loss) available to common shareholders |   | $                  | 4,449  |   |               | $      | (7,031 | )                  |   | $ | 4,939 |   |
|                                               |   |               |   |   |               |   |   |               |   |   |   |   |
| Basic Earnings (Loss) per Common Share             |   | $                  | 1.32   |   |               | $      | (2.09  | )                  |   | $ | 1.47 |   |
| Diluted Earnings (Loss) per Common Share           |   | $                  | 1.32   |   |               | $      | (2.09  | )                  |   | $ | 1.47 |   |

|                                                                 |   | Accumulated Balance |   |
|----------------------------------------------------------------------|--------|---------------------|--------|
|                                                                 |   | Year EndedDec 2010  |   |   | Year EndedDec 2009 |   |
| Unrealized holding gains (losses) from securities available for sale |   | $                   | (866   | ) |   | $ | 602 |   |
| Supplemental retirement program obligation                           |   |                | (731   | ) |   |   | (738 | ) |
| Net unrealized losses                                                |   |                | (1,597 | ) |   |   | (136 | ) |
| Tax effect                                                           |   |                | 668    |   |   |   | 84 |   |
| Accumulated Other Comprehensive Loss, Net of Tax                     |   | $                   | (929   | ) |   | $ | (52 | ) |

----

| Property Description                          |   | BALANCE ($) |   | PERCENTAGE OF BANK ASSETS |
|-----------------------------------------------|--------|-------------|--------|---------------------------|
| Accounts Receivable, Inventory, and Equipment |   | 65,258      |   | 6.26%                     |
| Land Only                                     |   | 54,912      |   | 5.27%                     |
| Shopping Center                               |   | 46,742      |   | 4.48%                     |
| Office Building                               |   | 40,073      |   | 3.84%                     |
| Manufacturing Business/Industrial             |   | 36,867      |   | 3.54%                     |
| Retail Business Store                         |   | 34,344      |   | 3.29%                     |
| Warehouse                                     |   | 33,249      |   | 3.19%                     |
| Medical Building                              |   | 33,121      |   | 3.18%                     |
| Land Development Business                     |   | 26,076      |   | 2.50%                     |
| Apartment Building                            |   | 23,307      |   | 2.24%                     |
| Motel                                         |   | 22,059      |   | 2.12%                     |
| Athletic/Recreational/School                  |   | 17,278      |   | 1.66%                     |
| Life Insurance                                |   | 14,199      |   | 1.36%                     |
| Non-Margin Stock                              |   | 12,827      |   | 1.23%                     |
| 1-4 Family Investment                         |   | 11,722      |   | 1.12%                     |
|                                          |   |        |   |                      |

----

----

|                                               |   | Dec 2010  |    |   | Dec 2009         |   |
|----------------------------------------------------|--------|-----------|---------|--------|------------------|--------|
|                                               |   | Amortized |    |   | Gross Unrealized |   |   | Fair |   |   | Amortized |   |   | Gross Unrealized |   |   | Fair |   |
|                                               |   | Cost      |    |   | Gains            |   |   | (Losses) |   |   | Value |   |   | Cost |   |   | Gains |   |   | (Losses) |   |   | Value |   |
| Held to Maturity:                                  |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal bonds                                    |   | $         | -       |   |             | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | 775 |   |   | $ | 1 |   |   | $ | - |   |   | $ | 776 |   |
| Asset backed securities                            |   |      | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |   |   | 98 |   |   |   | - |   |   |   | (11 | ) |   |   | 87 |   |
| Collateralized mortgage obligations issued by:     |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Agencies      |   |      | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |   |   | 561 |   |   |   | 19 |   |   |   | (2 | ) |   |   | 578 |   |
|        Private label |   |      | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,373 |   |   |   | 31 |   |   |   | (360 | ) |   |   | 1,044 |   |
| Mortgage backed securities                         |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   issued by agencies                     |   |      | -       |   |             |   | - |   |   |   | - |   |   |   | - |   |   |   | 867 |   |   |   | 40 |   |   |   | - |   |   |   | 907 |   |
| Total Held to Maturity                             |   | $         | -       |   |             | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | 3,674 |   |   | $ | 91 |   |   | $ | (373 | ) |   | $ | 3,392 |   |
|                                               |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for Sale:                                |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency bonds                                       |   | $         | -       |   |             | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | 2,504 |   |   | $ | 20 |   |   | $ | - |   |   | $ | 2,524 |   |
| Municipal bonds                                    |   |      | 62,925  |   |             |   | 1,509 |   |   |   | (580 | ) |   |   | 63,854 |   |   |   | 39,261 |   |   |   | 1,073 |   |   |   | (166 | ) |   |   | 40,168 |   |
| Asset backed securities                            |   |      | 100     |   |             |   | - |   |   |   | (58 | ) |   |   | 42 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Collateralized mortgage obligations issued by:     |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Agencies      |   |      | 50,714  |   |             |   | 364 |   |   |   | (479 | ) |   |   | 50,599 |   |   |   | 53,772 |   |   |   | 259 |   |   |   | (79 | ) |   |   | 53,952 |   |
|        Private label |   |      | 97,396  |   |             |   | 138 |   |   |   | (1,127 | ) |   |   | 96,407 |   |   |   | 1,523 |   |   |   | - |   |   |   | (24 | ) |   |   | 1,499 |   |
| Mortgage backed securities                         |   |      |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   issued by agencies                     |   |      | 13,386  |   |             |   | 107 |   |   |   | (232 | ) |   |   | 13,261 |   |   |   | 10,906 |   |   |   | 118 |   |   |   | (42 | ) |   |   | 10,982 |   |
| Corporate debt                                     |   |      | 1,967   |   |             |   | - |   |   |   | (508 | ) |   |   | 1,459 |   |   |   | 1,965 |   |   |   | - |   |   |   | (557 | ) |   |   | 1,408 |   |
| Bond money market funds                            |   |      | 768     |   |             |   | - |   |   |   | - |   |   |   | 768 |   |   |   | 39,025 |   |   |   | - |   |   |   | - |   |   |   | 39,025 |   |
| Equity securities                                  |   |      | 75      |   |             |   | - |   |   |   | - |   |   |   | 75 |   |   |   | 75 |   |   |   | - |   |   |   | - |   |   |   | 75 |   |
| Total Available for Sale                           |   | $         | 227,331 |   |             | $      | 2,118 |   |   | $ | (2,984 | ) |   | $ | 226,465 |   |   | $ | 149,031 |   |   | $ | 1,470 |   |   | $ | (868 | ) |   | $ | 149,633 |   |

----

|                                               |   | Available for Sale |    |
|----------------------------------------------------|--------|--------------------|---------|
|                                               |   | AmortizedCost      |    |   | FairValue |   |   | Yield |   |
|                                               |   |               |    |   |   |   |   |   |   |
| Municipal bonds:                                   |   |               |    |   |   |   |   |   |   |
| Due in one year or less                            |   |  $            | 2,685   |   |   |  $ | 2,706 |   |   |   | 5.36 | % |
| Due after 1 year through 5 years                   |   |               | 13,525  |   |   |   | 14,032 |   |   |   | 5.28 | % |
| Due after 5 years through 10 years                 |   |               | 37,900  |   |   |   | 38,533 |   |   |   | 4.79 | % |
| Due after 10 years                                 |   |               | 8,815   |   |   |   | 8,583 |   |   |   | 4.47 | % |
| Asset backed securities                            |   |               | 100     |   |   |   | 42 |   |   |   | 1.86 | % |
| Collateralized mortgage obligations issued by:     |   |               |    |   |   |   |   |   |   |   |   |   |
|        Agencies      |   |               | 50,714  |   |   |   | 50,599 |   |   |   | 2.57 | % |
|        Private label |   |               | 97,396  |   |   |   | 96,407 |   |   |   | 3.39 | % |
| Mortgage backed securities issued by agencies      |   |               | 13,386  |   |   |   | 13,261 |   |   |   | 2.90 | % |
| Corporate debt:                                    |   |               |    |   |   |   |   |   |   |   |   |   |
| Due after 10 years                                 |   |               | 1,967   |   |   |   | 1,459 |   |   |   | 1.01 | % |
| Bond money market funds                            |   |               | 768     |   |   |   | 768 |   |   |   | .01 | % |
| Equity securities                                  |   |               | 75      |   |   |   | 75 |   |   |   | - |   |
| Total                                              |   | $                  | 227,331 |   |   | $ | 226,465 |   |   |   | 3.57 | % |

|                                                  |   | Year Ended |    |   | Year Ended |   |    | Year Ended |   |
|-------------------------------------------------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|                                                  |   | Dec 2010   |    |   | Dec 2009   |   |    | Dec 2008   |   |
| Proceeds from sales                                   |   | $          | 159,626 |   |       | $      | 138,424 |       |   | $ | 8,959 |   |
| Gross gains on sales                                  |   |       | 774     |   |       |   | 2,083   |       |   |   | - |   |
| Gross losses on sales                                 |   |       | 6       |   |       |   | 37      |       |   |   | - |   |
| Other than temporary impairment losses                |   |       | 215     |   |       |   | 221     |       |   |   | 437 |   |
| Tax expense/benefit on realized security gains/losses |   |       | 219     |   |       |   | 723     |       |   |   | (173 | ) |

|                        |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |
|-----------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                        |   | Dec 2010   |   |   | Dec 2009   |   |   | Dec 2008   |   |
| Taxable interest income     |   | $          | 4,634  |   |       | $      | 3,351  |       |   | $ | 2,025 |   |
| Non-taxable interest income |   |       | 732    |   |       |   | 813    |       |   |   | 853 |   |
| Total Interest Income       |   | $          | 5,366  |   |       | $      | 4,164  |       |   | $ | 2,878 |   |

----

|  As of December 31, 2010                  |   | Less thanTwelve Months |    |   | Twelve MonthsOr Longer |   |   | Total     |   |
|------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|--------|-----------|--------|
|  Description of Securities                |   | FairValue              |    |   | UnrealizedLosses       |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
| Asset backed securities                        |   | $                      | 15      |   |                   | $      | (3     | )         |   | $ | 27 |   |   | $ | (55 | ) |   | $ | 42 |   |   | $ | (58 | ) |
| Collateralized mortgage obligations issued by: |   |                   |    |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Agencies        |   |                   | 20,969  |   |                   |   | (479   | )         |   |   | - |   |   |   | - |   |   |   | 20,969 |   |   |   | (479 | ) |
|       Private Label   |   |                   | 69,290  |   |                   |   | (967   | )         |   |   | 468 |   |   |   | (160 | ) |   |   | 69,758 |   |   |   | (1,127 | ) |
| Mortgage backed securities issued by agencies  |   |                   | 9,914   |   |                   |   | (232   | )         |   |   | - |   |   |   | - |   |   |   | 9,914 |   |   |   | (232 | ) |
| Corporate debt                                 |   |                   | -       |   |                   |   | -      |      |   |   | 1,459 |   |   |   | (508 | ) |   |   | 1,459 |   |   |   | (508 | ) |
| Municipal bonds                                |   |                   | 12,841  |   |                   |   | (543   | )         |   |   | 855 |   |   |   | (37 | ) |   |   | 13,696 |   |   |   | (580 | ) |
| Total Temporarily Impaired Securities          |   | $                      | 113,029 |   |                   | $      | (2,224 | )         |   | $ | 2,809 |   |   | $ | (760 | ) |   | $ | 115,838 |   |   | $ | (2,984 | ) |

|  As of December 31, 2009                  |   | Less thanTwelve Months |   |   | Twelve MonthsOr Longer |   |   | Total     |   |
|------------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|-----------|--------|
|  Description of Securities                |   | FairValue              |   |   | UnrealizedLosses       |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
| Asset backed securities                        |   | $                      | 63     |   |                   | $      | (6     | )         |   | $ | 24 |   |   | $ | (5 | ) |   | $ | 87 |   |   | $ | (11 | ) |
| Collateralized mortgage obligations issued by: |   |                   |   |   |                   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Agencies        |   |                   | 10,450 |   |                   |   | (80    | )         |   |   | 11 |   |   |   | (1 | ) |   |   | 10,461 |   |   |   | ( 81 | ) |
|       Private Label   |   |                   | 1,558  |   |                   |   | (31    | )         |   |   | 902 |   |   |   | (353 | ) |   |   | 2,460 |   |   |   | (384 | ) |
| Mortgage backed securities issued by agencies  |   |                   | 8,375  |   |                   |   | (42    | )         |   |   | 26 |   |   |   | - |   |   |   | 8,401 |   |   |   | (42 | ) |
| Corporate debt                                 |   |                   | -      |   |                   |   | -      |      |   |   | 1,408 |   |   |   | (557 | ) |   |   | 1,408 |   |   |   | (557 | ) |
| Municipal bonds                                |   |                   | 10,188 |   |                   |   | (140   | )         |   |   | 638 |   |   |   | (26 | ) |   |   | 10,826 |   |   |   | (166 | ) |
| Total Temporarily Impaired Securities          |   | $                      | 30,634 |   |                   | $      | (299   | )         |   | $ | 3,009 |   |   | $ | (942 | ) |   | $ | 33,643 |   |   | $ | (1,241 | ) |

----

| 3. | PORTFOLIO LOANS AND ALLOWANCE FOR LOAN LOSSES |
|----|-----------------------------------------------|

|                                                             |   | Commercial and commercial mortgage loans |    |   | Residential mortgage loans |   |   | Second and home equity loans |   |   |      Other consumer loans |   |   | Total  |   |
|------------------------------------------------------------------|--------|------------------------------------------|---------|--------|----------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------------------|--------|--------|--------|--------|
| Allowance for loan losses:                                       |   |                                     |    |   |                       |   |   |                         |   |   |                                          |   |   |   |   |
| Balance at beginning of period                                   |   | $                                        | 10,564  |   |                       | $      | 910    |                         |   | $      | 1,152                                         |   |   | $      | 487    |   |   | $ | 13,113 |   |
| Provision for loan losses                                        |   |                                     | 6,442   |   |                       |   | 460    |                         |   |   | 174                                           |   |   |   | 103    |   |   |   | 7,179 |   |
| Loan charge-offs                                                 |   |                                     | (4,447  | )      |                       |   | (697   | )                            |   |   | (502                                          | )      |   |   | (439   | ) |   |   | (6,085 | ) |
| Recoveries                                                       |   |                                     | 81      |   |                       |   | 126    |                         |   |   | 34                                            |   |   |   | 158    |   |   |   | 399 |   |
| Balance at End of Period                                         |   | $                                        | 12,640  |   |                       | $      | 799    |                         |   | $      | 858                                           |   |   | $      | 309    |   |   | $ | 14,606 |   |
| Ending balance:  individually evaluated for impairment |   | $                                        | 3,455   |   |                       | $      | -      |                         |   | $      | -                                             |   |   | $      | -      |   |   | $ | 3,455 |   |
| Ending balance:  collectively evaluated for impairment |   | $                                        | 9,185   |   |                       | $      | 799    |                         |   | $      | 858                                           |   |   | $      | 309    |   |   | $ | 11,151 |   |
| Loans:                                                           |   |                                     |    |   |                       |   |   |                         |   |   |                                          |   |   |   |   |   |   |   |   |   |
| Balance at End of Period                                         |   | $                                        | 550,686 |   |                       | $      | 92,796 |                         |   | $      | 92,557                                        |   |   | $      | 11,614 |   |   | $ | 747,653 |   |
| Ending balance:  individually evaluated for impairment |   | $                                        | 54,450  |   |                       | $      | -      |                         |   | $      | -                                             |   |   | $      | -      |   |   | $ | 54,450 |   |
| Ending balance:  collectively evaluated for impairment |   | $                                        | 496,236 |   |                       | $      | 92,796 |                         |   | $      | 92,557                                        |   |   | $      | 11,614 |   |   | $ | 693,203 |   |

|                      |   | Year EndedDec 2009 |    |   | Year EndedDec 2008 |   |
|---------------------------|--------|--------------------|---------|--------|--------------------|--------|
| Beginning balance         |   | $                  | 8,589   |   |               | $      | 6,972 |   |
| Provision for loan losses |   |               | 16,218  |   |               |   | 4,292 |   |
| Charge-offs               |   |               | (12,039 | )      |               |   | (3,041 | ) |
| Recoveries                |   |               | 345     |   |               |   | 366 |   |
| Ending Balance            |   | $                  | 13,113  |   |               | $      | 8,589 |   |

|            |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Special Mention |      | Loans classified as special mention have a potential weakness that deserves management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.                                                                                                                        |
|            |                     |
| Substandard     |      | Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. |

----

|                     |   | Commercial and commercial mortgage loans |    |   | Residential mortgage loans |   |   | Second and home equity loans |   |   |     Other consumer loans |   |   |              Total |   |
|--------------------------|--------|------------------------------------------|---------|--------|----------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|
| Rating:                  |   |                                     |    |   |                       |   |   |                         |   |   |                                    |   |   |                                                                           |   |
| Pass                     |   | $                                        | 472,375 |   |                       | $      | 91,094 |                         |   | $      | 91,790                                  |   |   | $                                                                              | 11,342 |   |   | $ | 666,601 |   |
| Special mention          |   |                                     | 17,816  |   |                       |   | 372    |                         |   |   | 78                                      |   |   |                                                                           | -      |   |   |   | 18,266 |   |
| Substandard              |   |                                     | 60,495  |   |                       |   | 1,330  |                         |   |   | 689                                     |   |   |                                                                           | 272    |   |   |   | 62,786 |   |
| Balance at End of Period |   | $                                        | 550,686 |   |                       | $      | 92,796 |                         |   | $      | 92,557                                  |   |   | $                                                                              | 11,614 |   |   | $ | 747,653 |   |

| As of December 31, 2010                                |   | Commercial and commercial mortgage loans |    |   | Residential mortgage loans |   |   | Second and home equity loans |   |   | Other consumer loans |   |   | Total  |   |
|--------------------------------------------------------|--------|------------------------------------------|---------|--------|----------------------------|--------|--------|------------------------------|--------|--------|----------------------|--------|--------|--------|--------|
| Loans:                                                 |   |                                     |    |   |                       |   |   |                         |   |   |                 |   |   |   |   |
| 30-59 days past due                                    |   | $                                        | 2,770   |   |                       | $      | 1,447  |                         |   | $      | 687                  |   |   | $      | 68     |   |   | $ | 4,972 |   |
| 60-89 days past due                                    |   |                                     | -       |   |                       |   | -      |                         |   |   | 78                   |   |   |   | 21     |   |   |   | 99 |   |
| Nonaccrual or greater than 90 days past due            |   |                                     | 18,082  |   |                       |   | 1,504  |                         |   |   | 678                  |   |   |   | 106    |   |   |   | 20,370 |   |
| Total Past Due                                         |   |                                     | 20,852  |   |                       |   | 2,951  |                         |   |   | 1,443                |   |   |   | 195    |   |   |   | 25,441 |   |
| Current                                                |   |                                     | 529,834 |   |                       |   | 89,845 |                         |   |   | 91,114               |   |   |   | 11,419 |   |   |   | 722,212 |   |
| Total Loans                                            |   | $                                        | 550,686 |   |                       | $      | 92,796 |                         |   | $      | 92,557               |   |   | $      | 11,614 |   |   | $ | 747,653 |   |
| Total loans greater than 90 days past due and accruing |   | $                                        | -       |   |                       | $      | 92     |                         |   | $      | -                    |   |   | $      | -      |   |   | $ | 92 |   |

----

| As Of                                        |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |
|----------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Impaired loans with a valuation reserve      |   | $        | 32,325 |   |     | $      | 27,448 |     |   | $ | 17,170 |   |
| Impaired loans with no valuation reserve     |   |     | 22,125 |   |     |   | 11,132 |     |   |   | 6,646 |   |
| Total Impaired Loans                         |   | $        | 54,450 |   |     | $      | 38,580 |     |   | $ | 23,816 |   |
|                                         |   |     |   |   |     |   |   |     |   |   |   |   |
| Valuation reserve on impaired loans          |   | $        | 3,455  |   |     | $      | 2,935  |     |   | $ | 2,087 |   |
|                                         |   |     |   |   |     |   |   |     |   |   |   |   |
| Average impaired loans                       |   | $        | 46,215 |   |     | $      | 30,938 |     |   | $ | 14,682 |   |
| Interest income recognized on impaired loans |   | $        | 1,627  |   |     | $      | 575    |     |   | $ | 325 |   |
| Cash basis interest included above           |   | $        | 77     |   |     | $      | 404    |     |   | $ | 284 |   |

|  As Of                                      |   |    Dec 2010 |   |
|--------------------------------------------------|--------|-----------------------|--------|
| Unpaid Principal Balance on:                     |   |                  |   |
| Impaired loans with a valuation reserve          |   | $                     | 35,167 |   |
| Impaired loans with no valuation reserve         |   |                  | 24,288 |   |
| Total Unpaid Principal Balance on Impaired Loans |   | $                     | 59,455 |   |

| 4. | LOAN SERVICING ACTIVITIES |
|----|---------------------------|

| 5. | ACCRUED INTEREST RECEIVABLE |
|----|-----------------------------|

| As Of                             |   | Dec 2010 |   |   | Dec 2009 |   |
|-----------------------------------|--------|----------|--------|--------|----------|--------|
| Loans                             |   | $        | 2,526  |   |     | $      | 2,782 |   |
| Securities                        |   |     | 1,259  |   |     |   | 751 |   |
| Total Accrued Interest Receivable |   | $        | 3,785  |   |     | $      | 3,533 |   |

----

| 6. | PREMISES AND EQUIPMENT |
|----|------------------------|

| As Of                        |   | Dec 2010 |    |   |  Dec 2009 |   |
|------------------------------|--------|----------|---------|--------|----------------|--------|
| Land                         |   | $        | 2,992   |   |           | $      | 2,485 |   |
| Buildings and improvements   |   |     | 15,977  |   |           |   | 15,561 |   |
| Furniture and equipment      |   |     | 7,993   |   |           |   | 8,615 |   |
| Total                        |   |     | 26,962  |   |           |   | 26,661 |   |
| Accumulated depreciation     |   |     | (10,734 | )      |           |   | (11,510 | ) |
| Total Premises and Equipment |   | $        | 16,228  |   |           | $      | 15,151 |   |

| 7. | DEPOSITS |
|----|----------|

|                       |   | Dec 2010 |    |   | Dec 2009              |   |
|----------------------------|--------|----------|---------|--------|-----------------------|--------|
|                       |   | Amount   |    |   | Weighted Average Rate |   |   | Amount |   |   | Weighted Average Rate |   |
| Non-interest bearing       |   | $        | 86,425  |   |                  |   |   |   | $ | 80,938 |   |   |   |   |
| Checking                   |   |     | 177,613 |   |                  |   | 0.92 | % |   |   | 170,226 |   |   |   | 1.19 | % |
| Savings                    |   |     | 45,764  |   |                  |   | 0.16 | % |   |   | 42,520 |   |   |   | 0.15 | % |
| Money market               |   |     | 224,382 |   |                  |   | 0.66 | % |   |   | 207,089 |   |   |   | 0.99 | % |
| Total transaction accounts |   |     | 534,184 |   |                  |   | 0.60 | % |   |   | 500,773 |   |   |   | 0.83 | % |
| Certificate accounts:      |   |     |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Less than one year         |   |     | 43,130  |   |                  |   | 0.75 | % |   |   | 44,316 |   |   |   | 1.20 | % |
| 12-23 months               |   |     | 59,789  |   |                  |   | 1.20 | % |   |   | 92,532 |   |   |   | 2.52 | % |
| 24-35 months               |   |     | 122,896 |   |                  |   | 2.02 | % |   |   | 137,466 |   |   |   | 3.32 | % |
| 36-59 months               |   |     | 76,446  |   |                  |   | 3.43 | % |   |   | 46,046 |   |   |   | 3.94 | % |
| 60-120 months              |   |     | 16,898  |   |                  |   | 3.83 | % |   |   | 19,172 |   |   |   | 4.06 | % |
| Total certificate accounts |   |     | 319,159 |   |                  |   | 2.13 | % |   |   | 339,532 |   |   |   | 2.95 | % |
| Total Deposits             |   | $        | 853,343 |   |                  |   | 1.17 | % |   | $ | 840,305 |   |   |   | 1.69 | % |
|                       |   |     |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |

|                                                          |          |   | 2011   |    |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015   |   |   | Thereafter |   |   | Total  |   |
|---------------------------------------------------------------|---------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
|     1.99% or less                              |          |   | $      | 107,792 |   |   | $      | 71,974 |   |   | $      | 1,021  |   |   | $      | 2,868  |   |       | $      | 157    |   |   | $ | 14 |   |   | $ | 183,826 |   |
|                                                          | 2.00% - 2.99% |   |   |    | 30,386 |   |   |   | 6,446  |   |   |   | 6,534  |   |   |   | 28,638 |       |   |   | 2,090  |   |   |   | 1,604 |   |   |   | 75,698 |   |
|                                                          | 3.00% - 3.99% |   |   |    | 16,861 |   |   |   | 2,163  |   |   |   | 4,117  |   |   |   | 440    |       |   |   | 97     |   |   |   | 284 |   |   |   | 23,962 |   |
|                                                          | 4.00% - 4.99% |   |   |    | 15,659 |   |   |   | 17,102 |   |   |   | 541    |   |   |   | 320    |       |   |   | 14     |   |   |   | 50 |   |   |   | 33,686 |   |
|     Over 5.00%                                 |          |   |   | 1,483   |   |   |   | 504    |   |   |   | -      |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 1,987 |   |
|     Total  Certificate Accounts |          |   | $      | 172,181 |   |   | $      | 98,189 |   |   | $      | 12,213 |   |   | $      | 32,266 |   |       | $      | 2,358  |   |   | $ | 1,952 |   |   | $ | 319,159 |   |

----

|                   |   | Year EndedDec 2010 |   |   | Year EndedDec 2009 |   |   | Year EndedDec 2008 |   |
|------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
|                   |   |               |   |   |               |   |   |               |   |
| Checking               |   | $                  | 1,836  |   |               | $      | 1,614  |               |   | $ | 918 |   |
| Savings                |   |               | 72     |   |               |   | 65     |               |   |   | 63 |   |
| Money market           |   |               | 1,686  |   |               |   | 2,235  |               |   |   | 2,867 |   |
| Certificate accounts   |   |               | 8,635  |   |               |   | 10,949 |               |   |   | 12,876 |   |
| Total Interest Expense |   | $                  | 12,229 |   |               | $      | 14,863 |               |   | $ | 16,724 |   |

| 8. | FEDERAL HOME LOAN BANK ADVANCES |
|----|---------------------------------|

| Maturing DuringYear EndedDecember 31 |   | Amount |   |   | Weighted Average Rate |   |
|--------------------------------------|--------|--------|--------|--------|---------------------------------|--------|
|                                 |   |   |   |   |                            |   |
| 2011                                 |   | $      | -      |   |                            |   | - |   |
| 2012                                 |   |   | -      |   |                            |   | - |   |
| 2013                                 |   |   | 33,879 |   |                            |   | 0.47 | % |
| 2014                                 |   |   | 19,405 |   |                            |   | 0.63 | % |
| 2015                                 |   |   | -      |   |                            |   | - |   |
| Thereafter                           |   |   | -      |   |                            |   | - |   |
| Total FHLB Advances                  |   | $      | 53,284 |   |                            |   | 0.53 | % |

| 9. | OTHER BORROWINGS |
|----|------------------|

----

| 10. | INCOME TAXES |
|-----|--------------|

|                           |   | Year Ended |   |   | Year Ended |   |   | Year Ended |   |
|--------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                           |   | Dec 2010   |   |   | Dec 2009   |   |   | Dec 2008   |   |
| Current:                       |   |       |   |   |       |   |   |       |   |
| Federal                        |   | $          | 2,202  |   |       | $      | (1,263 | )          |   | $ | 2,666 |   |
| State                          |   |       | 121    |   |       |   | -      |       |   |   | 768 |   |
| Deferred                       |   |       |   |   |       |   |   |       |   |   |   |   |
| Federal                        |   |       | (337   | )      |       |   | (1,671 | )          |   |   | (646 | ) |
| State                          |   |       | 160    |   |       |   | (622   | )          |   |   | (188 | ) |
| Income Tax Provision (Benefit) |   | $          | 2,146  |   |       | $      | (3,556 | )          |   | $ | 2,600 |   |

| Period Ended                                             |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |
|----------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Income tax provision (benefit) at federal statutory rate |   | $        | 2,648  |   |     | $      | (3,197 | )        |   | $ | 2,584 |   |
| State tax, net of federal tax benefit (provision)        |   |     | 185    |   |     |   | (411   | )        |   |   | 383 |   |
| Tax exempt interest                                      |   |     | (266   | )      |     |   | (291   | )        |   |   | (303 | ) |
| Increase in cash surrender value of life insurance  |   |     | (190   | )      |     |   | (166   | )        |   |   | (175 | ) |
| Impairment of goodwill                                   |   |     | -      |   |     |   | 474    |     |   |   | - |   |
| Community development tax credit                         |   |     | (108   | )      |     |   | (108   | )        |   |   | - |   |
| Other, net                                               |   |     | (123   | )      |     |   | 143    |     |   |   | 111 |   |
| Income Tax Provision (Benefit)                           |   | $        | 2,146  |   |     | $      | (3,556 | )        |   | $ | 2,600 |   |

----

| As Of                                                                                                              |   | Dec. 2010 |   |   | Dec. 2009 |   |
|--------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|
| Deferred tax assets:                                                                                               |   |      |   |   |      |   |
| Bad debt reserves, net                                                                                             |   | $         | 5,830  |   |      | $      | 5,450 |   |
| Net unrealized loss on securities available for sale and other than temporary impairment losses on debt securities |   |      | 464    |   |      |   | - |   |
| Capital loss on securities available for sale                                                                      |   |      | -      |   |      |   | 247 |   |
| Sale leaseback gain                                                                                                |   |      | 600    |   |      |   | 649 |   |
| Foreclosed assets                                                                                                  |   |      | 500    |   |      |   | - |   |
| Other                                                                                                              |   |      |   |   |      |   | 308 |   |
| Deferred compensation and other benefits                                                                           |   |      | 2,214  |   |      |   | 2,285 |   |
| Total deferred tax assets                                                                                          |   |      | 9,608  |   |      |   | 8,939 |   |
|                                                                                                               |   |      |   |   |      |   |   |   |
| Deferred tax liabilities:                                                                                          |   |      |   |   |      |   |   |   |
| Difference in basis of fixed assets                                                                                |   |      | 627    |   |      |   | 480 |   |
| FHLB dividend                                                                                                      |   |      | 185    |   |      |   | 204 |   |
| Unrealized gain on securities available for sale                                                                   |   |      | -      |   |      |   | 208 |   |
| Deferred fees                                                                                                      |   |      | 382    |   |      |   | 440 |   |
| Other                                                                                                              |   |      | 46     |   |      |   | - |   |
| Total deferred tax liabilities                                                                                     |   |      | 1,240  |   |      |   | 1,332 |   |
| Net Deferred Tax Asset                                                                                             |   | $         | 8,368  |   |      | $      | 7,607 |   |

| 11. | REGULATORY MATTERS |
|-----|--------------------|

----

|                                   |   | Actual |    |   | For CapitalAdequacy Purposes |   |   | To Be Categorized As“Well Capitalized”Under PromptCorrective ActionProvisions |   |
|----------------------------------------|--------|--------|---------|--------|------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|
|                                   |   | Amount |    |   | Ratio                        |   |   | Amount                                                                                    |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2010                |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital               |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| (to risk-weighted assets)              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 110,788 |   |                         |   | 12.93  | %                                                                                         |   | $ | 68,568 |   |   |   | 8.0 | % |   | $ | 85,711 |   |   |   | 10.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 114,412 |   |                         |   | 13.33  | %                                                                                         |   | $ | 68,645 |   |   |   | 8.0 | % |   | $ | 85,807 |   |   |   | 10.0 | % |
| Tier 1 risk-based capital              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to risk-weighted assets)              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 100,026 |   |                         |   | 11.67  | %                                                                                         |   | $ | 34,284 |   |   |   | 4.0 | % |   | $ | 51,426 |   |   |   | 6.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 103,638 |   |                         |   | 12.08  | %                                                                                         |   | $ | 34,323 |   |   |   | 4.0 | % |   | $ | 51,484 |   |   |   | 6.0 | % |
| Tier 1 leverage capital                |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to average assets)                    |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 100,026 |   |                         |   | 9.27   | %                                                                                         |   | $ | 43,169 |   |   |   | 4.0 | % |   | $ | 53,961 |   |   |   | 5.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 103,638 |   |                         |   | 9.60   | %                                                                                         |   | $ | 43,203 |   |   |   | 4.0 | % |   | $ | 54,003 |   |   |   | 5.0 | % |

|                                   |   | Actual |    |   | For CapitalAdequacy Purposes |   |   | To Be Categorized As“Well Capitalized”Under PromptCorrective ActionProvisions |   |
|----------------------------------------|--------|--------|---------|--------|------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|
|                                   |   | Amount |    |   | Ratio                        |   |   | Amount                                                                                    |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2009                |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Total risk-based capital               |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| (to risk-weighted assets)              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 104,060 |   |                         |   | 12.20  | %                                                                                         |   | $ | 68,222 |   |   |   | 8.0 | % |   | $ | 85,278 |   |   |   | 10.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 109,383 |   |                         |   | 12.81  | %                                                                                         |   | $ | 68,289 |   |   |   | 8.0 | % |   | $ | 85,361 |   |   |   | 10.0 | % |
| Tier 1 risk-based capital              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to risk-weighted assets)              |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 93,370  |   |                         |   | 10.95  | %                                                                                         |   | $ | 34,111 |   |   |   | 4.0 | % |   | $ | 51,167 |   |   |   | 6.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 98,683  |   |                         |   | 11.56  | %                                                                                         |   | $ | 34,144 |   |   |   | 4.0 | % |   | $ | 51,217 |   |   |   | 6.0 | % |
| Tier 1 leverage capital                |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (to average assets)                    |   |   |    |   |                         |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indiana Bank and Trust Company         |   | $      | 93,370  |   |                         |   | 8.86   | %                                                                                         |   | $ | 42,140 |   |   |   | 4.0 | % |   | $ | 52,675 |   |   |   | 5.0 | % |
| Indiana Community Bancorp Consolidated |   | $      | 98,683  |   |                         |   | 9.36   | %                                                                                         |   | $ | 42,172 |   |   |   | 4.0 | % |   | $ | 52,715 |   |   |   | 5.0 | % |

----

| 12. | EMPLOYEE BENEFIT PLANS |
|-----|------------------------|

|                                          |   |     |   |   |     |   |   |     |   |
|-----------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
|                                          |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |
| Economic assumptions:                         |   |     |   |   |     |   |   |     |   |
| Discount rate                                 |   |     | 5.3    | %      |     |   | 5.5    | %        |   |   | 5.5 | % |
| Salary rate                                   |   |     | 4.0    | %      |     |   | 4.0    | %        |   |   | 4.0 | % |
|                                          |   |     |   |   |     |   |   |     |   |   |   |   |
| Components of net periodic pension expense:   |   |     |   |   |     |   |   |     |   |   |   |   |
| Interest cost on projected benefit obligation |   | $        | 216    |   |     | $      | 228    |     |   | $ | 242 |   |
| Service cost                                  |   |     | 103    |   |     |   | 104    |     |   |   | 104 |   |
| Prior service cost                            |   |     | 54     |   |     |   | 89     |     |   |   | 99 |   |
| Net Periodic Benefit Cost                     |   | $        | 373    |   |     | $      | 421    |     |   | $ | 445 |   |

|                                                |   | Dec 2010 |   |   | Dec 2009 |   |
|-----------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Benefit obligation at beginning of year             |   | $        | 4,057  |   |     | $      | 4,257 |   |
| Interest cost                                       |   |     | 216    |   |     |   | 228 |   |
| Service cost                                        |   |     | 103    |   |     |   | 104 |   |
| Actuarial (gain)/loss                               |   |     | 47     |   |     |   | (324 | ) |
| Benefits paid during year                           |   |     | (211   | )      |     |   | (208 | ) |
| Benefit Obligation at End of Year (unfunded status) |   | $        | 4,212  |   |     | $      | 4,057 |   |

| Pension benefits                                    |   | Dec 2010 |   |   | Dec 2009 |   |
|-----------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Net loss, net of tax of ($174) and ($155)           |   | $        | 265    |   |     | $      | 236 |   |
| Prior service cost, net of tax of ($116) and ($138) |   |     | 177    |   |     |   | 209 |   |
| Total                                               |   | $        | 442    |   |     | $      | 445 |   |

----

|                                                                                                        |   | Dec 2010 |   |   | Dec 2009 |   |
|-------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Net (gain) loss, net of tax of $19 and $143                                                                 |   | $        | 29     |   |     | $      | (217 | ) |
| Amortization of prior service cost, net of tax of $21 and $21                                               |   |     | (33    | )      |     |   | (33 | ) |
| Total recognized in other comprehensive income                                                              |   | $        | (4     | )      |     | $      | (250 | ) |
| Total recognized in net periodic benefit cost and other comprehensive income, net of tax of ($145) and ($3) |   | $        | 221    |   |     | $      | 4 |   |

| 13. | STOCK-BASED COMPENSATION |
|-----|--------------------------|

| Options                          |   |    Shares |    |   | Weighted AverageExcercisedPrice |   |   | Weighted AverageLife (in years) |   |   | Aggregate Intrinsic Value |   |
|----------------------------------|--------|---------------------|---------|--------|---------------------------------|--------|--------|--------------------------------------|--------|--------|--------------------------------|--------|
| Outstanding December 31, 2007    |   |                | 405,952 |   |                            |   |   |                                 |   |   |                           |   |   |
| Granted                          |   |                | 68,500  |   |                            |   |   |                                 |   |   |                           |   |   |
| Forfeited                        |   |                | (81,174 | )      |                            |   |   |                                 |   |   |                           |   |   |
| Outstanding December 31, 2008    |   |                | 393,278 |   |                            |   |   |                                 |   |   |                           |   |   |
| Forfeited                        |   |                | (92,313 | )      |                            |   |   |                                 |   |   |                           |   |   |
| Outstanding December 31, 2009    |   |                | 300,965 |   |                            | $      | 22.75  |                                 |   |   |                           |   |   |   |
| Forfeited                        |   |                | (20,543 | )      |                            |   | 15.80  |                                 |   |   |                           |   |   |   |
| Outstanding December 31, 2010    |   |                | 280,422 |   |                            | $      | 23.26  |                                 |   |   | 4.4                            |   |   | $ | - |   |
| Exercisable at December 31, 2010 |   |                | 274,356 |   |                            | $      | 23.30  |                                 |   |   | 4.3                            |   |   | $ | - |   |

----

| Restricted Stock            |   | Shares |   |   | Weighted AverageGrant-Date Fair Value |   |
|-----------------------------|--------|--------|--------|--------|--------------------------------------------|--------|
| Nonvested December 31, 2009 |   |   | -      |   |                                       | $      | - |   |
| Granted                     |   |   | 27,000 |   |                                       |   | 12.15 |   |
| Nonvested December 31, 2010 |   |   | 27,000 |   |                                       | $      | 12.15 |   |

| 14. | COMMITMENTS |
|-----|-------------|

|                                                     |   |
|----------------------------------------------------------|--------|
|                                                     |   | Dec 2010 |   |   | Dec 2009 |   |
| Commitments to extend credit:                            |   |   |   |   |   |   |
|   Commercial mortgage and commercial loans (1) |   | $ | 76,505 |   |   | $ | 93,200 |   |
|   Residential mortgage loans                   |   |   | 14,519 |   |   |   | 12,606 |   |
|   Revolving home equity lines of credit        |   |   | 38,944 |   |   |   | 37,273 |   |
|   Other                                        |   |   | 16,436 |   |   |   | 17,217 |   |
|   Standby letters of credit                    |   |   | 5,100 |   |   |   | 2,121 |   |
| Commitments to sell loans:                               |   |   |   |   |   |   |   |   |
|   Residential mortgage loans                   |   |   | 15,562 |   |   |   | 10,650 |   |
|   Commercial mortgage and commercial loans     |   |   | - |   |   |   | 5,760 |   |

| 1)   | Commercial mortgage and commercial loan commitments to extend credit are presented net of the portion of participation interests due to investors. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| Year Ended December                                                  |   | Amount |   |
|----------------------------------------------------------------------|--------|--------|--------|
|      2011                                   |   | $      | 601    |   |
|      2012                                   |   |   | 521    |   |
|      2013                                   |   |   | 530    |   |
|      2014                                   |   |   | 531    |   |
|      2015                                   |   |   | 543    |   |
|     Thereafter                                   |   |   | 3,551  |   |
|      Total Minimum Operating Lease Payments |   | $      | 6,277  |   |

----

| 15. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
|-----|-------------------------------------|

|    |                     |                                                                                                                                                                                                                                                                                                   |
|---------|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 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                                       |   |   |                                          |   |
|------------------------------------------------|--------|---------------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|                                           |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   |  Significant Unobservable Inputs |   |   |   |   |
|                                           |   | Level 1                                                             |   |   | Level 2                                       |   |   | Level 3 |   |   | Fair Value |   |
| December 31, 2010                              |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |
| Municipal bonds                                |   | $                                                                   | -      |   |                                          | $      | 63,854 |   |   | $ | - |   |   | $ | 63,854 |   |
| Asset backed securities                        |   |                                                                | -      |   |                                          |   | 42 |   |   |   | - |   |   |   | 42 |   |
| Collateralized mortgage obligations issued by: |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|   Agencies                           |   |                                                                | -      |   |                                          |   | 50,599 |   |   |   | - |   |   |   | 50,599 |   |
|   Private label                      |   |                                                                | -      |   |                                          |   | 96,407 |   |   |   | - |   |   |   | 96,407 |   |
| Mortgage backed securities                     |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|   issued by agencies                 |   |                                                                | -      |   |                                          |   | 13,261 |   |   |   | - |   |   |   | 13,261 |   |
| Corporate debt                                 |   |                                                                | -      |   |                                          |   | 1,459 |   |   |   | - |   |   |   | 1,459 |   |
| Bond money market funds                        |   |                                                                | 768    |   |                                          |   | - |   |   |   | - |   |   |   | 768 |   |
| Equity securities                              |   |                                                                | -      |   |                                          |   | - |   |   |   | 75 |   |   |   | 75 |   |
| Securities Available for Sale                  |   | $                                                                   | 768    |   |                                          | $      | 225,622 |   |   | $ | 75 |   |   | $ | 226,465 |   |
|                                           |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                              |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Agency bonds                                   |   | $                                                                   | -      |   |                                          | $      | 2,524 |   |   | $ | - |   |   | $ | 2,524 |   |
| Municipal bonds                                |   |                                                                | -      |   |                                          |   | 40,168 |   |   |   | - |   |   |   | 40,168 |   |
| Collateralized mortgage obligations issued by: |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|   Agencies                           |   |                                                                | -      |   |                                          |   | 53,952 |   |   |   | - |   |   |   | 53,952 |   |
|   Private label                      |   |                                                                | -      |   |                                          |   | 1,499 |   |   |   | - |   |   |   | 1,499 |   |
| Mortgage backed securities                     |   |                                                                |   |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|   issued by agencies                 |   |                                                                | -      |   |                                          |   | 10,982 |   |   |   | - |   |   |   | 10,982 |   |
| Corporate debt                                 |   |                                                                | -      |   |                                          |   | 1,408 |   |   |   | - |   |   |   | 1,408 |   |
| Bond money market funds                        |   |                                                                | 39,025 |   |                                          |   | - |   |   |   | - |   |   |   | 39,025 |   |
| Equity securities                              |   |                                                                | -      |   |                                          |   | - |   |   |   | 75 |   |   |   | 75 |   |
| Securities Available for Sale                  |   | $                                                                   | 39,025 |   |                                          | $      | 110,533 |   |   | $ | 75 |   |   | $ | 149,633 |   |

|                           |   |    Total Fair Value Measurements |    |
|--------------------------------|--------|--------------------------------------------|---------|
|  Level 3 Instruments Only |   | Available for Sale Debt Securities    |    |
| Balance, December 31, 2009     |   | $                                          | 75      |   |
| Purchases                      |   |                                       | 88,978  |   |
| Settlements                    |   |                                       | (88,978 | ) |
| Balance, December 31, 2010     |   | $                                          | 75      |   |

----

|                    |   | Fair Value Measurements Using                                       |   |   |                                     |   |
|-------------------------|--------|---------------------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                    |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant Other Observable Inputs |   |   |  Significant Unobservable Inputs |   |   |   |   |
|                    |   | Level 1                                                             |   |   | Level 2                                  |   |   | Level 3 |   |   | Fair Value |   |
| December 31, 2010       |   |                                                                |   |   |                                     |   |   |   |   |   |   |   |
| Impaired loans          |   |                                                                | -      |   |                                     |   | - |   |   |   | 33,170 |   |   |   | 33,170 |   |
| Other real estate owned |   |                                                                | -      |   |                                     |   | - |   |   |   | 1,602 |   |   |   | 1,602 |   |
|                    |   |                                                                |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009       |   |                                                                |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans          |   |                                                                | -      |   |                                     |   | - |   |   |   | 25,205 |   |   |   | 25,205 |   |
| Other real estate owned |   |                                                                | -      |   |                                     |   | - |   |   |   | 2,081 |   |   |   | 2,081 |   |

|                                                  |   | Dec 2010      |    |   | Dec 2009  |   |
|-------------------------------------------------------|--------|---------------|---------|--------|-----------|--------|
|                                                  |   | CarryingValue |    |   | FairValue |   |   | CarryingValue |   |   | FairValue |   |
| Assets:                                               |   |          |    |   |      |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $             | 13,063  |   |      | $      | 13,063 |   |   | $ | 52,061 |   |   | $ | 52,061 |   |
| Interest bearing time deposits                        |   |          | -       |   |      |   | - |   |   |   | 410 |   |   |   | 410 |   |
| Securities available for sale                         |   |          | 226,465 |   |      |   | 226,465 |   |   |   | 149,633 |   |   |   | 149,633 |   |
| Securities held to maturity                           |   |          | -       |   |      |   | - |   |   |   | 3,674 |   |   |   | 3,392 |   |
| Loans held for sale                                   |   |          | 7,666   |   |      |   | 7,827 |   |   |   | 6,075 |   |   |   | 6,213 |   |
| Loans, net                                            |   |          | 732,795 |   |      |   | 761,838 |   |   |   | 724,668 |   |   |   | 735,599 |   |
| Accrued interest receivable                           |   |          | 3,785   |   |      |   | 3,785 |   |   |   | 3,533 |   |   |   | 3,533 |   |
| Federal Home Loan Bank stock                          |   |          | 7,507   |   |      |   | 7,507 |   |   |   | 8,329 |   |   |   | 8,329 |   |
|                                                  |   |          |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                          |   |          |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   |          | 853,343 |   |      |   | 861,739 |   |   |   | 840,305 |   |   |   | 845,691 |   |
| FHLB advances                                         |   |          | 53,284  |   |      |   | 55,028 |   |   |   | 55,000 |   |   |   | 55,022 |   |
| Junior subordinated debt                              |   |          | 15,464  |   |      |   | 9,281 |   |   |   | 15,464 |   |   |   | 4,154 |   |
| Short-term borrowings                                 |   |          | 12,088  |   |      |   | 12,088 |   |   |   | - |   |   |   | - |   |
| Advance payments by borrowers for taxes and insurance |   |          | 272     |   |      |   | 272 |   |   |   | 157 |   |   |   | 157 |   |
| Accrued interest payable                              |   |          | 84      |   |      |   | 84 |   |   |   | 176 |   |   |   | 176 |   |
|                                                  |   |          |    |   |      |   |   |   |   |   |   |   |   |   |   |   |

----

| 16.   | PARENT COMPANY FINANCIAL STATEMENTS |
|-----------------|-------------------------------------|

| The condensed financial statements of Indiana Community Bancorp are as follows: (dollars in thousands) |   |
|--------------------------------------------------------------------------------------------------------|--------|

| As of                                          |   | Dec 2010 |    |   | Dec 2009 |   |
|------------------------------------------------|--------|----------|---------|--------|----------|--------|
| Condensed Balance Sheets (Parent Company only) |   |     |    |   |     |   |
| Assets:                                        |   |     |    |   |     |   |
| Cash                                           |   | $        | 3,291   |   |     | $      | 4,425 |   |
| Investment in subsidiary                       |   |     | 100,037 |   |     |   | 95,333 |   |
| Other                                          |   |     | 954     |   |     |   | 953 |   |
| Total Assets                                   |   | $        | 104,282 |   |     | $      | 100,711 |   |
|                                           |   |     |    |   |     |   |   |   |
| Liabilities:                                   |   |     |    |   |     |   |   |   |
| Junior subordinated debt                       |   | $        | 15,464  |   |     | $      | 15,464 |   |
| Other                                          |   |     | 169     |   |     |   | 323 |   |
| Total liabilities                              |   |     | 15,633  |   |     |   | 15,787 |   |
| Shareholders' equity                           |   |     | 88,649  |   |     |   | 84,924 |   |
| Total Liabilities and Shareholders' Equity     |   | $        | 104,282 |   |     | $      | 100,711 |   |
|                                           |   |     |    |   |     |   |   |   |

----

| Period Ended                                                                  |   | Dec 2010 |   |   | Dec 2009 |   |   | Dec 2008 |   |
|-------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|
| Condensed Statements of Operations(Parent Company only)                       |   |     |   |   |     |   |   |     |   |
| Dividends from subsidiary                                                     |   | $        | -      |   |     | $      | -      |     |   | $ | 2,732 |   |
| Interest on securities                                                        |   |     | 9      |   |     |   | 12     |     |   |   | 23 |   |
| Non interest income                                                           |   |     | 35     |   |     |   | -      |     |   |   | - |   |
| Total income                                                                  |   |     | 44     |   |     |   | 12     |     |   |   | 2,755 |   |
| Interest on junior subordinated debt                                          |   |     | 312    |   |     |   | 411    |     |   |   | 765 |   |
| Non interest expenses                                                         |   |     | 544    |   |     |   | 598    |     |   |   | 801 |   |
| Total expenses                                                                |   |     | 856    |   |     |   | 1,009  |     |   |   | 1,566 |   |
| Income (loss) before taxes and change in undistributed earnings of subsidiary |   |     | (812   | )      |     |   | (997   | )        |   |   | 1,189 |   |
| Applicable income tax benefit                                                 |   |     | (321   | )      |     |   | (386   | )        |   |   | (545 | ) |
| Income (loss) before change in undistributed earnings of subsidiary           |   |     | (491   | )      |     |   | (611   | )        |   |   | 1,734 |   |
| Increase/(decrease) in undistributed earnings of subsidiary                   |   |     | 6,133  |   |     |   | (5,238 | )        |   |   | 3,269 |   |
| Net Income (Loss)                                                             |   | $        | 5,642  |   |     | $      | (5,849 | )        |   | $ | 5,003 |   |
|                                                                          |   |     |   |   |     |   |   |     |   |   |   |   |

| Period Ended                                                                      |   | Dec 2010 |   |   | Dec 2009 |   |    | Dec 2008 |   |
|-----------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|---------|----------|--------|
| Condensed Statements of Cash Flows(Parent Company only)                           |   |     |   |   |     |   |    |     |   |
| Operating Activities:                                                             |   |     |   |   |     |   |    |     |   |
| Net income/(loss)                                                                 |   | $        | 5,642  |   |     | $      | (5,849  | )        |   | $ | 5,003 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |     |   |   |     |   |    |     |   |   |   |   |
| Increase in other assets                                                          |   |     | (1     | )      |     |   | (241    | )        |   |   | (3 | ) |
| Increase/(decrease) in other liabilities                                          |   |     | (154   | )      |     |   | (198    | )        |   |   | 22 |   |
| (Increase)/decrease in undistributed earnings of subsidiary                       |   |     | (6,133 | )      |     |   | 5,238   |     |   |   | (3,269 | ) |
| Net cash provided/(used) by operating activities                                  |   |     | (646   | )      |     |   | (1,050  | )        |   |   | 1,753 |   |
|                                                                              |   |     |   |   |     |   |    |     |   |   |   |   |
|                                                                              |   |     |   |   |     |   |    |     |   |   |   |   |
| Investing Activities:                                                             |   |     |   |   |     |   |    |     |   |   |   |   |
| Investment in subsidiary                                                          |   |     | -      |   |     |   | (15,000 | )        |   |   | - |   |
| Proceeds from divestiture of inactive subsidiary                                  |   |     | 722    |   |     |   | -       |     |   |   | - |   |
| Net cash provided/(used) by investing activities                                  |   |     | 722    |   |     |   | (15,000 | )        |   |   | - |   |
|                                                                              |   |     |   |   |     |   |    |     |   |   |   |   |
| Financing Activities:                                                             |   |     |   |   |     |   |    |     |   |   |   |   |
| Payment of dividends on preferred stock                                           |   |     | (1,075 | )      |     |   | (994    | )        |   |   | - |   |
| Payment of dividends on common stock                                              |   |     | (135   | )      |     |   | (873    | )        |   |   | (2,828 | ) |
| Preferred stock and warrants issued                                               |   |     | -      |   |     |   | 21,500  |     |   |   | - |   |
| Repurchase shares of common stock                                                 |   |     | -      |   |     |   | -       |     |   |   | (286 | ) |
| Net cash provided/(used) by financing activities                                  |   |     | (1,210 | )      |     |   | 19,633  |     |   |   | (3,114 | ) |
|                                                                              |   |     |   |   |     |   |    |     |   |   |   |   |
| Net increase/(decrease) in cash                                                   |   |     | (1,134 | )      |     |   | 3,583   |     |   |   | (1,361 | ) |
| Cash at beginning of period                                                       |   |     | 4,425  |   |     |   | 842     |     |   |   | 2,203 |   |
| Cash at End of Period                                                             |   | $        | 3,291  |   |     | $      | 4,425   |     |   | $ | 842 |   |
|                                                                              |   |     |   |   |     |   |    |     |   |   |   |   |

| 17. | CAPITAL PURCHASE PROGRAM |
|-----|--------------------------|

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|                                                                                                                                                                                                                                                                   |   |             |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Fiscal Year Ended December 31, 2010 (Three months ended)                                                                                                                                                                                                               |   | Mar 31 2010 |   |   | Jun 30 2010 |   |   | Sep 30 2010 |   |   | Dec 31 2010 |   |
| Total interest income                                                                                                                                                                                                                                                  |   | $                | 11,124 |   |   | $ | 11,456 |   |   | $ | 11,714 |   |   | $ | 11,570 |   |
| Total interest expense                                                                                                                                                                                                                                                 |   |             | 3,718  |   |   |   | 3,594 |   |   |   | 3,356 |   |   |   | 2,962 |   |
| Net interest income                                                                                                                                                                                                                                                    |   |             | 7,406  |   |   |   | 7,862 |   |   |   | 8,358 |   |   |   | 8,608 |   |
| Provision for loan losses                                                                                                                                                                                                                                              |   |             | 2,095  |   |   |   | 1,496 |   |   |   | 1,638 |   |   |   | 1,950 |   |
| Net interest income after provision for loan losses                                                                                                                                                                                                                    |   |             | 5,311  |   |   |   | 6,366 |   |   |   | 6,720 |   |   |   | 6,658 |   |
| Gain/(loss) on securities                                                                                                                                                                                                                                              |   |             | -      |   |   |   | 12 |   |   |   | 485 |   |   |   | 271 |   |
| Non interest income                                                                                                                                                                                                                                                    |   |             | 2,163  |   |   |   | 2,920 |   |   |   | 2,529 |   |   |   | 3,251 |   |
| Non interest expenses                                                                                                                                                                                                                                                  |   |             | 7,108  |   |   |   | 6,908 |   |   |   | 7,226 |   |   |   | 7,656 |   |
| Income before income taxes                                                                                                                                                                                                                                             |   |             | 366    |   |   |   | 2,390 |   |   |   | 2,508 |   |   |   | 2,524 |   |
| Income tax provision (benefit)                                                                                                                                                                                                                                         |   |             | (52    | ) |   |   | 705 |   |   |   | 489 |   |   |   | 1,004 |   |
| Net Income                                                                                                                                                                                                                                                             |   | $                | 418    |   |   | $ | 1,685 |   |   | $ | 2,019 |   |   | $ | 1,520 |   |
| Basic earnings per common share                                                                                                                                                                                                                                        |   | $                | 0.04   |   |   | $ | 0.41 |   |   | $ | 0.51 |   |   | $ | 0.36 |   |
| Diluted earnings per common share                                                                                                                                                                                                                                      |   | $                | 0.04   |   |   | $ | 0.41 |   |   | $ | 0.51 |   |   | $ | 0.36 |   |
| Cash dividends per share                                                                                                                                                                                                                                               |   | $                | 0.010  |   |   | $ | 0.010 |   |   | $ | 0.010 |   |   | $ | 0.010 |   |
| Stock sales price range:  High (1)                                                                                                                                                                                                                           |   | $                | 9.80   |   |   | $ | 12.75 |   |   | $ | 13.70 |   |   | $ | 17.25 |   |
|                                             Low |   | $                | 7.50   |   |   | $ | 9.10 |   |   | $ | 11.89 |   |   | $ | 12.50 |   |

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|                                                                                                                                                                                                                                                                   |   |             |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Fiscal Year Ended December 31, 2009 (Three months ended)                                                                                                                                                                                                               |   | Mar 31 2009 |   |   | Jun 30 2009 |   |   | Sep 30 2009 |   |   | Dec 31 2009 |   |
| Total interest income                                                                                                                                                                                                                                                  |   | $                | 11,876 |   |   | $ | 11,656 |   |   | $ | 11,783 |   |   | $ | 11,776 |   |
| Total interest expense                                                                                                                                                                                                                                                 |   |             | 4,947  |   |   |   | 4,982 |   |   |   | 4,950 |   |   |   | 4,674 |   |
| Net interest income                                                                                                                                                                                                                                                    |   |             | 6,929  |   |   |   | 6,674 |   |   |   | 6,833 |   |   |   | 7,102 |   |
| Provision for loan losses                                                                                                                                                                                                                                              |   |             | 2,098  |   |   |   | 6,788 |   |   |   | 3,899 |   |   |   | 3,433 |   |
| Net interest income (loss) after provision for loan losses                                                                                                                                                                                                             |   |             | 4,831  |   |   |   | (114 | ) |   |   | 2,934 |   |   |   | 3,669 |   |
| Gain/(loss) on securities                                                                                                                                                                                                                                              |   |             | -      |   |   |   | - |   |   |   | - |   |   |   | 2,046 |   |
| Non interest income                                                                                                                                                                                                                                                    |   |             | 3,043  |   |   |   | 2,736 |   |   |   | 2,315 |   |   |   | 2,538 |   |
| Non interest expenses                                                                                                                                                                                                                                                  |   |             | 7,233  |   |   |   | 7,465 |   |   |   | 8,001 |   |   |   | 10,704 |   |
| Income (loss) before income taxes                                                                                                                                                                                                                                      |   |             | 641    |   |   |   | (4,843 | ) |   |   | (2,752 | ) |   |   | (2,451 | ) |
| Income tax provision (benefit)                                                                                                                                                                                                                                         |   |             | 201    |   |   |   | (2,001 | ) |   |   | (674 | ) |   |   | (1,082 | ) |
| Net Income (Loss)                                                                                                                                                                                                                                                      |   | $                | 440    |   |   | $ | (2,842 | ) |   | $ | (2,078 | ) |   | $ | (1,369 | ) |
| Basic earnings (loss) per common share                                                                                                                                                                                                                                 |   | $                | 0.05   |   |   | $ | (0.93 | ) |   | $ | (0.71 | ) |   | $ | (0.50 | ) |
| Diluted earnings (loss) per common share                                                                                                                                                                                                                               |   | $                | 0.05   |   |   | $ | (0.93 | ) |   | $ | (0.71 | ) |   | $ | (0.50 | ) |
| Cash dividends per share                                                                                                                                                                                                                                               |   | $                | 0.120  |   |   | $ | 0.120 |   |   | $ | 0.010 |   |   | $ | 0.010 |   |
| Stock sales price range:  High (1)                                                                                                                                                                                                                           |   | $                | 14.00  |   |   | $ | 13.92 |   |   | $ | 12.50 |   |   | $ | 9.20 |   |
|                                             Low |   | $                | 8.50   |   |   | $ | 12.22 |   |   | $ | 8.50 |   |   | $ | 6.80 |   |

| (1) | The Company's common stock trades on the NASDAQ Global Market under the symbol "INCB." |
|-----|----------------------------------------------------------------------------------------|

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