|                                                                          |   | Page               |
|-------------------------------------------------------------------------------|--------|--------------------|
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                       |   |  2            |
|                                                                          |   |               |
| Management’s Annual Report on Internal Control over Financial Reporting |   |  3            |
|                                                                          |   |               |
| FINANCIAL STATEMENTS                                                          |   |               |
|   Consolidated Balance Sheets                                       |   |  4            |
|   Consolidated Statements of Income                                 |   |  5            |
|   Consolidated Statements of Stockholders' Equity                   |   |  6            |
|   Consolidated Statements of Cash Flows                             |   |  7            |
|   Notes to Consolidated Financial Statements                        |   |  8 – 38 |
|                                                                          |   |               |
|                                                                          |   |               |

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----

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|                                                                                                                                                                                   |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|         ASSETS                                                                                                                                 |   |   |    |   |   |   |
|  Cash and due from banks                                                                                                                                                          |   | $      | 15,693  |   |   | $      | 14,300 |   |
|  Federal funds sold                                                                                                                                                               |   |   | 66,459  |   |   |   | 15,037 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Cash and Cash Equivalents                                                        |   |   | 82,152  |   |   |   | 29,337 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|  Investment securities available-for-sale (Note 3)                                                                                                                                |   |   | 56,096  |   |   |   | 70,948 |   |
|  Other Investments, at cost (Note 4)                                                                                                                                              |   |   | 6,026   |   |   |   | 8,417 |   |
|  Loans, net of allowance for loan losses of  $10,320 and   $11,681 in 2010 and 2009, respectively (Note 5)                                                         |   |   | 440,274 |   |   |   | 474,438 |   |
|  Premises and equipment, net (Note 6)                                                                                                                                             |   |   | 23,509  |   |   |   | 24,613 |   |
| Deferred Tax Assets                                                                                                                                                                    |   |   | 11,887  |   |   |   | 9,674 |   |
|  Interest receivable                                                                                                                                                              |   |   | 2,544   |   |   |   | 3,147 |   |
|  Bank Owned Life Insurance                                                                                                                                                        |   |   | 12,777  |   |   |   | 12,324 |   |
|   Other Real Estate Owned                                                                                                                                                    |   |   | 15,316  |   |   |   | 6,847 |   |
|  Other assets                                                                                                                                                                     |   |   | 4,927   |   |   |   | 5,562 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Assets                                                                           |   | $      | 655,508 |   |   | $      | 645,307 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|               LIABILITIES AND STOCKHOLDERS' EQUITY                                                               |   |   |    |   |   |   |   |   |
|  Deposits (Note 9)                                                                                                                                                                |   |   |    |   |   |   |   |   |
|   Noninterest bearing                                                                                                                                                        |   | $      | 85,923  |   |   | $      | 84,073 |   |
|   Interest bearing                                                                                                                                                           |   |   | 450,849 |   |   |   | 435,831 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Deposits                                                                         |   |   | 536,772 |   |   |   | 519,904 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|  Interest, taxes and other liabilities                                                                                                                                            |   |   | 1,786   |   |   |   | 1,950 |   |
|  Short term borrowings (Note 10)                                                                                                                                                  |   |   | 65,952  |   |   |   | 74,039 |   |
|  Long-term debt (Note 11)                                                                                                                                                         |   |   | 14,968  |   |   |   | 10,836 |   |
|  Capital securities (Note 12)                                                                                                                                                     |   |   | 3,150   |   |   |   | 3,150 |   |
|                 Total Other Liabilities                                                                |   |   | 85,856  |   |   |   | 89,975 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Liabilities                                                                      |   |   | 622,628 |   |   |   | 609,879 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|  STOCKHOLDERS' EQUITY                                                                                                                                                             |   |   |    |   |   |   |   |   |
|  Common stock, 5,011 and 5,011 shares  issued and    Authorized 40,000 shares, par  value   $0.625 per share  (Notes 14 and 16) |   |   | 3,132   |   |   |   | 3,132 |   |
|                                                                                                                                                                              |   |   |    |   |   |   |   |   |
|    Retained Earnings                                                                                                                                                         |   |   | 25,923  |   |   |   | 28,063 |   |
|     Accumulated other comprehensive (loss)                                                                                                                              |   |   | (3,958  | )      |   |   | (3,550 | ) |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Stockholders' Equity                                                             |   |   | 32,880  |   |   |   | 35,428 |   |
|                                                                                                                                                                                   |   |   |    |   |   |   |   |   |
|                 Total Liabilities and Stockholders' Equity                                             |   | $      | 655,508 |   |   | $      | 645,307 |   |

----

|                                                                                                                  |   | 2010   |   |                | 2009   |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------------|--------|--------|
| INTEREST INCOME                                                                                                       |   |   |   |                |   |   |
|       Loans receivable and fees on loans                                                |   | $      | 28,140 |                |   | $      | 30,338 |   |
|       Securities available for sale:                                                    |   |   |   |                |   |   |   |   |
|          Taxable                                                         |   |   | 854    |                |   |   | 1,673 |   |
|          Tax-exempt                                                      |   |   | 1,723  |                |   |   | 2,373 |   |
|          Other investment income                                         |   |   | 81     |                |   |   | 80 |   |
|       Federal funds sold                                                                |   |   | 60     |                |   |   | 10 |   |
|             Total Interest Income                         |   |   | 30,858 |                |   |   | 34,474 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  INTEREST EXPENSE                                                                                                |   |   |   |                |   |   |   |   |
|      Deposits                                                                                |   |   | 8,859  |                |   |   | 11,246 |   |
|      Federal funds purchased                                                                 |   |   | -      |                |   |   | 6 |   |
|      Other borrowed funds                                                                    |   |   | 3,679  |                |   |   | 4,893 |   |
|            Total interest expense                              |   |   | 12,538 |                |   |   | 16,145 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|            Net interest income                                 |   |   | 18,320 |                |   |   | 18,329 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  PROVISION FOR LOAN LOSSES (Note 5)                                                                              |   |   | 4,799  |                |   |   | 9,614 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|            Net interest income after provision for loan losses |   |   | 13,521 |                |   |   | 8,715 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  NON-INTEREST INCOME                                                                                             |   |   |   |                |   |   |   |   |
|       Securities gains (losses)                                                         |   |   | (163   | )                   |   |   | 380 |   |
|       Service charges on deposit accounts                                               |   |   | 2,044  |                |   |   | 2,225 |   |
|       Other service charges, commissions and fees                                       |   |   | 1,459  |                |   |   | 1,354 |   |
|       Other operating income                                                            |   |   | 686    |                |   |   | 1,683 |   |
|       Other than temporary impairment charge                                            |   |   | (1,263 | )                   |   |   | (5,621 | ) |
|              Total Non-Interest Income               |   |   | 2,763  |                |   |   | 21 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  NON-INTEREST EXPENSE                                                                                            |   |   |   |                |   |   |   |   |
|       Salaries and employee benefits (Note 15)                                          |   |   | 10,073 |                |   |   | 10,560 |   |
|       Occupancy expense of bank premises                                                |   |   | 1,176  |                |   |   | 1,145 |   |
|       Furniture and equipment expense                                                   |   |   | 1,572  |                |   |   | 1,613 |   |
|       Other operating expenses (Note 24)                                                |   |   | 5,452  |                |   |   | 5,662 |   |
|       Foreclosed Assets –Write-down and operating expenses                        |   |   | 2,416  |                |   |   | 1,369 |   |
|              Total Non-Interest Expenses             |   |   | 20,689 |                |   |   | 20,349 |   |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|             (Loss)  Income Before Income Taxes  |   |   | (4,405 | )                   |   |   | (11,613 | ) |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|       Income Tax Benefit (Note 8)                                                       |   |   | (2,265 | )                   |   |   | (5,234 | ) |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|              Net Income (Loss)                       |   | $      | (2,140 | )                   |   | $      | (6,379 | )       |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  Earnings (Loss) Per Common Share (Note 14)                                                                      |   | $      | (0.43  | )    |   | $      | (1.27 | ) |
|                                                                                                                  |   |   |   |                |   |   |   |   |
|  Earnings (Loss) Per Common Share - assuming dilution -Note 14 13)                                               |   | $      | (0.43  | )                   |   | $      | (1.27 | ) |

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|                                                                                                                     |                     |                           |                                       |                                                                                  | AccumulatedOtherComprehensiveIncome          |                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------------|--------------------------------------------|---------------------------------------------------------------------------------------|----------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                                                                                     |                     |                           | AdditionalPaid-inCapital                   | RetainedEarnings                                                                      |  TotalStockholders'Equity               |
|                                                                                                                     |   Common Stock |
|                                                                                                                     | Shares                   | Par Value                      |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Balance, December 31, 2008                                                                                               | 5,001                    | $    3,126 | $      7,688 | $    34,994                                                       | $      (6,760) | $     39,048                                                       |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Comprehensive income:                                                                                                    |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Net income                                                                                                               | -                        | -                              | -                                          | (6,379)                                                                               | -                                            | (6,379)                                                                                     |
| Change in unrealized gain (loss) on securities available-for-sale,   net of deferred income tax benefit of $77 | -                        | -                              | -                                          | -                                                                                     | (148)                                        | (148)                                                                                       |
| Less: reclassification adjustment, net of income tax expense of $1,730                                                   | -                        | -                              | -                                          | -                                                                                     | 3,358                                        | 3,358                                                                                       |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Total comprehensive income                                                                                               | -                        | -                              | -                                          | -                                                                                     | -                                            | (3,169)                                                                                     |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Common stock issued for stock options exercised                                                                          | 10                       | 6                              | 95                                         | -                                                                                     | -                                            |            101                       |
| Cash dividend                                                                                                            |                     |                           |                                       | (552)                                                                                 |                                         |   (552)                                                                           |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Balance, December 31, 2009                                                                                               | 5,011                    | $    3,132 | $      7,783 | $    28,063                                                       | $      (3,550) | $     35,428                                                       |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Comprehensive income:                                                                                                    |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Net income                                                                                                               | -                        | -                              | -                                          | (2,140)                                                                               | -                                            | (2,140)                                                                                     |
| Change in unrealized gain (loss) on securities available-for-sale,   net of deferred income tax benefit of $265     | -                        | -                              | -                                          | -                                                                                     | (515)                                        | (515)                                                                                       |
| Less: reclassification adjustment, net of income tax benefit of $56                                                      | -                        | -                              | -                                          | -                                                                                     | 107                                          | 107                                                                                         |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Total comprehensive income                                                                                               | -                        | -                              | -                                          | -                                                                                     | -                                            | (2,548)                                                                                     |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
|                                                                                                                     | -                        | -                              | -                                          | -                                                                                     | -                                            |                - |
|                                                                                                                     |                     |                           |                                       |               - |                                         |   -                                                                               |
|                                                                                                                     |                     |                           |                                       |                                                                                  |                                         |                                                                                        |
| Balance, December 31, 2010                                                                                               | 5,011                    | $    3,132 | $      7,783 | $    25,923                                                       | $      (3,958) | $     32,880                                                       |

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|                                                         |   | 2010   |    |                                                                                  | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|---------------------------------------------------------------------------------------|--------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                        |   |   |    |                                                                                  |   |   |
| Net income                                                   |   | $      | (2,140  | )                                                                                     |   | $      | (6,379 | ) |
| Adjustments to reconcile net income to net cash              |   |   |    |                                                                                  |   |   |   |   |
| provided by operating activities:                            |   |   |    |                                                                                  |   |   |   |   |
| Provision for loan losses                                    |   |   | 4,799   |                                                                                  |   |   | 9,614 |   |
| Provision for deferred income taxes                          |   |   | 2,029   |                                                                                  |   |   | (4,210 | ) |
| Depreciation and amortization                                |   |   | 1,314   |                                                                                  |   |   | 1,342 |   |
| Net realized (gains) losses on available-for-sale securities |   |   | 163     |                                                                                  |   |   | (380 | ) |
| Net amortization on securities                               |   |   | 248     |                                                                                  |   |   | 377 |   |
| Amortization of capital issue costs                          |   |   | 5       |                                                                                  |   |   | 5 |   |
| Other than temporary impairment charge                       |   |   | 1,263   |                                                                                  |   |   | 5,621 |   |
| Valuation adjustment of other real estate owned              |   |   | 1,739   |                                                                                  |   |   | 1,393 |   |
| Decrease in interest receivable                              |   |   | 603     |                                                                                  |   |   | 551 |   |
| (Increase) decrease in other assets                          |   |   | (3,749  | )                                                                                     |   |   | (3,460 | ) |
| Increase (decrease) in interest, taxes and other             |   |   |    |                                                                                  |   |   |   |   |
|   liabilities                                           |   |   | (164    | )               |   |   | (1,844 | ) |
| Net Cash provided by operating activities                    |   |   | 6,110   |                                                                                  |   |   | 2,630 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                        |   |   |    |                                                                                  |   |   |   |   |
| Securities available for sale:                               |   |   |    |                                                                                  |   |   |   |   |
| Proceeds from sale of debt and equity securities             |   |   | 33,479  |                                                                                  |   |   | 28,308 |   |
| Proceeds from maturities of debt and equity securities       |   |   | 8,262   |                                                                                  |   |   | 25,576 |   |
| Purchase of debt and equity securities                       |   |   | (29,182 | )                                                                                     |   |   | (18,938 | ) |
| Purchase (redemption) of other investments                   |   |   | 2,391   |                                                                                  |   |   | (1,788 | ) |
| Net (increase) decrease in loans                             |   |   | 13,976  |                                                                                  |   |   | (4,633 | ) |
| Proceeds from sales of other real estate owned               |   |   | 5,032   |                                                                                  |   |   | 1,387 |   |
| Proceeds from cash surrender value of Life Insurance         |   |   | -       |                                                                                  |   |   | 604 |   |
| Premises and equipment expenditures                          |   |   | (166    | )                                                                                     |   |   | (1,715 | ) |
| Net Cash used in investing activities                        |   |   | 33,792  |                                                                                  |   |   | 28,801 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                        |   |   |    |                                                                                  |   |   |   |   |
| Net increase in certificates of deposit                      |   |   | (7,549  | )                                                                                     |   |   | (22,105 | ) |
| Net increase in demand, savings and other deposits           |   |   | 24,417  |                                                                                  |   |   | 19,273 |   |
| Net increase (decrease) in short term borrowings             |   |   | (8,087  | )                                                                                     |   |   | (1,569 | ) |
| Net decrease )decrease) in long-term debt                    |   |   | 4,132   |                                                                                  |   |   | (13,824 | ) |
| Cash dividends paid                                          |   |   | -       |                                                                                  |   |   | (552 | ) |
| Proceeds from exercise of common stock options               |   |   | -       |                                                                                  |   |   | 101 |   |
| Net Cash provided by financing activities                    |   |   | 12,913  |                                                                                  |   |   | (18,676 | ) |
| Net increase in cash and cash equivalents                    |   |   | 52,815  |                                                                                  |   |   | 12,755 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR               |   |   | 29,337  |                                                                                  |   |   | 16,582 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF YEAR                     |   | $      | 82,152  |                                                                                  |   | $      | 29,337 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:           |   |   |    |                                                                                  |   |   |   |   |
| Cash paid during the year for:                               |   |   |    |                                                                                  |   |   |   |   |
| Interest                                                     |   | $      | 12,536  |                                                                                  |   | $      | 17,361 |   |
| Income taxes                                                 |   | $      | -       |                                                                                  |   | $      | 250 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |
| SUPPLEMENTAL DISCLOSSURES OF NONCASH TRANSACTIONS            |   |   |    |                                                                                  |   |   |   |   |
| Transfer of loans to other real estate owned                 |   | $      | 15,389  |                                                                                  |   | $      | 5,836 |   |
|                                                         |   |   |    |                                                                                  |   |   |   |   |

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| ·   | strengthen board oversight of the management and operations of the Bank; |
|--------------------|--------------------------------------------------------------------------|

| ·   | strengthen credit risk management and administration; |
|--------------------|-------------------------------------------------------|

| ·   | provide for the effective grading of the Bank’s loan portfolio; |
|--------------------|-----------------------------------------------------------------------|

| ·   | summarize the findings of its review of the adequacy of the staffing of its loan review function; |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | improve the Bank’s position with respect to loans, relationships, or other assets in excess of $500,000 that currently are or in the future become past due more than 90 days, on the Bank’s problem loan list, or adversely classified in any report of examination of the Bank; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | review and revise the Bank’s methodology for determining the allowance for loan and lease losses (“ALLL”) and maintain an adequate ALLL; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | maintain sufficient capital at the Company and the Bank; |
|--------------------|----------------------------------------------------------|

| ·   | establish a revised written contingency funding plan; |
|--------------------|-------------------------------------------------------|

| ·   | establish a revised investment policy; |
|--------------------|----------------------------------------|

| ·   | improve the Bank’s earnings and overall condition; |
|--------------------|----------------------------------------------------------|

| ·   | revise the Bank’s information technology program; and |
|--------------------|-------------------------------------------------------------|

| ·   | establish a disaster recovery and business continuity program. |
|--------------------|----------------------------------------------------------------|

| ·   | establish a committee to monitor compliance with all aspects of the written agreement. |
|--------------------|----------------------------------------------------------------------------------------|

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|                             |   | 2010           |   |
|----------------------------------|--------|----------------|--------|
|                             |   | Amortized Cost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Fair Value |   |
|                             |
|                             |   |           |   |   |   |   |   |   |   |   |   |   |
| U.S Government agencies          |   | $              | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| State and political subdivisions |   |           | 19,885 |   |   |   | 78 |   |   |   | 1,673 |   |   |   | 18,291 |   |
| Mortgage backed securities       |   |           | 29,465 |   |   |   | 289 |   |   |   | 312 |   |   |   | 29,442 |   |
| Pooled Trust Preferred           |   |           | 4,339  |   |   |   | - |   |   |   | 4,165 |   |   |   | 173 |   |
| Single Issue Trust Preferred     |   |           | 1,926  |   |   |   | - |   |   |   | 122 |   |   |   | 1,804 |   |
| SBA Pools                        |   |           | 5,978  |   |   |   | 1 |   |   |   | 45 |   |   |   | 5,934 |   |
| SLMA                             |   |           | 500    |   |   |   | - |   |   |   | 48 |   |   |   | 452 |   |
|                             |   | $              | 62,093 |   |   | $ | 368 |   |   | $ | 6,365 |   |   | $ | 56,096 |   |

|                             |   | 2009           |   |
|----------------------------------|--------|----------------|--------|
|                             |   | Amortized Cost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Fair Value |   |
|                             |
|                             |   |           |   |   |   |   |   |   |   |   |   |   |
| U.S Government agencies          |   | $              | 1,498  |   |   | $ | 9 |   |   | $ | - |   |   | $ | 1,507 |   |
| State and political subdivisions |   |           | 48,002 |   |   |   | 399 |   |   |   | 1,053 |   |   |   | 47,348 |   |
| Mortgage backed securities       |   |           | 18,425 |   |   |   | 314 |   |   |   | 2 |   |   |   | 18,737 |   |
| Pooled Trust Preferred           |   |           | 5,644  |   |   |   | - |   |   |   | 4,447 |   |   |   | 1,197 |   |
| Single Issue Trust Preferred     |   |           | 1,950  |   |   |   | - |   |   |   | 362 |   |   |   | 1,588 |   |
| SBA Pools                        |   |           | 45     |   |   |   | - |   |   |   | 1 |   |   |   | 44 |   |
| SLMA                             |   |           | 500    |   |   |   | - |   |   |   | 114 |   |   |   | 386 |   |
| Agency Preferred                 |   |           | 262    |   |   |   | - |   |   |   | 121 |   |   |   | 141 |   |
|                             |   | $              | 76,326 |   |   | $ | 722 |   |   | $ | 6,100 |   |   | $ | 70,948 |   |

|                              |   | December 31, 2010   |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | Less Than 12 months |   |   | 12 Months or More |   |   | Total |   |
|                              |   | Fair Value          |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and pol. subdivisions      |   | $                   | 10,822 |   |   | $ | 807 |   |   | $ | 4,372 |   |   | $ | 865 |   |   | $ | 15,194 |   |   | $ | 1,672 |   |
| Mortgage-backed securities        |   |                | 19,193 |   |   |   | 313 |   |   |   | - |   |   |   | - |   |   |   | 19,193 |   |   |   | 313 |   |
| Pooled Trust Preferred Securities |   |                | -      |   |   |   | - |   |   |   | 173 |   |   |   | 4,165 |   |   |   | 173 |   |   |   | 4,165 |   |
| Single Issue Trust Preferred      |   |                | 391    |   |   |   | 21 |   |   |   | 913 |   |   |   | 101 |   |   |   | 1,304 |   |   |   | 122 |   |
| SBA Pools                         |   |                | 4,018  |   |   |   | 45 |   |   |   | - |   |   |   | - |   |   |   | 4,018 |   |   |   | 45 |   |
| SLMA                              |   |                | -      |   |   |   | - |   |   |   | 452 |   |   |   | 48 |   |   |   | 452 |   |   |   | 48 |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total                 |   | $                   | 34,424 |   |   | $ | 1,186 |   |   | $ | 5,910 |   |   | $ | 5,179 |   |   | $ | 40,334 |   |   | $ | 6,365 |   |

----

|                              |   | December 31, 2009   |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | Less Than 12 months |   |   | 12 Months or More |   |   | Total |   |
|                              |   | Fair Value          |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and pol. subdivisions      |   | $                   | 12,363 |   |   | $ | 215 |   |   | $ | 7,975 |   |   | $ | 838 |   |   | $ | 20,338 |   |   | $ | 1,053 |   |
| Mortgage-backed securities        |   |                | 1,465  |   |   |   | 1 |   |   |   | 224 |   |   |   | 1 |   |   |   | 1,689 |   |   |   | 2 |   |
| Pooled Trust Preferred Securities |   |                | -      |   |   |   | - |   |   |   | 1,197 |   |   |   | 4,447 |   |   |   | 1,197 |   |   |   | 4,447 |   |
| Single Issue Trust Preferred      |   |                | -      |   |   |   | - |   |   |   | 1,588 |   |   |   | 362 |   |   |   | 1,588 |   |   |   | 362 |   |
| SBA Pools                         |   |                | -      |   |   |   | - |   |   |   | 44 |   |   |   | 1 |   |   |   | 44 |   |   |   | 1 |   |
| SLMA                              |   |                | -      |   |   |   | - |   |   |   | 386 |   |   |   | 114 |   |   |   | 386 |   |   |   | 114 |   |
| Agency Preferred                  |   |                | 86     |   |   |   | 15 |   |   |   | 55 |   |   |   | 106 |   |   |   | 141 |   |   |   | 121 |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total                 |   | $                   | 13,914 |   |   | $ | 231 |   |   | $ | 11,469 |   |   | $ | 5,869 |   |   | $ | 25,383 |   |   | $ | 6,100 |   |

----

| Description            | Type   | Class       | Original Amount$          | Book Value12/31/10$                     | Fair Value12/31/10$             | Unrealized Gain/(Loss)$                  | Lowest Credit Rating | Percentage of Banks Currently Deferring or Defaulting | Number of Issuers Currently Performing | Excess/ (Negative) Subordination Percentage(1) |
|------------------------|--------|-------------|---------------------------|-----------------------------------------|---------------------------------|------------------------------------------|----------------------|-------------------------------------------------------|----------------------------------------|------------------------------------------------|
|                   |   |        |                      |                                    |                            |                                     |                 |                                                  |                                   |                                           |
| Pretsel  4-B | Pooled | Mezz B      |    700,000 |    85                    | 19                              |       (66) | Ca                   | 27.10%                                                | 4                                      | 19.28 %                                        |
| Prestel 11-B           | Pooled | Mezz B      |   500,000       |    420                   |    66            |  ( 354)                             | Ca                   | 29.70%                                                | 47                                     | (29.10)%                                       |
| Prestel 12-B           | Pooled | Mezz B      |    750,000 |     394             |    16            |  ( 378)                             | Ca                   | 32.70%                                                | 47                                     | (36.81)%                                       |
| Prestel 13-B           | Pooled | Mezz B      |    500,000 |     358             |   33                  | ( 325)                                   | Ca                   | 31.50%                                                | 46                                     | (34.94)%                                       |
| Prestel 15-B           | Pooled | Mezz B      |    500,000 |     263             |      4 | ( 259)                                   | Ca                   | 35.40%                                                | 52                                     | (41.00)%                                       |
| Prestel 18-C           | Pooled | Mezz C      |    500,000 |    362                   |      4 | (358)                                    | Ca                   | 24.60%                                                | 54                                     | (16.78)%                                       |
| Prestel 19-C           | Pooled | Mezz C      |    500,000 |     346             |      3 | ( 343)                                   | Ca                   | 24.60%                                                | 52                                     | (18.99)%                                       |
| Prestel 20-C           | Pooled | Mezz C      |    500,000 |     102             |      1 | ( 101)                                   | Ca                   | 30.60%                                                | 45                                     | (25.42)%                                       |
| Prestel 21-C           | Pooled | Mezz C      |    500,000 |     293             |      5 | (288)                                    | Ca                   | 28.70%                                                | 51                                     | (21.64)%                                       |
| Prestel 22-C           | Pooled | Mezz C      |    500,000 |     307             |      4 | (303)                                    | Ca                   | 29.70%                                                | 63                                     | (23.97)%                                       |
| Prestel 22-C           | Pooled | Mezz C      |    500,000 |     331             |    5             | ( 326)                                   | Ca                   | 29.70%                                                | 63                                     | (23.97)%                                       |
| Prestel 22-C           | Pooled | Mezz C      | 500,000                   |     330             |      5 | (325)                                    | Ca                   | 29.70%                                                | 63                                     | (23.97)%                                       |
| Prestel 23-C           | Pooled | Mezz C      | 500,000                   |    442                   | 6                               | (436)                                    | C                    | 27.30%                                                | 93                                     | (18.33)%                                       |
| Tropc CDO III          | Pooled | Subordinate | 1,000,000                 |       306 | 2                               | (304)                                    | C                    | 39.20%                                                | 30                                     | (33.23)%                                       |

----

|                                   | Amortized Cost                                                                                                                                            |   | Fair Value                                                                                                                                                                  |
|----------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                                      |
| Due in one year or less                | $                          - |   | $                             - |
| Due after one year through five years  | 810                                                                                                                                                       |   | 775                                                                                                                                                                         |
| Due after five years through ten years | 2,860                                                                                                                                                     |   | 2,846                                                                                                                                                                       |
| Due after ten years                    | 28,958                                                                                                                                                    |   | 23,033                                                                                                                                                                      |
|                                   | 32,628                                                                                                                                                    |   | 26,654                                                                                                                                                                      |
|                                   |                                                                                                                                                      |   |                                                                                                                                                                        |
| Mortgage-backed securities             | 29,465                                                                                                                                                    |   | 29,442                                                                                                                                                                      |
|                                   | $                 62,093                                                  |   | $                  56,096                                                              |

|               |   | 2010   |   |   | 2009   |   |
|--------------------|--------|--------|--------|--------|--------|--------|
|               |   |   |   |   |   |   |
| Realized gains     |   | $      | 259    |   |   | $      | 533 |   |
| Realized losses    |   | $      | 422    | )      |   | $      | (153 | ) |
| Net gains (losses) |   | $      | (163   | )      |   | $      | 380 |   |

----

|                                  |   | 2010   |    |   | 2009   |   |
|---------------------------------------|--------|--------|---------|--------|--------|--------|
| Real Estate Secured:                  |   |   |    |   |   |   |
| Residential 1-4 family                |   | $      | 175,522 |   |   | $      | 183,983 |   |
| Multifamily                           |   |   | 15,593  |   |   |   | 12,895 |   |
| Construction and Land Loans           |   |   | 30,901  |   |   |   | 46,929 |   |
| Commercial, Owner Occupied            |   |   | 78,279  |   |   |   | 85,791 |   |
| Commercial, Non-owner occupied        |   |   | 43,652  |   |   |   | 41,032 |   |
| Second mortgages                      |   |   | 14,132  |   |   |   | 16,980 |   |
| Equity lines of credit                |   |   | 10,016  |   |   |   | 10,164 |   |
| Farmland                              |   |   | 12,790  |   |   |   | 11,176 |   |
|                                  |   |   | 380,885 |   |   |   | 408,950 |   |
|                                  |   |   |    |   |   |   |   |   |
| Secured (other) and unsecured         |   |   |    |   |   |   |   |   |
| Personal                              |   |   | 26,773  |   |   |   | 29,703 |   |
| Commercial                            |   |   | 40,471  |   |   |   | 44,840 |   |
| Agricultural                          |   |   | 2,848   |   |   |   | 3,069 |   |
|                                  |   |   | 70,092  |   |   |   | 77,612 |   |
|                                  |   |   |    |   |   |   |   |   |
| Overdrafts                            |   |   | 214     |   |   |   | 191 |   |
|                                  |   |   |    |   |   |   |   |   |
|                                  |   |   | 451,191 |   |   |   | 486,753 |   |
| Less:                                 |   |   |    |   |   |   |   |   |
|   Allowance for loan losses |   |   | 10,320  |   |   |   | 11,681 |   |
|   Net deferred fees         |   |   | 597     |   |   |   | 634 |   |
|                                  |   |   | 10,017  |   |   |   | 12,315 |   |
|                                  |   |   |    |   |   |   |   |   |
| Loans, net                            |   | $      | 440,274 |   |   | $      | 474,438 |   |

----

|                            |   | 2010   |   |   | 2009   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|
|                            |   |   |   |   |   |   |
| Balance, beginning              |   | $      | 11,681 |   |   | $      | 5,171 |   |
| Provision charged to operations |   |   | 4,799  |   |   |   | 9,614 |   |
| Loans charged to reserve        |   |   | (6,244 | )      |   |   | (3,247 | ) |
| Recoveries                      |   |   | 84     |   |   |   | 143 |   |
|                            |   |   |   |   |   |   |   |   |
| Balance, ending                 |   | $      | 10,320 |   |   | $      | 11,681 |   |

----

|                                                              |   | 30-59 Days Past Due |   |   | 60-89 Days Past Due |   |   | Greater Than 90 Days |   |   | Total Past Due |   |   | Current |   |   | Total Financing Receivables |   |    | Recorded Investment > 90 Days and Accruing |   |
|-------------------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|---------|--------|--------|-----------------------------|--------|---------|-----------------------------------------------|--------|
|                                                              |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |
| Real Estate Secured                                               |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |
| Residential 1-4 family                                            |   | $                   | 3,780  |   |                | $      | 1,245  |                 |   | $      | 4,937          |   |   | $       | 9,962  |   |                        | $      | 165,560 |                                          |   | $ | 175,522 |   |   | $ | 1,726 |   |
| Equity lines of credit                                            |   |                | -      |   |                |   | 99     |                 |   |   | -              |   |   |    | 99     |   |                        |   | 9,917   |                                          |   |   | 10,016 |   |   |   | - |   |
| Multifamily                                                       |   |                | -      |   |                |   | -      |                 |   |   | 40             |   |   |    | 40     |   |                        |   | 15,553  |                                          |   |   | 15,593 |   |   |   | - |   |
| Farmland                                                          |   |                | 348    |   |                |   | -      |                 |   |   | 774            |   |   |    | 1,122  |   |                        |   | 11,668  |                                          |   |   | 12,790 |   |   |   | - |   |
| Constuction, Land Development, Other Land Loans                   |   |                | 825    |   |                |   | 152    |                 |   |   | 3,153          |   |   |    | 4,130  |   |                        |   | 26,771  |                                          |   |   | 30,901 |   |   |   | 53 |   |
| Commercial Real Estate- Owner Occupied                            |   |                | 1,612  |   |                |   | 105    |                 |   |   | 6,301          |   |   |    | 8,018  |   |                        |   | 70,260  |                                          |   |   | 78,278 |   |   |   | 1,776 |   |
| Commercial Real Estate- Non Owner Occupied                        |   |                | -      |   |                |   | 165    |                 |   |   | 1,520          |   |   |    | 1,685  |   |                        |   | 41,967  |                                          |   |   | 43,652 |   |   |   | 602 |   |
| Second Mortgages                                                  |   |                | 234    |   |                |   | -      |                 |   |   | 529            |   |   |    | 763    |   |                        |   | 13,369  |                                          |   |   | 14,132 |   |   |   | - |   |
| Non Real Estate Secured                                           |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |
| Personal                                                          |   |                | 303    |   |                |   | 101    |                 |   |   | 74             |   |   |    | 478    |   |                        |   | 26,510  |                                          |   |   | 26,988 |   |   |   | 14 |   |
| Business                                                          |   |                | 190    |   |                |   | 406    |                 |   |   | 1,456          |   |   |    | 2,052  |   |                        |   | 38,419  |                                          |   |   | 40,471 |   |   |   | 289 |   |
| Agricultural                                                      |   |                | 7      |   |                |   | -      |                 |   |   | 96             |   |   |    | 103    |   |                        |   | 2,745   |                                          |   |   | 2,848 |   |   |   | 68 |   |
|                                                              |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |
|           Total |   | $                   | 7,299  |   |                | $      | 2,273  |                 |   | $      | 18,880         |   |   | $       | 28,452 |   |                        | $      | 422,739 |                                          |   | $ | 451,191 |   |   | $ | 4,528 |   |
|                                                              |   |                |   |   |                |   |   |                 |   |   |           |   |   |    |   |   |                        |   |    |                                          |   |   |   |   |   |   |   |   |

|                           |   | Amount |   |
|--------------------------------|--------|--------|--------|
| Real Estate Secured            |   |   |   |
| Residential 1-4 Family         |   | $      | 3,211  |   |
| Multifamily                    |   |   | 40     |   |
| Construction and Land Loans    |   |   | 3,100  |   |
| Commercial-Owner Occupied      |   |   | 4,525  |   |
| Commercial- Non Owner Occupied |   |   | 918    |   |
| Second Mortgages               |   |   | 529    |   |
| Equity Lines of Credit         |   |   | -      |   |
| Farmland                       |   |   | 774    |   |
| Secured (other) and Unsecured  |   |   |   |   |
| Personal                       |   |   | 60     |   |
| Commercial                     |   |   | 1,167  |   |
| Agricultural                   |   |   | 29     |   |
|                           |   |   |   |   |
| Total                          |   | $      | 14,353 |   |

----

| Grade (1)                           |   | Residential 1-4 Family     |   | Multifamily                           |   | Farmland                              |   | Construction, Land Loans                                |   | Commercial Real Estate- Owner Occupied |   | Commercial Real Estate Non-Owner Occupied   |
|-------------------------------------|--------|----------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|---------------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------------|
|                                |   |                       |   |                                  |   |                                  |   |                                                    |   |                                   |   |                                        |
| Quality                             |   |  40,371               |   |  1,911                           |   |  977                             |   |  4,298                                             |   |  7,102                            |   |  3,604                                 |
| Satisfactory                        |   |  80,759               |   |  9,258                           |   |  4,399                           |   |  7,355                                             |   |  26,055                           |   |  16,729                                |
| Acceptable                          |   |  36,411               |   |  1,806                           |   |  4,285                           |   |  5,585                                             |   |  27,878                           |   |  13,013                                |
| Special Mention                     |   |  4,778                |   |  946                             |   |  178                             |   |  2,346                                             |   |  5,430                            |   |  304                                   |
| Substandard                         |   |  12,832               |   |  1,672                           |   |  2,951                           |   |  11,317                                            |   |  11,390                           |   |  10,002                                |
| Doubtful                            |   |  371                  |   |  -                               |   |  -                               |   |  -                                                 |   |  424                              |   |  -                                     |
|                                |   |                       |   |                                  |   |                                  |   |                                                    |   |                                   |   |                                        |
|      Total |   | $   175,522 |   | $     15,593 |   | $     12,790 |   | $        30,901 |   | $     78,278  |   | $      43,652 |

| ·   | Conformity in all respects with Bank policy, guidelines, underwriting standards, and Federal and State regulations (no exceptions of any kind). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General conformity to the Bank's policy requirements, product guidelines and underwriting standards.  Any exceptions that are identified during the underwriting and approval process have been adequately mitigated by other factors. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Documented historical cash flow that meets or exceeds required minimum Bank guidelines, or that can be supplemented with verifiable cash flow from other sources.   |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Adequate secondary sources to liquidate the debt, including combinations of liquidity, liquidation of collateral, or liquidation value to the net worth of the borrower or guarantor |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Additional exceptions to the Bank's policy requirements, product guidelines or underwriting standards that present a higher degree of risk to the Bank.  Although the combination and/or severity of identified exceptions is greater, all exceptions have been properly mitigated by other factors. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Unproved, insufficient or marginal primary sources of repayment that appear sufficient to service the debt at this time.  Repayment weaknesses may be due to minor operational issues, financial trends, or reliance on projected (not historic) performance. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Marginal or unproven secondary sources to liquidate the debt, including combinations of liquidation of collateral and liquidation value to the net worth of the borrower or guarantor. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loans with underwriting guideline tolerances and/or exceptions with no identifiable mitigating factors. |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | Extending loans that are currently performing satisfactorily but with potential weaknesses that may, if not corrected, weaken the asset or inadequately protect the Bank's position at some future date. Potential weaknesses are the result of deviations from prudent lending practices. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loans where adverse economic conditions that develop subsequent to the loan origination do not jeopardize liquidation of the debt, but do substantially increase the level of risk may also warrant this rating. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | High debt to worth ratios and or declining or negative earnings trends |
|--------------------|------------------------------------------------------------------------|

| ·   | Declining or inadequate liquidity |
|--------------------|-----------------------------------|

| ·   | Improper loan structure  or questionable repayment sources |
|--------------------|----------------------------------------------------------------------|

| ·   | Lack of well-defined secondary repayment source, and |
|--------------------|------------------------------------------------------|

| ·   | Unfavorable competitive comparisons. |
|--------------------|--------------------------------------|

| ·   | Injection of capital |
|--------------------|----------------------|

| ·   | Alternative financing |
|--------------------|-----------------------|

| ·   | Liquidation of assets or the pledging of additional collateral. |
|--------------------|-----------------------------------------------------------------|

----

|                                 |   | Consumer - Non Real Estate |   |   | Equity Line of Credit |   |   | Commercial - Non Real Estate |   |   | Agricultural - Non Real Estate |   |
|--------------------------------------|--------|----------------------------|--------|--------|-----------------------|--------|--------|------------------------------|--------|--------|--------------------------------|--------|
|                                 |   |                       |   |   |                  |   |   |                         |   |   |                           |   |
| Performing                           |   | $                          | 26,699 |   |                  | $      | 10,016 |                         |   | $      | 39,015                         |   |   | $ | 2,751 |   |
| Nonperforming (>90 days past due) |   |                       | 74     |   |                  |   | -      |                         |   |   | 1,456                          |   |   |   | 97 |   |
|                                 |   |                       |   |   |                  |   |   |                         |   |   |                           |   |   |   |   |   |
|      Total  |   | $                          | 26,773 |   |                  | $      | 10,016 |                         |   | $      | 40,471                         |   |   | $ | 2,848 |   |
|                                 |   |                       |   |   |                  |   |   |                         |   |   |                           |   |   |   |   |   |

|                                                              |   | Recorded Investment |   |   | Unpaid Principal Balance |   |   | Related Allowance |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
|-------------------------------------------------------------------|--------|---------------------|--------|--------|--------------------------|--------|--------|-------------------|--------|--------|-----------------------------|--------|--------|----------------------------|--------|
| 2010 With no Related Allowance                                    |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |
| Real Estate Secured                                               |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |
| Residential 1-4 family                                            |   | $                   | 7,451  |   |                     | $      | 7,772  |              |   | $      | -                           |   |   | $                          | 6,857  |   |   | $ | 191 |   |
| Equity lines of credit                                            |   |                | -      |   |                     |   | -      |              |   |   | -                           |   |   |                       | -      |   |   |   | - |   |
| Multifamily                                                       |   |                | 40     |   |                     |   | 40     |              |   |   | -                           |   |   |                       | 1,314  |   |   |   | 1 |   |
| Farmland                                                          |   |                | 774    |   |                     |   | 1,300  |              |   |   | -                           |   |   |                       | 924    |   |   |   | - |   |
| Construction, Land Development, Other Land Loans                  |   |                | 3,853  |   |                     |   | 3,853  |              |   |   | -                           |   |   |                       | 5,768  |   |   |   | 141 |   |
| Commercial Real Estate- Owner Occupied                            |   |                | 5,498  |   |                     |   | 5,498  |              |   |   | -                           |   |   |                       | 3,318  |   |   |   | 260 |   |
| Commercial Real Estate- Non Owner Occupied                        |   |                | 3,506  |   |                     |   | 3,506  |              |   |   | -                           |   |   |                       | 2,215  |   |   |   | 77 |   |
| Second Mortgages                                                  |   |                | 700    |   |                     |   | 700    |              |   |   | -                           |   |   |                       | 516    |   |   |   | 25 |   |
| Non Real Estate Secured                                           |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |   |   |   |   |   |
| Personal /Consumer                                                |   |                | 21     |   |                     |   | 21     |              |   |   | -                           |   |   |                       | 11     |   |   |   | 2 |   |
| Business Commercial                                               |   |                | 1,266  |   |                     |   | 1,266  |              |   |   | -                           |   |   |                       | 1,162  |   |   |   | 55 |   |
| Agricultural                                                      |   |                | -      |   |                     |   | -      |              |   |   | -                           |   |   |                       | -      |   |   |   | - |   |
| Credit Cards                                                      |   |                | -      |   |                     |   | -      |              |   |   | -                           |   |   |                       | -      |   |   |   | - |   |
|                                                              |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |   |   |   |   |   |
|           Total |   | $                   | 23,109 |   |                     | $      | 23,956 |              |   | $      | -                           |   |   | $                          | 22,085 |   |   | $ | 752 |   |

----

|                                                              |   | Recorded Investment |   |   | Unpaid Principal Balance |   |   | Related Allowance |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
|-------------------------------------------------------------------|--------|---------------------|--------|--------|--------------------------|--------|--------|-------------------|--------|--------|-----------------------------|--------|--------|----------------------------|--------|
| 2010 With an Allowance Recorded                                   |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |
| Real Estate Secured                                               |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |
| Residential 1-4 family                                            |   | $                   | 4,515  |   |                     | $      | 4,515  |              |   | $      | 644                         |   |   | $                          | 2,377  |   |   | $ | 262 |   |
| Equity lines of credit                                            |   |                | -      |   |                     |   | -      |              |   |   | -                           |   |   |                       | -      |   |   |   | - |   |
| Multifamily                                                       |   |                | 1,632  |   |                     |   | 1,632  |              |   |   | 92                          |   |   |                       | 770    |   |   |   | 51 |   |
| Farmland                                                          |   |                | 312    |   |                     |   | 312    |              |   |   | 34                          |   |   |                       | 191    |   |   |   | 21 |   |
| Construction, Land Development, Other Land Loans                  |   |                | 7,035  |   |                     |   | 7,515  |              |   |   | 917                         |   |   |                       | 4,264  |   |   |   | 139 |   |
| Commercial Real Estate- Owner Occupied                            |   |                | 4,277  |   |                     |   | 4,277  |              |   |   | 110                         |   |   |                       | 2,981  |   |   |   | 37 |   |
| Commercial Real Estate- Non Owner Occupied                        |   |                | 5,033  |   |                     |   | 5,033  |              |   |   | 1,071                       |   |   |                       | 1,981  |   |   |   | 88 |   |
| Second Mortgages                                                  |   |                | 84     |   |                     |   | 122    |              |   |   | -                           |   |   |                       | 42     |   |   |   | - |   |
| Non Real Estate Secured                                           |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |   |   |   |   |   |
| Personal /Consumer                                                |   |                | 50     |   |                     |   | 50     |              |   |   | -                           |   |   |                       | 54     |   |   |   | 1 |   |
| Business Commercial                                               |   |                | 2,132  |   |                     |   | 2,132  |              |   |   | 1,250                       |   |   |                       | 956    |   |   |   | 58 |   |
| Agricultural                                                      |   |                | 28     |   |                     |   | 28     |              |   |   | 12                          |   |   |                       | 8      |   |   |   | - |   |
| Credit Cards                                                      |   |                | -      |   |                     |   | -      |              |   |   | -                           |   |   |                       | -      |   |   |   | - |   |
|                                                              |   |                |   |   |                     |   |   |              |   |   |                        |   |   |                       |   |   |   |   |   |   |
|           Total |   | $                   | 25,098 |   |                     | $      | 25,616 |              |   | $      | 4,130                       |   |   | $                          | 13,624 |   |   | $ | 657 |   |

| •   | A loan is 60 days or more delinquent on scheduled principal or interest; |
|---------------------|--------------------------------------------------------------------------|

| •   | A loan is presently in an unapproved over advanced position; |
|---------------------|--------------------------------------------------------------|

| •   | A loan is newly modified; or |
|---------------------|------------------------------|

| •   | A loan is expected to be modified. |
|---------------------|------------------------------------|

----

|                           |   | 2010   |   |   | 2009   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
|                           |   |   |   |   |   |   |
| Land                           |   | $      | 10,760 |   |   | $      | 10,723 |   |
| Bank Premises                  |   |   | 14,061 |   |   |   | 14,061 |   |
| Equipment                      |   |   | 12,195 |   |   |   | 12,015 |   |
|                           |   |   | 37,016 |   |   |   | 36,799 |   |
| Less: accumulated depreciation |   |   | 13,507 |   |   |   | 12,237 |   |
|                           |   |   | 23,509 |   |   |   | 24,562 |   |
| Construction in Progress       |   |   | -      |   |   |   | 51 |   |
|                           |   |   |   |   |   |   |   |   |
|                           |   | $      | 23,509 |   |   | $      | 24,613 |   |

----

|                                                                                 |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                 |   |   |   |   |   |   |
| Deferred tax assets:                                                                 |   |   |   |   |   |   |
|     Allowance for loan loss                                      |   | $      | 3,503  |   |   | $      | 3,971 |   |
|     Previous Years AMT                                           |   |   | 802    |   |   |   | 293 |   |
|     Loss on Other Equity Investments                             |   |   | 51     |   |   |   | 51 |   |
|     NOL carry-forwards  (20 year carry-forward period) |   |   | 3,529  |   |   |   |   |   |
|     Other than temporary impairment charge on AFS securities     |   |   | 2,340  |   |   |   | 3,947 |   |
|     Net unrealized loss on securities available-for-sale         |   |   | 2,039  |   |   |   | 1,829 |   |
|                                                                                 |   |   | 12,264 |   |   |   | 10,091 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Deferred tax liability:                                                              |   |   |   |   |   |   |   |   |
|     Depreciation                                                 |   |   | (377   | )      |   |   | (417 | ) |
|                                                                                 |   |   | (377   | )      |   |   | (417 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Net deferred tax asset                                                               |   | $      | 11,887 |   |   | $      | 9,674 |   |

|                          |   | 2010   |   |   | 2009   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|
|                          |   |   |   |   |   |   |
| Federal:                      |   |   |   |   |   |   |
|   Current           |   | $      | (4,294 | )      |   | $      | (1,024 | ) |
|   Deferred          |   |   | 2,029  |   |   |   | (4,210 | ) |
|                          |   |   |   |   |   |   |   |   |
|     Total |   | $      | (2,265 | )      |   | $      | (5,234 | ) |

|                                                   |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                   |   |   |   |   |   |   |
| Statutory rate applied to earnings before income taxes |   | $      | (1498  | )      |   | $      | (3,949 | ) |
| Tax exempt interest                                    |   |   | (586   | )      |   |   | (807 | ) |
| Life Insurance benefits                                |   |   | -      |   |   |   | (223 | ) |
| Other, net                                             |   |   | (181   | )      |   |   | (255 | ) |
|                                                   |   |   |   |   |   |   |   |   |
|     Total                          |   | $      | (2,265 | )      |   | $      | (5,234 | ) |

|                                          |   | 2010   |    |   | 2009   |   |
|-----------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                          |   |   |    |   |   |   |
| Non-interest bearing demand                   |   | $      | 85,923  |   |   | $      | 84,073 |   |
| Interest bearing demand                       |   |   | 94,084  |   |   |   | 75,560 |   |
| Savings deposits                              |   |   | 59,788  |   |   |   | 55,745 |   |
| Time deposits, in amounts of $100,000 or more |   |   | 99,766  |   |   |   | 111,637 |   |
| Other time deposits                           |   |   | 197,211 |   |   |   | 192,889 |   |
|                                          |   |   |    |   |   |   |   |   |
| Total deposits                                |   | $      | 536,772 |   |   | $      | 519,904 |   |

----

| 2011       |   | $      | 146,653 |   |
|------------|--------|--------|---------|--------|
| 2012       |   |   | 88,884  |   |
| 2013       |   |   | 20,749  |   |
| 2014       |   |   | 12,503  |   |
| 2015       |   |   | 18,180  |   |
| Thereafter |   |   | 10,008  |   |
|       |   |   |    |   |
|       |   | $      | 296,977 |   |

|                                                                                                                                                                                                                                                                                                                                                                           |   | 2010                                          |   | 2009                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|-----------------------------------------------------------------------------------|
| Note payable FHLB dated 03/04/05 for $5 million with an annual interest rate of 4.165%, due 03/04/2015. The note requires quarterly interest payments and has an early conversion option at 03/04/2010. The loan is secured by a floating blanket lien on a specific class of mortgage loans of the Bank and a specific group of securities available for sale.                |   | $     5,000          |   | Included in short term borrowings                                                 |
|                                                                                                                                                                                                                                                                                                                                                                           |   |                                          |   |                                                                              |
| Note payable FHLB dated 06/29/05 for $5 million with an annual interest rate of 3.760%, due 06/29/2015. The note requires quarterly interest payments and has an early conversion option at 06/29/2010. The loan is secured by a floating blanket lien on a specific class of mortgage loans of the Bank and a specific group of securities available for sale.                |   | 5,000                                         |   | Included in short term borrowings                                                 |
|                                                                                                                                                                                                                                                                                                                                                                           |   |                                          |   |                                                                              |
| Note payable FHLB dated 08/23/05 for $750,000 with an annual interest rate of 0%, due 08/24/2020. The note requires monthly principal payments and was granted as part of the FHLB’s affordable housing program. The loan is secured by a floating blanket lien on a specific class of mortgage loans of the Bank and a specific group of securities available for sale. |   |        451 |   |              500 |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2010                                  |   | 2009                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |                                              |
| Note payable FHLB dated 03/12/2008 for $8 million with an annual interest rate of 2.61%, due 03/12/2018. The note requires quarterly interest payments and has an early conversion option at 03/14/2011. The loan is secured by a floating blanket lien on a specific class of mortgage loans of the Bank and a specific group of securities available for sale.                                                      |   | Included in short term borrowings     |   | 8,000                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |                                              |
| Other notes payable resulting from seller-financing transactions for $375 with annual interest rates ranging from 3.2% to 8.0%, and due dates ranging from 2010-2013. The notes require monthly installments of principal and interest of $6. The loans are secured by a first deed of trust on real estate.                                                                                                          |   | 46                                    |   | 74                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |                                              |
| Holding Company Note payable to Community Bankers Bank with a rate of 6.75%. The note requires monthly installments of principal and interest in the amount of $51. The loan is secured by the stock of the subsidiary bank and contains certain other covenants that are typical for Bank Holding Company loans. The loan is being amortized over a 10 year term and contains a balloon date at then end of 5 years. |   | 3,471                                 |   | 2,262                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |                                              |
| Holding Company line of credit payable to Community Bankers Bank with a rate of 5%. The note requires monthly interest payments in the amount of $4. The loan is secured by the stock of the subsidiary bank and contains certain other covenants that are typical for Bank Holding Company loans. The loan matures in April 2012.                                                                                    |   | 1,000                                 |   | -                                                 |
|  Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                            |   | $     14,968 |   | $       10,836 |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |                                              |

| 2011       |   | $      | -      |   |
|------------|--------|--------|--------|--------|
| 2012       |   |   | 1,479  |   |
| 2013       |   |   | 496    |   |
| 2014       |   |   | 2,691  |   |
| 2015       |   |   | 10,051 |   |
| Thereafter |   |   | 251    |   |
|       |   |   |   |   |
|       |   | $      | 14,968 |   |

----

|                                            |   | 2010   |   |   | 2009   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                            |   |   |   |   |   |   |
| Income available to common stockholders         |   | $      | (2,040 | )      |   | $      | (6,379 | ) |
| Weighted average shares outstanding             |   |   | 5,011  |   |   |   | 5,006 |   |
| Shares outstanding including assumed conversion |   |   | 5,011  |   |   |   | 5,006 |   |
| Basic earnings (loss) per share                 |   | $      | (0.43  | )      |   | $      | (1.27 | ) |
| Fully diluted earnings (loss) per share         |   | $      | (0.43  | )      |   | $      | (1.27 | ) |

----

|                                               |   | 2010                            |   |   | 2009             |   |
|----------------------------------------------------|--------|---------------------------------|--------|--------|------------------|--------|
|                                               |   |                            |   |   |             |   |   |   |   |   |   |   |
|                                               |   | Weighted Average Exercise Price |   |   | Number of Shares |   |   | Weighted Average Exercise Price |   |   | Number of Shares |   |
|                                               |   |                            |   |   |             |   |   |   |   |   |   |   |
| Options outstanding at January 1                   |   | $                               | 13.51  |   |             |   | 262,779 |   |   | $ | 13.28 |   |   |   | 280,585 |   |
| Granted                                            |   |                            | -      |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                          |   |                            | -      |   |             |   | - |   |   |   | 10.13 |   |   |   | (10,016 | ) |
| Expired                                            |   |                            | 11.75  |   |             |   | (27,850 | ) |   |   | 9.50 |   |   |   | (7,790 | ) |
|                                               |   |                            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Options outstanding and exercisable at December 31 |   | $                               | 13.72  |   |             |   | 234,929 |   |   | $ | 13.51 |   |   |   | 262,779 |   |
|                                               |   |                            |   |   |             |   |   |   |   |   |   |   |   |   |   |   |

|                       |                     |   | Options Outstanding and Exercisable                              |          |
|----------------------------|--------------------------|--------|------------------------------------------------------------------|---------------|
| Range of Exercise Prices   |                     |   | Number Outstanding                                               |          | Weighted Average Remaining Contractual Life |   | Weighted Average Exercise Price |   |
|                       |                     |   |                                                             |          |   |   |   |   |
| $                          | 11.75 - $12.50 |   |                                                             |  40,150  |   | 0.53 years |   | $ | 12.50 |   |
| $                          | 13.00 - $15.00 |   |                                                             |  194,779 |   |          3.12 years |   | $ | 13.97 |   |
|                       |                     |   |                                                             |          |   |   |   |   |   |   |
| Outstanding at end of year |  234,929            |   |          2.67 years |          | $ | 13.72 |   |

----

----

| ·   | Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets. |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 - Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                             |  2010 |
|----------------------------------|------------|
|                             |       | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair Value |   |
| Available for Sale Securities    |       |   |   |   |   |   |   |   |   |   |   |   |
| State and Political Subdivisions |       | $ | - |   |   | $ | 18,291 |   |   | $ | - |   |   | $ | 18,291 |   |
| Mortgage Backed Securities       |       | $ | - |   |   | $ | 29,442 |   |   | $ | - |   |   | $ | 29,442 |   |
| TRUP CDO’s                 |       | $ | - |   |   | $ | - |   |   | $ | 173 |   |   | $ | 173 |   |
| Single Issue Trust Preferred     |       | $ | - |   |   | $ | 1,804 |   |   | $ | - |   |   | $ | 1,804 |   |
| SBA Pools                        |       | $ | - |   |   | $ | 5,934 |   |   | $ | - |   |   | $ | 5,934 |   |
| SLMA                             |       | $ | - |   |   | $ | 452 |   |   | $ | - |   |   | $ | 452 |   |
| Total AFS Securities             |       | $ | - |   |   | $ | 55,923 |   |   | $ | 173 |   |   | $ | 56,096 |   |

|                             |  2009 |
|----------------------------------|------------|
|                             |       | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair Value |   |
| Available for Sale Securities    |       |   |   |   |   |   |   |   |   |   |   |   |
| US Government agencies           |       | $ | - |   |   | $ | 1,507 |   |   | $ | - |   |   | $ | 1,507 |   |
| State and Political Subdivisions |       | $ | - |   |   | $ | 47,348 |   |   | $ | - |   |   | $ | 47,348 |   |
| Mortgage Backed Securities       |       | $ | - |   |   | $ | 18,737 |   |   | $ | - |   |   | $ | 18,737 |   |
| TRUP CDO’s                 |       | $ | - |   |   | $ | - |   |   | $ | 1,197 |   |   | $ | 1,197 |   |
| Single Issue Trust Preferred     |       | $ | - |   |   | $ | 1,588 |   |   | $ | - |   |   | $ | 1,588 |   |
| SBA Pools                        |       | $ | - |   |   | $ | 44 |   |   | $ | - |   |   | $ | 44 |   |
| SLMA                             |       | $ | - |   |   | $ | 386 |   |   | $ | - |   |   | $ | 386 |   |
| Agency Preferred                 |       | $ | - |   |   | $ | 141 |   |   | $ | - |   |   | $ | 141 |   |
| Total AFS Securities             |       | $ | - |   |   | $ | 69,751 |   |   | $ | 1,197 |   |   | $ | 70,948 |   |

| Investment Securities Available for Sale    |   |
|---------------------------------------------|--------|
| Beginning balance, January 1, 2010          |   | $ | 1,197 |   |
| Total gains (losses) included in net income |   |   | (1,263 | ) |
| Included in Other comprehensive Income      |   |   | 239 |   |
| Transfers in or out of Level 3              |   |   | - |   |
| Ending Balance December 31, 2010            |   | $ | 173 |   |

----

|               | Level 1                                                              | Level 2                                     | Level 3                                                              | Total Fair Value          |
|--------------------|----------------------------------------------------------------------|---------------------------------------------|----------------------------------------------------------------------|---------------------------|
| Impaired Loans     | $           - | $     25,098       | $           - | $   25,098 |
| Repossessions/OREO | $           - |  $     15,347 | $           - | $   15,347 |

----

|                          |   | December 31, 2010 |     |   | December 31, 2009 |   |
|-------------------------------|--------|------------------------|----------|--------|-------------------|--------|
|                          |   | Carrying Amount        |     |   | Fair Value        |   |   | Carrying Amount |   |   | Fair Value |   |
|                          |
|                          |   |                   |     |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents     |   | $                      | 82,152   |   |              | $      | 82,152 |   |   | $ | 29,337 |   |   | $ | 29,337 |   |
| Securities available for sale |   |                   | 56,096   |   |              |   | 56,096 |   |   |   | 70,948 |   |   |   | 70,948 |   |
| Other investments             |   |                   | 6,026    |   |              |   | 6,026 |   |   |   | 8,417 |   |   |   | 8,417 |   |
| Loans, net                    |   |                   | 440,274  |   |              |   | 438,952 |   |   |   | 474,438 |   |   |   | 467,790 |   |
| Deposits                      |   |                   | (536,772 | )      |              |   | (519,111 | ) |   |   | (519,904 | ) |   |   | (522,563 | ) |
| Other short-term borrowings   |   |                   | (65,952  | )      |              |   | (72,687 | ) |   |   | (74,039 | ) |   |   | (80,047 | ) |
| Long-term debt                |   |                   | (14,968  | )      |              |   | (15,779 | ) |   |   | (10,836 | ) |   |   | (10,875 | ) |
| Capital Securities            |   |                   | (3,150   | )      |              |   | (2,502 | ) |   |   | (3,150 | ) |   |   | (2,588 | ) |

|                   |   | 2010   |   |   | 2009   |   |
|------------------------|--------|--------|--------|--------|--------|--------|
|                   |   |   |   |   |   |   |
| Balance, beginning     |   | $      | 16,443 |   |   | $      | 16,255 |   |
|   Additions  |   |   | 3,238  |   |   |   | 7,883 |   |
|   Reductions |   |   | (4,559 | )      |   |   | (7,695 | ) |
|                   |   |   |   |   |   |   |   |   |
| Balance, ending        |   | $      | 15,122 |   |   | $      | 16,443 |   |
|                   |   |   |   |   |   |   |   |   |
| Unused commitments     |   | $      | 874    |   |   | $      | 894 |   |

----

----

|                                               | Actual                    |   | For Capital Adequacy Purposes |
|----------------------------------------------------|---------------------------|--------|-------------------------------|
|                                               |                      |
|                                               | Amount                    |   | Ratio                         |   | Amount |   | Ratio |
| As of December 31, 2010:                           |                      |   |                          |   |   |   |   |
| Total Risk-Based Capital (to Risk-Weighted Assets) | $   42,957 |   | 9.56%                         |   | $ 35,933 |   | =,> 8% |
| Tier 1 Capital (to Risk-Weighted Assets)           | 37,284                    |   | 8.30%                         |   | 17,967 |   | =,> 4% |
| Tier 1 Capital (to Adjusted Total Assets)          | 37,284                    |   | 5.71%                         |   | 26,099 |   | =,> 4% |
|                                               |                      |   |                          |   |   |   |   |
| As of December 31, 2009:                           |                      |   |                          |   |   |   |   |
| Total Risk-Based Capital (to Risk-Weighted Assets) | $   44,915 |   | 9.19%                         |   | $ 39,096 |   | =,> 8% |
| Tier 1 Capital (to Risk-Weighted Assets)           | 38,743                    |   | 7.93%                         |   | 19,548 |   | =,> 4% |
| Tier 1 Capital (to Adjusted Total Assets)          | 38,743                    |   | 5.90%                         |   | 26,278 |   | =,> 4% |
|                                               |                      |   |                          |   |   |   |   |

|                                                          | Actual                    | For Capital Adequacy Purposes | To be Well Capitalized under the Prompt Corrective Action Provisions |
|---------------------------------------------------------------|---------------------------|-------------------------------|----------------------------------------------------------------------|
|                                                          | Amount                    | Ratio                         | Amount                                                               | Ratio | Amount | Ratio |
|                                                          |                      |                          |                                                                 |   |   |   |
| As of December 31, 2010:                                      |                      |                          |                                                                 |   |   |   |
| Total Risk-Based Capital (to Risk-Weighted  Assets) | $   45,388 | 10.13%                        | $  35,849                                                  | =,> 8% | $ 44,811 | =,> 10% |
| Tier 1 Capital (to Risk-Weighted Assets)                      | 39,728                    | 8,87%                         | 17,924                                                               | =,> 4% | 26,887 | =,> 6% |
| Tier 1 Capital (to Adjusted Total Assets)                     | 39,728                    | 6.10%                         | 26,048                                                               | =,> 4% | 32,561 | =,> 5% |
|                                                          |                      |                          |                                                                 |   |   |   |
| As of December 31, 2009:                                      |                      |                          |                                                                 |   |   |   |
| Total Risk-Based Capital (to Risk-Weighted  Assets) | $   49,677 | 10.17%                        | $  39,062                                                  | =,> 8% | $ 48,828 | =,> 10% |
| Tier 1 Capital (to Risk-Weighted Assets)                      | 43,505                    | 8.91%                         | 19,531                                                               | =,> 4% | 29,297 | =,> 6% |
| Tier 1 Capital (to Adjusted Total Assets)                     | 43,505                    | 6.63%                         | 26,242                                                               | =,> 4% | 32,803 | =,> 5% |
|                                                          |                      |                          |                                                                 |   |   |   |

----

|                             |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
|                             |   |   |   |   |   |   |
| BOLI income                      |   | $      | 452    |   |   | $      | 458 |   |
| Life Insurance Proceeds          |   | $      | -      |   |   | $      | 656 |   |
|                             |   |   |   |   |   |   |   |   |
| Other Contracted Services        |   | $      | 597    |   |   | $      | 578 |   |
| Bank Franchise Taxes             |   | $      | 115    |   |   | $      | 470 |   |
| FDIC Insurance Costs             |   | $      | 1,311  |   |   | $      | 1,183 |   |
| Software Licensing / Maintenance |   | $      | 731    |   |   | $      | 731 |   |
|                             |   |   |   |   |   |   |   |   |
|                             |   |   |   |   |   |   |   |   |

| CONDENSED BALANCE SHEETS                                                       |   |   |   |   |   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                           |   | 2010   |   |   | 2009   |   |
| ASSETS                                                                         |   |   |   |   |   |   |
|   Cash                                                               |   | $      | 2,240  |   |   | $      | 1,051 |   |
|   Capital securities repurchased                                     |   |   | 600    |   |   |   | 600 |   |
|   Other investments                                                  |   |   | 102    |   |   |   | 102 |   |
|   Equity in subsidiary                                               |   |   | 38,473 |   |   |   | 40,189 |   |
|   Other assets                                                       |   |   | 393    |   |   |   | 145 |   |
|                                                                           |   |   |   |   |   |   |   |   |
|      Total Assets                                     |   | $      | 41,808 |   |   | $      | 42,087 |   |
|                                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                     |   |   |   |   |   |   |   |   |
|   Interest, taxes and other liabilities                              |   | $      | 334    |   |   | $      | 195 |   |
|   Other short term borrowings                                        |   |   | 373    |   |   |   | 453 |   |
|   Long Term Debt                                                     |   |   | 4,471  |   |   |   | 2,261 |   |
|   Capital securities                                                 |   |   | 3,750  |   |   |   | 3,750 |   |
|      Total Liabilities                                |   |   | 8,928  |   |   |   | 6,659 |   |
|                                                                           |   |   |   |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                     |   |   | 32,880 |   |   |   | 35,428 |   |
|                                                                           |   |   |   |   |   |   |   |   |
|      Total Liabilities and Stockholders’ Equity |   | $      | 41,808 |   |   | $      | 42,087 |   |

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| CONDENSED STATEMENTS OF INCOME                        |   |   |   |   |   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                  |   | 2010   |   |   | 2009   |   |
|                                                  |   |   |   |   |   |   |
| Dividends from subsidiary                             |   | $      | -      |   |   | $      | 1,000 |   |
| Interest income                                       |   |   | 55     |   |   |   | 55 |   |
| Other income                                          |   |   | -      |   |   |   | 59 |   |
| Interest expense                                      |   |   | (649   | )      |   |   | (491 | ) |
| Operating expense                                     |   |   | (39    | )      |   |   | (267 | ) |
|                                                  |   |   | (633   | )      |   |   | 356 |   |
|                                                  |   |   |   |   |   |   |   |   |
|                                                  |   |   |   |   |   |   |   |   |
| Income tax benefit                                    |   |   | 216    |   |   |   | 219 |   |
| Equity in undistributed earnings (loss) of subsidiary |   |   | (1,723 | )      |   |   | (6,954 | ) |
|                                                  |   |   |   |   |   |   |   |   |
| Net income (Loss)                                     |   | $      | (2,140 | )      |   | $      | (6,379 | ) |

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| CONDENSED STATEMENTS OF CASH FLOWS                                                           |   |   |   |   |   |   |
|----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                         |   | 2010   |   |   | 2009   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |   |   |   |   |   |   |
| Net income (Loss)                                                                            |   | $      | (2,140 | )      |   | $      | (6,379 | ) |
| Adjustments to reconcile net income to net cash  Provided by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                |   |   | 5      |   |   |   | 17 |   |
| Equity in undistributed earnings of subsidiary                                               |   |   | 1,723  |   |   |   | 6,954 |   |
| Increase in other assets                                                                     |   |   | (668   | )      |   |   | (103 | ) |
| Increase (decrease)  in other liabilities                                          |   |   | 138    |   |   |   | 114 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                                    |   |   | (942   | )      |   |   | 603 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |   |   |   |   |   |   |   |   |
| (Purchase) sale of other investments                                                         |   |   | -      |   |   |   | - |   |
| Net (increase) decrease in loans                                                             |   |   | -      |   |   |   | - |   |
| Premises and equipment expenditures                                                          |   |   | -      |   |   |   | - |   |
| Capital contributed to subsidiary bank                                                       |   |   | -      |   |   |   | (1,000 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) investing  activities                               |   |   | -      |   |   |   | (1,000 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                        |   |   |   |   |   |   |   |   |
| Net increase (decrease) in Short Term Borrowings                                             |   |   | (79    | )      |   |   | (547 | ) |
| Increase in Long Term Debt                                                                   |   |   | 2,210  |   |   |   | 2,261 |   |
| Cash dividends paid                                                                          |   |   | -      |   |   |   | (551 | ) |
| Repurchase of capital securities                                                             |   |   | -      |   |   |   | - |   |
| Proceeds from exercise of common stock options                                               |   |   | -      |   |   |   | 101 |   |
| Repurchase of Common Stock                                                                   |   |   | -      |   |   |   | - |   |
|                                                                                         |   |   |   |   |   |   |   |   |
|      Net cash (used in) provided by financing activities            |   |   | 2,131  |   |   |   | 1,264 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                         |   |   | 1,189  |   |   |   | 867 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT  BEGINNING OF YEAR                                    |   |   | 1,051  |   |   |   | 184 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF  YEAR                                          |   | $      | 2,240  |   |   | $      | 1,051 |   |
|  SUPPLEMENTAL SCHEDULE OF NONCASH INVESTIN ACTIVITIES                                   |   |   |   |   |   |   |   |   |
| Capital contributed to subsidiary bank—land and buildings                              |   | $      | -      |   |   | $      | 1,527 |   |

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