----

----

|   |   |                                                                                    |
|--------|--------|-----------------------------------------------------------------------------------------|
| þ |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|   |   |                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------|
| o      |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|                                      |   |                                 |
|-------------------------------------------|--------|--------------------------------------|
| Georgia                                   |   | 58-1485511                           |
| (State of Incorporation)                  |   | (I.R.S. Employer Identification No.) |
|                                      |   |                                 |
| 4806 N. Henry Blvd., Stockbridge, Georgia |   | 30281                                |
| Address of Principal Executive Offices    |   | (Zip Code)                           |

|                                 |   |                           |   |                               |   |                                        |
|--------------------------------------|--------|--------------------------------|--------|------------------------------------|--------|---------------------------------------------|
| Large accelerated filer  o |   | Accelerated filer  o |   | Non-accelerated filer  o |   | Smaller Reporting Company  þ |

----

----

|                         |                                                                                                      | Page   |
|------------------------------|-----------------------------------------------------------------------------------------------------------|--------|
| PART I.                      | FINANCIAL INFORMATION                                                                                     |   |
|                         |                                                                                                      |   |
| Item 1.                      | Financial Statements                                                                                      |   |
|                         |                                                                                                      |   |
|                         | Consolidated Balance Sheets – March 31, 2011 and December 31, 2010                             | 3      |
|                         |                                                                                                      |   |
|                         | Consolidated Statements of Operations – Three Months Ended March 31, 2011 and 2010                  | 4      |
|                         |                                                                                                      |   |
|                         | Consolidated Statements of Comprehensive Income (Loss) – Three Months Ended March 31, 2011 and 2010 | 5      |
|                         |                                                                                                      |   |
|                         | Consolidated Statement of Stockholders’ Equity – Three Months Ended March 31, 2011  | 6      |
|                         |                                                                                                      |   |
|                         | Consolidated Statements of Cash Flows – Three Months Ended March 31, 2011 and 2010                  | 7-8    |
|                         |                                                                                                      |   |
|                         | Notes to Consolidated Financial Statements                                                                | 9-33   |
|                         |                                                                                                      |   |
| Item 2.                      | Management's Discussion and Analysis ofFinancial Condition and Results of Operations                      | 34-53  |
|                         |                                                                                                      |   |
| Item 3.                      | Quantitative and Qualitative Disclosures About Market Risk                                                | 53     |
|                         |                                                                                                      |   |
| Item 4.                      | Controls and Procedures                                                                                   | 54     |
|                         |                                                                                                      |   |
| PART II.                     | OTHER INFORMATION                                                                                         |   |
|                         |                                                                                                      |   |
| Item 5.                      | Other Information                                                                                         | 55     |
|                         |                                                                                                      |   |
| Item 6.                      | Exhibits and Reports on Form 8-K                                                                          | 56     |
|                         |                                                                                                      |   |
| Signatures    |                                                                                                      | 57     |

----

Index

| ITEM 1. | Financial Statements |
|---------|----------------------|

|                                                                                                                                                                                  |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (in thousands, except share and per share amounts)                                                                                                                                    |   | 2011      |    |   | 2010         |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |
| Assets                                                                                                                                                                                |   |      |    |   |         |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |
| Cash and due from banks                                                                                                                                                               |   | $         | 16,769  |   |         | $      | 8,812 |   |
| Interest-bearing excess Federal Reserve balances                                                                                                                                      |   |      | 24,300  |   |         |   | 22,100 |   |
| Interest-bearing deposits in banks                                                                                                                                                    |   |      | 3,406   |   |         |   | 1,510 |   |
| Securities available for sale, at fair value                                                                                                                                          |   |      | 75,349  |   |         |   | 67,215 |   |
| Securities held to maturity (fair value approximates $378 and $378)                                                                                                                   |   |      | 375     |   |         |   | 375 |   |
| Restricted equity securities, at cost                                                                                                                                                 |   |      | 1,194   |   |         |   | 1,194 |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Loans                                                                                                                                                                                 |   |      | 369,955 |   |         |   | 380,242 |   |
| Less allowance for loan losses                                                                                                                                                        |   |      | 8,234   |   |         |   | 10,824 |   |
|           Loans, net                                                                                                                |   |      | 361,721 |   |         |   | 369,418 |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Premises and equipment                                                                                                                                                                |   |      | 9,017   |   |         |   | 9,034 |   |
| Foreclosed properties                                                                                                                                                                 |   |      | 78,110  |   |         |   | 79,451 |   |
| Income taxes receivable                                                                                                                                                               |   |      | 266     |   |         |   | 266 |   |
| Other assets                                                                                                                                                                          |   |      | 4,363   |   |         |   | 4,504 |   |
|           Total assets                                                                                                              |   | $         | 574,870 |   |         | $      | 563,879 |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Liabilities and Stockholders' Equity                                                                                                                                                  |   |      |    |   |         |   |   |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Deposits                                                                                                                                                                              |   |      |    |   |         |   |   |   |
|     Noninterest-bearing                                                                                                                                           |   | $         | 68,694  |   |         | $      | 60,047 |   |
|     Interest-bearing                                                                                                                                              |   |      | 487,997 |   |         |   | 484,616 |   |
|           Total deposits                                                                                                            |   |      | 556,691 |   |         |   | 544,663 |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Other borrowings                                                                                                                                                                      |   |      | 152     |   |         |   | 755 |   |
| Other liabilities                                                                                                                                                                     |   |      | 3,266   |   |         |   | 3,180 |   |
|           Total liabilities                                                                                                         |   |      | 560,109 |   |         |   | 548,598 |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Commitments and contingencies (Note 7)                                                                                                                                                |   |      |    |   |         |   |   |   |
|                                                                                                                                                                                  |   |      |    |   |         |   |   |   |
| Stockholders' equity                                                                                                                                                                  |   |      |    |   |         |   |   |   |
|     Preferred stock, no par value; 10,000,000 shares authorized; none issuedCommon stock, par value $.10; 50,000,000 shares authorized;14,388,749.6 shares issued |   |      | 1,439   |   |         |   | 1,439 |   |
|     Capital surplus                                                                                                                                               |   |      | 35,273  |   |         |   | 35,273 |   |
|     Accumulated deficit                                                                                                                                           |   |      | (20,070 | )      |         |   | (19,200 | ) |
|     Accumulated other comprehensive income                                                                                                                        |   |      | 438     |   |         |   | 88 |   |
|     Less cost of treasury stock, 143,060 shares                                                                                                                   |   |      | (2,319  | )      |         |   | (2,319 | ) |
|           Total stockholders' equity                                                                                                |   |      | 14,761  |   |         |   | 15,281 |   |
|           Total liabilities and stockholders' equity                                                                                |   | $         | 574,870 |   |         | $      | 563,879 |   |

----

Index

| (in thousands, except share and per share amounts)                                                                                                    |   | 2011   |       |   | 2010   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                                                                                                  |   |   |       |   |   |   |
| Interest income                                                                                                                                       |   |   |       |   |   |   |
|     Loans                                                                                                                         |   | $      | 3,878      |   |   | $      | 5,122 |   |
|     Taxable securities                                                                                                            |   |   | 520        |   |   |   | 490 |   |
|     Nontaxable securities                                                                                                         |   |   | 30         |   |   |   | 48 |   |
|     Deposits in banks                                                                                                             |   |   | 2          |   |   |   | 4 |   |
|     Federal Reserve balances                                                                                                      |   |   | 15         |   |   |   | 18 |   |
|               Total interest income                                             |   |   | 4,445      |   |   |   | 5,682 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Interest expense                                                                                                                                      |   |   |       |   |   |   |   |   |
|     Deposits                                                                                                                      |   |   | 2,153      |   |   |   | 2,849 |   |
|     Other borrowings                                                                                                              |   |   | -          |   |   |   | 11 |   |
|               Total interest expense                                            |   |   | 2,153      |   |   |   | 2,860 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
|               Net interest income                                               |   |   | 2,292      |   |   |   | 2,822 |   |
| Provision for (recovery of) loan losses                                                                                                               |   |   | 7          |   |   |   | (2,876 | ) |
|               Net interest income after provision for (recovery of) loan losses |   |   | 2,285      |   |   |   | 5,698 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Other operating income                                                                                                                                |   |   |       |   |   |   |   |   |
|     Service charges on deposit accounts                                                                                           |   |   | 422        |   |   |   | 443 |   |
|     Other service charges and fees                                                                                                |   |   | 208        |   |   |   | 200 |   |
|     Securities gains, net                                                                                                         |   |   | -          |   |   |   | 813 |   |
|     Mortgage banking income                                                                                                       |   |   | -          |   |   |   | 13 |   |
|               Total other operating income                                      |   |   | 630        |   |   |   | 1,469 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Other expenses                                                                                                                                        |   |   |       |   |   |   |   |   |
|     Salaries and employee benefits                                                                                                |   |   | 1,326      |   |   |   | 1,339 |   |
|     Occupancy and equipment expenses                                                                                              |   |   | 374        |   |   |   | 377 |   |
|     Nonperforming assets, net                                                                                                     |   |   | 1,031      |   |   |   | 428 |   |
|     FDIC and regulatory                                                                                                           |   |   | 645        |   |   |   | 387 |   |
|     Other operating expenses                                                                                                      |   |   | 409        |   |   |   | 467 |   |
|               Total other expenses                                              |   |   | 3,785      |   |   |   | 2,998 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
|               Earnings (loss) before income taxes                               |   |   | (870       | )      |   |   | 4,169 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Income tax expense (benefit)                                                                                                                          |   |   | -          |   |   |   | - |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
|               Net earnings (loss)                                               |   | $      | (870       | )      |   | $      | 4,169 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Earnings (loss) per share                                                                                                                             |   | $      | (0.06      | )      |   | $      | 0.29 |   |
|                                                                                                                                                  |   |   |       |   |   |   |   |   |
| Weighted average shares outstanding                                                                                                                   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |

----

Index

| (in thousands)                                                                                          |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                                    |   |   |   |   |   |   |
| Net earnings (loss)                                                                                     |   | $      | (870   | )      |   | $      | 4,169 |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss):                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Unrealized holding gains (losses) on investment securities available for sale arising during period     |   |   | 350    |   |   |   | (64 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Reclassification adjustment for gains on sale of securities available for sale realized in net earnings |   |   | -      |   |   |   | (813 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Total other comprehensive income (loss)                                                                 |   |   | 350    |   |   |   | (877 | ) |
|                                                                                                    |   |   |   |   |   |   |   |   |
| Total comprehensive income (loss)                                                                       |   | $      | (520   | )      |   | $      | 3,292 |   |

----

Index

|                                               |   |   |   |   |    |   |   |        |   |   |  Accumulated |   |   |     |   |   |          |   |
|----------------------------------------------------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|-------------------|--------|--------|----------|--------|--------|---------------|--------|
|                                               |   |   |   |   |    |   |   |        |   |   |  Other       |   |   |     |   |   |  Total   |   |
|                                               |   | Common |   |   | Capital |   |   | Accumulated |   |   | Comprehensive     |   |   | Treasury |   |   | Stockholders' |   |
| (in thousands)                                     |   | Stock  |   |   | Surplus |   |   | Deficit     |   |   | Income            |   |   | Stock    |   |   | Equity        |   |
|                                               |   |   |   |   |    |   |   |        |   |   |              |   |   |     |   |   |          |   |
| Balance, December 31, 2010                         |   | $      | 1,439  |   |    | $      | 35,273 |        |   | $      | (19,200           | )      |   | $        | 88     |   |          | $      | (2,319 | ) |   | $ | 15,281 |   |
|     Net loss                   |   |   | -      |   |    |   | -      |        |   |   | (870              | )      |   |     | -      |   |          |   | - |   |   |   | (870 | ) |
|     Other comprehensive income |   |   | -      |   |    |   | -      |        |   |   | -                 |   |   |     | 350    |   |          |   | - |   |   |   | 350 |   |
| Balance, March 31, 2011                            |   | $      | 1,439  |   |    | $      | 35,273 |        |   | $      | (20,070           | )      |   | $        | 438    |   |          | $      | (2,319 | ) |   | $ | 14,761 |   |

----

Index

| (in thousands)                                                                                                                          |   | 2011   |    |   | 2010   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                                                                    |   |   |    |   |   |   |
| Operating Activities                                                                                                                    |   |   |    |   |   |   |
|     Net earnings (loss)                                                                                             |   | $      | (870    | )      |   | $      | 4,169 |   |
|     Adjustments to reconcile net earnings (loss) to net cash                                                        |   |   |    |   |   |   |   |   |
|         provided by (used in) operating activities:                                             |   |   |    |   |   |   |   |   |
|         Depreciation                                                                            |   |   | 115     |   |   |   | 121 |   |
|         Decrease in loans held for sale                                                         |   |   | -       |   |   |   | 499 |   |
|         Provision for (recovery of) loan losses                                                 |   |   | 7       |   |   |   | (2,876 | ) |
|         Impairment losses on foreclosed properties                                              |   |   | 345     |   |   |   | 153 |   |
|         Gains on sale of securities available for sale                                          |   |   | -       |   |   |   | (813 | ) |
|         Net losses on sale of foreclosed properties                                             |   |   | 9       |   |   |   | 111 |   |
|         (Increase) decrease in interest receivable                                              |   |   | (40     | )      |   |   | 214 |   |
|         Decrease in interest payable                                                            |   |   | (271    | )      |   |   | (623 | ) |
|         Net other operating activities                                                          |   |   | 538     |   |   |   | (241 | ) |
|               Net cash provided by (used in) operating activities |   |   | (167    | )      |   |   | 714 |   |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Investing Activities                                                                                                                    |   |   |    |   |   |   |   |   |
|     Purchases of securities available for sale                                                                      |   |   | (15,959 | )      |   |   | (15,708 | ) |
|     Proceeds from maturities of securities available for sale                                                       |   |   | 8,175   |   |   |   | 14,624 |   |
|     Proceeds from sale of securities available for sale                                                             |   |   | -       |   |   |   | 20,327 |   |
|     Net increase in excess Federal Reserve balances                                                                 |   |   | (2,200  | )      |   |   | (4,700 | ) |
|     Net increase in interest-bearing deposits in banks                                                              |   |   | (1,896  | )      |   |   | (3,315 | ) |
|     Net decrease in loans                                                                                           |   |   | 8,629   |   |   |   | 3,402 |   |
|     Additions to foreclosed properties                                                                              |   |   | (41     | )      |   |   | (27 | ) |
|     Proceeds from sale of foreclosed properties                                                                     |   |   | 89      |   |   |   | 1,418 |   |
|     Purchase of premises and equipment                                                                              |   |   | (98     | )      |   |   | - |   |
|               Net cash provided by (used in) investing activities |   |   | (3,301  | )      |   |   | 16,021 |   |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Financing Activities                                                                                                                    |   |   |    |   |   |   |   |   |
|     Net increase (decrease) in deposits                                                                             |   |   | 12,028  |   |   |   | (16,644 | ) |
|     Net repayments of other borrowings                                                                              |   |   | (603    | )      |   |   | (159 | ) |
|               Net cash provided by (used in) financing activities |   |   | 11,425  |   |   |   | (16,803 | ) |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Net increase (decrease) in cash and due from banks                                                                                      |   |   | 7,957   |   |   |   | (68 | ) |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Cash and due from banks, beginning of period                                                                                            |   |   | 8,812   |   |   |   | 11,887 |   |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Cash and due from banks, end of period                                                                                                  |   | $      | 16,769  |   |   | $      | 11,819 |   |

----

Index

| (in thousands)                                                                                    |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                                                              |   |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information                                                 |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |
|     Cash paid for:                                                            |   |   |   |   |   |   |
|         Interest                                          |   | $      | 2,424  |   |   | $      | 3,483 |   |
|                                                                                              |   |   |   |   |   |   |   |   |
|     Noncash transactions                                                      |   |   |   |   |   |   |   |   |
|         Other real estate acquired in settlement of loans |   | $      | -      |   |   | $      | 13,047 |   |
|         Financed sales of foreclosed properties           |   | $      | 939    |   |   | $      | - |   |

----

Index

   

| 1) | BASIS OF PRESENTATION |
|----|-----------------------|

| 2) | RECENT OPERATING LOSSES AND IMPACT ON CAPITAL |
|----|-----------------------------------------------|

----

Index

| 2) | RECENT OPERATING LOSSES AND IMPACT ON CAPITAL, continued |
|----|----------------------------------------------------------|

| 3) | ACCOUNTING STANDARDS UPDATES |
|----|------------------------------|

----

Index

| 4) | SECURITIES |
|----|------------|

|   | Securities Available for Sale                                          |   |      |   |   | Gross      |   |   | Gross      |   |   | Estimated |      |
|--------|------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|-----------|-----------|
|   |                                                                   |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair      |      |
|   | (in thousands)                                                         |   | Cost      |   |   | Gains      |   |   | Losses     |   |   | Value     |      |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |
|   | March 31, 2011:                                                        |   |      |   |   |       |   |   |       |   |   |      |      |
|   |       U.S. Government sponsored agencies |   | $         | 9,752  |   |       | $      | 45     |       |   | $      | (24       | )         |   | $ | 9,773 |   |
|   |       State and municipal securities     |   |      | 27,298 |   |       |   | 292    |       |   |   | (225      | )         |   |   | 27,365 |   |
|   |       Mortgage-backed securities         |   |      | 36,748 |   |       |   | 447    |       |   |   | (97       | )         |   |   | 37,098 |   |
|   |       Other                              |   |      | 1,113  |   |       |   | -      |       |   |   | -         |      |   |   | 1,113 |   |
|   |                                                                   |   | $         | 74,911 |   |       | $      | 784    |       |   | $      | (346      | )         |   | $ | 75,349 |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   | December 31, 2010:                                                     |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   |       U.S. Government sponsored agencies |   | $         | 8,280  |   |       | $      | 28     |       |   | $      | (51       | )         |   | $ | 8,257 |   |
|   |       State and municipal securities     |   |      | 23,372 |   |       |   | 158    |       |   |   | (324      | )         |   |   | 23,206 |   |
|   |       Mortgage-backed securities         |   |      | 35,475 |   |       |   | 392    |       |   |   | (115      | )         |   |   | 35,752 |   |
|   |                                                                   |   | $         | 67,127 |   |       | $      | 578    |       |   | $      | (490      | )         |   | $ | 67,215 |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   | Securities Held to Maturity                                            |   |      |   |   |       | Gross  |   |       | Gross  |   |      | Estimated |   |
|   |                                                                   |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair      |      |
|   | (in thousands)                                                         |   | Cost      |   |   | Gains      |   |   | Losses     |   |   | Value     |      |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   | March 31, 2011:                                                        |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   |       State and municipal securities     |   | $         | 375    |   |       | $      | 3      |       |   | $      | -         |      |   | $ | 378 |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   | December 31, 2010:                                                     |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   |       State and municipal securities     |   | $         | 375    |   |       | $      | 3      |       |   | $      | -         |      |   | $ | 378 |   |
|   |                                                                   |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |
|   | Restricted equity securities are summarized as follows:                |   |      |   |   |       |   |   |       |   |   |      |      |   |   |   |   |

|   |                         | March 31, |   |   | December 31, |   |
|--------|------------------------------|-----------|--------|--------|--------------|--------|
|   | (in thousands)               |      | 2011   |   |         | 2010   |   |
|   |                         |      |   |   |         |   |
|   | Federal Home Loan Bank stock |      | $      | 1,194  |         |   | $ | 1,194 |   |

----

Index

| 4) | SECURITIES, continued |
|----|-----------------------|

|                |   | Three months ended |   |
|---------------------|--------|--------------------|--------|
|                |   | March 31,          |   |
| (in thousands)      |   | 2011               |   |   | 2010 |   |
|                |   |               |   |   |   |   |
| Proceeds from sales |   | $                  | -      |   |   | $ | 20,327 |   |
|                |   |               |   |   |   |   |   |   |
| Gross gains on sale |   | $                  | -      |   |   | $ | 813 |   |

|   |                                   |   | Securities Available for |   |   | Securities Held to |   |
|--------|----------------------------------------|--------|--------------------------|--------|--------|--------------------|--------|
|   |                                   |   | Sale                     |   |   | Maturity           |   |
|   |                                   |   | Amortized                |   |   | Estimated          |   |   | Amortized |   |   | Estimated |   |
|   | (in thousands)                         |   | Cost                     |   |   | Fair Value         |   |   | Cost |   |   | Fair Value |   |
|   |                                   |   |                     |   |   |               |   |   |   |   |   |   |   |
|   | Due in one year or less                |   | $                        | 1,229  |   |               | $      | 1,242 |   |   | $ | 175 |   |   | $ | 177 |   |
|   | Due after one year through five years  |   |                     | 5,458  |   |               |   | 5,511 |   |   |   | 200 |   |   |   | 201 |   |
|   | Due after five years through ten years |   |                     | 15,442 |   |               |   | 15,337 |   |   |   | - |   |   |   | - |   |
|   | After ten years                        |   |                     | 16,034 |   |               |   | 16,161 |   |   |   | - |   |   |   | - |   |
|   | Mortgage-backed securities             |   |                     | 36,748 |   |               |   | 37,098 |   |   |   | - |   |   |   | - |   |
|   |                                   |   | $                        | 74,911 |   |               | $      | 75,349 |   |   | $ | 375 |   |   | $ | 378 |   |

----

Index

| 4) | SECURITIES, continued |
|----|-----------------------|

|   |                                                                                  |   | Less Than 12 Months |   |   | 12 Months or More |   |
|--------|---------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|
|   |                                                                                  |   | Estimated           |   |   | Unrealized        |   |   | Estimated |   |   | Unrealized |   |
|   | (in thousands)                                                                        |   | Fair Value          |   |   | Losses            |   |   | Fair Value |   |   | Losses |   |
|   |                                                                                  |   |                |   |   |              |   |   |   |   |   |   |   |
|   | March 31, 2011:                                                                       |   |                |   |   |              |   |   |   |   |   |   |   |
|   |     U. S. Government sponsored agencies                           |   | $                   | 1,976  |   |              | $      | 24 |   |   | $ | - |   |   | $ | - |   |
|   |     State and municipal securities                                |   |                | 11,329 |   |              |   | 225 |   |   |   | - |   |   |   | - |   |
|   |     Mortgage-backed securities                                    |   |                | 9,339  |   |              |   | 97 |   |   |   | - |   |   |   | - |   |
|   |         Total temporarily impaired securities |   | $                   | 22,644 |   |              | $      | 346 |   |   | $ | - |   |   | $ | - |   |
|   |                                                                                  |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   | December 31, 2010:                                                                    |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   |     U. S. Government sponsored agencies                           |   | $                   | 2,960  |   |              | $      | 51 |   |   | $ | - |   |   | $ | - |   |
|   |     State and municipal securities                                |   |                | 10,258 |   |              |   | 324 |   |   |   | - |   |   |   | - |   |
|   |     Mortgage-backed securities                                    |   |                | 12,537 |   |              |   | 115 |   |   |   | - |   |   |   | - |   |
|   |         Total temporarily impaired securities |   | $                   | 25,755 |   |              | $      | 490 |   |   | $ | - |   |   | $ | - |   |

----

Index

| 4) | SECURITIES, continued |
|----|-----------------------|

| 5) | LOANS |
|----|-------|

|   |                                                  |   | March 31, |    |   | December 31, |   |
|--------|-------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|   | (in thousands)                                        |   | 2011      |    |   | 2010         |   |
|   |                                                  |   |      |    |   |         |   |
|   | Commercial                                            |   | $         | 3,898   |   |         | $      | 4,162 |   |
|   | Commercial real estate                                |   |      |    |   |         |   |   |   |
|   |   Land, development and construction        |   |      | 125,714 |   |         |   | 130,539 |   |
|   |   Other                                     |   |      | 105,687 |   |         |   | 106,152 |   |
|   |   Churches                                  |   |      | 75,088  |   |         |   | 79,706 |   |
|   | Residential real estate                               |   |      | 49,248  |   |         |   | 48,741 |   |
|   | Consumer                                              |   |      | 10,328  |   |         |   | 10,955 |   |
|   |         Total |   |      | 369,963 |   |         |   | 380,255 |   |
|   |                                                  |   |      |    |   |         |   |   |   |
|   | Deferred loan fees                                    |   |      | (8      | )      |         |   | (13 | ) |
|   | Allowance for loan losses                             |   |      | (8,234  | )      |         |   | (10,824 | ) |
|   |     Loans, net                    |   | $         | 361,721 |   |         | $      | 369,418 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                       |   | 2011       |   |
|--------|--------------------------------------------|--------|------------|--------|
|   |                                       |   |       |   |   | Commercial |   |   | Residential |   |   |   |   |   |   |   |   |   |   |
|   | (in thousands)                             |   | Commercial |   |   | Real Estate |   |   | Real Estate |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
|   |                                       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Balance, beginning of period               |   | $          | 15     |   |   | $ | 9,467 |   |   | $ | 463 |   |   | $ | 107 |   |   | $ | 772 |   |   | $ | 10,824 |   |
|   |                                       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Provision for (recovery of) loan losses    |   |       | (5     | ) |   |   | 238 |   |   |   | 352 |   |   |   | 104 |   |   |   | (682 | ) |   | $ | 7 |   |
|   |                                       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Loans charged off                          |   |       | -      |   |   |   | (2,217 | ) |   |   | (367 | ) |   |   | (40 | ) |   |   | - |   |   |   | (2,624 | ) |
|   |                                       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Recoveries of loans previously charged off |   |       | 4      |   |   |   | 15 |   |   |   | 7 |   |   |   | 1 |   |   |   | - |   |   |   | 27 |   |
|   |                                       |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Balance, end of period                     |   | $          | 14     |   |   | $ | 7,503 |   |   | $ | 455 |   |   | $ | 172 |   |   | $ | 90 |   |   | $ | 8,234 |   |

|   | (in thousands)                             |   | 2010   |   |
|--------|--------------------------------------------|--------|--------|--------|
|   |                                       |   |   |   |
|   | Balance, beginning of period               |   | $      | 13,324 |   |
|   |                                       |   |   |   |   |
|   | Provision for loan losses                  |   |   | (2,876 | ) |
|   |                                       |   |   |   |   |
|   | Loans charged off                          |   |   | (131   | ) |
|   |                                       |   |   |   |   |
|   | Recoveries of loans previously charged off |   |   | 3,418  |   |
|   |                                       |   |   |   |   |
|   | Balance, end of period                     |   | $      | 13,735 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                                                           |   | March 31, 2011 |   |
|--------|--------------------------------------------------------------------------------|--------|----------------|--------|
|   |                                                                           |   |           |   |   | Commercial |   |   | Residential |   |   |   |   |   |   |   |   |   |   |
|   | (in thousands)                                                                 |   | Commercial     |   |   | Real Estate |   |   | Real Estate |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
|   | Allowance for loan losses:                                                     |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Ending allowance balance attributable to loans:                                |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |     Individually evaluated for impairment                  |   | $              | -      |   |   | $ | 4,081 |   |   | $ | 16 |   |   | $ | - |   |   | $ | - |   |   | $ | 4,097 |   |
|   |     Collectively evaluated for impairment                  |   |           | 14     |   |   |   | 3,422 |   |   |   | 439 |   |   |   | 172 |   |   |   | 90 |   |   |   | 4,137 |   |
|   |         Total ending allowance balance |   | $              | 14     |   |   | $ | 7,503 |   |   | $ | 455 |   |   | $ | 172 |   |   | $ | 90 |   |   | $ | 8,234 |   |
|   |                                                                           |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                                                                           |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Loans:                                                                         |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Individually evaluated for impairment                              |   | $              | 2,014  |   |   | $ | 112,641 |   |   | $ | 13,798 |   |   | $ | - |   |   | $ | - |   |   | $ | 128,453 |   |
|   |  Collectively evaluated for impairment                                    |   |           | 1,884  |   |   |   | 193,840 |   |   |   | 35,450 |   |   |   | 10,328 |   |   |   | - |   |   |   | 241,502 |   |
|   |         Total loans                    |   | $              | 3,898  |   |   | $ | 306,481 |   |   | $ | 49,248 |   |   | $ | 10,328 |   |   | $ | - |   |   | $ | 369,955 |   |

|   |                                                                           |   | December 31, 2010 |   |
|--------|--------------------------------------------------------------------------------|--------|-------------------|--------|
|   |                                                                           |   |              |   |   | Commercial |   |   | Residential |   |   |   |   |   |   |   |   |   |   |
|   | (in thousands)                                                                 |   | Commercial        |   |   | Real Estate |   |   | Real Estate |   |   | Consumer |   |   | Unallocated |   |   | Total |   |
|   | Allowance for loan losses:                                                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Ending allowance balance attributable to loans:                                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |     Individually evaluated for impairment                  |   | $                 | -      |   |   | $ | 5,754 |   |   | $ | 14 |   |   | $ | - |   |   | $ | - |   |   | $ | 5,768 |   |
|   |     Collectively evaluated for impairment                  |   |              | 15     |   |   |   | 3,713 |   |   |   | 449 |   |   |   | 107 |   |   |   | 772 |   |   |   | 5,056 |   |
|   |         Total ending allowance balance |   | $                 | 15     |   |   | $ | 9,467 |   |   | $ | 463 |   |   | $ | 107 |   |   | $ | 772 |   |   | $ | 10,824 |   |
|   |                                                                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                                                                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Loans:                                                                         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Individually evaluated for impairment                              |   | $                 | 2,014  |   |   | $ | 111,544 |   |   | $ | 10,747 |   |   | $ | - |   |   | $ | - |   |   | $ | 124,305 |   |
|   |  Collectively evaluated for impairment                                    |   |              | 2,148  |   |   |   | 204,840 |   |   |   | 37,994 |   |   |   | 10,955 |   |   |   | - |   |   |   | 255,937 |   |
|   |         Total loans                    |   | $                 | 4,162  |   |   | $ | 316,384 |   |   | $ | 48,741 |   |   | $ | 10,955 |   |   | $ | - |   |   | $ | 380,242 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                                       |   | March 31, 2011 |    |   | December 31, 2010 |   |
|--------|------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|   |                                                       |   | Unpaid         |    |   |              |   |   | Allowance for |   |   | Unpaid |   |   |   |   |   | Allowance for |   |
|   |                                                       |   | Principal      |    |   | Recorded          |   |   | Loan Losses |   |   | Principal |   |   | Recorded |   |   | Loan Losses |   |
|   | (in thousands)                                             |   | Balance        |    |   | Investment        |   |   | Allocated |   |   | Balance |   |   | Investment |   |   | Allocated |   |
|   | With no related allowance recorded:                        |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Commercial                                     |   | $              | 2,014   |   |              | $      | 2,014 |   |   | $ | - |   |   | $ | 2,014 |   |   | $ | 2,014 |   |   | $ | - |   |
|   |   Commercial real estate                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |     Land, development and construction |   |           | 80,678  |   |              |   | 55,541 |   |   |   | - |   |   |   | 71,871 |   |   |   | 49,277 |   |   |   | - |   |
|   |     Other                              |   |           | 31,157  |   |              |   | 31,157 |   |   |   | - |   |   |   | 28,522 |   |   |   | 28,522 |   |   |   | - |   |
|   |     Churches                           |   |           | 1,016   |   |              |   | 1,016 |   |   |   | - |   |   |   | 1,018 |   |   |   | 1,018 |   |   |   | - |   |
|   |   Residential real estate                        |   |           | 13,032  |   |              |   | 12,937 |   |   |   | - |   |   |   | 9,926 |   |   |   | 9,824 |   |   |   | - |   |
|   | With an allowance recorded:                                |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Commercial                                     |   |           | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   |   Commercial real estate                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |     Land, development and construction |   |           | 24,681  |   |              |   | 23,052 |   |   |   | 3,273 |   |   |   | 34,179 |   |   |   | 32,577 |   |   |   | 5,696 |   |
|   |     Other                              |   |           | 1,875   |   |              |   | 1,875 |   |   |   | 808 |   |   |   | 150 |   |   |   | 150 |   |   |   | 58 |   |
|   |     Churches                           |   |           | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   |   Residential real estate                        |   |           | 861     |   |              |   | 861 |   |   |   | 16 |   |   |   | 923 |   |   |   | 923 |   |   |   | 14 |   |
|   |         Total      |   | $              | 155,314 |   |              | $      | 128,453 |   |   | $ | 4,097 |   |   | $ | 148,603 |   |   | $ | 124,305 |   |   | $ | 5,768 |   |

|   |                                                       |   | March 31, 2011 |    |   | March 31, 2010 |   |
|--------|------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|   |                                                       |   | Average        |    |   | Interest       |   |   | Average |   |   | Interest |   |
|   |                                                       |   | Investment in  |    |   | Income         |   |   | Investment in |   |   | Income |   |
|   | (in thousands)                                             |   | Impaired Loans |    |   | Recognized     |   |   | Impaired Loans |   |   | Recognized |   |
|   | With no related allowance recorded:                        |   |           |    |   |           |   |   |   |   |   |   |   |
|   |   Commercial                                     |   | $              | 2,014   |   |           | $      | 1 |   |   | $ | 769 |   |   | $ | - |   |
|   |   Commercial real estate                         |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   |     Land, development and construction |   |           | 52,773  |   |           |   | 34 |   |   |   | 68,582 |   |   |   | 230 |   |
|   |     Other                              |   |           | 29,839  |   |           |   | 62 |   |   |   | 21,277 |   |   |   | 36 |   |
|   |     Churches                           |   |           | 1,017   |   |           |   | - |   |   |   | 1,028 |   |   |   | - |   |
|   |   Residential real estate                        |   |           | 11,381  |   |           |   | 26 |   |   |   | 6,406 |   |   |   | 8 |   |
|   | With an allowance recorded:                                |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   |   Commercial                                     |   |           | -       |   |           |   | - |   |   |   | - |   |   |   | - |   |
|   |   Commercial real estate                         |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   |     Land, development and construction |   |           | 27,450  |   |           |   | - |   |   |   | 16,689 |   |   |   | 198 |   |
|   |     Other                              |   |           | 1,013   |   |           |   | 4 |   |   |   | 2,188 |   |   |   | - |   |
|   |     Churches                           |   |           | -       |   |           |   | - |   |   |   | - |   |   |   | - |   |
|   |   Residential real estate                        |   |           | 892     |   |           |   | 1 |   |   |   | 191 |   |   |   | 4 |   |
|   |         Total      |   | $              | 126,379 |   |           | $      | 128 |   |   | $ | 117,130 |   |   | $ | 476 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                           |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------|------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|   |                                           |   |           |   |   | Past Due          |   |   |   |   |   | Past Due |   |
|   |                                           |   |           |   |   | Loans over        |   |   |   |   |   | Loans over |   |
|   |                                           |   |           |   |   | 90 days still     |   |   |   |   |   | 90 days still |   |
|   | (in thousands)                                 |   | Nonaccrual     |   |   | Accruing          |   |   | Nonaccrual |   | Accruing |   |
|   |                                           |   |           |   |   |              |   |   |   |   |   |   |   |
|   | Commercial                                     |   | $              | 2,280  |   |              | $      | 29 |   |   | $ | 2,198 |   |   | $ | 113 |   |
|   | Commercial real estate:                        |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction |   |           | 57,157 |   |              |   | 7,793 |   |   |   | 60,404 |   |   |   | 87 |   |
|   |   Other                              |   |           | 21,792 |   |              |   | 1,409 |   |   |   | 20,081 |   |   |   | 565 |   |
|   |   Churches                           |   |           | 750    |   |              |   | - |   |   |   | 754 |   |   |   | - |   |
|   | Residential real estate                        |   |           | 4,047  |   |              |   | 448 |   |   |   | 3,904 |   |   |   | 258 |   |
|   | Consumer                                       |   |           | 52     |   |              |   | 2 |   |   |   | 96 |   |   |   | 22 |   |
|   |                                           |   | $              | 86,078 |   |              | $      | 9,681 |   |   | $ | 87,437 |   |   | $ | 1,045 |   |

|   |                                           |   | March 31, 2011 |   |
|--------|------------------------------------------------|--------|----------------|--------|
|   |                                           |   |  30-59    |   |   |  60-89 |   |   | Greater than |   |   |   |   |   |   |   |   |   |   |
|   |                                           |   | Days           |   |   | Days |   |   | 90 Days |   |   | Total |   |   | Loans Not |   |   |   |   |
|   | (in thousands)                                 |   | Past Due       |   |   | Past Due |   |   | Past Due |   |   | Past Due |   |   | Past Due |   |   | Total |   |
|   |                                           |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Commercial                                     |   | $              | 86     |   |   | $ | 35 |   |   | $ | 2,309 |   |   | $ | 2,430 |   |   | $ | 1,468 |   |   | $ | 3,898 |   |
|   | Commercial Real Estate:                        |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction |   |           | 2,101  |   |   |   | 141 |   |   |   | 64,060 |   |   |   | 66,302 |   |   |   | 59,412 |   |   |   | 125,714 |   |
|   |   Other                              |   |           | 4,497  |   |   |   | 4,669 |   |   |   | 22,363 |   |   |   | 31,529 |   |   |   | 74,150 |   |   |   | 105,679 |   |
|   |   Churches                           |   |           | 4,184  |   |   |   | - |   |   |   | 271 |   |   |   | 4,455 |   |   |   | 70,633 |   |   |   | 75,088 |   |
|   | Residential real estate                        |   |           | 1,936  |   |   |   | 782 |   |   |   | 4,144 |   |   |   | 6,862 |   |   |   | 42,386 |   |   |   | 49,248 |   |
|   | Consumer                                       |   |           | 944    |   |   |   | 238 |   |   |   | 53 |   |   |   | 1,235 |   |   |   | 9,093 |   |   |   | 10,328 |   |
|   |     Total                  |   | $              | 13,748 |   |   | $ | 5,865 |   |   | $ | 93,200 |   |   | $ | 112,813 |   |   | $ | 257,142 |   |   | $ | 369,955 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                           |   | December 31, 2010 |   |
|--------|------------------------------------------------|--------|-------------------|--------|
|   |                                           |   |  30-59       |   |   |  60-89 |   |   | Greater than |   |   |   |   |   |   |   |   |   |   |
|   |                                           |   | Days              |   |   | Days |   |   | 90 Days |   |   | Total |   |   | Loans Not |   |   |   |   |
|   | (in thousands)                                 |   | Past Due          |   |   | Past Due |   |   | Past Due |   |   | Past Due |   |   | Past Due |   |   | Total |   |
|   |                                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Commercial                                     |   | $                 | 67     |   |   | $ | 14 |   |   | $ | 2,311 |   |   | $ | 2,392 |   |   | $ | 1,770 |   |   | $ | 4,162 |   |
|   | Commercial Real Estate:                        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction |   |              | 19,828 |   |   |   | 2,548 |   |   |   | 59,005 |   |   |   | 81,381 |   |   |   | 49,158 |   |   |   | 130,539 |   |
|   |   Other                              |   |              | 3,975  |   |   |   | 3,130 |   |   |   | 19,792 |   |   |   | 26,897 |   |   |   | 79,242 |   |   |   | 106,139 |   |
|   |   Churches                           |   |              | 772    |   |   |   | - |   |   |   | 273 |   |   |   | 1,045 |   |   |   | 78,661 |   |   |   | 79,706 |   |
|   | Residential real estate                        |   |              | 1,329  |   |   |   | 268 |   |   |   | 4,000 |   |   |   | 5,597 |   |   |   | 43,144 |   |   |   | 48,741 |   |
|   | Consumer                                       |   |              | 33     |   |   |   | 38 |   |   |   | 118 |   |   |   | 189 |   |   |   | 10,766 |   |   |   | 10,955 |   |
|   |     Total                  |   | $                 | 26,004 |   |   | $ | 5,998 |   |   | $ | 85,499 |   |   | $ | 117,501 |   |   | $ | 262,741 |   |   | $ | 380,242 |   |

----

Index

| 5) | LOANS, continued |
|----|------------------|

|   |                                           |   | March 31, 2011 |    |
|--------|------------------------------------------------|--------|----------------|---------|
|   |                                           |   |           |    |   | Special |   |   |   |   |   |   |   |   |   |   |
|   | (in thousands)                                 |   | Pass           |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
|   |                                           |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Commercial                                     |   | $              | 1,526   |   |   | $ | 3 |   |   | $ | 2,369 |   |   | $ | - |   |   | $ | 3,898 |   |
|   | Commercial real estate:                        |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction |   |           | 22,375  |   |   |   | 23,856 |   |   |   | 79,483 |   |   |   | - |   |   |   | 125,714 |   |
|   |   Other                              |   |           | 59,538  |   |   |   | 11,716 |   |   |   | 34,425 |   |   |   | - |   |   |   | 105,679 |   |
|   |   Churches                           |   |           | 69,440  |   |   |   | 4,117 |   |   |   | 1,531 |   |   |   | - |   |   |   | 75,088 |   |
|   | Residential real estate                        |   |           | 28,801  |   |   |   | 5,346 |   |   |   | 15,101 |   |   |   | - |   |   |   | 49,248 |   |
|   | Consumer                                       |   |           | 9,859   |   |   |   | 57 |   |   |   | 412 |   |   |   | - |   |   |   | 10,328 |   |
|   |                                           |   | $              | 191,539 |   |   | $ | 45,095 |   |   | $ | 133,321 |   |   | $ | - |   |   | $ | 369,955 |   |

|   |                                           |   | December 31, 2010 |    |
|--------|------------------------------------------------|--------|-------------------|---------|
|   |                                           |   |              |    |   | Special |   |   |   |   |   |   |   |   |   |   |
|   | (in thousands)                                 |   | Pass              |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
|   |                                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Commercial                                     |   | $                 | 1,736   |   |   | $ | 145 |   |   | $ | 2,281 |   |   | $ | - |   |   | $ | 4,162 |   |
|   | Commercial real estate:                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction |   |              | 29,780  |   |   |   | 18,341 |   |   |   | 82,418 |   |   |   | - |   |   |   | 130,539 |   |
|   |   Other                              |   |              | 60,999  |   |   |   | 15,067 |   |   |   | 30,073 |   |   |   | - |   |   |   | 106,139 |   |
|   |   Churches                           |   |              | 74,134  |   |   |   | 4,034 |   |   |   | 1,538 |   |   |   | - |   |   |   | 79,706 |   |
|   | Residential real estate                        |   |              | 31,849  |   |   |   | 5,432 |   |   |   | 11,460 |   |   |   | - |   |   |   | 48,741 |   |
|   | Consumer                                       |   |              | 10,721  |   |   |   | 16 |   |   |   | 218 |   |   |   | - |   |   |   | 10,955 |   |
|   |                                           |   | $                 | 209,219 |   |   | $ | 43,035 |   |   | $ | 127,988 |   |   | $ | - |   |   | $ | 380,242 |   |

----

Index

| 6) | NONPERFORMING ASSETS |
|----|----------------------|

|   |                                                  |   | March 31, 2011     |   |
|--------|-------------------------------------------------------|--------|--------------------|--------|
|   | (in thousands)                                        |   | NonperformingLoans |   |   | ForeclosedProperties |   |   | Total |   |
|   |                                                  |   |               |   |   |   |   |   |   |   |
|   | Commercial                                            |   |               | 2,309  |   |   |   | - |   |   |   | 2,309 |   |
|   | Commercial real estate                                |   |               |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction        |   |               | 64,950 |   |   |   | 59,240 |   |   |   | 124,190 |   |
|   |   Other                                     |   |               | 23,201 |   |   |   | 7,954 |   |   |   | 31,155 |   |
|   |   Churches                                  |   |               | 750    |   |   |   | - |   |   |   | 750 |   |
|   | Residential real estate                               |   |               | 4,495  |   |   |   | 10,916 |   |   |   | 15,411 |   |
|   | Consumer                                              |   |               | 54     |   |   |   | - |   |   |   | 54 |   |
|   |         Total |   | $                  | 95,759 |   |   | $ | 78,110 |   |   | $ | 173,869 |   |

|   |                                                  |   | December 31, 2010  |   |
|--------|-------------------------------------------------------|--------|--------------------|--------|
|   | (in thousands)                                        |   | NonperformingLoans |   |   | ForeclosedProperties |   |   | Total |   |
|   |                                                  |   |               |   |   |   |   |   |   |   |
|   | Commercial                                            |   |               | 2,311  |   |   |   | - |   |   |   | 2,311 |   |
|   | Commercial real estate                                |   |               |   |   |   |   |   |   |   |   |   |   |
|   |   Land, development and construction        |   |               | 60,491 |   |   |   | 59,512 |   |   |   | 120,003 |   |
|   |   Other                                     |   |               | 20,646 |   |   |   | 8,640 |   |   |   | 29,286 |   |
|   |   Churches                                  |   |               | 754    |   |   |   | - |   |   |   | 754 |   |
|   | Residential real estate                               |   |               | 4,162  |   |   |   | 11,299 |   |   |   | 15,461 |   |
|   | Consumer                                              |   |               | 118    |   |   |   | - |   |   |   | 118 |   |
|   |         Total |   | $                  | 88,482 |   |   | $ | 79,451 |   |   | $ | 167,933 |   |

----

Index

| 6) | NONPERFORMING ASSETS, continued |
|----|---------------------------------|

|   |                                       |   | Three Months Ended March 31, |   |
|--------|--------------------------------------------|--------|------------------------------|--------|
|   | (in thousands)                             |   | 2011                         |   |   | 2010 |   |
|   |                                       |   |                         |   |   |   |   |
|   | Balance, beginning of year                 |   | $                            | 79,451 |   |   | $ | 49,732 |   |
|   | Loans transferred to foreclosed properties |   |                         | -      |   |   |   | 13,047 |   |
|   | Capitalized costs to properties            |   |                         | 41     |   |   |   | 27 |   |
|   | Cash sales proceeds                        |   |                         | (89    | )  |   |   | (1,418 | )  |
|   | Financed sales                             |   |                         | (939   | )  |   |   | - |   |
|   | Loss on sale of properties                 |   |                         | (9     | )  |   |   | (111 | )  |
|   | Impairment losses                          |   |                         | (345   | )  |   |   | (153 | )  |
|   | Balance, end of period                     |   | $                            | 78,110 |   |   | $ | 61,124 |   |

|   |                                           |   | Three Months Ended March 31, |   |
|--------|------------------------------------------------|--------|------------------------------|--------|
|   | (in thousands)                                 |   | 2011                         |   |   | 2010 |   |
|   |                                           |   |                         |   |   |   |   |
|   | Net loss on sales of real estate               |   | $                            | 9      |   |   | $ | 111 |   |
|   | Impairment losses on foreclosed assets         |   |                         | 345    |   |   |   | 153 |   |
|   | Operating expenses on foreclosed assets        |   |                         | 528    |   |   |   | 239 |   |
|   | Property taxes on nonperforming loans          |   |                         | 300    |   |   |   | - |   |
|   | Less:  Rental income on foreclosed assets |   |                         | (151   | )  |   |   | (75 | )  |
|   |                                           |   | $                            | 1,031  |   |   | $ |  428 |   |

----

Index

| 7) | COMMITMENTS AND CONTINGENCIES |
|----|-------------------------------|

|   |                         |   | March 31, |   |   | December 31, |   |
|--------|------------------------------|--------|-----------|--------|--------|--------------|--------|
|   | (in thousands)               |   | 2011      |   |   | 2010         |   |
|   |                         |   |      |   |   |         |   |
|   | Standby letters of credit    |   | $         | 1,860  |   |         | $      | 2,056 |   |
|   |                         |   |      |   |   |         |   |   |   |
|   | Commitments to extend credit |   |      | 13,904 |   |         |   | 16,388 |   |
|   |                         |   |      |   |   |         |   |   |   |
|   |                         |   | $         | 15,764 |   |         | $      | 18,444 |   |

----

Index

| 7) | COMMITMENTS AND CONTINGENCIES, continued |
|----|------------------------------------------|

| 8) | CONCENTRATIONS OF CREDIT RISK |
|----|-------------------------------|

----

Index

| 9) | REGULATORY MATTERS |
|----|--------------------|

----

Index

| 9) | REGULATORY MATTERS, continued |
|----|-------------------------------|

|   |                       |   |         |   |   |   |   |   | Well Capitalized |   |
|--------|----------------------------|--------|--------------|--------|--------|--------|--------|--------|------------------|--------|
|   |                       |   |         |   |   |   |   |   | Regulatory       |   |
|   |                       |   | Consolidated |   |   | Bank   |   |   | Requirement      |   |
|   |                       |   |         |   |   |   |   |   |             |   |
|   | Leverage Capital Ratios    |   |         | 2.49   | %      |   |   | 2.47   | %                |   |   | 5.00 | % |
|   |                       |   |         |   |   |   |   |   |             |   |   |   |   |
|   | Risk Based Capital Ratios: |   |         |   |   |   |   |   |             |   |   |   |   |
|   |   Tier 1         |   |         | 2.97   | %      |   |   | 2.94   | %                |   |   | 6.00 | % |
|   |   Total          |   |         | 4.21   | %      |   |   | 4.18   | %                |   |   | 10.00 | % |

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES |
|-----|--------------------------------------|

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

|   |                          |   | Fair Value Measurements at March 31, 2011 Using                           |   |
|--------|-------------------------------|--------|---------------------------------------------------------------------------|--------|
|   | (in thousands)                |   |  Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |   | Total Carrying Value |   |
|   |                          |   |                                                                      |   |   |   |   |   |   |   |   |   |   |
|   | Assets                        |   |                                                                      |   |   |   |   |   |   |   |   |   |   |
|   | Securities available for sale |   | $                                                                         | 6,597  |   |   | $ | 68,752 |   |   | $ | - |   |   | $ | 75,349 |   |
|   | Total assets at fair value    |   | $                                                                         | 6,597  |   |   | $ | 68,752 |   |   | $ | - |   |   | $ | 75,349 |   |
|   |                          |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                          |   |                                                                      |   |   |   |   |   |
|   |                          |   | Fair Value Measurements at December 31, 2010 Using                        |   |
|   | (in thousands)                |   |  Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |   | Total Carrying Value |   |
|   |                          |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Assets                        |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities available for sale |   | $                                                                         | 6,621  |   |   | $ | 60,594 |   |   | $ | - |   |   | $ | 67,215 |   |
|   | Total assets at fair value    |   | $                                                                         | 6,621  |   |   | $ | 60,594 |   |   | $ | - |   |   | $ | 67,215 |   |

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

|   |              |   | For the three months ended March 31, 2011                           |   |
|--------|-------------------|--------|---------------------------------------------------------------------|--------|
|   |              |   | Fair Value Changes Based On:                                        |   |
|   | (in thousands)    |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |   | Total Losses |   |
|   |              |   |                                                                |   |   |   |   |   |   |   |   |   |   |
|   | Impaired loans    |   | $                                                                   | -      |   |   | $ | (471 | ) |   | $ | 1,378 |   |   | $ | 907 |   |
|   | Foreclosed assets |   |                                                                | -      |   |   |   | - |   |   |   | 345 |   |   |   | 345 |   |
|   | Total             |   | $                                                                   | -      |   |   | $ | (471 | ) |   | $ | 1,723 |   |   | $ | 1,252 |   |
|   |              |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |              |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |              |   |                                                                |   |
|   |              |   |                                                                |   |
|   |              |   | For the three months ended March 31, 2010                           |   |
|   |              |   | Fair Value Changes Based On:                                        |   |
|   | (in thousands)    |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |   | Total Losses |   |
|   |              |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Impaired loans    |   | $                                                                   | -      |   |   | $ | 125 |   |   | $ | 155 |   |   | $ | 280 |   |
|   | Foreclosed assets |   |                                                                | -      |   |   |   | 9 |   |   |   | 144 |   |   |   | 153 |   |
|   | Total             |   | $                                                                   | -      |   |   | $ | 134 |   |   | $ | 299 |   |   | $ | 433 |   |

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

----

Index

| 10) | FAIR VALUE OF ASSETS AND LIABILITIES, continued |
|-----|-------------------------------------------------|

|   |                                                                                      |   | March 31, 2011 |    |   | December 31, 2010 |   |
|--------|-------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|   |                                                                                      |   | Carrying       |    |   | Fair              |   |   | Carrying |   |   | Fair |   |
|   | (in thousands)                                                                            |   | Amount         |    |   | Value             |   |   | Amount |   |   | Value |   |
|   |                                                                                      |   |           |    |   |              |   |   |   |   |   |   |   |
|   |  Financial assets:                                                                   |   |           |    |   |              |   |   |   |   |   |   |   |
|   |       Cash, interest-bearing deposits in banks,             |   |           |    |   |              |   |   |   |   |   |   |   |
|   |          and excess Federal Reserve balances |   | $              | 44,475  |   |              | $      | 44,475 |   |   | $ | 32,422 |   |   | $ | 32,422 |   |
|   |       Securities available for sale                         |   |           | 75,349  |   |              |   | 75,349 |   |   |   | 67,215 |   |   |   | 67,215 |   |
|   |       Securities held to maturity                           |   |           | 375     |   |              |   | 378 |   |   |   | 375 |   |   |   | 378 |   |
|   |       Restricted equity securities                          |   |           | 1,194   |   |              |   | 1,194 |   |   |   | 1,194 |   |   |   | 1,194 |   |
|   |       Loans, net                                            |   |           | 361,721 |   |              |   | 361,217 |   |   |   | 369,418 |   |   |   | 369,167 |   |
|   |       Accrued interest receivable                           |   |           | 1,652   |   |              |   | 1,652 |   |   |   | 1,612 |   |   |   | 1,612 |   |
|   |                                                                                      |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   |  Financial liabilities:                                                              |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   |       Deposits                                              |   | $              | 556,691 |   |              | $      | 562,320 |   |   | $ | 544,663 |   |   | $ | 549,935 |   |
|   |        Other borrowings                                |   |           | 152     |   |              |   | 152 |   |   |   | 755 |   |   |   | 755 |   |
|   |       Accrued interest payable                              |   |           | 1,251   |   |              |   | 1,251 |   |   |   | 1,522 |   |   |   | 1,522 |   |

| 11) | SUBSEQUENT EVENTS |
|-----|-------------------|

----

Index

| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

|   | ● | the notes to our financial statements disclose a going concern issue for the Company; |
|--------|---------|---------------------------------------------------------------------------------------|

|   | ● | we have received a Prompt Corrective Action Notification; |
|--------|---------|-----------------------------------------------------------|

|   | ● | we have entered into a Consent Order with the Georgia Department of Banking and Finance (the “DBF”) and the Federal Deposit Insurance Corporation (the “FDIC”); |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the Company is currently attempting to raise additional capital through a Private Placement Memorandum.  The proceeds from this offering may not be sufficient to meet the capital requirements of our regulators or otherwise support our operations; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | continued deterioration in the metro Atlanta real estate markets and more particularly Henry and surrounding counties; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------|

|   | ● | our allowance for loan losses may not be sufficient to cover actual loan losses that could be incurred; |
|--------|---------|---------------------------------------------------------------------------------------------------------|

----

Index

|   | ● | increased carrying costs and the probability of additional impairment charges associated with our foreclosed properties |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------|

|   | ● | extended holding periods that may be required before we can liquidate our foreclosed properties |
|--------|---------|-------------------------------------------------------------------------------------------------|

|   | ● | our ability to maintain liquidity or access other sources of funding; |
|--------|---------|-----------------------------------------------------------------------|

|   | ● | changes in the cost and availability of funding; |
|--------|---------|--------------------------------------------------|

|   | ● | changes in prevailing interest rates that may negatively affect our net income and the value of our assets; |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | ● | regulatory reform and changes in financial services laws and regulations; |
|--------|---------|---------------------------------------------------------------------------|

|   | ● | competition from financial institutions and other financial service providers; |
|--------|---------|--------------------------------------------------------------------------------|

|   | ● | ability to retain key personnel, and; |
|--------|---------|---------------------------------------|

|   | ● | increasing FDIC Insurance premiums brought on by systemic industry deterioration in conjunction with a higher risk rating assigned to our Bank; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

----

Index

|                                              |   | Three Months Ended: |       |
|---------------------------------------------------|--------|---------------------|------------|
|                                              |   |  March 31,     |       |   | December 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |
| (in thousands, except per share and other data)   |   | 2011                |       |   | 2010 |   |   | 2010 |   |   | 2010 |   |   | 2010 |   |
| SUMMARY OF OPERATIONS                             |   |                |       |   |   |   |   |
| Interest income                                   |   | $                   | 4,445      |   |   | $ | 4,405 |   |   | $ | 4,670 |   |   | $ | 5,237 |   |   | $ | 5,682 |   |
| Interest expense                                  |   |                | 2,153      |   |   |   | 2,251 |   |   |   | 2,365 |   |   |   | 2,484 |   |   |   | 2,860 |   |
| Net interest income                               |   |                | 2,292      |   |   |   | 2,154 |   |   |   | 2,305 |   |   |   | 2,753 |   |   |   | 2,822 |   |
| Provision for (recovery of) loan losses           |   |                | 7          |   |   |   | 690 |   |   |   | 1,175 |   |   |   | 2,180 |   |   |   | (2,876 | ) |
| Other income                                      |   |                | 630        |   |   |   | 677 |   |   |   | 790 |   |   |   | 952 |   |   |   | 1,469 |   |
| Other expenses                                    |   |                | 3,785      |   |   |   | 4,908 |   |   |   | 4,257 |   |   |   | 7,070 |   |   |   | 2,998 |   |
| Earnings (loss) before income taxes               |   |                | (870       | ) |   |   | (2,767 | ) |   |   | (2,337 | ) |   |   | (5,545 | ) |   |   | 4,169 |   |
| Income tax expense (benefit)                      |   |                | -          |   |   |   | 229 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net earnings (losses)                             |   | $                   | (870       | ) |   | $ | (2,996 | ) |   | $ | (2,337 | ) |   | $ | (5,545 | ) |   | $ | 4,169 |   |
|                                              |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares                           |   |                | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |
|                                              |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PERFORMANCE MEASURES                              |   |                |       |   |   |   |   |   |   |
| Per common share:                                 |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share                         |   | $                   | (0.06      | ) |   | $ | (0.21 | ) |   | $ | (0.16 | ) |   | $ | (0.39 | ) |   | $ | 0.29 |   |
| Cash dividends per share                          |   |                | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                              |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profitability ratios:                             |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average equity                          |   |                | -23.58     | % |   |   | -64.00 | % |   |   | -43.28 | % |   |   | -82.56 | % |   |   | 63.53 | % |
| Return on average assets                          |   |                | -0.61      | % |   |   | -2.12 | % |   |   | -1.62 | % |   |   | -3.77 | % |   |   | 2.75 | % |
| Net interest margin                               |   |                | 1.96       | % |   |   | 1.79 | % |   |   | 1.78 | % |   |   | 2.20 | % |   |   | 2.21 | % |
| Loan Quality Indicators                           |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net charge-offs (recoveries)                      |   |                | 2,597      |   |   |   | 2,305 |   |   |   | 166 |   |   |   | 4,485 |   |   |   | (3,287 | ) |
| Net charge-offs (recoveries) to average loans (1) |   |                | 0.69       | % |   |   | 0.59 | % |   |   | 0.04 | % |   |   | 1.08 | % |   |   | -0.76 | % |
|                                              |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| AVERAGE BALANCES                                  |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                             |   | $                   | 378,031    |   |   | $ | 390,775 |   |   | $ | 408,363 |   |   | $ | 416,877 |   |   | $ | 431,729 |   |
| Investment securities                             |   |                | 68,948     |   |   |   | 61,194 |   |   |   | 61,486 |   |   |   | 51,751 |   |   |   | 57,810 |   |
| Earning assets                                    |   |                | 480,202    |   |   |   | 477,521 |   |   |   | 473,842 |   |   |   | 507,255 |   |   |   | 523,121 |   |
| Total assets                                      |   |                | 574,269    |   |   |   | 566,179 |   |   |   | 575,419 |   |   |   | 589,063 |   |   |   | 606,236 |   |
| Deposits                                          |   |                | 556,001    |   |   |   | 543,740 |   |   |   | 549,946 |   |   |   | 558,710 |   |   |   | 575,076 |   |
| Stockholders' equity                              |   |                | 14,757     |   |   |   | 18,724 |   |   |   | 21,598 |   |   |   | 26,864 |   |   |   | 26,247 |   |
|                                              |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Percentage not annualized                |   |                |       |   |   |   |   |   |   |   |   |   |   |

----

Index

|                                           |   | At the Quarters Ended: |       |
|------------------------------------------------|--------|------------------------|------------|
|                                           |   | March 31,              |       |   | December 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |
|                                           |   | 2011                   |       |   | 2010 |   |   | 2010 |   |   | 2010 |   |   | 2010 |   |
| SELECTED BALANCE SHEET ITEMS                   |   |                   |       |   |
| Loans                                          |   | $                      | 369,955    |   |   | $ | 380,242 |   |   | $ | 406,731 |   |   | $ | 408,207 |   |   | $ | 418,384 |   |
| Investment securities                          |   |                   | 75,724     |   |   |   | 67,590 |   |   |   | 65,108 |   |   |   | 56,845 |   |   |   | 53,565 |   |
| Total assets                                   |   |                   | 574,870    |   |   |   | 563,879 |   |   |   | 563,557 |   |   |   | 580,294 |   |   |   | 600,269 |   |
| Deposits                                       |   |                   | 556,691    |   |   |   | 544,663 |   |   |   | 541,203 |   |   |   | 554,283 |   |   |   | 569,457 |   |
| Stockholders' equity                           |   |                   | 14,761     |   |   |   | 15,281 |   |   |   | 19,231 |   |   |   | 21,263 |   |   |   | 26,619 |   |
| Common shares outstanding                      |   |                   | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |   |   | 14,245,690 |   |
| Book value                                     |   |                   | 1.04       |   |   |   | 1.07 |   |   |   | 1.35 |   |   |   | 1.49 |   |   |   | 1.87 |   |
| KEY BALANCE SHEET RATIOS                       |   |                   |       |   |   |   |   |   |   |
| Liquidity ratios:                              |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans to total deposits                  |   |                   | 66.46      | % |   |   | 69.81 | % |   |   | 75.15 | % |   |   | 73.65 | % |   |   | 73.47 | % |
| Average loans to average earning assets        |   |                   | 78.72      | % |   |   | 81.83 | % |   |   | 86.18 | % |   |   | 82.18 | % |   |   | 82.53 | % |
| Noninterest-bearing deposits to total deposits |   |                   | 12.34      | % |   |   | 11.02 | % |   |   | 12.64 | % |   |   | 12.93 | % |   |   | 10.51 | % |
| Capital ratios:                                |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Leverage                                       |   |                   | 2.49       | % |   |   | 2.68 | % |   |   | 3.16 | % |   |   | 3.48 | % |   |   | 4.30 | % |
| Risk-based capital                             |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1                                         |   |                   | 2.97       | % |   |   | 3.14 | % |   |   | 3.73 | % |   |   | 4.19 | % |   |   | 5.15 | % |
| Total                                          |   |                   | 4.21       | % |   |   | 4.39 | % |   |   | 4.99 | % |   |   | 5.45 | % |   |   | 6.42 | % |
| ASSET QUALITY                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing loans                           |   | $                      | 95,759     |   |   | $ | 88,482 |   |   | $ | 106,678 |   |   | $ | 92,435 |   |   | $ | 83,580 |   |
| Foreclosed properties                          |   |                   | 78,110     |   |   |   | 79,451 |   |   |   | 62,493 |   |   |   | 65,336 |   |   |   | 64,469 |   |
| Total non-performing assets (NPAs)             |   |                   | 173,869    |   |   |   | 167,933 |   |   |   | 169,171 |   |   |   | 157,771 |   |   |   | 148,049 |   |
| Allowance for loan losses                      |   |                   | 8,234      |   |   |   | 10,824 |   |   |   | 12,439 |   |   |   | 11,430 |   |   |   | 13,735 |   |
| Allowance for loan losses to loans             |   |                   | 2.23       | % |   |   | 2.85 | % |   |   | 3.06 | % |   |   | 2.80 | % |   |   | 3.28 | % |
| NPAs to loans and foreclosed properties        |   |                   | 38.80      | % |   |   | 36.53 | % |   |   | 36.05 | % |   |   | 33.32 | % |   |   | 30.66 | % |
| NPAs to total assets                           |   |                   | 30.24      | % |   |   | 29.78 | % |   |   | 30.02 | % |   |   | 27.19 | % |   |   | 24.66 | % |

----

Index

----

Index

|                                                                      |   | 2011    |    |   | 2010     |   |
|---------------------------------------------------------------------------|--------|---------|---------|--------|----------|--------|
|                                                                      |   | Average |    |   |     |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| (in thousands)                                                            |   | Balance |    |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                                                      |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amounts reflected in financial statements                                 |   | $       | 480,202 |   |     | $      | 4,445 |   |   |   | 3.80 | % |   | $ | 523,121 |   |   | $ | 5,682 |   |   |   | 4.45 | % |
|                                                                      |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of nonaccrual interest (collected) reversed                        |   |    |    |   |     |   | (49 | ) |   |   |   |   |   |   |   |   |   |   | (476 | ) |   |   |   |   |
| Effect of interest advance (collected) reversed                           |   |    |    |   |     |   | - |   |   |   |   |   |   |   |   |   |   |   | (150 | ) |   |   |   |   |
|   Total adjustments                                             |   |    |    |   |     |   | (49 | ) |   |   |   |   |   |   |   |   |   |   | (626 | ) |   |   |   |   |
|                                                                      |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amounts excluding the effect of nonaccrual interest income/reversals |   | $       | 480,202 |   |     | $      | 4,396 |   |   |   | 3.75 | % |   | $ | 523,121 |   |   | $ | 5,056 |   |   |   | 3.96 | % |
|                                                                      |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted net interest revenue                                             |   |    |    |   |     | $      | 2,243 |   |   |   |   |   |   |   |   |   |   | $ | 2,196 |   |   |   |   |   |
| Adjusted net interest margin                                              |   |    |    |   |     |   |   |   |   |   | 1.92 | % |   |   |   |   |   |   |   |   |   |   | 1.72 | % |

----

Index

|                                                    |   | 2011    |    |   | 2010     |   |
|---------------------------------------------------------|--------|---------|---------|--------|----------|--------|
|                                                    |   | Average |    |   |     |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| (in thousands)                                          |   | Balance |    |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Assets:                                                 |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans(1)                                                |   | $       | 378,031 |   |     | $      | 3,878 |   |   |   | 4.21 | % |   | $ | 431,729 |   |   | $ | 5,122 |   |   |   | 4.87 | % |
| Taxable securities(2)(3)                                |   |    | 66,597  |   |     |   | 520 |   |   |   | 3.20 | % |   |   | 52,946 |   |   |   | 490 |   |   |   | 3.80 | % |
| Tax-exempt securities(2)(4)                             |   |    | 2,351   |   |     |   | 30 |   |   |   | 5.23 | % |   |   | 4,864 |   |   |   | 48 |   |   |   | 4.05 | % |
| Overnight investments and other interest-earning assets |   |    | 33,223  |   |     |   | 17 |   |   |   | 0.21 | % |   |   | 33,582 |   |   |   | 22 |   |   |   | 0.27 | % |
| Total interest-earning assets                           |   |    | 480,202 |   |     |   | 4,445 |   |   |   | 3.80 | % |   |   | 523,121 |   |   |   | 5,682 |   |   |   | 4.45 | % |
| Non-interest-earning assets:                            |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                               |   |    | (10,429 | )      |     |   |   |   |   |   |   |   |   |   | (17,372 | ) |   |   |   |   |   |   |   |   |
| Cash and due from banks                                 |   |    | 11,103  |   |     |   |   |   |   |   |   |   |   |   | 11,427 |   |   |   |   |   |   |   |   |   |
| Other assets                                            |   |    | 93,393  |   |     |   |   |   |   |   |   |   |   |   | 89,060 |   |   |   |   |   |   |   |   |   |
| Total assets                                            |   | $       | 574,269 |   |     |   |   |   |   |   |   |   |   | $ | 606,236 |   |   |   |   |   |   |   |   |   |
|                                                    |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity:                   |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                           |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits:                              |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                                                     |   | $       | 59,093  |   |     | $      | 32 |   |   |   | 0.22 | % |   | $ | 56,874 |   |   | $ | 69 |   |   |   | 0.50 | % |
| Money market                                            |   |    | 37,901  |   |     |   | 53 |   |   |   | 0.57 | % |   |   | 36,517 |   |   |   | 54 |   |   |   | 0.61 | % |
| Savings                                                 |   |    | 32,120  |   |     |   | 35 |   |   |   | 0.45 | % |   |   | 32,273 |   |   |   | 39 |   |   |   | 0.50 | % |
| Time deposits less than $100,000                        |   |    | 195,652 |   |     |   | 1,140 |   |   |   | 2.39 | % |   |   | 207,261 |   |   |   | 1,410 |   |   |   | 2.79 | % |
| Time deposits greater than $100,000                     |   |    | 127,013 |   |     |   | 633 |   |   |   | 2.04 | % |   |   | 124,157 |   |   |   | 903 |   |   |   | 2.98 | % |
| Brokered deposits                                       |   |    | 37,721  |   |     |   | 260 |   |   |   | 2.83 | % |   |   | 52,787 |   |   |   | 374 |   |   |   | 2.91 | % |
| Total interest-bearing deposits                         |   |    | 489,500 |   |     |   | 2,153 |   |   |   | 1.80 | % |   |   | 509,869 |   |   |   | 2,849 |   |   |   | 2.29 | % |
| Other borrowings                                        |   |    | 319     |   |     |   | - |   |   |   | 0.00 | % |   |   | 1,468 |   |   |   | 11 |   |   |   | 3.07 | % |
| Total interest-bearing liabilities                      |   |    | 489,819 |   |     |   | 2,153 |   |   |   | 1.80 | % |   |   | 511,337 |   |   |   | 2,860 |   |   |   | 2.29 | % |
| Non-interest-bearing liabilities:                       |   |    |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                           |   |    | 66,501  |   |     |   |   |   |   |   |   |   |   |   | 65,207 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                       |   |    | 3,192   |   |     |   |   |   |   |   |   |   |   |   | 3,445 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                       |   |    | 559,512 |   |     |   |   |   |   |   |   |   |   |   | 579,989 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                    |   |    | 14,757  |   |     |   |   |   |   |   |   |   |   |   | 26,247 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity              |   | $       | 574,269 |   |     |   |   |   |   |   |   |   |   | $ | 606,236 |   |   |   |   |   |   |   |   |   |
| Net interest revenue                                    |   |    |    |   |     | $      | 2,292 |   |   |   |   |   |   |   |   |   |   | $ | 2,822 |   |   |   |   |   |
| Net interest-rate spread                                |   |    |    |   |     |   |   |   |   |   | 2.00 | % |   |   |   |   |   |   |   |   |   |   | 2.16 | % |
| Net interest margin(5)                                  |   |    |    |   |     |   |   |   |   |   | 1.96 | % |   |   |   |   |   |   |   |   |   |   | 2.21 | % |

| (1)   | Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued.                                                                                                                             |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)   | Securities available for sale are shown at amortized cost.  Average unrealized gains of $147,000 for the three months ended March 31, 2011 and $829,000 for the three months ended March 31, 2010 are included in other assets.  |
| (3)   | Includes restricted equity securities                                                                                                                                                                                                           |
| (4)   | Interest income on tax-exempt securities is not stated on a tax equivalent basis.                                                                                                                                                               |
| (5)   | Net interest margin is not stated on a  tax-equivalent basis.                                                                                                                                                                         |

----

Index

|                                                    |   | Three months ended March 31, 2011 |   |
|---------------------------------------------------------|--------|-----------------------------------|--------|
|                                                    |   | Compared to 2010                  |   |
|                                                    |   | Increase (decrease)               |   |
|                                                    |   | Due to Changes in                 |   |
| (in thousands)                                          |   | Volume                            |   |   | Rate |   |   | Total |   |
| Interest-earning assets:                                |   |                              |   |   |   |   |   |   |   |
| Loans                                                   |   | $                                 | (596   | ) |   | $ | (648 | ) |   | $ | (1,244 | ) |
| Taxable securities                                      |   |                              | 114    |   |   |   | (84 | ) |   |   | 30 |   |
| Tax-exempt securities                                   |   |                              | (29    | ) |   |   | 11 |   |   |   | (18 | ) |
| Overnight investments and other interest-earning assets |   |                              | -      |   |   |   | (5 | ) |   |   | (5 | ) |
| Total interest-earning assets                           |   |                              | (511   | ) |   |   | (726 | ) |   |   | (1,237 | ) |
|                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                           |   |                              |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits:                              |   |                              |   |   |   |   |   |   |   |   |   |   |
| NOW                                                     |   |                              | 2      |   |   |   | (39 | ) |   |   | (37 | ) |
| Money market                                            |   |                              | 2      |   |   |   | (3 | ) |   |   | (1 | ) |
| Savings                                                 |   |                              | -      |   |   |   | (4 | ) |   |   | (4 | ) |
| Time deposits less than $100,000                        |   |                              | (76    | ) |   |   | (194 | ) |   |   | (270 | ) |
| Time deposits greater than $100,000                     |   |                              | 20     |   |   |   | (290 | ) |   |   | (270 | ) |
| Brokered deposits                                       |   |                              | (104   | ) |   |   | (10 | ) |   |   | (114 | ) |
| Total interest-bearing deposits                         |   |                              | (156   | ) |   |   | (540 | ) |   |   | (696 | ) |
| Other borrowings                                        |   |                              | (5     | ) |   |   | (6 | ) |   |   | (11 | ) |
| Total interest-bearing liabilities                      |   |                              | (161   | ) |   |   | (546 | ) |   |   | (707 | ) |
|                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in net interest revenue             |   | $                                 | (350   | ) |   | $ | (180 | ) |   | $ | (530 | ) |

----

Index

----

Index

|                                                  |   | March 31, |    |   | December 31, |   |
|-------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (in thousands)                                        |   | 2011      |    |   | 2010         |   |
|                                                  |   |      |    |   |         |   |
| Commercial                                            |   | $         | 3,898   |   |         | $      | 4,162 |   |
| Commercial real estate                                |   |      |    |   |         |   |   |   |
|   Land, development and construction        |   |      | 125,714 |   |         |   | 130,539 |   |
|   Other                                     |   |      | 105,687 |   |         |   | 106,152 |   |
|   Churches                                  |   |      | 75,088  |   |         |   | 79,706 |   |
| Residential real estate                               |   |      | 49,248  |   |         |   | 48,741 |   |
| Consumer                                              |   |      | 10,328  |   |         |   | 10,955 |   |
|         Total |   |      | 369,963 |   |         |   | 380,255 |   |
|                                                  |   |      |    |   |         |   |   |   |
| Deferred loan fees                                    |   |      | (8      | )      |         |   | (13 | ) |
| Allowance for loan losses                             |   |      | (8,234  | )      |         |   | (10,824 | ) |
|     Loans, net                    |   | $         | 361,721 |   |         | $      | 369,418 |   |

----

Index

----

Index

| (in thousands)                                          |   | 2011   |    |   | 2010   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                    |   |   |    |   |   |   |
| Allowance at beginning of the period                    |   | $      | 10,824  |   |   | $      | 13,324 |   |
|                                                    |   |   |    |   |   |   |   |   |
| Loans charged off:                                      |   |   |    |   |   |   |   |   |
|     Real estate                     |   |   | (2,584  | )      |   |   | (124 | ) |
|     Commercial                      |   |   | -       |   |   |   | - |   |
|     Consumer                        |   |   | (40     | )      |   |   | (7 | ) |
|                                                    |   |   | (2,624  | )      |   |   | (131 | ) |
| Recoveries:                                             |   |   |    |   |   |   |   |   |
|     Real estate                     |   |   | 22      |   |   |   | 3,405 |   |
|     Commercial                      |   |   | 4       |   |   |   | - |   |
|     Consumer                        |   |   | 1       |   |   |   | 13 |   |
|                                                    |   |   | 27      |   |   |   | 3,418 |   |
|                                                    |   |   |    |   |   |   |   |   |
| Net (charge-offs) recoveries                            |   |   | (2,597  | )      |   |   | 3,287 |   |
|                                                    |   |   |    |   |   |   |   |   |
| Provision for (recovery of) loan losses                 |   |   | 7       |   |   |   | (2,876 | ) |
|                                                    |   |   |    |   |   |   |   |   |
| Balance at end of the period                            |   | $      | 8,234   |   |   | $      | 13,735 |   |
|                                                    |   |   |    |   |   |   |   |   |
| Total loans:                                            |   |   |    |   |   |   |   |   |
| At period end                                           |   | $      | 369,955 |   |   | $      | 418,384 |   |
| Average                                                 |   |   | 378,031 |   |   |   | 431,729 |   |
|                                                    |   |   |    |   |   |   |   |   |
| Allowance as percentage of period end loans             |   |   | 2.23    | %      |   |   | 3.28 | % |
|                                                    |   |   |    |   |   |   |   |   |
| As a percentage of average loans:                       |   |   |    |   |   |   |   |   |
| Net charge-offs(1)                                      |   |   | 0.69    | %      |   |   | -0.76 | % |
| Provision for loan losses                               |   |   | 0.00    | %      |   |   | -0.67 | % |
|                                                    |   |   |    |   |   |   |   |   |
| (1)  Net charge off percentage not annualized |   |   |    |   |   |   |   |   |

----

Index

|                                                    |   | March 31, 2011      |   |   | December 31, 2010    |   |
|---------------------------------------------------------|--------|---------------------|--------|--------|----------------------|--------|
| (in thousands)                                          |   | Nonperforming Loans |   |   | ForeclosedProperties |   |   | Total |   |   | Nonperforming Loans |   |   | ForeclosedProperties |   |   | Total |   |
|                                                    |   |                |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                              |   | $                   | 2,309  |   |                 | $      | - |   |   | $ | 2,309 |   |   | $ | 2,311 |   |   | $ | - |   |   | $ | 2,311 |   |
| Commercial real estate                                  |   |                |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Land, development and construction          |   |                | 64,950 |   |                 |   | 59,240 |   |   |   | 124,190 |   |   |   | 60,491 |   |   |   | 59,512 |   |   |   | 120,003 |   |
|   Other                                       |   |                | 23,201 |   |                 |   | 7,954 |   |   |   | 31,155 |   |   |   | 20,646 |   |   |   | 8,640 |   |   |   | 29,286 |   |
|   Churches                                    |   |                | 750    |   |                 |   | - |   |   |   | 750 |   |   |   | 754 |   |   |   | - |   |   |   | 754 |   |
| Residential real estate                                 |   |                | 4,495  |   |                 |   | 10,916 |   |   |   | 15,411 |   |   |   | 4,162 |   |   |   | 11,299 |   |   |   | 15,461 |   |
| Consumer                                                |   |                | 54     |   |                 |   | - |   |   |   | 54 |   |   |   | 118 |   |   |   | - |   |   |   | 118 |   |
|         Total   |   | $                   | 95,759 |   |                 | $      | 78,110 |   |   | $ | 173,868 |   |   | $ | 88,482 |   |   | $ | 79,451 |   |   | $ | 167,933 |   |
|                                                    |   |                |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NPLs as a percentage of total loans                     |   |                |   |   |                 |   |   |   |   |   | 25.88 | % |   |   |   |   |   |   |   |   |   |   | 23.27 | % |
| NPAs as a percentage of loans and foreclosed properties |   |                |   |   |                 |   |   | 38.80 | % |   |   |   |   |   |   |   |   |   |   | 36.53 | % |
| NPAs as a percentage of total assets                    |   |                |   |   |                 |   |   |   |   |   | 30.24 | % |   |   |   |   |   |   |   |   |   |   | 29.78 | % |

----

Index

|                                           |   | March 31, 2011 |   |   | December 31, 2010 |   |
|------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                           |   |           |   |   | Past Due          |   |   |   |   |   | Past Due |   |
|                                           |   |           |   |   | Loans over        |   |   |   |   |   | Loans over |   |
|                                           |   |           |   |   | 90 days still     |   |   |   |   |   | 90 days still |   |
|                                           |   | Nonaccrual     |   |   | Accruing          |   |   | Nonaccrual |   |   | Accruing |   |
|                                           |   |           |   |   |              |   |   |   |   |   |   |   |
| Commercial                                     |   | $              | 2,280  |   |              | $      | 29 |   |   | $ | 2,198 |   |   | $ | 113 |   |
| Commercial real estate:                        |   |           |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Land, development and construction |   |           | 57,157 |   |              |   | 7,793 |   |   |   | 60,404 |   |   |   | 87 |   |
|   Other                              |   |           | 21,792 |   |              |   | 1,409 |   |   |   | 20,081 |   |   |   | 565 |   |
|   Churches                           |   |           | 750    |   |              |   | - |   |   |   | 754 |   |   |   | - |   |
| Residential real estate                        |   |           | 4,047  |   |              |   | 448 |   |   |   | 3,904 |   |   |   | 258 |   |
| Consumer                                       |   |           | 52     |   |              |   | 2 |   |   |   | 96 |   |   |   | 22 |   |
|                                           |   | $              | 86,078 |   |              | $      | 9,681 |   |   | $ | 87,437 |   |   | $ | 1,045 |   |

----

Index

----

Index

----

Index

|                       |   |         |   |   |   |   |   | Well Capitalized |   |
|----------------------------|--------|--------------|--------|--------|--------|--------|--------|------------------|--------|
|                       |   |         |   |   |   |   |   | Regulatory       |   |
|                       |   | Consolidated |   |   | Bank   |   |   | Requirement      |   |
|                       |   |         |   |   |   |   |   |             |   |
| Leverage Capital Ratios    |   |         | 2.49   | %      |   |   | 2.47   | %                |   |   | 5.00 | % |
|                       |   |         |   |   |   |   |   |             |   |   |   |   |
| Risk Based Capital Ratios: |   |         |   |   |   |   |   |             |   |   |   |   |
|   Tier 1         |   |         | 2.97   | %      |   |   | 2.94   | %                |   |   | 6.00 | % |
|   Total          |   |         | 4.21   | %      |   |   | 4.18   | %                |   |   | 10.00 | % |

----

Index

| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk |
|---------|------------------------------------------------------------|

----

Index

| ITEM 4. | Controls and Procedures |
|---------|-------------------------|

----

Index

| ITEM 5. | OTHER INFORMATION |
|---------|-------------------|

----

Index

| ITEM 6. | EXHIBITS |
|---------|----------|

|   | (a) | Exhibits. |
|--------|-----|-----------|

|   | 10.3   | First Amendment to Executive Salary Continuation Plan-David H. Gill, dated May 13, 2011.                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                |
|   | 31.1   | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                          |
|   |   |                                                                                                                                                                                |
|   | 31.2   | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.                                                          |
|   |   |                                                                                                                                                                                |
|   | 32     | Certification of the Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----

Index

|   |   | HENRY COUNTY BANCSHARES, INC. |
|--------|--------|-------------------------------|
|   |   | (Registrant)                  |
|   |   |                          |

| DATE:    | May 16, 2011 | By:    | /s/ David H. Gill                |   |
|-------------------------|-------------------|--------|----------------------------------|--------|
|                    |              |   | David H. Gill, President and CEO |   |
|                    |              |   | (Principal Executive Officer)    |   |
|                    |              |   |                             |   |

| DATE:    | May 16, 2011 | By:    | /s/ Charles W. Blair, Jr.                         |   |
|-------------------------|-------------------|--------|---------------------------------------------------|--------|
|                    |              |   | Charles W. Blair, Jr., EVP & CFO              |   |
|                    |              |   | (Principal Financial and Accounting Officer) |   |
|                    |              |   |                                              |   |