----

----

----

----

| Financial Comparisons                                                 |
|-----------------------------------------------------------------------|
| Consolidated Average Balance Sheet, Interest Income/Expense and Rates |
| (Dollars in Thousands)                                                |

|                                                                                                                             2010 |                                  2009 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   Average Balance | Interest Income/Expense | Yield or Rate (a) | Average Balance | Interest Income/Expense | Yield or Rate (a) |
|--------|-----------------------------|-------------------------|-------------------|-----------------|-------------------------|-------------------|

|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |
|----------------------------------------------------------------------------------------------|--------|--------|---------|--------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------|---------|--------|--------|--------|--------|--------|
|  Interest-earning assets                                                                |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |
|  Loans net of unearned income (b) (c)                                              |   | $      | 198,537 |                                                                                                         |   | $      | 11,532 |       |    |   | 5.81   | %      |   | $      | 207,972 |   |   | $ | 12,221 |   |   |   | 5.88 | % |
|  Taxable securities (d)                                                                 |   |   | 74,045  |                                                                                                         |   |   | 4,476  |       |    |   | 6.04   |   |   |   | 114,970 |   |   |   | 6,809 |   |   |   | 5.92 |   |
|  Non-taxable securities (d)                                                             |   |   | 54,774  |                                                                                                         |   |   | 3,595  |       |    |   | 6.56   |   |   |   | 15,048 |   |   |   | 974 |   |   |   | 6.47 |   |
|  Interest-bearing deposits with    banks                            |   |   | 458     |                                                                                                         |   |   | 2      |       |    |   | 0.43   |   |   |   | 301 |   |   |   | 3 |   |   |   | 1.00 |   |
|  Federal funds sold                                                                     |   |   | 0       |                                                                                                         |   |   | 0      |       |    |   | 0.00   |   |   |   | 97 |   |   |   | - |   |   |   | 0.00 |   |
|  Total earning assets                                                                   |   |   | 327,814 |                                                                                                         |   |   | 19,605 |       |    |   | 5.98   |   |   |   | 338,388 |   |   |   | 20,007 |   |   |   | 5.91 |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
|  Non-interest-earning assets                                                            |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
|  Cash                                                                                   |   |   | 6,668   |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 6,952 |   |   |   |   |   |   |   |   |   |
|  Allowance for loan losses                                                              |   |   | (1,703  | )                                                                                                            |   |   |   |       |    |   |   |   |   |   | (1,812 | ) |   |   |   |   |   |   |   |   |
|  Other assets                                                                           |   |   | 34,731  |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 26,718 |   |   |   |   |   |   |   |   |   |
|  Total non-interest-earning         assets |   |   | 39,696  |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 31,858 |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
|  Total assets                                                                           |   | $      | 367,510 |                                                                                                         |   |   |   |       |    |   |   |   |   | $      | 370,246 |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders’ Equity                                                   |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |   |   |
|  Interest-bearing deposits                                                              |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
|     NOW accounts                                                         |   | $      | 23,105  |                                                                                                         |   | $      | 33     |       |    |   | 0.14   | %      |   | $      | 21,067 |   |   | $ | 35 |   |   |   | 0.17 | % |
|     Money Market accounts                                                |   |   | 33,339  |                                                                                                         |   |   | 224    |       |    |   | 0.67   |   |   |   | 27,988 |   |   |   | 242 |   |   |   | 0.86 |   |
|     Savings deposits                                                     |   |   | 48,651  |                                                                                                         |   |   | 231    |       |    |   | 0.47   |   |   |   | 43,099 |   |   |   | 246 |   |   |   | 0.57 |   |
|  Time deposits                                                                          |   |   | 95,144  |                                                                                                         |   |   | 1,878  |       |    |   | 1.97   |   |   |   | 101,298 |   |   |   | 2,560 |   |   |   | 2.53 |   |
|  Short-term borrowings                                                                  |   |   | 31,945  |                                                                                                         |   |   | 139    |       |    |   | 0.45   |   |   |   | 36,401 |   |   |   | 200 |   |   |   | 0.55 |   |
|  Long-term borrowings                                                                   |   |   | 10,000  |                                                                                                         |   |   | 237    |       |    |   | 2.37   |   |   |   | 24,411 |   |   |   | 899 |   |   |   | 3.68 |   |
|  Total interest-bearing  liabilities                                          |   |   | 242,184 |                                                                                                         |   |   | 2,742  |       |    |   | 1.13   |   |   |   | 254,264 |   |   |   | 4,182 |   |   |   | 1.64 |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                                                                |   |   | 75,799  |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 70,873 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                            |   |   | 4,000   |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 3,724 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                                                         |   |   | 45,527  |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 41,385 |   |   |   |   |   |   |   |   |   |
| Total non-interest-bearing                                                                   |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| Funding sources                                                                              |   |   | 125,326 |                                                                                                         |   |   |   |       |    |   |   |   |   |   | 115,982 |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| Total liabilities and                                                                        |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| shareholders' equity                                                                         |   | $      | 367,510 |                                                                                                         |   |   |   |       |    |   |   |   |   | $      | 370,246 |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
|   Net interest income and net                                                      |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |
| Yield on interest earning assets                                                             |   |   |  $ |                  16,863 |   |   |   | 5.14  |  % |   |   |   |   |   |  $ | 15,825 |   |   |   | 4.68  |  % | ,055 | 4.68% |
|                                                                                         |   |   |    |                                                                                                         |   |   |   |       |    |   |   |   |   |   |   |   |   |

| (a)   | Yields on interest earning assets have been computed on a tax-equivalent basis using the 34% federal income tax statutory rate. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| (b)   |  Income on non-accrual loans is accounted for on the cash basis, and the loan balances are included in interest earning assets. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------|

| (c)   |  Loan income includes net loan fees/costs. |
|-----------------|-------------------------------------------------|

| (d)   | The yield information does not give effect to changes in fair value that are reflected as a component of stockholders’ equity. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                                    |
|---------------------------------------------------------|
| Analysis of Year-to-Year Changes in Net Interest Income |
| (Dollars in Thousands)                                  |

|                                 |   | 2010 Change from 2009 |   |
|--------------------------------------|--------|-----------------------|--------|
|                                 |   | Total                 |   |   | Change Due |   |   | Change Due |   |
|                                 |   | Change                |   |   | To Volume |   |   | To Rate |   |
|                                 |   |                  |   |   |   |   |   |   |   |
| Interest-earning assets              |   |                  |   |   |   |   |   |   |   |
| Loans net of unearned income         |   | $                     | (689   | ) |   | $ | (554 | ) |   | $ | (135 | ) |
| Securities                           |   |                  |   |   |   |   |   |   |   |   |   |   |
|   Taxable                  |   |                  | (2,333 | ) |   |   | (2,424 | ) |   |   | 91 |   |
|   Non-taxable              |   |                  | 2,621  |   |   |   | 2,571 |   |   |   | 50 |   |
| Interest-bearing deposits with banks |   |                  | (1     | ) |   |   | 2 |   |   |   | (3 | ) |
|                                 |   |                  |   |   |   |   |   |   |   |   |   |   |
| Total interest income                |   |                  | (402   | ) |   |   | (405 | ) |   |   | 3 |   |
|                                 |   |                  |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities         |   |                  |   |   |   |   |   |   |   |   |   |   |
| Deposits                             |   |                  | (717   | ) |   |   | 108 |   |   |   | (825 | ) |
| Short-term borrowings                |   |                  | (61    | ) |   |   | (24 | ) |   |   | (37 | ) |
| Long-term borrowings                 |   |                  | (662   | ) |   |   | (531 | ) |   |   | (131 | ) |
|                                 |   |                  |   |   |   |   |   |   |   |   | 1,22 |   |
| Total interest expense               |   |                  | (1,440 | ) |   |   | (447 | ) |   |   | (993 | ) |
|                                 |   |                  |   |   |   |   |   |   |   |   |   |   |
| Net interest income                  |   | $                     | 1,038  |   |   | $ | 42 |   |   | $ | 996 |   |
|                                 |   |                  |   |   |   |   |   |   |   |   |   |   |

----

|                            |   |           |        |
|---------------------------------|--------|----------------|-------------|
|                            |   |           |        |
|                            |   | Amount         |        |   | Percent |   |
|                            |   | (in thousands) |        |
| Remaining maturity:             |   |           |        |   |   |   |
|                            |   |           |        |   |   |   |
| 3 months or less                |   | $              | 4,784       |   |   |   | 15.3 | % |
| Over 3 through 6 months         |   |           | 8,589       |   |   |   | 27.5 |   |
| Over 6 months through 12 months |   |           | 8,590       |   |   |   | 27.5 |   |
| Over 12 months                  |   |           |  9,248 |   |   |   |  29.7 |   |
|                            |   |           |        |   |   |   |   |   |
|                            |   |           |        |   |   |   |   |   |
| Total                           |   | $              | 31,211      |   |   |   | 100 | % |
|                            |   |           |        |   |   |   |   |   |

----

|                             | Within                | One-Five | After                                                                                                             |                                                                                                                             |                                                                                  |
|----------------------------------|-----------------------|----------|-------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
|                             | One Year              | Years    | Five Years                                                                                                        | Total                                                                                                                            |                                                                                  |
|                             |                  |     |                                                                                                              |                                                                                                                             |                                                                                  |
| Commercial and industrial        |    $ 3,783  |     |       $ 11,030                                                                           |            $     687                                       |          $ 15,500                             |
| Real estate-construction         | 669                   |     | -                                                                                                                 |                   803                            |                1,472 |
| Other                            |    888 |     |                   1,364 |                5,930                                       |        8,182                                            |
|                             |                  |     |                                                                                                              |                                                                                                                             |                                                                                  |
| Totals                           |    $ 5,340  |     |            12,394                                               |      $  7,420                                                                                      |          $ 25,154                             |
|                             |                  |     |                                                                                                              |                                                                                                                             |                                                                                  |
|                             |                  |     |                                                                                                              |                                                                                                                             |                                                                                  |
| Loans at fixed interest rates    |                  |     |         $   9,794                                               |            $   7420                                             |                                                                                  |
| Loans at variable interest rates |                  |     |                  2,600       |                       - |                                                                                  |
|                             |                  |     |                                                                                                              |                                                                                                                             |                                                                                  |
|                             |                  |     |         $ 12,394                                                               |            $  7,420                                                  |                                                                                  |

|                                                                                           Loans by Classification at December 31,                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    (in thousands) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial ,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Industrial & Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $ | 36,213 |   |   | $ | 40,282 |   |   | $ | 37,820 |   |   | $ | 41,990 |   |   | $ | 42,897 |   |
|     Commercial real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 63,466 |   |   |   | 61,359 |   |   |   | 61,408 |   |   |   | 62,779 |   |   |   | 65,786 |   |
| Residential mortgages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 68,758 |   |   |   | 77,216 |   |   |   | 85,575 |   |   |   | 86,412 |   |   |   | 80,918 |   |
| Loans to Individuals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |  23,296 |   |   |   |  26,050 |   |   |   | 24,617 |   |   |   | 35,533 |   |   |   | 39,728 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 191,733 |   |   |   | 204,907 |   |   |   | 215,750 |   |   |   | 226,814 |   |   |   | 229,329 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net unamortized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| costs/(fees)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | 173 |   |   |   | 185 |   |   |   | 183 |   |   |   | 191 |   |   |   | 199 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans, net of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  costs/(fees)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $ | 191,906 |   |   | $ | 205,092 |   |   | $ | 215,933 |   |   | $ | 227,005 |   |   | $ | 229,528 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                        |   | Maturity Distribution of Securities at December 31, 2010 |   |   |             |   |
|-----------------------------|--------|----------------------------------------------------------|--------|--------|------------------|--------|
|                        |   | (in thousands)                                           |   |   |             |   |
|                        |   |                                                     |   |   |             |   |   |   |   |
|                        |   | U.S                                                      |   |   | State &      |   |   | Total |   |   | Weighted |   |
|                        |   | Govt.                                                    |   |   | Political        |   |   | Amortized |   |   | Average |   |
|                        |   | Agencies (1)                                             |   |   | Subdivisions (2) |   |   | Cost |   |   | TE Yield (2) |   |
|                        |   |                                                     |   |   |             |   |   |   |   |   |   |   |
| Within 1 year               |   | $                                                        | -      |   |             | $      | - |   |   | $ | - |   |   |   | 0.00 | % |
| After 1 but within 5 years  |   |                                                     | -      |   |             |   | - |   |   |   | - |   |   |   | 0.00 | % |
| After 5 but within 10 years |   |                                                     | -      |   |             |   | - |   |   |   | - |   |   |   | 0.00 | % |
| After 10 years              |   |                                                     | 60,181 |   |             |   | 64,691 |   |   |   | 124,872 |   |   |   | 6.25 | % |
|                        |   |                                                     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|                        |   | $                                                        | 60,181 |   |             | $      | 64,691 |   |   | $ | 124,872 |   |   |   | 6.25 | % |
|                        |   |                                                     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |

|                                                               |   | Fair Values of Securities at December 31, |    |
|--------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                               |   | (in thousands)                            |    |
|                                                               |   |                                      |    |   |   |   |
|                                                               |   | 2010                                      |    |   | 2009 |   |   | 2008 |   |
|                                                               |   |                                      |    |   |   |   |   |   |   |
| U.S. Govt. Agencies                                                |   | $                                         | 65,711  |   |   | $ | 96,555 |   |   | $ | 112,028 |   |
|                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |
| Obligations of State &   Political Subdivisions |   |                                      | 65,448  |   |   |   | 42,363 |   |   |   | 2,743 |   |
|                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |
|                                                               |   | $                                         | 131,159 |   |   | $ | 138,918 |   |   | $ | 114,771 |   |

----

|                            |   | 0-30 Days |     |   | 31-90 Days |   |    | 91-180 Days |   |   | 181-365 Days |   |   | 1-5 Years |         |   | Over 5 Years |   |        | Totals |   |
|---------------------------------|--------|-----------|----------|--------|------------|--------|---------|-------------|--------|--------|--------------|--------|--------|-----------|--------------|--------|--------------|--------|-------------|--------|--------|
| Interest-earning assets:        |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |
| Securities                      |   | $         | 1,607    |   |       | $      | 2,594   |        |   | $      | 3,223        |   |   | $         | 6,033        |   |         | $      | 32,789      |   |   | $ | 78,626 |   |   | $ | 124,872 |   |
| Loans                           |   |      | 17,203   |   |       |   | 12,291  |        |   |   | 13,586       |   |   |      | 26,247       |   |         |   | 116,689     |   |   |   | 5,926 |   |   |   | 191,942 |   |
| Total interest-sensitive        |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Assets                          |   |      | 18,810   |   |       |   | 14,885  |        |   |   | 16,809       |   |   |      | 32,280       |   |         |   | 149,478     |   |   |   | 84,552 |   |   |   | 316,814 |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:   |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Certificates of deposit         |   |      | 5,934    |   |       |   | 8,531   |        |   |   | 18,410       |   |   |      | 21,661       |   |         |   | 33,647      |   |   |   | 581 |   |   |   | 88,764 |   |
| Other interest-bearing deposits |   |      | 39,071   |   |       |   | 267     |        |   |   | 401          |   |   |      | 802          |   |         |   | 42,962      |   |   |   | 27,018 |   |   |   | 110,521 |   |
| Short term borrowings           |   |      | 17,700   |   |       |   | -       |        |   |   | -            |   |   |      | -            |   |         |   | -           |   |   |   | - |   |   |   | 17,700 |   |
| Long term borrowings            |   |      | -        |   |       |   | -       |        |   |   | -            |   |   |      | -            |   |         |   | 10,000      |   |   |   | - |   |   |   | 10,000 |   |
| Total interest-sensitive        |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
|    Liabilities   |   |      | 62,705   |   |       |   | 8,798   |        |   |   | 18,811       |   |   |      | 22,463       |   |         |   | 86,609      |   |   |   | 27,599 |   |   |   | 226,985 |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap        |   | $         | (43,895  | )      |       | $      | 6,087   |        |   | $      | (2,002       | )      |   | $         | 9,817        |   |         | $      | 62,869      |   |   | $ | 56,953 |   |   | $ | 89,829 |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Cumulative gap                  |   | $         | ( 43,895 | )      |       | $      | (37,808 | )           |   | $      | (39,810      | )      |   | $         | (29,993      | )      |         | $      | 32,876      |   |   | $ | 89,829 |   |   |   |   |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Ratio of cumulative gap to      |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |
| Interest sensitive assets       |   |      | (13.86   | %)     |       |   | (11.93  | %)          |   |   | (12.57       | %)     |   |      |  ( 9.47 | %)     |         |   |  10.38 | %      |   |   | 28.35 | % |   |   |   |   |
|                            |   |      |     |   |       |   |    |        |   |   |         |   |   |      |         |   |         |   |        |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                          Years Ended December 31,                                                                                                                         (Dollars in thousands) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans outstanding at end of the year,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net of unearned income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $ | 191,906 |   |   | $ | 205,092 |   |   | $ | 215,933 |   |   | $ | 227,005 |   |   | $ | 229,528 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Average loans outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $ | 198,537 |   |   | $ | 207,972 |   |   | $ | 219,000 |   |   | $ | 226,713 |   |   | $ | 218,944 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $ | 1,722 |   |   | $ | 1,821 |   |   | $ | 1,869 |   |   | $ | 1,806 |   |   | $ | 1,636 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans charged off:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial, industrial & other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 0 |   |   |   | 9 |   |   |   | 39 |   |   |   | 20 |   |   |   | 47 |   |
|    Commercial real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 28 |   |   |   | 0 |   |
| Residential mortgages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 25 |   |   |   | 49 |   |   |   | 31 |   |   |   | 0 |   |   |   | 0 |   |
| Loans to individuals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 14 |   |   |   | 42 |   |   |   | 5 |   |   |   | 18 |   |   |   | 13 |   |
| Total loans charged off                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 39 |   |   |   | 100 |   |   |   | 75 |   |   |   | 66 |   |   |   | 60 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial, industrial & other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 1 |   |   |   | 0 |   |   |   | 8 |   |   |   | 24 |   |   |   | 3 |   |
|    Commercial real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 0 |   |   |   | 0 |   |   |   | 2 |   |   |   | 5 |   |   |   | 8 |   |
| Residential mortgages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Loans to individuals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 2 |   |   |   | 1 |   |   |   | 2 |   |   |   | 10 |   |   |   | 9 |   |
| Total recoveries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 3 |   |   |   | 1 |   |   |   | 12 |   |   |   | 39 |   |   |   | 20 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loans charged off/(recovered)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 36 |   |   |   | 99 |   |   |   | 63 |   |   |   | 27 |   |   |   | 40 |   |
| Provision charged/(credited) to expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 0 |   |   |   | 0 |   |   |   | 15 |   |   |   | 90 |   |   |   | 210 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $ | 1,686 |   |   | $ | 1,722 |   |   | $ | 1,821 |   |   | $ | 1,869 |   |   | $ | 1,806 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net (recoveries)/charge-offs as a                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| percentage of average loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 0.02 | % |   |   | 0.05 | % |   |   | 0.03 | % |   |   | 0.01 | % |   |   | 0.02 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| as a percentage of average loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | 0.85 | % |   |   | 0.83 | % |   |   | 0.83 | % |   |   | 0.82 | % |   |   | 0.83 | % |

----

| Years Ended December 31,                                                                                                                   (Dollars in thousands) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial, industrial & other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $ | 107 |   |   | $ | 109 |   |   | $ | 108 |   |   | $ | 110 |   |   | $ | 169 |   |
|    Commercial real estate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   | 1,378 |   |   |   | 1,423 |   |   |   | 1,520 |   |   |   | 1,480 |   |   |   | 1,422 |   |
| Residential mortgages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 110 |   |   |   | 134 |   |   |   | 145 |   |   |   | 104 |   |   |   | 97 |   |
| Loans to individuals                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 31 |   |   |   | 36 |   |   |   | 48 |   |   |   | 35 |   |   |   | 42 |   |
| Unallocated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | 60 |   |   |   | 20 |   |   |   | 0 |   |   |   | 140 |   |   |   | 76 |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $ | 1,686 |   |   | $ | 1,722 |   |   | $ | 1,821 |   |   | $ | 1,869 |   |   | $ | 1,806 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Dec. 31, 2010                  |   |   |   |
|--------------------------------|--------|--------|--------|
| Loans on non-accrual basis     |   | $      | 149    |   |
| Loans past due 90 days or more |   |   | -      |   |
| Renegotiated loans             |   |   | 674    |   |
| Total                          |   | $      | 823    |   |
|                           |   |   |   |   |
| Dec. 31, 2009                  |   |   |   |   |
| Loans on non-accrual basis     |   | $      | 261    |   |
| Loans past due 90 days or more |   |   | -      |   |
| Renegotiated loans             |   |   | 979    |   |
| Total                          |   | $      | 1,240  |   |
|                           |   |   |   |   |
| Dec. 31, 2008                  |   |   |   |   |
| Loans on non-accrual basis     |   | $      | 29     |   |
| Loans past due 90 days or more |   |   | -      |   |
| Renegotiated loans             |   |   | 3,566  |   |
| Total                          |   | $      | 3,595  |   |
|                           |   |   |   |   |
| Dec. 31, 2007                  |   |   |   |   |
| Loans on non-accrual basis     |   | $      | 156    |   |
| Loans past due 90 days or more |   |   | -      |   |
| Renegotiated loans             |   |   | 350    |   |
| Total                          |   | $      | 506    |   |
|                           |   |   |   |   |
| Dec. 31, 2006                  |   |   |   |   |
| Loans on non-accrual basis     |   | $      | 561    |   |
| Loans past due 90 days or more |   |   | -      |   |
| Renegotiated loans             |   |   | 2,823  |   |
| Total                          |   | $      | 3,384  |   |

----

|                       |   |   |   |   | Percent     |   |
|----------------------------|--------|--------|--------|--------|-------------|--------|
|                       |   |   |   |   | of Adjusted |   |
|                       |   | Amount |   |   | Assets      |   |
|                       |   |   |   |   |        |   |
| Tier I Capital             |   | $      | 41,640 |   |        |   | 19.9 | % |
| Tier I Capital Requirement |   |   | 8,355  |   |        |   | 4.0 |   |
|                       |   |   |   |   |        |   |   |   |
| Total Equity Capital       |   | $      | 43,326 |   |        |   | 20.7 | % |
| Risk-Based Requirement     |   |   | 16,710 |   |        |   | 8.0 |   |
|                       |   |   |   |   |        |   |   |   |
|                       |   |   |   |   |        |   |   |   |
| Leverage Capital           |   | $      | 41,640 |   |        |   | 11.9 | % |
| Leverage Requirement       |   |   | 14,000 |   |        |   | 4.0 |   |

----

| RBC Capital Markets                         | Stifel Nicolaus & Company, Inc.                         |
|---------------------------------------------|-------------------------------------------------------------|
| 60South 6th Street                          | 1 South Street                                              |
| Minneapolis, MN 55402800-285-4964           | Baltimore, MD 21202800-682-0300                             |
|                                        |                                                        |
| Knight Capital                              | Boenning & Scattergood                                  |
| 545 Washington Blvd                         | 4 Tower Bridge, Suite 300                                   |
| 30th FloorJersey City, NJ 07310800-544-7508 | 200 Bar Harbor DriveWest Conshohocken, PA 19428800-842-8928 |
|                                        |                                                        |
| UBS Securities                              | Citadel Securities LLC                                      |
| 677 Washington Blvd                         | 131 South Dearborn Street                                   |
| 6th Floor                                   | 32nd Floor                                                  |
| Stamford, CT 06901                          | Chicago, IL 60603                                           |
| 203-719-7400                                | 312-395-2100                                                |

| Goldman Sachs      | Merrill Lynch      |
|--------------------|--------------------|
| 200 West Street    | One Bryant Park    |
| 4th Floor          | 6th Floor          |
| New York, NY 10282 | New York, NY 10036 |
| 212-902-8585       | 800-937-0501       |

| Hudson Securities     | Susquehanna Capital  |
|-----------------------|----------------------|
| 111 Town Square Place | 401 City Avenue      |
| 15h Floor             | Bala Cynwd, PA 19004 |
| Jersey City, NJ 07310 | 800-825-9550         |
| 201-216-9100          |                 |

----

----

|   | December 31,                                     |
|--------|--------------------------------------------------|
|   | 2010                                             |   | 2009 |
|   | (Dollars in Thousands, Except per Share Amounts) |

| Cash and due from banks                                                                 |   | $      | 5,578   |   |   | $      | 6,610   |   |
|-----------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Interest bearing deposits with banks                                                    |   |   | 16      |   |   |   | 131     |   |
| Cash and Cash Equivalents                                                               |   |   | 5,594   |   |   |   | 6,741   |   |
| Securities available for sale                                                           |   |   | 131,159 |   |   |   | 138,918 |   |
| Restricted investments in bank stock                                                    |   |   | 4,339   |   |   |   | 4,567   |   |
| Loans receivable, net of allowance for loan losses of $1,686 in 2010 and $1,722 in 2009 |   |   | 190,220 |   |   |   | 203,370 |   |
| Premises and equipment, net                                                             |   |   | 3,323   |   |   |   | 3,548   |   |
| Accrued interest receivable                                                             |   |   | 1,519   |   |   |   | 1,456   |   |
| Investment in life insurance                                                            |   |   | 15,471  |   |   |   | 14,921  |   |
| Other assets                                                                            |   |   | 3,852   |   |   |   | 2,483   |   |

| Total Assets | $355,477 |   | $376,004 |
|--------------|----------|--------|----------|

|   | Liabilities |
|--------|-------------|

| Deposits:             |   |   |    |   |   |   |
|-----------------------|--------|--------|---------|--------|--------|--------|
| Non-interest bearing  |   | $      | 77,209  |   |   | $      | 74,260 |   |
| Interest bearing      |   |   | 199,285 |   |   |   | 195,470 |   |
| Total Deposits        |   |   | 276,494 |   |   |   | 269,730 |   |
| Short-term borrowings |   |   | 17,700  |   |   |   | 48,850 |   |
| Long-term borrowings  |   |   | 10,000  |   |   |   | 10,000 |   |
| Other liabilities     |   |   | 5,271   |   |   |   | 3,932 |   |

| Total Liabilities | 309,465 |   | 332,512 |
|-------------------|---------|--------|---------|

|   | Shareholders’ Equity |
|--------|----------------------------|

| Common stock, par value $2 per share; authorized 10,000,000 shares; issued 3,600,000  shares; outstanding 2,860,953  shares in 2010 and 2009 |   |   | 7,200   |   |   |   | 7,200   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|
| Retained earnings                                                                                                                                                |   |   | 47,207  |   |   |   | 44,223  |   |
| Accumulated other comprehensive income                                                                                                                           |   |   | 4,149   |   |   |   | 4,613   |   |
| Treasury stock, at cost, 739,047 shares in 2010 and 2009                                                                                                         |   |   | (12,544 | )      |   |   | (12,544 | )      |

| Total Shareholders’ Equity | 46,012 |   | 43,492 |
|----------------------------------|--------|--------|--------|

| Total Liabilities and Shareholders’ Equity | $355,477 |   | $376,004 |
|--------------------------------------------------|----------|--------|----------|

----

|   |             Years Ended December 31, |
|--------|--------------------------------------------------------------------------------------------------|
|   | 2010                                                                                             |   | 2009 |   |
|   | (In Thousands, Except per Share Amounts)                                                         |

|   | Interest Income |
|--------|-----------------|

| Interest and fees on loans            | $11,368 |   |  $12,041 |   |
|---------------------------------------|---------|--------|---------------|--------|
| Interest and dividends on securities: |    |   |          |   |
| Taxable                               | 4,474   |   |  6,809   |   |
| Exempt from federal income taxes      | 2,373   |   | 643           |   |
| Other                                 | 2       |   | 3             |   |

| Total Interest Income |  18,217 |   | 19,496 |   |
|-----------------------|--------------|--------|--------|--------|

|   | Interest Expense |
|--------|------------------|

| Deposits              | 2,366            |   |  3,083 |   |
|-----------------------|------------------|--------|-------------|--------|
| Short-term borrowings |    139 |   | 200         |   |
| Long-term borrowings  |    237 |   | 899         |   |

| Total Interest Expense | 2,742 |   |  4,182 |   |
|------------------------|-------|--------|-------------|--------|

| Net Interest Income |                                   15,475 |   |                                    15,314 |   |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Provision for Loan Losses |                                              - |   |                                             - |   |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Net Interest Income after Provisionfor Loan Losses |                                     15,475 |   |                                     15,314 |   |
|----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

|   | Other Operating Income |
|--------|------------------------|

| Service charges on deposit accounts      |                                          505              |   |                                           583                       |   |
|------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Other service charges and fees           |                                          772                   |   |                                           753                       |   |
| Net security losses                      |                                             (5) |   |                                               - |   |
| Trust department income                  |                                          947              |   |                                           925                       |   |
| Income from investment in life insurance |                                          508                   |   |                                           485                       |   |
| Other income                             |                                          181                   |   |                                           221                       |   |

| Total Other Operating Income |                                      2,908 |   |                                       2,967 |   |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

|   | Other Operating Expenses |
|--------|--------------------------|

| Salaries and employee benefits |                                      6,070                 |   |                                        5,724                 |   |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Net occupancy                  |                                         837 |   |                                           819 |   |
| Furniture and equipment        |                                         537 |   |                                           525 |   |
| Professional fees              |                                         432 |   |                                           385 |   |
| Pennsylvania shares tax        |                                         501 |   |                                           507 |   |
| FDIC insurance expense         |                                         343 |   |                                           452 |   |
| ATM expenses                   |                                         352 |   |                                           367 |   |
| Director fees                  |                                         471 |   |                                           476 |   |
| Other expenses                 |                                      2,035                 |   |                                        1,991                 |   |

| Total Other Operating Expenses |                                    11,578 |   |                                      11,246 |   |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Income before Income Taxes |                                       6,805 |   |                                        7,035 |   |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Income Tax Expense |                                       1,304 |   |                                        1,906 |   |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Net Income |                                   $  5,501 |   |                                   $   5,129 |   |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

| Earnings per Share, Basic |                                    $   1.92 |   |                                   $     1.79 |   |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

----

|   |   | CommonStock                              |   | Retained Earnings |   | AccumulatedOther Comprehensive Income |   | TreasuryStock |   | TotalShareholders’Equity |
|--------|--------|------------------------------------------|--------|-------------------|--------|---------------------------------------|--------|---------------|--------|--------------------------------|
|   |   | (In Thousands, Except per Share Amounts) |

| Balance – December 31, 2008                                                                                                                |   | $      | 7,200  |   |   | $      | 41,616 |   |   | $      | 2,490  |   |   | $      | (12,238 | )      |   | $      | 39,068 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Comprehensive income:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income                                                                                                                                       |   |   | -      |   |   |   | 5,129  |   |   |   | -      |   |   |   | -       |   |   |   | 5,129  |   |
| Change in unrealized net gains on securitiesavailable for sale, net of deferred income tax expense                                          |   |   | -      |   |   |   | -      |   |   |   | 2,123  |   |   |   | -       |   |   |   | 2,123  |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Total Comprehensive Income                                                                                                                       |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | -       |   |   |   | 7,252  |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash dividends paid, $0.88 per share                                                                                                             |   |   | -      |   |   |   | (2,522 | )      |   |   | -      |   |   |   | -       |   |   |   | (2,522 | )      |
| Purchases of treasury stock (20,000 shares)                                                                                                      |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | (306    | )      |   |   | (306   | )      |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Balance – December 31, 2009                                                                                                           |   |   | 7,200  |   |   |   | 44,223 |   |   |   | 4,613  |   |   |   | (12,544 | )      |   |   | 43,492 |   |
| Comprehensive income:                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income                                                                                                                                       |   |   | -      |   |   |   | 5,501  |   |   |   | -      |   |   |   | -       |   |   |   | 5,501  |   |
| Change in unrealized net loss on securitiesavailable for sale, net of reclassification adjustment and deferred income tax benefit |   |   | -      |   |   |   | -      |   |   |   | (464   | )      |   |   | -       |   |   |   | (464   | )      |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Total Comprehensive Income                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   | 5,037  |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Cash dividends paid, $0.88 per share                                                                                                             |   |   | -      |   |   |   | (2,517 | )      |   |   | -      |   |   |   | -       |   |   |   | (2,517 | )      |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Balance – December 31, 2010                                                                                                           |   | $      | 7,200  |   |   | $      | 47,207 |   |   | $      | 4,149  |   |   | $      | (12,544 | )      |   | $      | 46,012 |   |

----

|   | Years Ended December 31, |   |
|--------|--------------------------|--------|
|   | 2010                     |   | 2009 |   |
|   | (In Thousands)           |   |

|   | Cash Flows from Operating Activities |
|--------|--------------------------------------|

| Net income                                                                                              | $  5,501 |   | $  5,129 |   |
|---------------------------------------------------------------------------------------------------------|--------------------|--------|--------------------|--------|
| Adjustments to reconcile net income to net cash provided by Operating activities:                  |               |   |               |   |
| Depreciation and amortization                                                                           | 407                |   | 414                |   |
| Amortization of intangibles                                                                             | 98                 |   | 98                 |   |
| Net accretion of securities and loan fees                                                               | (129)              |   | (308)              |   |
| Net security losses                                                                                     | 5                  |   | -                  |   |
| Income from investment in life insurance                                                                | (508)              |   | (485)              |   |
| Gain on life insurance death benefit                                                                    | -                  |   | (21)               |   |
|              Deferred tax expense (benefit) | 30                 |   | 59                 |   |
| Decrease (increase) in accrued interest receivable andother assets                                 | 236                |   | (1,598)            |   |
| Decrease  in accrued interest payable and other liabilities                                   | (184)              |   | (435)              |   |

| Net Cash Provided by Operating Activities | 5,456 |   | 2,853 |   |
|-------------------------------------------|-------|--------|-------|--------|

|   | Cash Flows from Investing Activities |
|--------|--------------------------------------|

| Purchases of securities                                  | (25,239) |   | (59,889) |   |
|----------------------------------------------------------|----------|--------|----------|--------|
| Maturities, calls and principal repayments of securities | 32,432   |   | 39,268   |   |
| Purchases of restricted bank stock                       | -        |   | (600)    |   |
| Maturities of restricted bank stock                      | 228      |   | -        |   |
| Net decrease in loans                                    | 13,058   |   | 10,710   |   |
| Proceeds from life insurance death benefit               | -        |   | 185      |   |
| Proceeds from sale of foreclosed assets                  | 3        |   | 5        |   |
| Purchases of premises and equipment                      | (182)    |   | (413)    |   |

| Net Cash Provided by (Used in) Investing Activities | 20,300 |   | (10,734) |   |
|-----------------------------------------------------|--------|--------|----------|--------|

|   | Cash Flows from Financing Activities |
|--------|--------------------------------------|

| Net increase in deposits                         | 6,764    |   | 12,643   |   |
|--------------------------------------------------|----------|--------|----------|--------|
| Net (decrease) increase in short-term borrowings | (31,150) |   | 17,675   |   |
| Repayment of long-term borrowings                | -        |   | (20,000) |   |
| Dividends paid                                   | (2,517)  |   | (2,522)  |   |
| Purchases of treasury stock                      | -        |   | (306)    |   |

| Net Cash (Used in) Provided by Financing Activities | (26,903) |   | 7,490 |   |
|-----------------------------------------------------|----------|--------|-------|--------|

| Net Decrease in Cash and Cash Equivalents | (1,147) |   | (391) |   |
|-------------------------------------------|---------|--------|-------|--------|

| Cash and Cash Equivalents – Beginning | 6,741 |   | 7,132 |   |
|---------------------------------------------|-------|--------|-------|--------|

| Cash and Cash Equivalents – Ending | $  5,594 |   | $  6,741 |   |
|------------------------------------------|--------------------|--------|--------------------|--------|
|                                     |               |   |               |   |

|   | Supplementary Cash Flows Information |
|--------|--------------------------------------|

| Interest paid | $  2,862 |   | $ 4,456 |   |
|---------------|--------------------|--------|---------|--------|

| Income taxes paid | $  1,375 |   | $  1,985 |   |
|-------------------|--------------------|--------|--------------------|--------|

| Loans transferred to foreclosed real estate | $       80 |   | $       30 |   |
|---------------------------------------------|-----------------------------------------------|--------|-----------------------------------------------|--------|

|   | Non-Cash Investing Activities |
|--------|-------------------------------|

| Purchase of investment securities not settled until 2011    included in other assets and other liabilities | $  1,731 |   | $         0 |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------------------|--------|----------------------------------------------------------|--------|

----

|   | Note 1 – Summary of Significant Accounting Policies |
|--------|-----------------------------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

|   | Allowance for Loan Losses (Continued) |
|--------|---------------------------------------|

| 1. | Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.                                                                            |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2. | National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans. |

| 3. | Nature and volume of the portfolio and terms of loans.          |
|----|-----------------------------------------------------------------|
| 4. | Experience, ability, and depth of lending management and staff. |

| 5. | Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications.                         |
|----|-----------------------------------------------------------------------------------------------------------------------------------|
| 6. | Quality of the Corporation’s loan review system, and the degree of oversight by the Corporation’s Board of Directors. |

| 7. | Existence and effect of any concentrations of credit and changes in the level of such concentrations. |
|----|-------------------------------------------------------------------------------------------------------|
| 8. | Effect of external factors, such as competition and legal and regulatory requirements.                |

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

|   | Allowance for Loan Losses (Continued) |
|--------|---------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

|   | Allowance for Loan Losses (Continued) |
|--------|---------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

----

|   | Note 1 – Summary of Significant Accounting Policies (Continued) |
|--------|-----------------------------------------------------------------------|

----

|   | Note 2 - Cash and Due from Banks |
|--------|----------------------------------|

|   | Note 3 - Securities |
|--------|---------------------|

|   | AmortizedCost  |   | GrossUnrealizedGains |   | GrossUnrealizedLosses |   | FairValue |
|--------|----------------|--------|----------------------|--------|-----------------------|--------|-----------|
|   | (In Thousands) |

| December 31, 2010:                              |                |   |                   |   |                     |   |                |
|-------------------------------------------------|---------------------|--------|------------------------|--------|--------------------------|--------|---------------------|
|                                            |                |   |                   |   |                     |   |                |
| Obligations of states and politicalsubdivisions | $  64,691 |   | $   937 |   | $   (180) |   | $  65,448 |
| Mortgage-backed securities                      | 60,181              |   | 5,530                  |   | -                        |   | 65,711              |

|   | $124,872 |   | $6,467 |   | $   (180) |   | $131,159 |
|--------|----------|--------|--------|--------|--------------------------|--------|----------|

| December 31, 2009:                              |                      |   |                   |   |                     |   |                |
|-------------------------------------------------|---------------------------|--------|------------------------|--------|--------------------------|--------|---------------------|
| Obligations of states and politicalsubdivisions | $   41,629 |   | $   975 |   | $   (241) |   | $  42,363 |
| Mortgage-backed securities                      | 90,300                    |   | 6,255                  |   | -                        |   | 96,555              |

|   | $131,929 |   | $7,230 |   | $   (241) |   | $138,918 |
|--------|----------|--------|--------|--------|--------------------------|--------|----------|

|   |   | AmortizedCost  |   | FairValue |
|--------|--------|----------------|--------|-----------|
|   |   | (In Thousands) |

|   | Due within one year                    | $              - |   | $            - |
|--------|----------------------------------------|----------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|
|   | Due after one year through five years  | -                                                                                      |   | -                                                                          |
|   | Due after five years through ten years | -                                                                                      |   | -                                                                          |
|   | Due after ten years                    | 124,872                                                                                |   | 131,159                                                                    |

|   |   | $124,872 |   | $131,159 |
|--------|--------|----------|--------|----------|

----

|   | Note 3 - Securities (Continued) |
|--------|---------------------------------|

|                                             | (In Thousands)         |
|--------------------------------------------------|------------------------|
|                                             | December 31, 2010 |
|                                             | Less than 12 Months    |   | 12 Months or More |   | Total |
|                                             | FairValue              |   | Unrealized Losses |   | FairValue |   | Unrealized Losses |   | FairValue |   | Unrealized Losses |
|                                             |                   |
| Obligations of states and political subdivisions | $11,183                |   | $(180) |   | - |   | - |   | $11,183 |   | $(180) |   |
|                                             | (In Thousands)         |
|                                             | December 31, 2009 |

| Obligations of states and political subdivisions | $12,900 |   | $(241) |   | - |   | - |   | $12,900 |   | $(241) |
|--------------------------------------------------|---------|--------|--------|--------|---|--------|---|--------|---------|--------|--------|

|   | Note 4 - Loans |
|--------|----------------|

|   |   |   | December 31,   |
|--------|--------|--------|----------------|
|   |   |   | 2010           |   | 2009 |
|   |   |   | (In Thousands) |

|   | Commercial                                            |   |     |   |     |
|--------|-------------------------------------------------------|--------|----------|--------|----------|
|   |    Commercial , Industrial & Other |   | $ 36,245 |   | $ 40,316 |
|   |    Commercial real estate              |   | 63,529   |   | 61,412   |
|   | Residential mortgages                                 |   | 68,755   |   | 77,211   |
|   | Loans to Individuals                                  |   | 23,377   |   | 26,153   |

|   |   |   | $191,906 |   | $205,092 |
|--------|--------|--------|----------|--------|----------|

----

|                   |                                                                                                                                                                            |   |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                   |  Pass                                                                                                                                                                      |   | Special Mention |  Substandard |  Doubtful |  Total |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |
| Commercial             |                                                                                                                                                                            |   |   |   |   |   |   |
| Commercial,            |                                                                                                                                                                            |   |   |   |   |   |   |
| Industrial & Other |                          $   35,802      |   |                        $         90 |   $        353 |                   $           0 |                   $   36,245 |   |
| Commercial real estate |                        50,554                                     |   |                    5,362 |                7,613 |            0 |                 63,529 |   |
| Residential mortgages  |                         68,498                               |   |                   105 |                152 |             0 |                  68,755 |   |
| Loans to Individuals   |                              23,331 |   |                    46 |                   0 |                  0 |                       23,377 |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |
| Total                  |                           $178,185            |   |  $    5,603 |                   $     8,118 |                    $           0 |                   $191,906 |   |
|                   |                                                                                                                                                                            |   |   |   |   |   |   |

|                                                             |   |                     |
|------------------------------------------------------------------|--------|--------------------------|
|                                                             |   | 30-89 Days Past Due |   |   |   >90 Days Past Due and Still Accruing |   |   |  Non-Accrual |   |   |    Total Past Due |   |   |   Current |   |   |    Total Loans |   |
|                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial,                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Industrial & Other |   | $                        | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 36,245 |   |   | $ | 36,245 |   |
|     Commercial real estate                   |   |                     | 0 |   |   |   | 0 |   |   |   | 16 |   |   |   | 16 |   |   |   | 63,513 |   |   |   | 63,529 |   |
| Residential mortgages                                            |   |                     | 6 |   |   |   | 0 |   |   |   | 99 |   |   |   | 105 |   |   |   | 68,650 |   |   |   | 68,755 |   |
| Loans to individuals                                             |   |                     |  29 |   |   |   |  0 |   |   |   | 34 |   |   |   | 63 |   |   |   | 23,314 |   |   |   | 23,377 |   |
|                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total            |   | $                        | 35 |   |   | $ | 0 |   |   | $ | 149 |   |   | $ | 184 |   |   | $ | 191,722 |   |   | $ | 191,906 |   |

----

|                                                             |   |                      |
|------------------------------------------------------------------|--------|---------------------------|
|                                                             |   |  Recorded Investment |   |   | Unpaid Principal Balance |   |   |  Related Allowance |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
|                                                             |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With no related allowance recorded:                              |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                       |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial,                              |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Industrial & Other |   | $                         | 44 |   |   | $ | 44 |   |   | $ | 0 |   |   | $ | 52 |   |   | $ | 4 |   |
|     Commercial real estate                   |   |                      | 317 |   |   |   | 317 |   |   |   | 0 |   |   |   | 336 |   |   |   | 22 |   |
| Residential mortgages                                            |   |                      | 40 |   |   |   | 40 |   |   |   | 0 |   |   |   | 44 |   |   |   | 3 |   |
| Loans to Individuals                                             |   |                      | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|         Subtotal         |   |                      | 401 |   |   |   | 401 |   |   |   | 0 |   |   |   | 432 |   |   |   | 29 |   |
| With an allowance recorded:                                      |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                       |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial,                              |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Industrial & Other |   |                      | 236 |   |   |   | 236 |   |   |   | 26 |   |   |   | 254 |   |   |   | 11 |   |
|     Commercial real estate                   |   |                      | 741 |   |   |   | 741 |   |   |   | 87 |   |   |   | 748 |   |   |   | 37 |   |
| Residential mortgages                                            |   |                      | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Loans to Individuals                                             |   |                      | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
|         Subtotal         |   |                      | 977 |   |   |   | 977 |   |   |   | 113 |   |   |   | 1,002 |   |   |   | 48 |   |
|  Total                                                      |   | $                         | 1,378 |   |   | $ | 1,378 |   |   | $ | 113 |   |   | $ | 1,434 |   |   | $ | 77 |   |

----

|                                                            |   |                               |
|-----------------------------------------------------------------|--------|------------------------------------|
|                                                            |   | Commercial, Industrial & Other |   |   | Commercial Real Estate |   |   | Residential Mortgages |   |   | Loans to Individuals |   |   |        Unallocated |   |   |              Total |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for  creditlosses:                          |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                               |   | $                                  | 109 |   |   | $ | 1,423 |   |   | $ | 134 |   |   | $ | 36 |   |   | $ | 20 |   |   | $ | 1,722 |   |
|       Charge-offs                 |   |                               | 0 |   |   |   | 0 |   |   |   | (25 | ) |   |   | (14 | ) |   |   | 0 |   |   |   | (39 | ) |
|        Recoveries            |   |                               | 1 |   |   |   | 0 |   |   |   | 0 |   |   |   | 2 |   |   |   | 0 |   |   |   | 3 |   |
|        Provision             |   |                               | (3 | ) |   |   | (45 | ) |   |   | 1 |   |   |   | 7 |   |   |   | 40 |   |   |   | 0 |   |
| Ending Balance                                                  |   | $                                  | 107 |   |   | $ | 1,378 |   |   | $ | 110 |   |   | $ | 31 |   |   | $ | 60 |   |   | $ | 1,686 |   |
| Ending balance: individually evaluated for impairment           |   | $                                  | 26 |   |   | $ | 87 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 113 |   |
| Ending balance: collectively evaluated for impairment           |   | $                                  | 81 |   |   | $ | 1,291 |   |   | $ | 110 |   |   | $ | 31 |   |   | $ | 60 |   |   | $ | 1,573 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $                                  | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable:                                               |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending Balance                                                  |   | $                                  | 36,245 |   |   | $ | 63,529 |   |   | $ | 68,755 |   |   | $ | 23,377 |   |   | $ | 0 |   |   | $ | 191,906 |   |
| Ending balance: individually evaluated for impairment           |   | $                                  | 280 |   |   | $ | 1,058 |   |   | $ | 40 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 1,378 |   |
| Ending balance: collectively evaluated for impairment           |   | $                                  | 35,965 |   |   | $ | 62,471 |   |   | $ | 68,715 |   |   | $ | 23,377 |   |   | $ | 0 |   |   | $ | 190,528 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $                                  | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                            |   |                               |
|-----------------------------------------------------------------|--------|------------------------------------|
|                                                            |   | Commercial, Industrial & Other |   |   | Commercial Real Estate |   |   | Residential Mortgages |   |   | Loans to Individuals |   |   |        Unallocated |   |   |   Total |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for  creditlosses:                          |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning Balance                                               |   | $                                  | 108 |   |   | $ | 1,520 |   |   | $ | 145 |   |   | $ | 48 |   |   | $ | 0 |   |   | $ | 1,821 |   |
|       Charge-offs                 |   |                               | (9 | ) |   |   | 0 |   |   |   | (49 | ) |   |   | (42 | ) |   |   | 0 |   |   |   | (100 | ) |
|        Recoveries            |   |                               | 0 |   |   |   | 0 |   |   |   | 0 |   |   |   | 1 |   |   |   | 0 |   |   |   | 1 |   |
|        Provision             |   |                               | 10 |   |   |   | (97 | ) |   |   | 38 |   |   |   | 29 |   |   |   | 20 |   |   |   | 0 |   |
| Ending Balance                                                  |   | $                                  | 109 |   |   | $ | 1,423 |   |   | $ | 134 |   |   | $ | 36 |   |   | $ | 20 |   |   | $ | 1,722 |   |
| Ending balance: individually evaluated for impairment           |   | $                                  | 47 |   |   | $ | 72 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 119 |   |
| Ending balance: collectively evaluated for impairment           |   | $                                  | 62 |   |   | $ | 1,351 |   |   | $ | 134 |   |   | $ | 36 |   |   | $ | 20 |   |   | $ | 1,603 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $                                  | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |
|                                                            |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable:                                               |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending Balance                                                  |   | $                                  | 40,316 |   |   | $ | 61,412 |   |   | $ | 77,211 |   |   | $ | 26,153 |   |   | $ | 0 |   |   | $ | 205,092 |   |
| Ending balance: individually evaluated for impairment           |   | $                                  | 291 |   |   | $ | 1,164 |   |   | $ | 49 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 1,504 |   |
| Ending balance: collectively evaluated for impairment           |   | $                                  | 40,025 |   |   | $ | 60,248 |   |   | $ | 77,162 |   |   | $ | 26,153 |   |   | $ | 0 |   |   | $ | 203,588 |   |
| Ending balance: loans acquired with deteriorated credit quality |   | $                                  | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |   | $ | 0 |   |

----

|   | Note 6 - Financial Instruments with Off-Balance Sheet Risk |
|--------|------------------------------------------------------------|

|                                                                                               |   | December 31,   |   |   |
|----------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|
|                                                                                               |   | 2010           |   |   | 2009 |
|                                                                                               |   | (In Thousands) |
| Financial instruments whose contract amounts represent credit risk:                                |   |           |   |   |   |
|       Commitments to extend credit, including unused lines of credit |   | $              | 36,406 |   |   | $ | 30,282 |   |
|       Standby letters of credit                                      |   |           | 243    |   |   |   | 435 |   |
|       Financial standby letters of credit                            |   |           | 1,947  |   |   |   | 2,152 |   |

----

|   | Note 7 - Premises and Equipment |
|--------|---------------------------------|

|   |   |   | 2010           |   | 2009 |
|--------|--------|--------|----------------|--------|------|
|   |   |   | (In Thousands) |

| Land                                      |   | $      | 437    |   |   | $      | 437    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Premises                                  |   |   | 5,815  |   |   |   | 5,789  |   |
| Leasehold improvements                    |   |   | 301    |   |   |   | 301    |   |
| Furniture and equipment                   |   |   | 5,953  |   |   |   | 5,873  |   |
|                                      |   |   |   |   |   |   |   |   |
|                                      |   |   | 12,506 |   |   |   | 12,400 |   |
| Accumulated depreciation and amortization |   |   | (9,183 | )      |   |   | (8,852 | )      |

|   |   |   |                    $  3,323 |   |                   $ 3,548 |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|

|   |   |   | 2010           |   | 2009 |
|--------|--------|--------|----------------|--------|------|
|   |   |   | (In Thousands) |

| Savings accounts      |   | $      | 51,184 |   |   | $      | 45,347 |   |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| NOW accounts          |   |   | 22,621 |   |   |   | 21,089 |   |
| Money market accounts |   |   | 36,716 |   |   |   | 29,166 |   |
| Time deposits         |   |   | 88,764 |   |   |   | 99,868 |   |

|   |   |   |                   $199,285 |   |                  $195,470 |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|

| 2011 |   | $      | 54,877 |   |
|------|--------|--------|--------|--------|
| 2012 |   |   | 12,918 |   |
| 2013 |   |   | 5,289  |   |
| 2014 |   |   | 7,164  |   |
| 2015 |   |   | 8,516  |   |

|   |   |   |   | $ | 88,764 |   |
|--------|--------|--------|--------|---|--------|--------|

|   | Note 9 - Short-Term Borrowings |
|--------|--------------------------------|

----

|   | Note 9 - Short-Term Borrowings (Continued) |
|--------|--------------------------------------------|

|   | The outstanding balances and related information of short-term borrowings are summarized as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------|

|   |   |   | Years Ended December 31, |
|--------|--------|--------|--------------------------|
|   |   |   | 2010                     |   | 2009 |
|   |   |   | (Dollars in Thousands)   |

| Average balance during the year                   |   | $      | 31,945 |   |   | $      | 36,401 |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Average interest rate during the year             |   |   | 0.43   | %      |   |   | 0.55   | %      |
| Maximum month-end balance                         |   | $      | 50,775 |   |   | $      | 49,850 |   |
| Weighted average interest rate at end of the year |   |   | 0.37   | %      |   |   | 0.35   | %      |

|   | Note 10 - Long-Term Borrowings |
|--------|--------------------------------|

|   | Note 11 - Employee Benefit Plans |
|--------|----------------------------------|

|   | Note 12 - Comprehensive Income |
|--------|--------------------------------|

|                                                                                          |   | 2010           |   |   | 2009   |
|-----------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|
|                                                                                          |   | (In Thousands) |   |   |
| Unrealized (losses) gains      On securities available for sale |   | $              | (707   | )      |   | $ | 3,216 |   |   |
|  Reclassification adjustment for loss realized in income                                 |   |           | 5      |   |   |   | - |   |   |
|                                                                                          |   |           |   |   |   |   |   |   |   |
| Net Unrealized (Losses) Gains                                                                 |   |           | (702   | )      |   |   | 3,216 |   |   |
|                                                                                          |   |           |   |   |   |   |   |   |   |
| Tax effect (benefit)                                                                          |   |           | (238   | )      |   |   | 1,093 |   |   |
| Net of Tax Amount                                                                             |   | $              | (464   | )      |   | $ | 2,123 |   |   |

----

|   | Note 13 - Lease Commitments |
|--------|-----------------------------|

| 2011       |   | $      | 144    |   |
|------------|--------|--------|--------|--------|
| 2012       |   |   | 96     |   |
| 2013       |   |   | 94     |   |
| 2014       |   |   | 96     |   |
| 2015       |   |   | 88     |   |
| Thereafter |   |   | 197    |   |
|       |   |   |   |   |
|       |   | $      | 715    |   |

|   | Note 14 - Income Taxes |
|--------|------------------------|

|   |   | 2010           |   | 2009 |
|--------|--------|----------------|--------|------|
|   |   | (In Thousands) |

| Allowance for loan losses                            |   | $      | 340    |   |   | $      | 340    |   |
|------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Accrued benefits                                     |   |   | 34     |   |   |   | 42     |   |
| Intangible assets                                    |   |   | 94     |   |   |   | 70     |   |
| Other                                                |   |   | 12     |   |   |   | 10     |   |
|                                                 |   |   |   |   |   |   |   |   |
| Total Deferred Tax Assets                            |   |   | 480    |   |   |   | 462    |   |
|                                                 |   |   |   |   |   |   |   |   |
| Deferred loan fees                                   |   |   | 64     |   |   |   | 68     |   |
| Securities accretion                                 |   |   | 53     |   |   |   | 69     |   |
| Unrealized net gain on securities available for sale |   |   | 2,138  |   |   |   | 2,376  |   |
| Depreciation                                         |   |   | 400    |   |   |   | 339    |   |
| Other                                                |   |   | 7      |   |   |   | -      |   |
|                                                 |   |   |   |   |   |   |   |   |
| Total Deferred Tax Liabilities                       |   |   | 2,662  |   |   |   | 2,852  |   |
|                                                 |   |   |   |   |   |   |   |   |
| Net Deferred Tax Liability                           |   | $      | (2,182 | )      |   | $      | (2,390 | )      |

|   |   |   | 2010                                                                                                                                                                                          |   | 2009 |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------|
|   |   |   |                               (In Thousands) |

| Current  |   | $      | 1,274  |   |   | $      | 1,847  |   |
|----------|--------|--------|--------|--------|--------|--------|--------|--------|
| Deferred |   |   | 30     |   |   |   | 59     |   |
|     |   |   |   |   |   |   |   |   |
|     |   | $      | 1,304  |   |   | $      | 1,906  |   |

----

|   | Note 14 - Income Taxes (Continued) |
|--------|------------------------------------|

|   | 2010           |   | 2009 |
|--------|----------------|--------|------|
|   | (In Thousands) |

| Tax at statutory rates                   |   | $      | 2,314  |   |   |   | 34.0   | %      |   | $      | 2,392  |   |   |   | 34.0   | %      |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Increase (decrease) resulting from:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt income                        |   |   | (915   | )      |   |   | (13.4  | )      |   |   | (337   | )      |   |   | (4.8   | )      |
| Non-deductible interest expense          |   |   | 54     |   |   |   | 0.8    |   |   |   | 15     |   |   |   | 0.2    |   |
| Increase in investment in life insurance |   |   | (158   | )      |   |   | (2.3   | )      |   |   | (165   | )      |   |   | (2.3   | )      |
| Other                                    |   |   | 9      |   |   |   | 0.1    |   |   |   | 1      |   |   |   | 0.0    |   |
|                                     |   | $      | 1,304  |   |   |   | 19.2   | %      |   | $      | 1,906  |   |   |   | 27.1   | %      |

----

|   | (Level 1)Quoted Prices In active Markets For Identical Assets |   | (Level 2) Significant Other Observable Inputs |   | (Level 3) Significant Unobservable Inputs  |
|--------|---------------------------------------------------------------|--------|----------------------------------------------------|--------|------------------------------------------------------|
|   |                                                          |   |                                               |   |                                                 |

| December 31, 2010:                              |                                                                       |   | (In Thousands)            |   |                                                                       |   |
|-------------------------------------------------|----------------------------------------------------------------------------|--------|---------------------------|--------|----------------------------------------------------------------------------|--------|
| Obligations of states and politicalsubdivisions | $            0 |   | $   65,448 |   | $            0 |   |
| Mortgage-backed securities                      | 0                                                                          |   | 65,711                    |   | 0                                                                          |   |

|   | $            0 |   | $131,159 |   | $            0 |   |
|--------|----------------------------------------------------------------------------|--------|----------|--------|----------------------------------------------------------------------------|--------|

| December 31, 2009:                              |                                                                       |   |                      |   |                                                                       |   |
|-------------------------------------------------|----------------------------------------------------------------------------|--------|---------------------------|--------|----------------------------------------------------------------------------|--------|
| Obligations of states and politicalsubdivisions | $            0 |   | $   42,363 |   | $            0 |   |
| Mortgage-backed securities                      | 0                                                                          |   | 96,555                    |   | 0                                                                          |   |

|   | $            0 |   | $138,918 |   | $            0 |   |
|--------|----------------------------------------------------------------------------|--------|----------|--------|----------------------------------------------------------------------------|--------|

|   | (Level 1)Quoted Prices In active Markets For Identical Assets |   | (Level 2) Significant Other Observable Inputs |   | (Level 3) Significant Unobservable Inputs  |
|--------|---------------------------------------------------------------|--------|----------------------------------------------------|--------|------------------------------------------------------|
|   |                                                          |   |                                               |   |                                                 |

| December 31, 2010: |                                                                       |   | (In Thousands)                                                       |   |                                                 |   |
|--------------------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|               |                                                                       |   |                                                                 |   |                                                 |   |
| Impaired Loans     | $            0 |   | $           0 |   | $        864 |   |

| December 31, 2009: |                                                                       |   |                                                                       |   |                                                 |   |
|--------------------|----------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|               |                                                                       |   |                                                                       |   |                                                 |   |
| Impaired Loans     | $            0 |   | $            0 |   | $        866 |   |

----

----

|   | Note 15 - Fair Value of Financial Instruments (Continued) |
|--------|-----------------------------------------------------------|

|                                    |   | December 31, 2010 |    |   | December 31, 2009 |   |
|-----------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                    |   | Carrying Amount   |    |   | FairValue         |   |   | Carrying Amount |   |   | FairValue |   |
|                                    |   | (In Thousands)    |    |
| Financial assets:                       |   |              |    |   |              |   |   |   |   |   |   |   |
| Cash and short-term investments         |   | $                 | 5,594   |   |              | $      | 5,594 |   |   | $ | 6,741 |   |   | $ | 6,741 |   |
| Securities available for sale           |   |              | 131,159 |   |              |   | 131,159 |   |   |   | 138,918 |   |   |   | 138,918 |   |
| Restricted investments in bank stock    |   |              | 4,339   |   |              |   | 4,339 |   |   |   | 4,567 |   |   |   | 4,567 |   |
| Net loans receivable                    |   |              | 190,220 |   |              |   | 191,109 |   |   |   | 203,370 |   |   |   | 203,553 |   |
| Accrued interest receivable             |   |              | 1,519   |   |              |   | 1,519 |   |   |   | 1,456 |   |   |   | 1,456 |   |
| Financial liabilities:                  |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                |   | $                 | 276,494 |   |              | $      | 272,035 |   |   | $ | 269,730 |   |   | $ | 264,300 |   |
| Short-term borrowings                   |   |              | 17,700  |   |              |   | 17,700 |   |   |   | 48,850 |   |   |   | 48,850 |   |
| Long-term borrowings                    |   |              | 10,000  |   |              |   | 10,172 |   |   |   | 10,000 |   |   |   | 10,139 |   |
| Accrued interest payable                |   |              | 331     |   |              |   | 331 |   |   |   | 451 |   |   |   | 451 |   |
|                                    |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance sheet financial instruments |   |              | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |

|   | Note 16 - Related Party Transactions |
|--------|--------------------------------------|

----

|   | Note 17 - Capital Requirements and Regulatory Restrictions |
|--------|------------------------------------------------------------|

|   |   |   Actual     |   |  For Capital Adequacy Purposes |   | To be Well Capitalized Under Prompt Corrective Action Provisions |   |
|--------|--------|------------------------|--------|-------------------------------------|--------|------------------------------------------------------------------|--------|
|   |   | Amount                 |   | Ratio                               |   | Amount                                                           |   | Ratio |   | Amount |   | Ratio |   |
|   |   | (Dollars in Thousands) |   |

| As of December 31, 2010                                           |   |   |   |   |   |   |   |   |   |   |              |   |   |   |      |   |   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|--------|--------|-----------|--------|--------|--------|
|      Total capital (to risk-weighted assets)  |   | $      | 43,326 |   |   |   | 20.7   | %      |   | $      | 316,710      |   |   |   | 38.0 | %      |   | $      | 320,888 |   |   |   | 310.0 | % |
|      Tier 1 capital (to risk-weighted assets) |   |   | 41,640 |   |   |   | 19.9   |   |   |   | 3 8,355 |   |   |   | 34.0 |   |   |   | 312,533 |   |   |   | 3 6.0 |   |
|      Tier 1 capital (to average assets)       |   |   | 41,640 |   |   |   | 11.9   |   |   |   | 314,000      |   |   |   | 34.0 |   |   |   | 317,500 |   |   |   | 3 5.0 |   |

| As of December 31, 2009                                           |   |   |   |   |   |   |   |   |   |   |              |   |   |   |      |   |   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|--------|--------|-----------|--------|--------|--------|
|      Total capital (to risk-weighted assets)  |   | $      | 40,293 |   |   |   | 19.1   | %      |   | $      | 316,915      |   |   |   | 38.0 | %      |   | $      | 321,144 |   |   |   | 310.0 | % |
|      Tier 1 capital (to risk-weighted assets) |   |   | 38,570 |   |   |   | 18.2   |   |   |   | 3 8,458 |   |   |   | 34.0 |   |   |   | 312,686 |   |   |   | 3 6.0 |   |
|      Tier 1 capital (to average assets)       |   |   | 38,570 |   |   |   | 10.5   |   |   |   | 314,656      |   |   |   | 34.0 |   |   |   | 318,320 |   |   |   | 3 5.0 |   |

----

|   | Note 18 - Condensed Financial Information of Commercial National Financial Corporation (Parent Only) |
|--------|------------------------------------------------------------------------------------------------------|

|   | Statements of Financial Condition |
|--------|-----------------------------------|

|   |   |   | December 31,   |
|--------|--------|--------|----------------|
|   |   |   | 2010           |   | 2009 |
|   |   |   | (In Thousands) |

| Assets                                           |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cash                                             |   | $      | 32     |   |   | $      | 41 |   |
| Investment in bank subsidiary                    |   |   | 45,935 |   |   |   | 43,427 |   |
| Other assets                                     |   |   | 108    |   |   |   | 54 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total Assets                                     |   | $      | 46,075 |   |   | $      | 43,522 |   |
|                                             |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders’ Equity       |   |   |   |   |   |   |   |   |
| Liabilities                                      |   | $      | 63     |   |   | $      | 30 |   |
| Shareholders’ equity                       |   |   | 46,012 |   |   |   | 43,492 |   |
|                                             |   |   |   |   |   |   |   |   |
| Total Liabilities and Shareholders’ Equity |   | $      | 46,075 |   |   | $      | 43,522 |   |

|   | Statements of Income |
|--------|----------------------|

|   |   |   | Years Ended December 31, |
|--------|--------|--------|--------------------------|
|   |   |   | 2010                     |   | 2009 |
|   |   |   | (In Thousands)           |

| Dividends from bank subsidiary                                                                        |   | $      | 2,634  |   |   | $      | 2,943  |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Fees from bank subsidiary                                                                             |   |   | 419    |   |   |   | 380    |   |
| Expenses                                                                                              |   |   | (577   | )      |   |   | (533   | )      |
|                                                                                                  |   |   |   |   |   |   |   |   |
| Income before taxes and equity in undistributed     earnings of subsidiaries |   |   | 2,476  |   |   |   | 2,790  |   |
| Income tax benefit                                                                                    |   |   | (53    | )      |   |   | (52    | )      |
|                                                                                                  |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   | 2,529  |   |   |   | 2,842  |   |
| Equity in undistributed earnings of subsidiaries                                                      |   |   | 2,972  |   |   |   | 2,287  |   |
|                                                                                                  |   |   |   |   |   |   |   |   |
| Net Income                                                                                            |   | $      | 5,501  |   |   | $      | 5,129  |   |

----

|   | Note 18 - Condensed Financial Information of Commercial National Financial Corporation (Parent Only) (Continued) |
|--------|------------------------------------------------------------------------------------------------------------------|

|   | Statements of Cash Flows |
|--------|--------------------------|

|   |   |   | Years Ended December 31, |
|--------|--------|--------|--------------------------|
|   |   |   | 2010                     |   | 2009 |
|   |   |   | (In Thousands)           |

| Cash Flows from Operating Activities                                            |   |   |   |   |   |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Net income                                                                      |   | $      | 5,501  |   |   | $      | 5,129 |   |
| Adjustments to reconcile net income tonet cash provided by operatingactivities: |   |   |   |   |   |   |   |   |
| Undistributed earnings from subsidiaries                                        |   |   | (2,972 | )      |   |   | (2,287 | ) |
| Increase in other assets                                                        |   |   | (54    | )      |   |   | (39 | ) |
| Increase in liabilities                                                         |   |   | 33     |   |   |   | 10 |   |
|                                                                            |   |   |   |   |   |   |   |   |
| Net Cash Provided by Operating Activities                                       |   |   | 2,508  |   |   |   | 2,813 |   |
|                                                                            |   |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities                                            |   |   |   |   |   |   |   |   |
| Dividends paid                                                                  |   |   | (2,517 | )      |   |   | (2,522 | ) |
| Purchase of treasury stock                                                      |   |   | -      |   |   |   | (307 | ) |
|                                                                            |   |   |   |   |   |   |   |   |
| Net Cash Used in Financing Activities                                           |   |   | (2,517 | )      |   |   | (2,829 | ) |
|                                                                            |   |   |   |   |   |   |   |   |
| Net Decrease  in Cash                                                 |   |   | (9     | )      |   |   | (16 | ) |
|                                                                            |   |   |   |   |   |   |   |   |
| Cash – Beginning                                                          |   |   | 41     |   |   |   | 57 |   |
|                                                                            |   |   |   |   |   |   |   |   |
| Cash – Ending                                                             |   | $      | 32     |   |   | $      | 41 |   |

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