| MAINE                                                          | 01-0404322                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| MAIN STREET, DAMARISCOTTA,   MAINE | 04543            |
|---------------------------------------------------|------------------|
| (Address of principal executive offices)          |  (Zip code) |

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| Part I. Financial Information                                                                              | 1  |
|------------------------------------------------------------------------------------------------------------|----|
| Selected Financial Data (Unaudited)                                                                        | 1  |
| Item 1 – Financial Statements                                                                        | 2  |
| Report of Independent Registered Public Accounting Firm                                                    | 2  |
| Consolidated Balance Sheets (Unaudited)                                                                    | 3  |
| Consolidated Statements of Income (Unaudited)                                                              | 4  |
| Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)                               | 5  |
| Consolidated Statements of Cash Flows (Unaudited)                                                          | 6  |
| Notes to Consolidated Financial Statements                                                                 | 7  |
| Note 1 – Basis of Presentation                                                                       | 7  |
| Note 2 –Investment Securities                                                                        | 7  |
| Note 3 – Loans                                                                                       | 10 |
| Note 4 – Allowance for Loan Losses                                                                   | 15 |
| Note 5 – Stock Options and Stock and Stock Based Compensation                                        | 20 |
| Note 6 – Preferred and Common Stock                                                                  | 21 |
| Note 7 – Earnings Per Share                                                                          | 22 |
| Note 8 – Employee Benefit Plans                                                                      | 23 |
| Note 9 – Goodwill and Other Intangible Assets                                                        | 24 |
| Note 10 – Mortgage Servicing Rights                                                                  | 25 |
| Note 11 – Income Taxes                                                                               | 25 |
| Note 12 - Certificates of Deposit                                                                          | 25 |
| Note 13 – Reclassifications                                                                          | 26 |
| Note 14 – Fair Value Disclosures                                                                     | 26 |
| Note 15 – Impact of Recently Issued Accounting Standards                                             | 30 |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31 |
| Forward-Looking Statements                                                                                 | 31 |
| Critical Accounting Policies                                                                               | 31 |
| Use of Non-GAAP Financial Measures                                                                         | 32 |
| Executive Summary                                                                                          | 34 |
| Net Interest Income                                                                                        | 35 |
| Average Daily Balance Sheets                                                                               | 37 |
| Non-Interest Income                                                                                        | 38 |
| Non-Interest Expense                                                                                       | 38 |
| Income Taxes                                                                                               | 38 |
| Investments                                                                                                | 38 |
| Impaired Securities                                                                                        | 38 |
| Federal Home Loan Bank Stock                                                                               | 40 |
| Loans and Loans Held for Sale                                                                              | 42 |
| Credit Risk Management and Allowance for Loan Losses                                                       | 44 |
| Non-Performing Loans and Troubled Debt Restructured                                                        | 48 |
| Impaired Loans                                                                                             | 50 |
| Past Due Loans                                                                                             | 50 |
| Potential Problem Loans and Loans in Process of Foreclosure                                                | 51 |
| Other Real Estate Owned                                                                                    | 51 |
| Goodwill                                                                                                   | 51 |
| Liquidity Management                                                                                       | 53 |
| Deposits                                                                                                   | 53 |
| Borrowed Funds                                                                                             | 53 |
| Shareholders’ Equity                                                                                 | 53 |
| Off-Balance-Sheet Financial Instruments and Contractual Obligations                                        | 54 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk                                  | 54 |
| Market-Risk Management                                                                                     | 55 |
| Asset/Liability Management                                                                                 | 55 |
| Interest Rate Risk Management                                                                              | 56 |
| Item 4: Controls and Procedures                                                                            | 57 |
| Part II – Other Information                                                                          | 58 |
| Item 1 – Legal Proceedings                                                                           | 58 |
| Item 1a – Risk Factors                                                                               | 58 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                 | 58 |
| Item 3 – Default Upon Senior Securities                                                              | 58 |
| Item 4 – Other Information                                                                           | 58 |
| Item 5 – Exhibits                                                                                    | 59 |
| Signatures                                                                                                 | 60 |

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| Dollars in thousands,                      |   | For the six months endedJune 30, |      |   | For the quarters endedJune 30, |   |
|--------------------------------------------|--------|----------------------------------|-----------|--------|--------------------------------|--------|
| except for per share amounts               |   | 2011                             |      |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
|                                       |   |                             |      |   |                           |   |   |   |   |   |   |   |
| Summary of Operations                      |   |                             |      |   |                           |   |   |   |   |   |   |   |
| Interest Income                            |   | $                                | 28,251    |   |                           | $      | 28,348 |   |   | $ | 13,997 |   |   | $ | 14,215 |   |
| Interest Expense                           |   |                             | 7,523     |   |                           |   | 8,370 |   |   |   | 3,774 |   |   |   | 4,258 |   |
| Net Interest Income                        |   |                             | 20,728    |   |                           |   | 19,978 |   |   |   | 10,223 |   |   |   | 9,957 |   |
| Provision for Loan Losses                  |   |                             | 4,100     |   |                           |   | 4,500 |   |   |   | 2,000 |   |   |   | 2,100 |   |
| Non-Interest Income                        |   |                             | 4,511     |   |                           |   | 4,457 |   |   |   | 2,234 |   |   |   | 2,282 |   |
| Non-Interest Expense                       |   |                             | 12,738    |   |                           |   | 12,177 |   |   |   | 6,250 |   |   |   | 5,895 |   |
| Net Income                                 |   |                             | 6,336     |   |                           |   | 5,844 |   |   |   | 3,193 |   |   |   | 3,160 |   |
| Per Common Share Data                      |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings per Share                   |   | $                                | 0.58      |   |                           | $      | 0.53 |   |   | $ | 0.29 |   |   | $ | 0.29 |   |
| Diluted Earnings per Share                 |   |                             | 0.58      |   |                           |   | 0.53 |   |   |   | 0.29 |   |   |   | 0.29 |   |
| Cash Dividends Declared                    |   |                             | 0.390     |   |                           |   | 0.390 |   |   |   | 0.195 |   |   |   | 0.195 |   |
| Book Value per Common Share                |   |                             | 13.42     |   |                           |   | 12.89 |   |   |   | 13.42 |   |   |   | 12.89 |   |
| Tangible Book Value per Common Share       |   |                             | 10.60     |   |                           |   | 10.05 |   |   |   | 10.60 |   |   |   | 10.05 |   |
| Market Value                               |   |                             | 14.86     |   |                           |   | 13.13 |   |   |   | 14.86 |   |   |   | 13.13 |   |
| Financial Ratios                           |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Return on Average Equity1                  |   |                             | 9.90      | %      |                           |   | 9.38 | % |   |   | 9.78 | % |   |   | 10.05 | % |
| Return on Average Tangible Equity1,2       |   |                             | 11.26     | %      |                           |   | 10.64 | % |   |   | 11.09 | % |   |   | 11.50 | % |
| Return on Average Assets1                  |   |                             | 0.90      | %      |                           |   | 0.88 | % |   |   | 0.89 | % |   |   | 0.94 | % |
| Average Equity to Average Assets           |   |                             | 10.78     | %      |                           |   | 11.25 | % |   |   | 10.80 | % |   |   | 11.21 | % |
| Average Tangible Equity to Average Assets2 |   |                             | 8.84      | %      |                           |   | 9.18 | % |   |   | 8.88 | % |   |   | 9.15 | % |
| Net Interest Margin Tax-Equivalent1,2      |   |                             | 3.31      | %      |                           |   | 3.41 | % |   |   | 3.22 | % |   |   | 3.35 | % |
| Dividend Payout Ratio                      |   |                             | 67.24     | %      |                           |   | 73.58 | % |   |   | 67.24 | % |   |   | 67.24 | % |
| Allowance for Loan Losses/Total Loans      |   |                             | 1.70      | %      |                           |   | 1.52 | % |   |   | 1.70 | % |   |   | 1.52 | % |
| Non-Performing Loans to Total Loans        |   |                             | 2.49      | %      |                           |   | 2.53 | % |   |   | 2.49 | % |   |   | 2.53 | % |
| Non-Performing Assets to Total Assets      |   |                             | 2.10      | %      |                           |   | 2.14 | % |   |   | 2.10 | % |   |   | 2.14 | % |
| Efficiency Ratio2                          |   |                             | 47.47     | %      |                           |   | 47.46 | % |   |   | 46.66 | % |   |   | 45.86 | % |
| At Period End                              |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                               |   | $                                | 1,417,690 |   |                           | $      | 1,326,275 |   |   | $ | 1,417,690 |   |   | $ | 1,326,275 |   |
| Total Loans                                |   |                             | 886,929   |   |                           |   | 932,010 |   |   |   | 886,929 |   |   |   | 932,010 |   |
| Total Investment Securities                |   |                             | 442,691   |   |                           |   | 294,584 |   |   |   | 442,691 |   |   |   | 294,584 |   |
| Total Deposits                             |   |                             | 998,838   |   |                           |   | 949,501 |   |   |   | 998,838 |   |   |   | 949,501 |   |
| Total Shareholders’ Equity           |   |                             | 156,210   |   |                           |   | 150,445 |   |   |   | 156,210 |   |   |   | 150,445 |   |

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|                                                                                                                                                 |   | June 30,2011 |          |   | December 31,2010 |   |          | June 30, 2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------------|--------|------------------|--------|---------------|--------------------|--------|
| Assets                                                                                                                                               |   |         |          |   |             |   |          |               |   |
| Cash and cash equivalents                                                                                                                            |   | $            | 14,322,000    |   |             | $      | 13,838,000    |               |   | $ | 22,219,000 |   |
| Time deposits in other banks                                                                                                                         |   |         | 100,000       |   |             |   | 100,000       |               |   |   | - |   |
| Securities available for sale                                                                                                                        |   |         | 304,278,000   |   |             |   | 293,229,000   |               |   |   | 149,249,000 |   |
| Securities to be held to maturity (fair value of $128,426,000 at June 30, 2011, $110,366,000 at December 31, 2010 and $134,249,000 at June 30, 2010) |   |         | 122,970,000   |   |             |   | 107,380,000   |               |   |   | 129,892,000 |   |
| Federal Reserve Bank stock, at cost                                                                                                                  |   |         | 1,412,000     |   |             |   | 1,412,000     |               |   |   | 1,412,000 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                |   |         | 14,031,000    |   |             |   | 14,031,000    |               |   |   | 14,031,000 |   |
| Loans held for sale                                                                                                                                  |   |         | 419,000       |   |             |   | 2,806,000     |               |   |   | 3,426,000 |   |
| Loans                                                                                                                                                |   |         | 886,929,000   |   |             |   | 887,596,000   |               |   |   | 932,010,000 |   |
| Less allowance for loan losses                                                                                                                       |   |         | 15,034,000    |   |             |   | 13,316,000    |               |   |   | 14,165,000 |   |
| Net loans                                                                                                                                            |   |         | 871,895,000   |   |             |   | 874,280,000   |               |   |   | 917,845,000 |   |
| Accrued interest receivable                                                                                                                          |   |         | 6,511,000     |   |             |   | 5,263,000     |               |   |   | 6,536,000 |   |
| Premises and equipment                                                                                                                               |   |         | 18,351,000    |   |             |   | 18,980,000    |               |   |   | 18,739,000 |   |
| Other real estate owned                                                                                                                              |   |         | 7,723,000     |   |             |   | 4,929,000     |               |   |   | 4,794,000 |   |
| Goodwill                                                                                                                                             |   |         | 27,684,000    |   |             |   | 27,684,000    |               |   |   | 27,684,000 |   |
| Other assets                                                                                                                                         |   |         | 27,994,000    |   |             |   | 29,870,000    |               |   |   | 30,448,000 |   |
| Total assets                                                                                                                                         |   | $            | 1,417,690,000 |   |             | $      | 1,393,802,000 |               |   | $ | 1,326,275,000 |   |
| Liabilities                                                                                                                                          |   |         |          |   |             |   |          |               |   |   |   |   |
| Demand deposits                                                                                                                                      |   | $            | 71,517,000    |   |             | $      | 74,032,000    |               |   | $ | 62,821,000 |   |
| NOW deposits                                                                                                                                         |   |         | 117,064,000   |   |             |   | 119,823,000   |               |   |   | 112,256,000 |   |
| Money market deposits                                                                                                                                |   |         | 69,681,000    |   |             |   | 71,604,000    |               |   |   | 77,231,000 |   |
| Savings deposits                                                                                                                                     |   |         | 107,278,000   |   |             |   | 100,870,000   |               |   |   | 95,686,000 |   |
| Certificates of deposit                                                                                                                              |   |         | 633,298,000   |   |             |   | 608,189,000   |               |   |   | 601,507,000 |   |
| Total deposits                                                                                                                                       |   |         | 998,838,000   |   |             |   | 974,518,000   |               |   |   | 949,501,000 |   |
| Borrowed funds – short term                                                                                                                    |   |         | 119,170,000   |   |             |   | 127,160,000   |               |   |   | 103,771,000 |   |
| Borrowed funds – long term                                                                                                                     |   |         | 130,166,000   |   |             |   | 130,170,000   |               |   |   | 110,173,000 |   |
| Other liabilities                                                                                                                                    |   |         | 13,306,000    |   |             |   | 12,106,000    |               |   |   | 12,385,000 |   |
| Total Liabilities                                                                                                                                    |   |         | 1,261,480,000 |   |             |   | 1,243,954,000 |               |   |   | 1,175,830,000 |   |
| Shareholders' equity                                                                                                                                 |   |         |          |   |             |   |          |               |   |   |   |   |
| Preferred stock, $1,000 preference value per share                                                                                                   |   |         | 24,754,000    |   |             |   | 24,705,000    |               |   |   | 24,655,000 |   |
| Common stock, one cent par value per share                                                                                                           |   |         | 98,000        |   |             |   | 98,000        |               |   |   | 98,000 |   |
| Additional paid-in capital                                                                                                                           |   |         | 45,629,000    |   |             |   | 45,474,000    |               |   |   | 45,298,000 |   |
| Retained earnings                                                                                                                                    |   |         | 83,594,000    |   |             |   | 81,701,000    |               |   |   | 79,864,000 |   |
| Accumulated other comprehensive income (loss)                                                                                                        |   |         |          |   |             |   |          |               |   |   |   |   |
|   Net unrealized gain (loss) on securities available-for-sale                                                                              |   |         | 2,198,000     |   |             |   | (2,057,000    | )                  |   |   | 732,000 |   |
|   Net unrealized loss on postretirement benefit costs                                                                                      |   |         | (63,000       | )      |             |   | (73,000       | )                  |   |   | (202,000 | ) |
| Total shareholders' equity                                                                                                                           |   |         | 156,210,000   |   |             |   | 149,848,000   |               |   |   | 150,445,000 |   |
| Total liabilities & shareholders' equity                                                                                                         |   | $            | 1,417,690,000 |   |             | $      | 1,393,802,000 |               |   | $ | 1,326,275,000 |   |
| Common Stock                                                                                                                                         |   |         |          |   |             |   |          |               |   |   |   |   |
| Number of shares authorized                                                                                                                          |   |         | 18,000,000    |   |             |   | 18,000,000    |               |   |   | 18,000,000 |   |
| Number of shares issued and outstanding                                                                                                              |   |         | 9,793,706     |   |             |   | 9,773,025     |               |   |   | 9,758,218 |   |
| Book value per common share                                                                                                                          |   | $            | 13.42         |   |             | $      | 12.80         |               |   | $ | 12.89 |   |
| Tangible book value per common share                                                                                                                 |   | $            | 10.60         |   |             | $      | 9.97          |               |   | $ | 10.05 |   |

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|                                                         |   | For the six months endedJune 30, |       |   | For the quarters endedJune 30, |   |
|--------------------------------------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                                                         |   | 2011                             |       |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
| Interest income                                              |   |                             |       |   |                           |   |   |   |   |   |   |   |
| Interest and fees on loans                                   |   | $                                | 20,128,000 |   |                           | $      | 22,206,000 |   |   | $ | 9,955,000 |   |   | $ | 11,056,000 |   |
| Interest on deposits with other banks                        |   |                             | 3,000      |   |                           |   | 2,000 |   |   |   | 1,000 |   |   |   | - |   |
| Interest and dividends on investments                        |   |                             | 8,120,000  |   |                           |   | 6,140,000 |   |   |   | 4,041,000 |   |   |   | 3,159,000 |   |
|      Total interest income          |   |                             | 28,251,000 |   |                           |   | 28,348,000 |   |   |   | 13,997,000 |   |   |   | 14,215,000 |   |
| Interest expense                                             |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                         |   |                             | 5,081,000  |   |                           |   | 5,051,000 |   |   |   | 2,518,000 |   |   |   | 2,571,000 |   |
| Interest on borrowed funds                                   |   |                             | 2,442,000  |   |                           |   | 3,319,000 |   |   |   | 1,256,000 |   |   |   | 1,687,000 |   |
|      Total interest expense         |   |                             | 7,523,000  |   |                           |   | 8,370,000 |   |   |   | 3,774,000 |   |   |   | 4,258,000 |   |
| Net interest income                                          |   |                             | 20,728,000 |   |                           |   | 19,978,000 |   |   |   | 10,223,000 |   |   |   | 9,957,000 |   |
| Provision for loan losses                                    |   |                             | 4,100,000  |   |                           |   | 4,500,000 |   |   |   | 2,000,000 |   |   |   | 2,100,000 |   |
| Net interest income after provision for loan losses          |   |                             | 16,628,000 |   |                           |   | 15,478,000 |   |   |   | 8,223,000 |   |   |   | 7,857,000 |   |
| Non-interest income                                          |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Investment management and fiduciary income                   |   |                             | 782,000    |   |                           |   | 787,000 |   |   |   | 358,000 |   |   |   | 376,000 |   |
| Service charges on deposit accounts                          |   |                             | 1,351,000  |   |                           |   | 1,505,000 |   |   |   | 711,000 |   |   |   | 796,000 |   |
| Net securities gains                                         |   |                             | 229,000    |   |                           |   | 2,000 |   |   |   | 229,000 |   |   |   | - |   |
| Mortgage origination and servicing income                    |   |                             | 652,000    |   |                           |   | 613,000 |   |   |   | 193,000 |   |   |   | 335,000 |   |
| Other operating income                                       |   |                             | 1,497,000  |   |                           |   | 1,550,000 |   |   |   | 743,000 |   |   |   | 775,000 |   |
|      Total non-interest income      |   |                             | 4,511,000  |   |                           |   | 4,457,000 |   |   |   | 2,234,000 |   |   |   | 2,282,000 |   |
| Non-interest expense                                         |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                               |   |                             | 6,005,000  |   |                           |   | 5,553,000 |   |   |   | 2,928,000 |   |   |   | 2,808,000 |   |
| Occupancy expense                                            |   |                             | 827,000    |   |                           |   | 776,000 |   |   |   | 378,000 |   |   |   | 382,000 |   |
| Furniture and equipment expense                              |   |                             | 1,111,000  |   |                           |   | 1,121,000 |   |   |   | 561,000 |   |   |   | 540,000 |   |
| FDIC insurance premiums                                      |   |                             | 806,000    |   |                           |   | 952,000 |   |   |   | 405,000 |   |   |   | 477,000 |   |
| Amortization of identified intangibles                       |   |                             | 141,000    |   |                           |   | 142,000 |   |   |   | 70,000 |   |   |   | 71,000 |   |
| Other operating expense                                      |   |                             | 3,848,000  |   |                           |   | 3,633,000 |   |   |   | 1,908,000 |   |   |   | 1,617,000 |   |
|      Total non-interest expense     |   |                             | 12,738,000 |   |                           |   | 12,177,000 |   |   |   | 6,250,000 |   |   |   | 5,895,000 |   |
| Income before income taxes                                   |   |                             | 8,401,000  |   |                           |   | 7,758,000 |   |   |   | 4,207,000 |   |   |   | 4,244,000 |   |
| Applicable income taxes                                      |   |                             | 2,065,000  |   |                           |   | 1,914,000 |   |   |   | 1,014,000 |   |   |   | 1,084,000 |   |
| NET INCOME                                                   |   | $                                | 6,336,000  |   |                           | $      | 5,844,000 |   |   | $ | 3,193,000 |   |   | $ | 3,160,000 |   |
| Less dividends & premium amortization on preferred stock |   |                             | 674,000    |   |                           |   | 674,000 |   |   |   | 337,000 |   |   |   | 337,000 |   |
| Net income available to common shareholders                  |   | $                                | 5,662,000  |   |                           | $      | 5,170,000 |   |   | $ | 2,856,000 |   |   | $ | 2,823,000 |   |
| Basic earnings per common share                              |   | $                                | 0.58       |   |                           | $      | 0.53 |   |   | $ | 0.29 |   |   | $ | 0.29 |   |
| Diluted earnings per common share                            |   | $                                | 0.58       |   |                           | $      | 0.53 |   |   | $ | 0.29 |   |   | $ | 0.29 |   |
| Weighted average number of common shares outstanding         |   |                             | 9,781,766  |   |                           |   | 9,753,500 |   |   |   | 9,784,743 |   |   |   | 9,756,907 |   |
| Incremental shares                                           |   |                             | 10,399     |   |                           |   | 5,009 |   |   |   | 12,238 |   |   |   | 5,128 |   |
| Cash dividends declared per common share                     |   | $                                | 0.390      |   |                           | $      | 0.390 |   |   | $ | 0.195 |   |   | $ | 0.195 |   |

----

|                                                                                   |   |      |       |   |                       |   |      |     |   |   |          |   |   | Accumulated   |       |   |   |   |
|----------------------------------------------------------------------------------------|--------|-----------|------------|--------|----------------------------|--------|-----------|----------|--------|--------|---------------|--------|--------|---------------|------------|--------|--------|--------|
|                                                                                   |   |      |       |   | Common stock and           |   |      |     |   |   | other         |   |   | Total         |       |
|                                                                                   |   | Preferred |       |   | additional paid-in capital |   |      | Retained |   |   | comprehensive |   |   | shareholders' |       |
|                                                                                   |   | stock     |       |   | Shares                     |   |      | Amount   |   |   | earnings      |   |   | income (loss) |       |   | equity |   |
| Balance at December 31, 2009                                                           |   | $         | 24,606,000 |   |                       |   | 9,744,170 |     |   | $      | 45,218,000    |   |   | $             | 78,450,000 |   |   | $      | (336,000 | ) |   | $ | 147,938,000 |   |
| Net income                                                                             |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | 5,844,000  |   |   |   | - |   |   |   | 5,844,000 |   |
| Net unrealized gain on securities available for sale, net of taxes of $461,000         |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | -          |   |   |   | 857,000 |   |   |   | 857,000 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $6,000 |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | -          |   |   |   | 9,000 |   |   |   | 9,000 |   |
| Comprehensive income                                                                   |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | 5,844,000  |   |   |   | 866,000 |   |   |   | 6,710,000 |   |
| Cash dividends declared                                                                |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | (4,430,000 | )      |   |   | - |   |   |   | (4,430,000 | ) |
| Equity compensation expense                                                            |   |      | -          |   |                       |   | -         |     |   |   | 19,000        |   |   |          | -          |   |   |   | - |   |   |   | 19,000 |   |
| Amortization of premium for preferred stock issuance                                   |   |      | 49,000     |   |                       |   | -         |     |   |   | (49,000       | )      |   |          | -          |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of common stock                                                     |   |      | -          |   |                       |   | 14,048    |     |   |   | 208,000       |   |   |          | -          |   |   |   | - |   |   |   | 208,000 |   |
| Balance at June 30, 2010                                                               |   | $         | 24,655,000 |   |                       |   | 9,758,218 |     |   | $      | 45,396,000    |   |   | $             | 79,864,000 |   |   | $      | 530,000 |   |   | $ | 150,445,000 |   |
| Balance at December 31, 2010                                                           |   | $         | 24,705,000 |   |                       |   | 9,773,025 |     |   | $      | 45,572,000    |   |   | $             | 81,701,000 |   |   | $      | (2,130,000 | ) |   | $ | 149,848,000 |   |
| Net income                                                                             |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | 6,336,000  |   |   |   | - |   |   |   | 6,336,000 |   |
| Net unrealized gain on securities available for sale, net of taxes of $2,291,000       |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | -          |   |   |   | 4,255,000 |   |   |   | 4,255,000 |   |
| Unrecognized transition obligation for postretirement benefits, net of taxes of $5,000 |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | -          |   |   |   | 10,000 |   |   |   | 10,000 |   |
| Comprehensive income                                                                   |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | 6,336,000  |   |   |   | 4,265,000 |   |   |   | 10,601,000 |   |
| Cash dividends declared                                                                |   |      | -          |   |                       |   | -         |     |   |   | -             |   |   |          | (4,443,000 | )      |   |   | - |   |   |   | (4,443,000 | ) |
| Equity compensation expense                                                            |   |      | -          |   |                       |   | -         |     |   |   | 11,000        |   |   |          | -          |   |   |   | - |   |   |   | 11,000 |   |
| Amortization of premium for preferred stock issuance                                   |   |      | 49,000     |   |                       |   | -         |     |   |   | (49,000       | )      |   |          | -          |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of common stock                                                     |   |      | -          |   |                       |   | 20,681    |     |   |   | 193,000       |   |   |          | -          |   |   |   | - |   |   |   | 193,000 |   |
| Balance at June 30, 2011                                                               |   | $         | 24,754,000 |   |                       |   | 9,793,706 |     |   | $      | 45,727,000    |   |   | $             | 83,594,000 |   |   | $      | 2,135,000 |   |   | $ | 156,210,000 |   |

----

|                                                                              |   | For the six months ended |         |
|-----------------------------------------------------------------------------------|--------|--------------------------|--------------|
|                                                                              |   | June 30, 2011            |         |   | June 30, 2010 |   |
| Cash flows from operating activities                                              |   |                     |         |   |   |   |
|      Net income                                          |   | $                        | 6,336,000    |   |   | $ | 5,844,000 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                     |         |   |   |
| Depreciation                                                                      |   |                     | 681,000      |   |   |   | 726,000 |   |
| Change in deferred taxes                                                          |   |                     | (374,000     | ) |   |   | 192,000 |   |
| Provision for loan losses                                                         |   |                     | 4,100,000    |   |   |   | 4,500,000 |   |
| Loans originated for resale                                                       |   |                     | (20,502,000  | ) |   |   | (21,553,000 | ) |
| Proceeds from sales and transfers of loans                                        |   |                     | 22,889,000   |   |   |   | 21,003,000 |   |
| Net gain on sale or call of securities available for sale                         |   |                     | (229,000     | ) |   |   | (2,000 | ) |
| Net loss (gain) on sale of other real estate owned                                |   |                     | 47,000       |   |   |   | (19,000 | ) |
| Provision for losses on other real estate owned                                   |   |                     | 145,000      |   |   |   | 164,000 |   |
| Equity compensation expense                                                       |   |                     | 11,000       |   |   |   | 19,000 |   |
| Net increase in other assets and accrued interest                                 |   |                     | (482,000     | ) |   |   | (2,429,000 | ) |
| Net increase in other liabilities                                                 |   |                     | 66,000       |   |   |   | 895,000 |   |
| Net loss on disposal of premises and equipment                                    |   |                     | 5,000        |   |   |   | - |   |
| Net amortization (accretion) of premiums on investments                           |   |                     | 2,048,000    |   |   |   | (203,000 | ) |
| Amortization of investment in limited partnership                                 |   |                     | 195,000      |   |   |   | 150,000 |   |
| Net acquisition amortization                                                      |   |                     | 103,000      |   |   |   | 244,000 |   |
|      Net cash provided by operating activities           |   |                     | 15,039,000   |   |   |   | 9,531,000 |   |
| Cash flows from investing activities                                              |   |                     |         |   |   |   |   |   |
| Proceeds from sales of securities available for sale                              |   |                     | 75,176,000   |   |   |   | 202,000 |   |
| Proceeds from maturities, payments and calls of securities available for sale     |   |                     | 26,723,000   |   |   |   | 35,132,000 |   |
| Proceeds from maturities, payments and calls of securities to be held to maturity |   |                     | 10,441,000   |   |   |   | 60,755,000 |   |
| Proceeds from sales of other real estate owned                                    |   |                     | 992,000      |   |   |   | 1,963,000 |   |
| Purchases of securities available for sale                                        |   |                     | (107,910,000 | ) |   |   | (101,332,000 | ) |
| Purchases of securities to be held to maturity                                    |   |                     | (26,342,000  | ) |   |   | - |   |
| Net (increase) decrease in loans                                                  |   |                     | (5,693,000   | ) |   |   | 14,953,000 |   |
| Capital expenditures                                                              |   |                     | (57,000      | ) |   |   | (1,134,000 | ) |
|      Net cash provided by (used in) investing activities |   |                     | (26,670,000  | ) |   |   | 10,539,000 |   |
| Cash flows from financing activities                                              |   |                     |         |   |   |   |   |   |
| Net decrease in demand, savings, and money market accounts                        |   |                     | (789,000     | ) |   |   | (18,576,000 | ) |
| Net increase in certificates of deposit                                           |   |                     | 25,141,000   |   |   |   | 45,442,000 |   |
| Advances on long-term borrowings                                                  |   |                     | -            |   |   |   | 10,000,000 |   |
| Net decrease in short-term borrowings                                             |   |                     | (7,987,000   | ) |   |   | (45,827,000 | ) |
| Proceeds from sale of common stock                                                |   |                     | 193,000      |   |   |   | 208,000 |   |
| Dividends paid                                                                    |   |                     | (4,443,000   | ) |   |   | (4,430,000 | ) |
|      Net cash provided (used) by financing activities    |   |                     | 12,115,000   |   |   |   | (13,183,000 | ) |
| Net increase in cash and cash equivalents                                         |   |                     | 484,000      |   |   |   | 6,887,000 |   |
| Cash and cash equivalents at beginning of year                                    |   |                     | 13,838,000   |   |   |   | 15,332,000 |   |
|      Cash and cash equivalents at end of period          |   | $                        | 14,322,000   |   |   | $ | 22,219,000 |   |
| Interest paid                                                                     |   | $                        | 7,594,000    |   |   | $ | 8,313,000 |   |
| Income taxes paid                                                                 |   |                     | 1,297,000    |   |   |   | 1,210,000 |   |
| Non-cash transactions                                                             |   |                     |         |   |   |   |   |   |
|    Transfer from loans to other real estate owned                  |   |                     | 3,978,000    |   |   |   | 1,557,000 |   |

----

|                              |   | Amortized |        |   | Unrealized |   |      | Unrealized |   |   | Fair Value  |   |
|-----------------------------------|--------|-----------|-------------|--------|------------|--------|-----------|------------|--------|--------|-------------|--------|
|                              |   | Cost      |        |   | Gains      |   |      | Losses     |   |   | (Estimated) |   |
| Securities available for sale     |   |      |        |   |       |   |      |       |   |   |        |   |
| U.S. Treasury and agency          |   | $         | 15,324,000  |   |       | $      | 799,000   |       |   | $      | -           |   |   | $ | 16,123,000 |   |
| Mortgage-backed securities        |   |      | 220,245,000 |   |       |   | 2,548,000 |       |   |   | (1,269,000  | )      |   |   | 221,524,000 |   |
| State and political subdivisions  |   |      | 63,696,000  |   |       |   | 1,573,000 |       |   |   | (107,000    | )      |   |   | 65,162,000 |   |
| Corporate securities              |   |      | 1,105,000   |   |       |   | -         |       |   |   | (169,000    | )      |   |   | 936,000 |   |
| Other equity securities           |   |      | 527,000     |   |       |   | 26,000    |       |   |   | (20,000     | )      |   |   | 533,000 |   |
|                              |   | $         | 300,897,000 |   |       | $      | 4,946,000 |       |   | $      | (1,565,000  | )      |   | $ | 304,278,000 |   |
| Securities to be held to maturity |   |      |        |   |       |   |      |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency          |   | $         | 12,970,000  |   |       | $      | -         |       |   | $      | (186,000    | )      |   | $ | 12,784,000 |   |
| Mortgage-backed securities        |   |      | 60,836,000  |   |       |   | 3,626,000 |       |   |   | (37,000     | )      |   |   | 64,425,000 |   |
| State and political subdivisions  |   |      | 48,864,000  |   |       |   | 2,399,000 |       |   |   | (346,000    | )      |   |   | 50,917,000 |   |
| Corporate securities              |   |      | 300,000     |   |       |   | -         |       |   |   | -           |   |   |   | 300,000 |   |
|                              |   | $         | 122,970,000 |   |       | $      | 6,025,000 |       |   | $      | (569,000    | )      |   | $ | 128,426,000 |   |
| Non-marketable securities         |   |      |        |   |       |   |      |       |   |   |        |   |   |   |   |   |
| Federal Home Loan Bank Stock      |   | $         | 14,031,000  |   |       | $      | -         |       |   | $      | -           |   |   | $ | 14,031,000 |   |
| Federal Reserve Bank Stock        |   |      | 1,412,000   |   |       |   | -         |       |   |   | -           |   |   |   | 1,412,000 |   |
|                              |   | $         | 15,443,000  |   |       | $      | -         |       |   | $      | -           |   |   | $ | 15,443,000 |   |

----

|                              |   | Amortized |        |   | Unrealized |   |      | Unrealized |   |   | Fair Value  |   |
|-----------------------------------|--------|-----------|-------------|--------|------------|--------|-----------|------------|--------|--------|-------------|--------|
|                              |   | Cost      |        |   | Gains      |   |      | Losses     |   |   | (Estimated) |   |
| Securities available for sale     |   |      |        |   |       |   |      |       |   |   |        |   |
| U.S. Treasury and agency          |   | $         | 15,380,000  |   |       | $      | 665,000   |       |   | $      | -           |   |   | $ | 16,045,000 |   |
| Mortgage-backed securities        |   |      | 236,126,000 |   |       |   | 1,024,000 |       |   |   | (2,736,000  | )      |   |   | 234,414,000 |   |
| State and political subdivisions  |   |      | 43,404,000  |   |       |   | 171,000   |       |   |   | (2,051,000  | )      |   |   | 41,524,000 |   |
| Corporate securities              |   |      | 1,113,000   |   |       |   | -         |       |   |   | (247,000    | )      |   |   | 866,000 |   |
| Other equity securities           |   |      | 371,000     |   |       |   | 19,000    |       |   |   | (10,000     | )      |   |   | 380,000 |   |
|                              |   | $         | 296,394,000 |   |       | $      | 1,879,000 |       |   | $      | (5,044,000  | )      |   | $ | 293,229,000 |   |
| Securities to be held to maturity |   |      |        |   |       |   |      |       |   |   |        |   |   |   |   |   |
| U.S. Treasury and agency          |   | $         | 2,190,000   |   |       | $      | 35,000    |       |   | $      | -           |   |   | $ | 2,225,000 |   |
| Mortgage-backed securities        |   |      | 55,710,000  |   |       |   | 2,656,000 |       |   |   | (144,000    | )      |   |   | 58,222,000 |   |
| State and political subdivisions  |   |      | 49,330,000  |   |       |   | 1,102,000 |       |   |   | (663,000    | )      |   |   | 49,769,000 |   |
| Corporate securities              |   |      | 150,000     |   |       |   | -         |       |   |   | -           |   |   |   | 150,000 |   |
|                              |   | $         | 107,380,000 |   |       | $      | 3,793,000 |       |   | $      | (807,000    | )      |   | $ | 110,366,000 |   |
| Non-marketable securities         |   |      |        |   |       |   |      |       |   |   |        |   |   |   |   |   |
| Federal Home Loan Bank Stock      |   | $         | 14,031,000  |   |       | $      | -         |       |   | $      | -           |   |   | $ | 14,031,000 |   |
| Federal Reserve Bank Stock        |   |      | 1,412,000   |   |       |   | -         |       |   |   | -           |   |   |   | 1,412,000 |   |
|                              |   | $         | 15,443,000  |   |       | $      | -         |       |   | $      | -           |   |   | $ | 15,443,000 |   |

|                  |   | Securities available for sale |        |   | Securities to be held to maturity |   |
|-----------------------|--------|-------------------------------|-------------|--------|-----------------------------------|--------|
|                  |   | AmortizedCost                 |        |   | Fair Value (Estimated)            |   |   | AmortizedCost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less |   | $                             | 5,032,000   |   |                              | $      | 4,941,000 |   |   | $ | 227,000 |   |   | $ | 227,000 |   |
| Due in 1 to 5 years   |   |                          | 7,623,000   |   |                              |   | 7,904,000 |   |   |   | 10,633,000 |   |   |   | 11,147,000 |   |
| Due in 5 to 10 years  |   |                          | 25,845,000  |   |                              |   | 26,099,000 |   |   |   | 23,562,000 |   |   |   | 24,623,000 |   |
| Due after 10 years    |   |                          | 261,870,000 |   |                              |   | 264,801,000 |   |   |   | 88,548,000 |   |   |   | 92,429,000 |   |
| Equity securities     |   |                          | 527,000     |   |                              |   | 533,000 |   |   |   | - |   |   |   | - |   |
|                  |   | $                             | 300,897,000 |   |                              | $      | 304,278,000 |   |   | $ | 122,970,000 |   |   | $ | 128,426,000 |   |

|                  |   | Securities available for sale |        |   | Securities to be held to maturity |   |
|-----------------------|--------|-------------------------------|-------------|--------|-----------------------------------|--------|
|                  |   | AmortizedCost                 |        |   | Fair Value (Estimated)            |   |   | AmortizedCost |   |   | Fair Value (Estimated) |   |
| Due in 1 year or less |   | $                             | -           |   |                              | $      | - |   |   | $ | 1,195,000 |   |   | $ | 1,203,000 |   |
| Due in 1 to 5 years   |   |                          | 2,950,000   |   |                              |   | 3,099,000 |   |   |   | 5,475,000 |   |   |   | 5,749,000 |   |
| Due in 5 to 10 years  |   |                          | 2,385,000   |   |                              |   | 2,404,000 |   |   |   | 13,838,000 |   |   |   | 14,435,000 |   |
| Due after 10 years    |   |                          | 290,688,000 |   |                              |   | 287,346,000 |   |   |   | 86,872,000 |   |   |   | 88,979,000 |   |
| Equity securities     |   |                          | 371,000     |   |                              |   | 380,000 |   |   |   | - |   |   |   | - |   |
|                  |   | $                             | 296,394,000 |   |                              | $      | 293,229,000 |   |   | $ | 107,380,000 |   |   | $ | 110,366,000 |   |

----

|                 |   | For the six months endedJune 30, 2011 |       |   | For the six months endedJune 30, 2010 |   |
|----------------------|--------|---------------------------------------|------------|--------|---------------------------------------|--------|
| Proceeds from sales  |   | $                                     | 75,176,000 |   |                                  | $      | 202,000 |   |
| Gross gains          |   | $                                     | 957,000    |   |                                  | $      | 2,000 |   |
| Gross losses         |   |                                  | (728,000   | )      |                                  |   | - |   |
| Net gain             |   | $                                     | 229,000    |   |                                  | $      | 2,000 |   |
| Related income taxes |   | $                                     | 80,000     |   |                                  | $      | 1,000 |   |

|                             |   | Less than 12 months |       |   | 12 months or more |   |       | Total  |   |
|----------------------------------|--------|---------------------|------------|--------|-------------------|--------|------------|--------|--------|
|                             |   | Fair                |       |   | Unrealized        |   |       | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                             |   | Value               |       |   | Losses            |   |       | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 12,784,000 |   |              | $      | (186,000   | )      |   | $ | - |   |   | $ | - |   |   | $ | 12,784,000 |   |   | $ | (186,000 | ) |
| Mortgage-backed securities       |   |                | 71,157,000 |   |              |   | (1,044,000 | )      |   |   | 3,681,000 |   |   |   | (262,000 | ) |   |   | 74,838,000 |   |   |   | (1,306,000 | ) |
| State and political subdivisions |   |                | 12,050,000 |   |              |   | (142,000   | )      |   |   | 1,489,000 |   |   |   | (311,000 | ) |   |   | 13,539,000 |   |   |   | (453,000 | ) |
| Corporate securities             |   |                | -          |   |              |   | -          |   |   |   | 936,000 |   |   |   | (169,000 | ) |   |   | 936,000 |   |   |   | (169,000 | ) |
| Other equity securities          |   |                | 247,000    |   |              |   | (15,000    | )      |   |   | 48,000 |   |   |   | (5,000 | ) |   |   | 295,000 |   |   |   | (20,000 | ) |
|                             |   | $                   | 96,238,000 |   |              | $      | (1,387,000 | )      |   | $ | 6,154,000 |   |   | $ | (747,000 | ) |   | $ | 102,392,000 |   |   | $ | (2,134,000 | ) |

|                             |   | Less than 12 months |        |   | 12 months or more |   |       | Total  |   |
|----------------------------------|--------|---------------------|-------------|--------|-------------------|--------|------------|--------|--------|
|                             |   | Fair                |        |   | Unrealized        |   |       | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                             |   | Value               |        |   | Losses            |   |       | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | -           |   |              | $      | -          |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Mortgage-backed securities       |   |                | 160,767,000 |   |              |   | (2,654,000 | )      |   |   | 5,348,000 |   |   |   | (226,000 | ) |   |   | 166,115,000 |   |   |   | (2,880,000 | ) |
| State and political subdivisions |   |                | 44,513,000  |   |              |   | (2,307,000 | )      |   |   | 1,355,000 |   |   |   | (407,000 | ) |   |   | 45,868,000 |   |   |   | (2,714,000 | ) |
| Corporate securities             |   |                | -           |   |              |   | -          |   |   |   | 866,000 |   |   |   | (247,000 | ) |   |   | 866,000 |   |   |   | (247,000 | ) |
| Other equity securities          |   |                | -           |   |              |   | -          |   |   |   | 56,000 |   |   |   | (10,000 | ) |   |   | 56,000 |   |   |   | (10,000 | ) |
|                             |   | $                   | 205,280,000 |   |              | $      | (4,961,000 | )      |   | $ | 7,625,000 |   |   | $ | (890,000 | ) |   | $ | 212,905,000 |   |   | $ | (5,851,000 | ) |

----

|                           |   | June 30, 2011 |        |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|---------------|-------------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |        |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 263,337,000 |   |              |   | 29.7   | %             |   | $ | 245,540,000 |   |   |   | 27.7 | % |   | $ | 260,799,000 |   |   |   | 28.0 | % |
|    Construction |   |          | 29,386,000  |   |              |   | 3.3    | %             |   |   | 41,869,000 |   |   |   | 4.7 | % |   |   | 35,932,000 |   |   |   | 3.9 | % |
|    Other        |   |          | 102,499,000 |   |              |   | 11.6   | %             |   |   | 101,462,000 |   |   |   | 11.4 | % |   |   | 113,831,000 |   |   |   | 12.2 | % |
| Municipal                      |   |          | 19,974,000  |   |              |   | 2.3    | %             |   |   | 21,833,000 |   |   |   | 2.5 | % |   |   | 23,795,000 |   |   |   | 2.6 | % |
| Residential                    |   |          |        |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 335,807,000 |   |              |   | 37.9   | %             |   |   | 337,927,000 |   |   |   | 38.1 | % |   |   | 359,774,000 |   |   |   | 38.4 | % |
|    Construction |   |          | 11,063,000  |   |              |   | 1.2    | %             |   |   | 15,512,000 |   |   |   | 1.7 | % |   |   | 18,302,000 |   |   |   | 2.0 | % |
| Home equity line of credit     |   |          | 107,224,000 |   |              |   | 12.0   | %             |   |   | 105,297,000 |   |   |   | 11.9 | % |   |   | 100,450,000 |   |   |   | 10.8 | % |
| Consumer                       |   |          | 17,639,000  |   |              |   | 2.0    | %             |   |   | 18,156,000 |   |   |   | 2.0 | % |   |   | 19,127,000 |   |   |   | 2.1 | % |
| Total loans                    |   | $             | 886,929,000 |   |              |   | 100.0  | %             |   | $ | 887,596,000 |   |   |   | 100.0 | % |   | $ | 932,010,000 |   |   |   | 100.0 | % |

----

|                           |   | 30-89 DaysPast Due |       |   | 90+ DaysPast Due |   |       | AllPast Due |   |   | Current    |   |   | Total  |        |   | 90+ Days & Accruing |   |
|--------------------------------|--------|--------------------|------------|--------|------------------|--------|------------|-------------|--------|--------|------------|--------|--------|--------|-------------|--------|-------------------------|--------|
| Commercial                     |   |               |       |   |             |   |       |        |   |   |       |   |   |   |        |   |                    |   |
|    Real estate  |   | $                  | 2,227,000  |   |             | $      | 4,051,000  |        |   | $      | 6,278,000  |   |   | $      | 257,059,000 |   |                    | $      | 263,337,000 |   |   | $ | - |   |
|    Construction |   |               | 117,000    |   |             |   | -          |        |   |   | 117,000    |   |   |   | 29,269,000  |   |                    |   | 29,386,000 |   |   |   | - |   |
|    Other        |   |               | 544,000    |   |             |   | 997,000    |        |   |   | 1,541,000  |   |   |   | 100,958,000 |   |                    |   | 102,499,000 |   |   |   | 38,000 |   |
| Municipal                      |   |               | -          |   |             |   | -          |        |   |   | -          |   |   |   | 19,974,000  |   |                    |   | 19,974,000 |   |   |   | - |   |
| Residential                    |   |               |       |   |             |   |       |        |   |   |       |   |   |   |        |   |                    |   |   |   |   |   |   |   |
|    Term         |   |               | 6,093,000  |   |             |   | 9,916,000  |        |   |   | 16,009,000 |   |   |   | 319,798,000 |   |                    |   | 335,807,000 |   |   |   | 309,000 |   |
|    Construction |   |               | -          |   |             |   | 334,000    |        |   |   | 334,000    |   |   |   | 10,729,000  |   |                    |   | 11,063,000 |   |   |   | - |   |
| Home equity line of credit     |   |               | 868,000    |   |             |   | 740,000    |        |   |   | 1,608,000  |   |   |   | 105,616,000 |   |                    |   | 107,224,000 |   |   |   | - |   |
| Consumer                       |   |               | 258,000    |   |             |   | 8,000      |        |   |   | 266,000    |   |   |   | 17,373,000  |   |                    |   | 17,639,000 |   |   |   | 8,000 |   |
| Total                          |   | $                  | 10,107,000 |   |             | $      | 16,046,000 |        |   | $      | 26,153,000 |   |   | $      | 860,776,000 |   |                    | $      | 886,929,000 |   |   | $ | 355,000 |   |

|                           |   | 30-89 DaysPast Due |       |   | 90+ DaysPast Due |   |       | AllPast Due |   |   | Current    |   |   | Total  |        |   | 90+ Days& Accruing |   |
|--------------------------------|--------|--------------------|------------|--------|------------------|--------|------------|-------------|--------|--------|------------|--------|--------|--------|-------------|--------|------------------------|--------|
| Commercial                     |   |               |       |   |             |   |       |        |   |   |       |   |   |   |        |   |                   |   |
|    Real estate  |   | $                  | 2,055,000  |   |             | $      | 4,000,000  |        |   | $      | 6,055,000  |   |   | $      | 239,485,000 |   |                   | $      | 245,540,000 |   |   | $ | - |   |
|    Construction |   |               | 120,000    |   |             |   | 937,000    |        |   |   | 1,057,000  |   |   |   | 40,812,000  |   |                   |   | 41,869,000 |   |   |   | - |   |
|    Other        |   |               | 3,070,000  |   |             |   | 1,370,000  |        |   |   | 4,440,000  |   |   |   | 97,022,000  |   |                   |   | 101,462,000 |   |   |   | 524,000 |   |
| Municipal                      |   |               | -          |   |             |   | -          |        |   |   | -          |   |   |   | 21,833,000  |   |                   |   | 21,833,000 |   |   |   | - |   |
| Residential                    |   |               |       |   |             |   |       |        |   |   |       |   |   |   |        |   |                   |   |   |   |   |   |   |   |
|    Term         |   |               | 4,535,000  |   |             |   | 7,696,000  |        |   |   | 12,231,000 |   |   |   | 325,696,000 |   |                   |   | 337,927,000 |   |   |   | 585,000 |   |
|    Construction |   |               | 104,000    |   |             |   | 1,724,000  |        |   |   | 1,828,000  |   |   |   | 13,684,000  |   |                   |   | 15,512,000 |   |   |   | - |   |
| Home equity line of credit     |   |               | 1,564,000  |   |             |   | 474,000    |        |   |   | 2,038,000  |   |   |   | 103,259,000 |   |                   |   | 105,297,000 |   |   |   | - |   |
| Consumer                       |   |               | 259,000    |   |             |   | 7,000      |        |   |   | 266,000    |   |   |   | 17,890,000  |   |                   |   | 18,156,000 |   |   |   | 7,000 |   |
| Total                          |   | $                  | 11,707,000 |   |             | $      | 16,208,000 |        |   | $      | 27,915,000 |   |   | $      | 859,681,000 |   |                   | $      | 887,596,000 |   |   | $ | 1,116,000 |   |

----

|                           |   | June 30, 2011 |       |   | December 31, 2010 |   |       | June 30, 2010 |   |
|--------------------------------|--------|---------------|------------|--------|-------------------|--------|------------|---------------|--------|
| Commercial                     |   |          |       |   |              |   |       |          |   |
|    Real estate  |   | $             | 6,746,000  |   |              | $      | 5,946,000  |          |   | $ | 7,333,000 |   |
|    Construction |   |          | 771,000    |   |              |   | 937,000    |          |   |   | 472,000 |   |
|    Other        |   |          | 2,095,000  |   |              |   | 1,753,000  |          |   |   | 2,505,000 |   |
| Municipal                      |   |          | -          |   |              |   | -          |          |   |   | - |   |
| Residential                    |   |          |       |   |              |   |       |          |   |   |   |   |
|    Term         |   |          | 11,260,000 |   |              |   | 8,347,000  |          |   |   | 9,865,000 |   |
|    Construction |   |          | 334,000    |   |              |   | 3,567,000  |          |   |   | 2,936,000 |   |
| Home Equity Line of Credit     |   |          | 740,000    |   |              |   | 519,000    |          |   |   | 170,000 |   |
| Consumer                       |   |          | 103,000    |   |              |   | 106,000    |          |   |   | 326,000 |   |
| Total                          |   | $             | 22,049,000 |   |              | $      | 21,175,000 |          |   | $ | 23,607,000 |   |

|                                                                                 |   | June 30, 2011 |        |   | December 31, 2010 |   |        | June 30, 2010 |   |
|--------------------------------------------------------------------------------------|--------|---------------|-------------|--------|-------------------|--------|-------------|---------------|--------|
| Balance of impaired loans                                                            |   | $             | 26,981,000  |   |              | $      | 25,283,000  |          |   | $ | 26,599,000 |   |
| Less portion for which no allowance for loan losses is allocated                     |   |          | (19,368,000 | )      |              |   | (15,773,000 | )             |   |   | (16,644,000 | ) |
| Portion of impaired loan balance for which an allowance for loan losses is allocated |   | $             | 7,613,000   |   |              | $      | 9,510,000   |          |   | $ | 9,955,000 |   |
| Portion of allowance for loan losses allocated to the impaired loan balance          |   | $             | 1,965,000   |   |              | $      | 1,256,000   |          |   | $ | 2,062,000 |   |

----

|                       |   |                |       |   |                     |   |       |              |   |   | For six months endedJune 30, 2011 |   |   | For the quarter endedJune 30, 2011 |       |
|----------------------------|--------|---------------------|------------|--------|--------------------------|--------|------------|-------------------|--------|--------|-----------------------------------|--------|--------|------------------------------------|------------|
|                       |   | Recorded Investment |       |   | Unpaid Principal Balance |   |       | Related Allowance |   |   | Average Recorded Investment       |   |   | Un-Recognized Interest Income      |       |   | Average Recorded Investment |   |   | Un-Recognized Interest Income |   |
| With No Related Allowance  |   |
| Commercial                 |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |
|   Real estate    |   | $                   | 5,841,000  |   |                     | $      | 5,841,000  |              |   | $      | -                                 |   |   | $                                  | 5,151,000  |   |   | $ | 143,000 |   |   | $ | 5,738,000 |   |   | $ | 80,000 |   |
|   Construction   |   |                | 772,000    |   |                     |   | 772,000    |              |   |   | -                                 |   |   |                               | 617,000    |   |   |   | 22,000 |   |   |   | 790,000 |   |   |   | 14,000 |   |
|   Other          |   |                | 1,056,000  |   |                     |   | 1,056,000  |              |   |   | -                                 |   |   |                               | 1,118,000  |   |   |   | 41,000 |   |   |   | 1,064,000 |   |   |   | 20,000 |   |
| Municipal                  |   |                | -          |   |                     |   | -          |              |   |   | -                                 |   |   |                               | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential                |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Term           |   |                | 10,818,000 |   |                     |   | 10,818,000 |              |   |   | -                                 |   |   |                               | 8,957,000  |   |   |   | 226,000 |   |   |   | 9,785,000 |   |   |   | 126,000 |   |
|   Construction   |   |                | 334,000    |   |                     |   | 334,000    |              |   |   | -                                 |   |   |                               | 1,641,000  |   |   |   | 47,000 |   |   |   | 348,000 |   |   |   | 4,000 |   |
| Heloc                      |   |                | 509,000    |   |                     |   | 509,000    |              |   |   | -                                 |   |   |                               | 417,000    |   |   |   | 6,000 |   |   |   | 516,000 |   |   |   | 4,000 |   |
| Consumer                   |   |                | 38,000     |   |                     |   | 38,000     |              |   |   | -                                 |   |   |                               | 40,000     |   |   |   | 3,000 |   |   |   | 38,000 |   |   |   | 1,000 |   |
|                       |   | $                   | 19,368,000 |   |                     | $      | 19,368,000 |              |   | $      | -                                 |   |   | $                                  | 17,941,000 |   |   | $ | 488,000 |   |   | $ | 18,279,000 |   |   | $ | 249,000 |   |
| With an Allowance Recorded |   |
| Commercial                 |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate    |   | $                   | 905,000    |   |                     | $      | 905,000    |              |   | $      | 613,000                           |   |   | $                                  | 2,021,000  |   |   | $ | 52,000 |   |   | $ | 1,785,000 |   |   | $ | 24,000 |   |
|   Construction   |   |                | -          |   |                     |   | -          |              |   |   | -                                 |   |   |                               | 227,000    |   |   |   | 8,000 |   |   |   | 3,000 |   |   |   | - |   |
|   Other          |   |                | 1,039,000  |   |                     |   | 1,039,000  |              |   |   | 857,000                           |   |   |                               | 652,000    |   |   |   | 21,000 |   |   |   | 754,000 |   |   |   | 11,000 |   |
| Municipal                  |   |                | -          |   |                     |   | -          |              |   |   | -                                 |   |   |                               | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential                |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Term           |   |                | 5,373,000  |   |                     |   | 5,373,000  |              |   |   | 265,000                           |   |   |                               | 5,254,000  |   |   |   | 65,000 |   |   |   | 4,978,000 |   |   |   | 31,000 |   |
|   Construction   |   |                | -          |   |                     |   | -          |              |   |   | -                                 |   |   |                               | 192,000    |   |   |   | 5,000 |   |   |   | 192,000 |   |   |   | 2,000 |   |
| Heloc                      |   |                | 231,000    |   |                     |   | 231,000    |              |   |   | 165,000                           |   |   |                               | 256,000    |   |   |   | 4,000 |   |   |   | 281,000 |   |   |   | 2,000 |   |
| Consumer                   |   |                | 65,000     |   |                     |   | 65,000     |              |   |   | 65,000                            |   |   |                               | 69,000     |   |   |   | 2,000 |   |   |   | 65,000 |   |   |   | 1,000 |   |
|                       |   | $                   | 7,613,000  |   |                     | $      | 7,613,000  |              |   | $      | 1,965,000                         |   |   | $                                  | 8,671,000  |   |   | $ | 157,000 |   |   | $ | 8,058,000 |   |   | $ | 71,000 |   |
| Total                      |   |
| Commercial                 |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate    |   | $                   | 6,746,000  |   |                     | $      | 6,746,000  |              |   | $      | 613,000                           |   |   | $                                  | 7,171,000  |   |   | $ | 195,000 |   |   | $ | 7,521,000 |   |   | $ | 104,000 |   |
|   Construction   |   |                | 772,000    |   |                     |   | 772,000    |              |   |   | -                                 |   |   |                               | 844,000    |   |   |   | 29,000 |   |   |   | 793,000 |   |   |   | 13,000 |   |
|   Other          |   |                | 2,095,000  |   |                     |   | 2,095,000  |              |   |   | 857,000                           |   |   |                               | 1,770,000  |   |   |   | 63,000 |   |   |   | 1,816,000 |   |   |   | 31,000 |   |
| Municipal                  |   |                | -          |   |                     |   | -          |              |   |   | -                                 |   |   |                               | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential                |   |                |       |   |                     |   |       |              |   |   |                              |   |   |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Term           |   |                | 16,191,000 |   |                     |   | 16,191,000 |              |   |   | 265,000                           |   |   |                               | 14,210,000 |   |   |   | 290,000 |   |   |   | 14,761,000 |   |   |   | 156,000 |   |
|   Construction   |   |                | 334,000    |   |                     |   | 334,000    |              |   |   | -                                 |   |   |                               | 1,833,000  |   |   |   | 52,000 |   |   |   | 539,000 |   |   |   | 6,000 |   |
| Heloc                      |   |                | 740,000    |   |                     |   | 740,000    |              |   |   | 165,000                           |   |   |                               | 673,000    |   |   |   | 10,000 |   |   |   | 797,000 |   |   |   | 6,000 |   |
| Consumer                   |   |                | 103,000    |   |                     |   | 103,000    |              |   |   | 65,000                            |   |   |                               | 109,000    |   |   |   | 5,000 |   |   |   | 103,000 |   |   |   | 2,000 |   |
|                       |   | $                   | 26,981,000 |   |                     | $      | 26,981,000 |              |   | $      | 1,965,000                         |   |   | $                                  | 26,610,000 |   |   | $ | 644,000 |   |   | $ | 26,330,000 |   |   | $ | 318,000 |   |

----

|                           |   | Recorded Investment |       |   | UnpaidPrincipal Balance |   |       | Related Allowance |   |   | AverageRecorded Investment |   |   | Unrecognized InterestIncome |       |
|--------------------------------|--------|---------------------|------------|--------|-------------------------|--------|------------|-------------------|--------|--------|----------------------------|--------|--------|-----------------------------|------------|
| With No Related Allowance      |   |
| Commercial                     |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |
|    Real estate  |   | $                   | 3,531,000  |   |                    | $      | 3,531,000  |              |   | $      | -                          |   |   | $                           | 3,967,000  |   |   | $ | 232,000 |   |
|    Construction |   |                | 257,000    |   |                    |   | 257,000    |              |   |   | -                          |   |   |                        | 271,000    |   |   |   | 20,000 |   |
|    Other        |   |                | 1,256,000  |   |                    |   | 1,256,000  |              |   |   | -                          |   |   |                        | 1,484,000  |   |   |   | 104,000 |   |
| Municipal                      |   |                | -          |   |                    |   | -          |              |   |   | -                          |   |   |                        | -          |   |   |   | - |   |
| Residential                    |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
|    Term         |   |                | 6,804,000  |   |                    |   | 6,804,000  |              |   |   | -                          |   |   |                        | 7,814,000  |   |   |   | 436,000 |   |
|    Construction |   |                | 3,567,000  |   |                    |   | 3,567,000  |              |   |   | -                          |   |   |                        | 2,573,000  |   |   |   | 134,000 |   |
| Home Equity Line of Credit     |   |                | 319,000    |   |                    |   | 319,000    |              |   |   | -                          |   |   |                        | 196,000    |   |   |   | 6,000 |   |
| Consumer                       |   |                | 39,000     |   |                    |   | 39,000     |              |   |   | -                          |   |   |                        | 20,000     |   |   |   | 3,000 |   |
|                           |   | $                   | 15,773,000 |   |                    | $      | 15,773,000 |              |   | $      | -                          |   |   | $                           | 16,325,000 |   |   | $ | 935,000 |   |
| With an Allowance Recorded     |   |
| Commercial                     |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
|    Real estate  |   | $                   | 2,415,000  |   |                    | $      | 2,415,000  |              |   | $      | 192,000                    |   |   | $                           | 2,925,000  |   |   | $ | 157,000 |   |
|    Construction |   |                | 680,000    |   |                    |   | 680,000    |              |   |   | 152,000                    |   |   |                        | 305,000    |   |   |   | 22,000 |   |
|    Other        |   |                | 497,000    |   |                    |   | 497,000    |              |   |   | 291,000                    |   |   |                        | 912,000    |   |   |   | 60,000 |   |
| Municipal                      |   |                | -          |   |                    |   | -          |              |   |   | -                          |   |   |                        | -          |   |   |   | - |   |
| Residential                    |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
|    Term         |   |                | 5,651,000  |   |                    |   | 5,651,000  |              |   |   | 432,000                    |   |   |                        | 4,869,000  |   |   |   | 134,000 |   |
|    Construction |   |                | -          |   |                    |   | -          |              |   |   | -                          |   |   |                        | 281,000    |   |   |   | 14,000 |   |
| Home Equity Line of Credit     |   |                | 200,000    |   |                    |   | 200,000    |              |   |   | 122,000                    |   |   |                        | 87,000     |   |   |   | 3,000 |   |
| Consumer                       |   |                | 67,000     |   |                    |   | 67,000     |              |   |   | 67,000                     |   |   |                        | 132,000    |   |   |   | 9,000 |   |
|                           |   | $                   | 9,510,000  |   |                    | $      | 9,510,000  |              |   | $      | 1,256,000                  |   |   | $                           | 9,511,000  |   |   | $ | 399,000 |   |
| Total                          |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
| Commercial                     |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
|    Real estate  |   | $                   | 5,946,000  |   |                    | $      | 5,946,000  |              |   | $      | 192,000                    |   |   | $                           | 6,892,000  |   |   | $ | 389,000 |   |
|    Construction |   |                | 937,000    |   |                    |   | 937,000    |              |   |   | 152,000                    |   |   |                        | 576,000    |   |   |   | 42,000 |   |
|    Other        |   |                | 1,753,000  |   |                    |   | 1,753,000  |              |   |   | 291,000                    |   |   |                        | 2,396,000  |   |   |   | 164,000 |   |
| Municipal                      |   |                | -          |   |                    |   | -          |              |   |   | -                          |   |   |                        | -          |   |   |   | - |   |
| Residential                    |   |                |       |   |                    |   |       |              |   |   |                       |   |   |                        |       |   |   |   |   |   |
|    Term         |   |                | 12,455,000 |   |                    |   | 12,455,000 |              |   |   | 432,000                    |   |   |                        | 12,683,000 |   |   |   | 570,000 |   |
|    Construction |   |                | 3,567,000  |   |                    |   | 3,567,000  |              |   |   | -                          |   |   |                        | 2,854,000  |   |   |   | 148,000 |   |
| Home Equity Line of Credit     |   |                | 519,000    |   |                    |   | 519,000    |              |   |   | 122,000                    |   |   |                        | 283,000    |   |   |   | 9,000 |   |
| Consumer                       |   |                | 106,000    |   |                    |   | 106,000    |              |   |   | 67,000                     |   |   |                        | 152,000    |   |   |   | 12,000 |   |
|                           |   | $                   | 25,283,000 |   |                    | $      | 25,283,000 |              |   | $      | 1,256,000                  |   |   | $                           | 25,836,000 |   |   | $ | 1,334,000 |   |

----

|  As of June 30, 2011      |   | Specific Reserves on Loans Evaluated Individually for Impairment |      |   | General Reserves Based on Historical Loss Experience |   |      | Reserves for Qualitative Factors |   |   | UnallocatedReserves |   |   | Total Reserves |      |
|--------------------------------|--------|------------------------------------------------------------------|-----------|--------|------------------------------------------------------|--------|-----------|----------------------------------|--------|--------|---------------------|--------|--------|----------------|-----------|
| Commercial                     |   |                                                             |      |   |                                                 |   |      |                             |   |   |                |   |   |           |      |
|    Real estate  |   | $                                                                | 613,000   |   |                                                 | $      | 2,463,000 |                             |   | $      | 3,851,000           |   |   | $              | -         |   |   | $ | 6,927,000 |   |
|    Construction |   |                                                             | -         |   |                                                 |   | 274,000   |                             |   |   | 428,000             |   |   |           | -         |   |   |   | 702,000 |   |
|    Other        |   |                                                             | 857,000   |   |                                                 |   | 962,000   |                             |   |   | 1,504,000           |   |   |           | -         |   |   |   | 3,323,000 |   |
| Municipal                      |   |                                                             | -         |   |                                                 |   | -         |                             |   |   | 19,000              |   |   |           | -         |   |   |   | 19,000 |   |
| Residential                    |   |                                                             |      |   |                                                 |   |      |                             |   |   |                |   |   |           |      |   |   |   |   |   |
|    Term         |   |                                                             | 265,000   |   |                                                 |   | 505,000   |                             |   |   | 586,000             |   |   |           | -         |   |   |   | 1,356,000 |   |
|    Construction |   |                                                             | -         |   |                                                 |   | 16,000    |                             |   |   | 19,000              |   |   |           | -         |   |   |   | 35,000 |   |
| Home Equity Line of Credit     |   |                                                             | 165,000   |   |                                                 |   | 85,000    |                             |   |   | 402,000             |   |   |           | -         |   |   |   | 652,000 |   |
| Consumer                       |   |                                                             | 65,000    |   |                                                 |   | 264,000   |                             |   |   | 335,000             |   |   |           | -         |   |   |   | 664,000 |   |
| Unallocated                    |   |                                                             | -         |   |                                                 |   | -         |                             |   |   | -                   |   |   |           | 1,356,000 |   |   |   | 1,356,000 |   |
|                           |   | $                                                                | 1,965,000 |   |                                                 | $      | 4,569,000 |                             |   | $      | 7,144,000           |   |   | $              | 1,356,000 |   |   | $ | 15,034,000 |   |

|  As of December 31, 2010  |   | Specific Reserves on Loans Evaluated Individually for Impairment |      |   | General Reserves Based on Historical Loss Experience |   |      | Reserves for Qualitative Factors |   |   | Unallocated Reserves |   |   | Total Reserves |      |
|--------------------------------|--------|------------------------------------------------------------------|-----------|--------|------------------------------------------------------|--------|-----------|----------------------------------|--------|--------|----------------------|--------|--------|----------------|-----------|
| Commercial                     |   |                                                             |      |   |                                                 |   |      |                             |   |   |                 |   |   |           |      |
|    Real estate  |   | $                                                                | 192,000   |   |                                                 | $      | 2,183,000 |                             |   | $      | 2,885,000            |   |   | $              | -         |   |   | $ | 5,260,000 |   |
|    Construction |   |                                                             | 152,000   |   |                                                 |   | 370,000   |                             |   |   | 490,000              |   |   |           | -         |   |   |   | 1,012,000 |   |
|    Other        |   |                                                             | 291,000   |   |                                                 |   | 899,000   |                             |   |   | 1,187,000            |   |   |           | -         |   |   |   | 2,377,000 |   |
| Municipal                      |   |                                                             | -         |   |                                                 |   | -         |                             |   |   | 19,000               |   |   |           | -         |   |   |   | 19,000 |   |
| Residential                    |   |                                                             |      |   |                                                 |   |      |                             |   |   |                 |   |   |           |      |   |   |   |   |   |
|    Term         |   |                                                             | 432,000   |   |                                                 |   | 401,000   |                             |   |   | 575,000              |   |   |           | -         |   |   |   | 1,408,000 |   |
|    Construction |   |                                                             | -         |   |                                                 |   | 18,000    |                             |   |   | 26,000               |   |   |           | -         |   |   |   | 44,000 |   |
| Home Equity Line of Credit     |   |                                                             | 122,000   |   |                                                 |   | 72,000    |                             |   |   | 476,000              |   |   |           | -         |   |   |   | 670,000 |   |
| Consumer                       |   |                                                             | 67,000    |   |                                                 |   | 324,000   |                             |   |   | 255,000              |   |   |           | -         |   |   |   | 646,000 |   |
| Unallocated                    |   |                                                             | -         |   |                                                 |   | -         |                             |   |   | -                    |   |   |           | 1,880,000 |   |   |   | 1,880,000 |   |
|                           |   | $                                                                | 1,256,000 |   |                                                 | $      | 4,267,000 |                             |   | $      | 5,913,000            |   |   | $              | 1,880,000 |   |   | $ | 13,316,000 |   |

----

----

|            |   | CommercialConstruction |       |   | CommercialReal Estate |   |        | CommercialOther |   |   | MunicipalLoans |   |   | All Risk-Rated Loans |       |
|-----------------|--------|------------------------|------------|--------|-----------------------|--------|-------------|-----------------|--------|--------|----------------|--------|--------|----------------------|------------|
| 1 Strong        |   | $                      | -          |   |                  | $      | 29,000      |            |   | $      | 467,000        |   |   | $                    | 2,341,000  |   |   | $ | 2,837,000 |   |
| 2 Above Average |   |                   | 10,000     |   |                  |   | 21,021,000  |            |   |   | 3,657,000      |   |   |                 | 10,772,000 |   |   |   | 35,460,000 |   |
| 3 Satisfactory  |   |                   | 1,616,000  |   |                  |   | 40,346,000  |            |   |   | 15,714,000     |   |   |                 | 3,985,000  |   |   |   | 61,661,000 |   |
| 4 Average       |   |                   | 12,894,000 |   |                  |   | 114,124,000 |            |   |   | 41,208,000     |   |   |                 | 2,876,000  |   |   |   | 171,102,000 |   |
| 5 Watch         |   |                   | 6,293,000  |   |                  |   | 38,095,000  |            |   |   | 15,042,000     |   |   |                 | -          |   |   |   | 59,430,000 |   |
| 6 OAEM          |   |                   | 4,015,000  |   |                  |   | 19,572,000  |            |   |   | 6,338,000      |   |   |                 | -          |   |   |   | 29,925,000 |   |
| 7 Substandard   |   |                   | 4,558,000  |   |                  |   | 30,150,000  |            |   |   | 20,067,000     |   |   |                 | -          |   |   |   | 54,775,000 |   |
| 8 Doubtful      |   |                   | -          |   |                  |   | -           |            |   |   | 6,000          |   |   |                 | -          |   |   |   | 6,000 |   |
| 9 Loss          |   |                   | -          |   |                  |   | -           |            |   |   | -              |   |   |                 | -          |   |   |   | - |   |
|  Total     |   | $                      | 29,386,000 |   |                  | $      | 263,337,000 |            |   | $      | 102,499,000    |   |   | $                    | 19,974,000 |   |   | $ | 415,196,000 |   |

|            |   | CommercialConstruction |       |   | CommercialReal Estate |   |        | CommercialOther |   |   | MunicipalLoans |   |   | All Risk-Rated Loans |       |
|-----------------|--------|------------------------|------------|--------|-----------------------|--------|-------------|-----------------|--------|--------|----------------|--------|--------|----------------------|------------|
| 1 Strong        |   | $                      | -          |   |                  | $      | 48,000      |            |   | $      | 395,000        |   |   | $                    | 2,481,000  |   |   | $ | 2,924,000 |   |
| 2 Above Average |   |                   | 10,000     |   |                  |   | 20,365,000  |            |   |   | 4,483,000      |   |   |                 | 11,453,000 |   |   |   | 36,311,000 |   |
| 3 Satisfactory  |   |                   | 4,694,000  |   |                  |   | 42,600,000  |            |   |   | 16,052,000     |   |   |                 | 4,900,000  |   |   |   | 68,246,000 |   |
| 4 Average       |   |                   | 22,177,000 |   |                  |   | 107,167,000 |            |   |   | 41,972,000     |   |   |                 | 2,999,000  |   |   |   | 174,315,000 |   |
| 5 Watch         |   |                   | 6,347,000  |   |                  |   | 27,898,000  |            |   |   | 12,203,000     |   |   |                 | -          |   |   |   | 46,448,000 |   |
| 6 OAEM          |   |                   | 3,715,000  |   |                  |   | 19,496,000  |            |   |   | 6,463,000      |   |   |                 | -          |   |   |   | 29,674,000 |   |
| 7 Substandard   |   |                   | 4,926,000  |   |                  |   | 27,966,000  |            |   |   | 19,894,000     |   |   |                 | -          |   |   |   | 52,786,000 |   |
| 8 Doubtful      |   |                   | -          |   |                  |   | -           |            |   |   | -              |   |   |                 | -          |   |   |   | - |   |
| 9 Loss          |   |                   | -          |   |                  |   | -           |            |   |   | -              |   |   |                 | -          |   |   |   | - |   |
|  Total     |   | $                      | 41,869,000 |   |                  | $      | 245,540,000 |            |   | $      | 101,462,000    |   |   | $                    | 21,833,000 |   |   | $ | 410,704,000 |   |

----

|  For the six months ended                       |   | Commercial  |        |   | Municipal    |   |       | Residential |   |   | Home Equity |   |   | Consumer |       |   | Unallocated  |   |        | Total          |   |
|------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|------------|-------------|--------|--------|-------------|--------|--------|----------|------------|--------|--------------|--------|-------------|----------------|--------|
| June 30, 2011                                        |   | Real Estate |        |   | Construction |   |       | Other       |   |   |        |   |   | Term     |       |   | Construction |   |        | Line of Credit |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                           |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                    |   | $           | 5,260,000   |   |         | $      | 1,012,000  |        |   | $      | 2,377,000   |   |   | $        | 19,000     |   |         | $      | 1,408,000   |           |   | $ | 44,000 |   |   | $ | 670,000 |   |   | $ | 646,000 |   |   | $ | 1,880,000 |   |   | $ | 13,316,000 |   |
| Charge offs                                          |   |        | 835,000     |   |         |   | -          |        |   |   | 319,000     |   |   |     | 13,000     |   |         |   | 697,000     |           |   |   | 505,000 |   |   |   | 45,000 |   |   |   | 156,000 |   |   |   | - |   |   |   | 2,570,000 |   |
| Recoveries                                           |   |        | 5,000       |   |         |   | -          |        |   |   | 21,000      |   |   |     | 12,000     |   |         |   | 4,000       |           |   |   | - |   |   |   | 1,000 |   |   |   | 145,000 |   |   |   | - |   |   |   | 188,000 |   |
| Provision                                            |   |        | 2,497,000   |   |         |   | (310,000   | )           |   |   | 1,244,000   |   |   |     | 1,000      |   |         |   | 641,000     |           |   |   | 496,000 |   |   |   | 26,000 |   |   |   | 29,000 |   |   |   | (524,000 | ) |   |   | 4,100,000 |   |
| Ending balance                                       |   | $           | 6,927,000   |   |         | $      | 702,000    |        |   | $      | 3,323,000   |   |   | $        | 19,000     |   |         | $      | 1,356,000   |           |   | $ | 35,000 |   |   | $ | 652,000 |   |   | $ | 664,000 |   |   | $ | 1,356,000 |   |   | $ | 15,034,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 613,000     |   |         | $      | -          |        |   | $      | 857,000     |   |   | $        | -          |   |         | $      | 265,000     |           |   | $ | - |   |   | $ | 165,000 |   |   | $ | 65,000 |   |   | $ | - |   |   | $ | 1,965,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 6,314,000   |   |         | $      | 702,000    |        |   | $      | 2,466,000   |   |   | $        | 19,000     |   |         | $      | 1,091,000   |           |   | $ | 35,000 |   |   | $ | 487,000 |   |   | $ | 599,000 |   |   | $ | 1,356,000 |   |   | $ | 13,069,000 |   |
| Related loan balances:                               |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                       |   | $           | 263,337,000 |   |         | $      | 29,386,000 |        |   | $      | 102,499,000 |   |   | $        | 19,974,000 |   |         | $      | 335,807,000 |           |   | $ | 11,063,000 |   |   | $ | 107,224,000 |   |   | $ | 17,639,000 |   |   | $ | - |   |   | $ | 886,929,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 6,746,000   |   |         | $      | 772,000    |        |   | $      | 2,095,000   |   |   | $        | -          |   |         | $      | 16,191,000  |           |   | $ | 334,000 |   |   | $ | 740,000 |   |   | $ | 103,000 |   |   | $ | - |   |   | $ | 26,981,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 256,591,000 |   |         | $      | 28,614,000 |        |   | $      | 100,404,000 |   |   | $        | 19,974,000 |   |         | $      | 319,616,000 |           |   | $ | 10,729,000 |   |   | $ | 106,484,000 |   |   | $ | 17,536,000 |   |   | $ | - |   |   | $ | 859,948,000 |   |

|  For the quarter ended                          |   | Commercial  |        |   | Municipal    |   |       | Residential |   |   | Home Equity |   |   | Consumer |       |   | Unallocated  |   |        | Total          |   |
|------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|------------|-------------|--------|--------|-------------|--------|--------|----------|------------|--------|--------------|--------|-------------|----------------|--------|
| June 30, 2011                                        |   | Real Estate |        |   | Construction |   |       | Other       |   |   |        |   |   | Term     |       |   | Construction |   |        | Line of Credit |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                           |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                    |   | $           | 6,310,000   |   |         | $      | 639,000    |        |   | $      | 2,535,000   |   |   | $        | 19,000     |   |         | $      | 1,405,000   |           |   | $ | 146,000 |   |   | $ | 678,000 |   |   | $ | 713,000 |   |   | $ | 1,555,000 |   |   | $ | 14,000,000 |   |
| Charge offs                                          |   |        | 546,000     |   |         |   | -          |        |   |   | 158,000     |   |   |     | 13,000     |   |         |   | 240,000     |           |   |   | - |   |   |   | 44,000 |   |   |   | 56,000 |   |   |   | - |   |   |   | 1,057,000 |   |
| Recoveries                                           |   |        | -           |   |         |   | -          |        |   |   | 4,000       |   |   |     | 12,000     |   |         |   | 1,000       |           |   |   | - |   |   |   | 1,000 |   |   |   | 73,000 |   |   |   | - |   |   |   | 91,000 |   |
| Provision                                            |   |        | 1,163,000   |   |         |   | 63,000     |        |   |   | 942,000     |   |   |     | 1,000      |   |         |   | 190,000     |           |   |   | (111,000 | ) |   |   | 17,000 |   |   |   | (66,000 | ) |   |   | (199,000 | ) |   |   | 2,000,000 |   |
| Ending balance                                       |   | $           | 6,927,000   |   |         | $      | 702,000    |        |   | $      | 3,323,000   |   |   | $        | 19,000     |   |         | $      | 1,356,000   |           |   | $ | 35,000 |   |   | $ | 652,000 |   |   | $ | 664,000 |   |   | $ | 1,356,000 |   |   | $ | 15,034,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 613,000     |   |         | $      | -          |        |   | $      | 857,000     |   |   | $        | -          |   |         | $      | 265,000     |           |   | $ | - |   |   | $ | 165,000 |   |   | $ | 65,000 |   |   | $ | - |   |   | $ | 1,965,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 6,314,000   |   |         | $      | 702,000    |        |   | $      | 2,466,000   |   |   | $        | 19,000     |   |         | $      | 1,091,000   |           |   | $ | 35,000 |   |   | $ | 487,000 |   |   | $ | 599,000 |   |   | $ | 1,356,000 |   |   | $ | 13,069,000 |   |
| Related loan balances:                               |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                       |   | $           | 263,337,000 |   |         | $      | 29,386,000 |        |   | $      | 102,499,000 |   |   | $        | 19,974,000 |   |         | $      | 335,807,000 |           |   | $ | 11,063,000 |   |   | $ | 107,224,000 |   |   | $ | 17,639,000 |   |   | $ | - |   |   | $ | 886,929,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 6,746,000   |   |         | $      | 772,000    |        |   | $      | 2,095,000   |   |   | $        | -          |   |         | $      | 16,191,000  |           |   | $ | 334,000 |   |   | $ | 740,000 |   |   | $ | 103,000 |   |   | $ | - |   |   | $ | 26,981,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 256,591,000 |   |         | $      | 28,614,000 |        |   | $      | 100,404,000 |   |   | $        | 19,974,000 |   |         | $      | 319,616,000 |           |   | $ | 10,729,000 |   |   | $ | 106,484,000 |   |   | $ | 17,536,000 |   |   | $ | - |   |   | $ | 859,948,000 |   |

----

|  For the year ended                             |   | Commercial  |        |   | Municipal    |   |       | Residential |   |   | Home Equity |   |   | Consumer |       |   | Unallocated  |   |        | Total          |   |
|------------------------------------------------------|--------|-------------|-------------|--------|--------------|--------|------------|-------------|--------|--------|-------------|--------|--------|----------|------------|--------|--------------|--------|-------------|----------------|--------|
| December 31, 2010                                    |   | Real Estate |        |   | Construction |   |       | Other       |   |   |        |   |   | Term     |       |   | Construction |   |        | Line of Credit |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                           |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                    |   | $           | 4,986,000   |   |         | $      | 807,000    |        |   | $      | 3,363,000   |   |   | $        | 23,000     |   |         | $      | 1,198,000   |           |   | $ | 174,000 |   |   | $ | 515,000 |   |   | $ | 717,000 |   |   | $ | 1,854,000 |   |   | $ | 13,637,000 |   |
| Charge offs                                          |   |        | 4,005,000   |   |         |   | 175,000    |        |   |   | 1,125,000   |   |   |     | -          |   |         |   | 392,000     |           |   |   | 2,361,000 |   |   |   | 8,000 |   |   |   | 951,000 |   |   |   | - |   |   |   | 9,017,000 |   |
| Recoveries                                           |   |        | 4,000       |   |         |   | -          |        |   |   | 69,000      |   |   |     | -          |   |         |   | 4,000       |           |   |   | - |   |   |   | - |   |   |   | 219,000 |   |   |   | - |   |   |   | 296,000 |   |
| Provision                                            |   |        | 4,275,000   |   |         |   | 380,000    |        |   |   | 70,000      |   |   |     | (4,000     | )      |         |   | 598,000     |           |   |   | 2,231,000 |   |   |   | 163,000 |   |   |   | 661,000 |   |   |   | 26,000 |   |   |   | 8,400,000 |   |
| Ending balance                                       |   | $           | 5,260,000   |   |         | $      | 1,012,000  |        |   | $      | 2,377,000   |   |   | $        | 19,000     |   |         | $      | 1,408,000   |           |   | $ | 44,000 |   |   | $ | 670,000 |   |   | $ | 646,000 |   |   | $ | 1,880,000 |   |   | $ | 13,316,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 192,000     |   |         | $      | 152,000    |        |   | $      | 291,000     |   |   | $        | -          |   |         | $      | 432,000     |           |   | $ | - |   |   | $ | 122,000 |   |   | $ | 67,000 |   |   | $ | - |   |   | $ | 1,256,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 5,068,000   |   |         | $      | 860,000    |        |   | $      | 2,086,000   |   |   | $        | 19,000     |   |         | $      | 976,000     |           |   | $ | 44,000 |   |   | $ | 548,000 |   |   | $ | 579,000 |   |   | $ | 1,880,000 |   |   | $ | 12,060,000 |   |
| Related loan balances:                               |   |        |        |   |         |   |       |        |   |   |        |   |   |     |       |   |         |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                       |   | $           | 245,540,000 |   |         | $      | 41,869,000 |        |   | $      | 101,462,000 |   |   | $        | 21,833,000 |   |         | $      | 337,927,000 |           |   | $ | 15,512,000 |   |   | $ | 105,297,000 |   |   | $ | 18,156,000 |   |   | $ | - |   |   | $ | 887,596,000 |   |
| Ending balance specifically evaluated for impairment |   | $           | 5,946,000   |   |         | $      | 937,000    |        |   | $      | 1,753,000   |   |   | $        | -          |   |         | $      | 12,456,000  |           |   | $ | 3,567,000 |   |   | $ | 519,000 |   |   | $ | 106,000 |   |   | $ | - |   |   | $ | 25,284,000 |   |
| Ending balance collectively evaluated for impairment |   | $           | 239,594,000 |   |         | $      | 40,932,000 |        |   | $      | 99,709,000  |   |   | $        | 21,833,000 |   |         | $      | 325,471,000 |           |   | $ | 11,945,000 |   |   | $ | 104,778,000 |   |   | $ | 18,050,000 |   |   | $ | - |   |   | $ | 862,312,000 |   |

----

| ·   | The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, or an inability to refinance with another lender, and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Bank has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | Number of Shares |   |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Term (In years) |   |   | Aggregate Intrinsic Value(In thousands) |   |
|-------------------------------------------------|--------|------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|-----------------------------------------|--------|
| Outstanding at December 31, 2010                |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   |                                    |   |   |   |
|      Granted in 2011   |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
|      Exercised in 2011 |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
|      Forfeited in 2011 |   |             | -      |   |                            |   | -      |                                                   |   |   |                                    |   |   |   |
| Outstanding at June 30, 2011                    |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   | 2.8                                     |   |   | $ | 75 |   |
| Exercisable at June 30, 2011                    |   |             | 55,500 |   |                            | $      | 15.89  |                                                   |   |   | 2.8                                     |   |   | $ | 75 |   |

----

----

|                                                                          |   | Income      |      |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|-----------|--------|---------------|--------|-----------|-----------|--------|
|                                                                          |   | (Numerator) |      |   | (Denominator) |   |      | Amount    |   |
| For the six months ended June 30, 2011                                        |   |        |      |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 6,336,000 |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 674,000   |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 5,662,000 |   |          |   | 9,781,766 |      |   | $ | 0.58 |   |
| Effect of dilutive securities: incentive stock options and warrants           |   |        |      |   |          |   | 10,399    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 5,662,000 |   |          |   | 9,792,165 |      |   | $ | 0.58 |   |
| For the six months ended June 30, 2010                                        |   |        |      |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 5,844,000 |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 674,000   |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 5,170,000 |   |          |   | 9,753,500 |      |   | $ | 0.53 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |      |   |          |   | 5,009     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 5,170,000 |   |          |   | 9,758,509 |      |   | $ | 0.53 |   |

|                                                                          |   | Income      |      |   | Shares        |   |      | Per-Share |   |
|-------------------------------------------------------------------------------|--------|-------------|-----------|--------|---------------|--------|-----------|-----------|--------|
|                                                                          |   | (Numerator) |      |   | (Denominator) |   |      | Amount    |   |
| For the quarter ended June 30, 2011                                           |   |        |      |   |          |   |      |      |   |
| Net income as reported                                                        |   | $           | 3,193,000 |   |          |   |      |      |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337,000   |   |          |   |      |      |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,856,000 |   |          |   | 9,784,743 |      |   | $ | 0.29 |   |
| Effect of dilutive securities:incentive stock options and restricted stock    |   |        |      |   |          |   | 12,238    |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 2,856,000 |   |          |   | 9,796,981 |      |   | $ | 0.29 |   |
| For the quarter ended June 30, 2010                                           |   |        |      |   |          |   |      |      |   |   |   |   |
| Net income as reported                                                        |   | $           | 3,160,000 |   |          |   |      |      |   |   |   |   |
| Less dividends and amortization of premium on preferred stock                 |   |        | 337,000   |   |          |   |      |      |   |   |   |   |
| Basic EPS: Income available to common shareholders                            |   |        | 2,823,000 |   |          |   | 9,756,907 |      |   | $ | 0.29 |   |
| Effect of dilutive securities: incentive stock options                        |   |        |      |   |          |   | 5,128     |      |   |   |   |   |
| Diluted EPS: Income available to common shareholders plus assumed conversions |   | $           | 2,823,000 |   |          |   | 9,762,035 |      |   | $ | 0.29 |   |

----

|                             |  Outstanding |  In-the-Money |  Out-of-the-Money |
|----------------------------------|-------------------|--------------------|------------------------|
| As of June 30, 2011              |              |               |                   |
| Incentive stock options          | 55,500            | 13,500             | 42,000                 |
| Warrants issued to U.S. Treasury | 225,904           | -                  | 225,904                |
| Total dilutive securities        | 281,404           | 13,500             | 267,904                |
| As of June 30, 2010              |              |               |                   |
| Incentive stock options          | 55,500            | 13,500             | 42,000                 |
| Warrants issued to U.S. Treasury | 225,904           | -                  | 225,904                |
| Total dilutive securities        | 281,404           | 13,500             | 267,904                |

----

|                                    |   | At and for the six months ended June 30, |       |
|-----------------------------------------|--------|------------------------------------------|------------|
|                                    |   | 2011                                     |       |   | 2010 |   |
| Change in benefit obligation            |   |                                     |       |   |   |   |
| Benefit obligation at beginning of year |   | $                                        | 1,796,000  |   |   | $ | 1,962,000 |   |
| Service cost                            |   |                                     | 8,000      |   |   |   | 11,000 |   |
| Interest cost                           |   |                                     | 58,000     |   |   |   | 67,000 |   |
| Benefits paid                           |   |                                     | (78,000    | ) |   |   | (74,000 | ) |
| Benefit obligation at end of period     |   |                                     | 1,784,000  |   |   |   | 1,966,000 |   |
| Funded status                           |   |                                     |       |   |   |   |   |   |
| Benefit obligation at end of period     |   |                                     | (1,784,000 | ) |   |   | (1,966,000 | ) |
| Accrued benefit cost at end of period   |   | $                                        | (1,784,000 | ) |   | $ | (1,966,000 | ) |

|                                               |   | For six months endedJune 30, |   |   | For quarters endedJune 30, |   |
|----------------------------------------------------|--------|------------------------------|--------|--------|----------------------------|--------|
|                                               |   | 2011                         |   |   | 2010                       |   |   | 2011 |   |   | 2010 |   |
| Components of net periodic benefit cost            |   |                         |   |   |                       |   |   |   |   |   |   |   |
| Service cost                                       |   | $                            | 8,000  |   |                       | $      | 11,000 |   |   | $ | 4,000 |   |   | $ | 6,000 |   |
| Interest cost                                      |   |                         | 58,000 |   |                       |   | 67,000 |   |   |   | 29,000 |   |   |   | 33,000 |   |
| Amortization of unrecognized transition obligation |   |                         | 14,000 |   |                       |   | 14,000 |   |   |   | 7,000 |   |   |   | 7,000 |   |
| Amortization of prior service credit               |   |                         | -      |   |                       |   | (1,000 | ) |   |   | - |   |   |   | - |   |
| Amortization of accumulated losses                 |   |                         | 10,000 |   |                       |   | 12,000 |   |   |   | 5,000 |   |   |   | 7,000 |   |
| Net periodic benefit cost                          |   | $                            | 90,000 |   |                       | $      | 103,000 |   |   | $ | 45,000 |   |   | $ | 53,000 |   |

|                                                                                               |   | June 30,2011 |    |   | December 31,2010 |   |     | June 30,2010 |   |
|----------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|----------|--------------|--------|
| Unamortized net actuarial loss                                                                     |   | $            | (49,000 | )      |             | $      | (49,000  | )            |   | $ | (233,000 | ) |
| Unrecognized transition obligation                                                                 |   |         | (49,000 | )      |             |   | (63,000  | )            |   |   | (78,000 | ) |
|                                                                                               |   |         | (98,000 | )      |             |   | (112,000 | )            |   |   | (311,000 | ) |
| Deferred tax benefit at 35%                                                                        |   |         | 34,000  |   |             |   | 39,000   |         |   |   | 109,000 |   |
| Net unrecognized postretirement benefits included in accumulated other comprehensive income (loss) |   | $            | (64,000 | )      |             | $      | (73,000  | )            |   | $ | (202,000 | ) |

----

|                      |   | June 30,2011 |       |   | December 31, 2010 |   |       | June 30,2010 |   |
|---------------------------|--------|--------------|------------|--------|-------------------|--------|------------|--------------|--------|
| Mortgage servicing rights |   | $            | 5,987,000  |   |              | $      | 5,732,000  |         |   | $ | 5,323,000 |   |
| Accumulated amortization  |   |         | (4,537,000 | )      |              |   | (4,265,000 | )            |   |   | (4,013,000 | ) |
| Impairment reserve        |   |         | (58,000    | )      |              |   | (23,000    | )            |   |   | (60,000 | ) |
|                      |   | $            | 1,392,000  |   |              | $      | 1,444,000  |         |   | $ | 1,250,000 |   |

|                                  |   | June 30, 2011 |        |   | December 31, 2010 |   |        | June 30, 2010 |   |
|---------------------------------------|--------|---------------|-------------|--------|-------------------|--------|-------------|---------------|--------|
| Certificates of deposit < $100,000 |   | $             | 279,567,000 |   |              | $      | 231,945,000 |          |   | $ | 237,757,000 |   |
| Certificates $100,000 to $250,000     |   |          | 319,122,000 |   |              |   | 338,452,000 |          |   |   | 313,908,000 |   |
| Certificates $250,000 and over        |   |          | 34,609,000  |   |              |   | 37,792,000  |          |   |   | 49,842,000 |   |
|                                  |   | $             | 633,298,000 |   |              | $      | 608,189,000 |          |   | $ | 601,507,000 |   |

----

|                                               |   | At June 30, 2011 |   |
|----------------------------------------------------|--------|------------------|--------|
|                                               |   | Level 1          |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |             |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                | -      |   |   | $ | 16,123,000 |   |   | $ | - |   |   | $ | 16,123,000 |   |
|    Mortgage-backed securities       |   |             | -      |   |   |   | 221,524,000 |   |   |   | - |   |   |   | 221,524,000 |   |
|    State and political subdivisions |   |             | -      |   |   |   | 65,162,000 |   |   |   | - |   |   |   | 65,162,000 |   |
|    Corporate securities             |   |             | -      |   |   |   | 936,000 |   |   |   | - |   |   |   | 936,000 |   |
|    Other equity securities          |   |             | -      |   |   |   | 533,000 |   |   |   | - |   |   |   | 533,000 |   |
| Total assets                                       |   | $                | -      |   |   | $ | 304,278,000 |   |   | $ | - |   |   | $ | 304,278,000 |   |

----

|                                               |   | At December 31, 2010 |   |
|----------------------------------------------------|--------|----------------------|--------|
|                                               |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Securities available for sale                      |   |                 |   |   |   |   |   |   |   |   |   |   |
|    U.S. Treasury and agency         |   | $                    | -      |   |   | $ | 16,045,000 |   |   | $ | - |   |   | $ | 16,045,000 |   |
|    Mortgage-backed securities       |   |                 | -      |   |   |   | 234,414,000 |   |   |   | - |   |   |   | 234,414,000 |   |
|    State and political subdivisions |   |                 | -      |   |   |   | 41,524,000 |   |   |   | - |   |   |   | 41,524,000 |   |
|    Corporate securities             |   |                 | -      |   |   |   | 866,000 |   |   |   | - |   |   |   | 866,000 |   |
|    Other equity securities          |   |                 | -      |   |   |   | 380,000 |   |   |   | - |   |   |   | 380,000 |   |
| Total assets                                       |   | $                    | -      |   |   | $ | 293,229,000 |   |   | $ | - |   |   | $ | 293,229,000 |   |

|                      |   | At June 30, 2011 |   |
|---------------------------|--------|------------------|--------|
|                      |   | Level 1          |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                | -      |   |   | $ | 1,962,000 |   |   | $ | - |   |   | $ | 1,962,000 |   |
| Loans held for sale       |   |             | -      |   |   |   | 419,000 |   |   |   | - |   |   |   | 419,000 |   |
| Other real estate owned   |   |             | -      |   |   |   | 7,723,000 |   |   |   | - |   |   |   | 7,723,000 |   |
| Impaired loans            |   |             | -      |   |   |   | 5,648,000 |   |   |   | - |   |   |   | 5,648,000 |   |
| Total assets              |   | $                | -      |   |   | $ | 15,752,000 |   |   | $ | - |   |   | $ | 15,752,000 |   |

|                      |   | At December 31, 2010 |   |
|---------------------------|--------|----------------------|--------|
|                      |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Mortgage servicing rights |   | $                    | -      |   |   | $ | 1,684,000 |   |   | $ | - |   |   | $ | 1,684,000 |   |
| Loans held for sale       |   |                 | -      |   |   |   | 2,806,000 |   |   |   | - |   |   |   | 2,806,000 |   |
| Other real estate owned   |   |                 | -      |   |   |   | 4,929,000 |   |   |   | - |   |   |   | 4,929,000 |   |
| Impaired loans            |   |                 | -      |   |   |   | 8,254,000 |   |   |   | - |   |   |   | 8,254,000 |   |
| Total assets              |   | $                    | -      |   |   | $ | 17,673,000 |   |   | $ | - |   |   | $ | 17,673,000 |   |

----

|                                                  |   | June 30, 2011 |        |   | December 31, 2010 |   |
|-------------------------------------------------------|--------|---------------|-------------|--------|-------------------|--------|
|                                                  |   | Carrying      |        |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                                  |   | amount        |        |   | fair value        |   |   | amount |   |   | fair value |   |
| Financial assets                                      |   |          |        |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $             | 14,322,000  |   |              | $      | 14,322,000 |   |   | $ | 13,838,000 |   |   | $ | 13,838,000 |   |
| Time deposits in other banks                          |   |          | 100,000     |   |              |   | 100,000 |   |   |   | 100,000 |   |   |   | 100,000 |   |
| Securities available for sale                         |   |          | 304,278,000 |   |              |   | 304,278,000 |   |   |   | 293,229,000 |   |   |   | 293,229,000 |   |
| Securities to be held to maturity                     |   |          | 122,970,000 |   |              |   | 128,426,000 |   |   |   | 107,380,000 |   |   |   | 110,366,000 |   |
| Federal Home Loan Bank and Federal Reserve Bank stock |   |          | 15,443,000  |   |              |   | 15,443,000 |   |   |   | 15,443,000 |   |   |   | 15,443,000 |   |
| Loans held for sale                                   |   |          | 419,000     |   |              |   | 419,000 |   |   |   | 2,806,000 |   |   |   | 2,806,000 |   |
| Loans (net of allowance for loan losses)              |   |          | 871,895,000 |   |              |   | 875,988,000 |   |   |   | 874,280,000 |   |   |   | 878,856,000 |   |
| Accrued interest receivable                           |   |          | 6,511,000   |   |              |   | 6,511,000 |   |   |   | 5,263,000 |   |   |   | 5,263,000 |   |
| Financial liabilities                                 |   |          |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   | $             | 998,838,000 |   |              | $      | 953,240,000 |   |   | $ | 974,518,000 |   |   | $ | 924,903,000 |   |
| Borrowed funds                                        |   |          | 249,336,000 |   |              |   | 256,037,000 |   |   |   | 257,330,000 |   |   |   | 262,984,000 |   |
| Accrued interest payable                              |   |          | 855,000     |   |              |   | 855,000 |   |   |   | 926,000 |   |   |   | 926,000 |   |

----

----

----

----

----

|                                |   | For the six months endedJune 30, |   |   | For the quarters endedJune 30, |   |
|-------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
| In thousands of dollars             |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
| Net interest income as presented    |   | $                                | 20,728 |   |                           | $      | 19,978 |   |   | $ | 10,223 |   |   | $ | 9,957 |   |
| Effect of tax-exempt income         |   |                             | 1,272  |   |                           |   | 1,127 |   |   |   | 663 |   |   |   | 567 |   |
| Net interest income, tax equivalent |   | $                                | 22,000 |   |                           | $      | 21,105 |   |   | $ | 10,886 |   |   | $ | 10,524 |   |

|                                                  |   | For the six months endedJune 30, |   |   | For the quarters endedJune 30, |   |
|-------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
| In thousands of dollars                               |   | 2011                             |   |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
| Non-interest expense, as presented                    |   | $                                | 12,738 |   |                           | $      | 12,177 |   |   | $ | 6,250 |   |   | $ | 5,895 |   |
| Net securities losses                                 |   |                             | -      |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Other than temporary impairment charge                |   |                             | -      |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted non-interest expense                         |   | $                                | 12,738 |   |                           | $      | 12,177 |   |   | $ | 6,250 |   |   | $ | 5,895 |   |
| Net interest income, as presented                     |   | $                                | 20,728 |   |                           | $      | 19,978 |   |   | $ | 10,223 |   |   | $ | 9,957 |   |
| Effect of tax-exempt income                           |   |                             | 1,272  |   |                           |   | 1,127 |   |   |   | 663 |   |   |   | 567 |   |
| Non-interest income, as presented                     |   |                             | 4,511  |   |                           |   | 4,457 |   |   |   | 2,234 |   |   |   | 2,282 |   |
| Effect of non-interest tax-exempt income              |   |                             | 94     |   |                           |   | 94 |   |   |   | 47 |   |   |   | 47 |   |
| Net securities gains                                  |   |                             | 229    |   |                           |   | 2 |   |   |   | 229 |   |   |   | - |   |
| Adjusted net interest income plus non-interest income |   | $                                | 26,834 |   |                           | $      | 25,658 |   |   | $ | 13,396 |   |   | $ | 12,853 |   |
| Non-GAAP efficiency ratio                             |   |                             | 47.47  | %      |                           |   | 47.46 | % |   |   | 46.66 | % |   |   | 45.86 | % |
| GAAP efficiency ratio                                 |   |                             | 50.47  | %      |                           |   | 49.83 | % |   |   | 50.17 | % |   |   | 48.17 | % |

----

|                                      |   | For the six months endedJune 30, |    |   | For the quarters endedJune 30, |   |
|-------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
|  In thousands of dollars             |   | 2011                             |    |   | 2010                           |   |   | 2011 |   |   | 2010 |   |
| Average shareholders' equity as presented |   | $                                | 153,747 |   |                           | $      | 150,289 |   |   | $ | 155,679 |   |   | $ | 150,760 |   |
|   Less preferred stock          |   |                             | (24,705 | )      |                           |   | (24,606 | ) |   |   | (24,730 | ) |   |   | (24,631 | ) |
|   Less intangible assets        |   |                             | (27,684 | )      |                           |   | (27,684 | ) |   |   | (27,684 | ) |   |   | (27,684 | ) |
| Tangible average shareholders' equity     |   | $                                | 101,358 |   |                           | $      | 97,999 |   |   | $ | 103,265 |   |   | $ | 98,445 |   |

----

| For the six months ended                             |   | June 30, 2011      |   |   | June 30, 2010      |   |
|------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| In thousands of dollars                              |   | Amount of interest |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |               |   |   |               |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                  | 3      |   |               |   | 0.25 | % |   | $ | 2 |   |   |   | 0.00 | % |
| Investments                                          |   |               | 9,200  |   |               |   | 4.17 | % |   |   | 7,023 |   |   |   | 4.58 | % |
| Loans held for sale                                  |   |               | 25     |   |               |   | 4.78 | % |   |   | 74 |   |   |   | 4.39 | % |
| Loans                                                |   |               | 20,295 |   |               |   | 4.58 | % |   |   | 22,376 |   |   |   | 4.82 | % |
|    Total interest-earning assets      |   |               | 29,523 |   |               |   | 4.44 | % |   |   | 29,475 |   |   |   | 4.76 | % |
| Interest-bearing liabilities                         |   |               |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |               | 5,081  |   |               |   | 1.07 | % |   |   | 5,051 |   |   |   | 1.15 | % |
| Other borrowings                                     |   |               | 2,442  |   |               |   | 2.11 | % |   |   | 3,319 |   |   |   | 2.91 | % |
|    Total interest-bearing liabilities |   |               | 7,523  |   |               |   | 1.27 | % |   |   | 8,370 |   |   |   | 1.51 | % |
| Net interest income                                  |   | $                  | 22,000 |   |               |   |   |   |   | $ | 21,105 |   |   |   |   |   |
| Interest rate spread                                 |   |               |   |   |               |   | 3.17 | % |   |   |   |   |   |   | 3.24 | % |
| Net interest margin                                  |   |               |   |   |               |   | 3.31 | % |   |   |   |   |   |   | 3.41 | % |

----

| For the quarters ended                               |   | June 30, 2011      |   |   | June 30, 2010      |   |
|------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| In thousands of dollars                              |   | Amount of interest |   |   | Average Yield/Rate |   |   | Amount of interest |   |   | Average Yield/Rate |   |
| Interest on earning assets                           |   |               |   |   |               |   |   |   |   |   |   |   |
| Interest-bearing deposits                            |   | $                  | 1      |   |               |   | 0.25 | % |   | $ | - |   |   |   | 0.00 | % |
| Investments                                          |   |               | 4,608  |   |               |   | 4.01 | % |   |   | 3,607 |   |   |   | 4.53 | % |
| Loans held for sale                                  |   |               | 17     |   |               |   | 4.75 | % |   |   | 41 |   |   |   | 4.47 | % |
| Loans                                                |   |               | 10,034 |   |               |   | 4.50 | % |   |   | 11,134 |   |   |   | 4.77 | % |
|    Total interest-earning assets      |   |               | 14,660 |   |               |   | 4.34 | % |   |   | 14,782 |   |   |   | 4.71 | % |
| Interest-bearing liabilities                         |   |               |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                             |   |               | 2,518  |   |               |   | 1.05 | % |   |   | 2,571 |   |   |   | 1.15 | % |
| Other borrowings                                     |   |               | 1,256  |   |               |   | 2.10 | % |   |   | 1,687 |   |   |   | 2.95 | % |
|    Total interest-bearing liabilities |   |               | 3,774  |   |               |   | 1.26 | % |   |   | 4,258 |   |   |   | 1.52 | % |
| Net interest income                                  |   | $                  | 10,886 |   |               |   |   |   |   | $ | 10,524 |   |   |   |   |   |
| Interest rate spread                                 |   |               |   |   |               |   | 3.08 | % |   |   |   |   |   |   | 3.19 | % |
| Net interest margin                                  |   |               |   |   |               |   | 3.22 | % |   |   |   |   |   |   | 3.35 | % |

| For the six months ended June 30, 2011 compared to 2010 |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| In thousands of dollars                                 |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                               |   | $      | -      |   |   | $      | -      |   |   | $ | 1 |   |   | $ | 1 |   |
| Investment securities                                   |   |   | 3,090  |   |   |   | (634   | ) |   |   | (279 | ) |   |   | 2,177 |   |
| Loans held for sale                                     |   |   | (52    | )      |   |   | 6      |   |   |   | (4 | ) |   |   | (50 | ) |
| Loans                                                   |   |   | (1,024 | )      |   |   | (1,107 | ) |   |   | 51 |   |   |   | (2,080 | ) |
|    Total interest income                 |   |   | 2,014  |   |   |   | (1,735 | ) |   |   | (231 | ) |   |   | 48 |   |
| Interest expense                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                |   |   | 431    |   |   |   | (369   | ) |   |   | (32 | ) |   |   | 30 |   |
| Other borrowings2                                       |   |   | 47     |   |   |   | (911   | ) |   |   | (13 | ) |   |   | (877 | ) |
| Total interest expense                                  |   |   | 478    |   |   |   | (1,280 | ) |   |   | (45 | ) |   |   | (847 | ) |
|    Change in net interest income         |   | $      | 1,536  |   |   | $      | (455   | ) |   | $ | (186 | ) |   | $ | 895 |   |

| For the quarters ended June 30, 2011 compared to 2010 |   |   |   |   |   |   |   |
|-------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| In thousands of dollars                               |   | Volume |   |   | Rate   |   |   | Rate/Volume1 |   |   | Total |   |
| Interest on earning assets                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits                             |   | $      | -      |   |   | $      | -      |   |   | $ | 1 |   |   | $ | 1 |   |
| Investment securities                                 |   |   | 1,606  |   |   |   | (419   | ) |   |   | (186 | ) |   |   | 1,003 |   |
| Loans held for sale                                   |   |   | (31    | )      |   |   | 73     |   |   |   | (62 | ) |   |   | (20 | ) |
| Loans                                                 |   |   | (515   | )      |   |   | (618   | ) |   |   | 29 |   |   |   | (1,104 | ) |
|    Total interest income               |   |   | 1,060  |   |   |   | (964   | ) |   |   | (218 | ) |   |   | (122 | ) |
| Interest expense                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                              |   |   | 205    |   |   |   | (239   | ) |   |   | (19 | ) |   |   | (53 | ) |
| Other borrowings2                                     |   |   | 82     |   |   |   | (489   | ) |   |   | (24 | ) |   |   | (431 | ) |
| Total interest expense                                |   |   | 287    |   |   |   | (728   | ) |   |   | (43 | ) |   |   | (484 | ) |
|    Change in net interest income       |   | $      | 773    |   |   | $      | (236   | ) |   | $ | (175 | ) |   | $ | 362 |   |

----

|                                                                                   |   | For thesix months ended |      |   | For thequarters ended |   |
|----------------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|-----------------------|--------|
|  In thousands of dollars                                                          |   | June 30, 2011           |      |   | June 30,2010          |   |   | June 30, 2011 |   |   | June 30,2010 |   |
| Assets                                                                                 |   |                    |      |   |                  |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                              |   | $                       | 15,339    |   |                  | $      | 14,456 |   |   | $ | 14,479 |   |   | $ | 13,535 |   |
| Time deposits in other banks                                                           |   |                    | 100       |   |                  |   | - |   |   |   | 100 |   |   |   | - |   |
| Securities available for sale                                                          |   |                    | 321,200   |   |                  |   | 128,387 |   |   |   | 333,275 |   |   |   | 149,171 |   |
| Securities to be held to maturity                                                      |   |                    | 108,525   |   |                  |   | 165,321 |   |   |   | 112,513 |   |   |   | 154,517 |   |
| Federal Reserve Bank stock, at cost                                                    |   |                    | 1,412     |   |                  |   | 1,412 |   |   |   | 1,412 |   |   |   | 1,412 |   |
| Federal Home Loan Bank, at cost                                                        |   |                    | 14,031    |   |                  |   | 14,031 |   |   |   | 14,031 |   |   |   | 14,031 |   |
| Loans held for sale (fair value approximates cost)                                     |   |                    | 1,054     |   |                  |   | 3,401 |   |   |   | 568 |   |   |   | 3,677 |   |
| Loans                                                                                  |   |                    | 893,787   |   |                  |   | 936,648 |   |   |   | 893,508 |   |   |   | 936,807 |   |
| Allowance for loan losses                                                              |   |                    | (14,180   | )      |                  |   | (14,484 | ) |   |   | (14,505 | ) |   |   | (14,741 | ) |
|      Net loans                                                |   |                    | 879,607   |   |                  |   | 922,164 |   |   |   | 879,003 |   |   |   | 922,066 |   |
| Accrued interest receivable                                                            |   |                    | 5,491     |   |                  |   | 5,674 |   |   |   | 5,698 |   |   |   | 5,987 |   |
| Premises and equipment                                                                 |   |                    | 18,725    |   |                  |   | 18,261 |   |   |   | 18,565 |   |   |   | 18,302 |   |
| Other real estate owned                                                                |   |                    | 5,401     |   |                  |   | 5,639 |   |   |   | 5,797 |   |   |   | 5,625 |   |
| Goodwill                                                                               |   |                    | 27,684    |   |                  |   | 27,684 |   |   |   | 27,684 |   |   |   | 27,684 |   |
| Other assets                                                                           |   |                    | 28,244    |   |                  |   | 29,298 |   |   |   | 27,966 |   |   |   | 29,210 |   |
|         Total Assets                           |   | $                       | 1,426,813 |   |                  | $      | 1,335,728 |   |   | $ | 1,441,091 |   |   | $ | 1,345,217 |   |
|                                                                                   |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities & Shareholders’ Equity                                           |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                                                                        |   | $                       | 69,488    |   |                  | $      | 61,138 |   |   | $ | 68,674 |   |   | $ | 60,518 |   |
| NOW deposits                                                                           |   |                    | 120,930   |   |                  |   | 114,886 |   |   |   | 119,625 |   |   |   | 114,588 |   |
| Money market deposits                                                                  |   |                    | 72,436    |   |                  |   | 85,152 |   |   |   | 69,388 |   |   |   | 79,960 |   |
| Savings deposits                                                                       |   |                    | 105,472   |   |                  |   | 93,674 |   |   |   | 107,162 |   |   |   | 94,442 |   |
| Certificates of deposit                                                                |   |                    | 661,072   |   |                  |   | 590,801 |   |   |   | 669,455 |   |   |   | 605,381 |   |
|      Total deposits                                           |   |                    | 1,029,398 |   |                  |   | 945,651 |   |   |   | 1,034,304 |   |   |   | 954,889 |   |
| Borrowed funds – short term                                                      |   |                    | 102,738   |   |                  |   | 119,503 |   |   |   | 109,896 |   |   |   | 118,819 |   |
| Borrowed funds – long term                                                       |   |                    | 130,166   |   |                  |   | 110,173 |   |   |   | 130,166 |   |   |   | 110,173 |   |
| Dividends payable                                                                      |   |                    | 980       |   |                  |   | 987 |   |   |   | 984 |   |   |   | 998 |   |
| Other liabilities                                                                      |   |                    | 9,784     |   |                  |   | 9,125 |   |   |   | 10,063 |   |   |   | 9,579 |   |
|      Total Liabilities                                        |   |                    | 1,273,066 |   |                  |   | 1,185,439 |   |   |   | 1,285,413 |   |   |   | 1,194,458 |   |
| Shareholders' Equity:                                                                  |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock                                                                        |   |                    | 24,705    |   |                  |   | 24,606 |   |   |   | 24,730 |   |   |   | 24,631 |   |
| Common stock                                                                           |   |                    | 98        |   |                  |   | 97 |   |   |   | 98 |   |   |   | 98 |   |
| Additional paid-in capital                                                             |   |                    | 45,536    |   |                  |   | 45,187 |   |   |   | 45,609 |   |   |   | 45,271 |   |
| Retained earnings                                                                      |   |                    | 83,755    |   |                  |   | 80,518 |   |   |   | 84,324 |   |   |   | 80,811 |   |
| Net unrealized gain/(loss) on securities available-for-sale                            |   |                    | (280      | )      |                  |   | 89 |   |   |   | 982 |   |   |   | 155 |   |
| Net unrealized loss on postretirement benefit costs                                    |   |                    | (67       | )      |                  |   | (208 | ) |   |   | (65 | ) |   |   | (207 | ) |
|     Total Shareholders’ Equity                               |   |                    | 153,747   |   |                  |   | 150,289 |   |   |   | 155,678 |   |   |   | 150,759 |   |
|        Total Liabilities & Shareholders' Equity |   | $                       | 1,426,813 |   |                  | $      | 1,335,728 |   |   | $ | 1,441,091 |   |   | $ | 1,345,217 |   |

----

----

| Dollars in thousands              |   | June 30, 2011 |    |   | December 31, 2010 |   |    | June 30, 2010 |   |
|-----------------------------------|--------|---------------|---------|--------|-------------------|--------|---------|---------------|--------|
| Securities available for sale     |   |          |    |   |              |   |    |          |   |
| U.S. Treasury and agency          |   | $             | 16,123  |   |              | $      | 16,045  |          |   | $ | 51,451 |   |
| Mortgage-backed securities        |   |          | 221,524 |   |              |   | 234,414 |          |   |   | 66,984 |   |
| State and political subdivisions  |   |          | 65,162  |   |              |   | 41,524  |          |   |   | 29,589 |   |
| Corporate securities              |   |          | 936     |   |              |   | 866     |          |   |   | 817 |   |
| Other equity securities           |   |          | 533     |   |              |   | 380     |          |   |   | 408 |   |
|                              |   | $             | 304,278 |   |              | $      | 293,229 |          |   | $ | 149,249 |   |
| Securities to be held to maturity |   |          |    |   |              |   |    |          |   |   |   |   |
| U.S. Treasury and agency          |   | $             | 12,970  |   |              | $      | 2,190   |          |   | $ | 7,973 |   |
| Mortgage-backed securities        |   |          | 60,836  |   |              |   | 55,710  |          |   |   | 69,756 |   |
| State and political subdivisions  |   |          | 48,864  |   |              |   | 49,330  |          |   |   | 52,013 |   |
| Corporate securities              |   |          | 300     |   |              |   | 150     |          |   |   | 150 |   |
|                              |   | $             | 122,970 |   |              | $      | 107,380 |          |   | $ | 129,892 |   |
| Non-marketable securities:        |   |          |    |   |              |   |    |          |   |   |   |   |
| Federal Home Loan Bank Stock      |   | $             | 14,031  |   |              | $      | 14,031  |          |   | $ | 14,031 |   |
| Federal Reserve Bank Stock        |   |          | 1,412   |   |              |   | 1,412   |          |   |   | 1,412 |   |
|                              |   | $             | 15,443  |   |              | $      | 15,443  |          |   | $ | 15,443 |   |
| Total securities                  |   | $             | 442,691 |   |              | $      | 416,052 |          |   | $ | 294,584 |   |

----

|                                     |   | Available For Sale |    |   | Held to Maturity  |   |
|------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|  Dollars in thousands               |   | FairValue          |    |   | Yield to maturity |   |   | Amortized Cost |   |   | Yield to maturity |   |
|  U.S. Treasury & Agency         |   |               |    |   |              |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   | $                  | -       |   |              |   | 0.00 | % |   | $ | - |   |   |   | 0.00 | % |
|  Due in 1 to 5 years                |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | 5,000 |   |   |   | 3.00 | % |
|  Due after 10 years                 |   |               | 16,123  |   |              |   | 5.34 | % |   |   | 7,970 |   |   |   | 4.23 | % |
|   Total                        |   |               | 16,123  |   |              |   | 5.34 | % |   |   | 12,970 |   |   |   | 3.75 | % |
|  Mortgage-Backed Securities         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | 4,742   |   |              |   | 0.65 | % |   |   | 82 |   |   |   | 4.57 | % |
|  Due in 1 to 5 years                |   |               | 4,357   |   |              |   | 3.54 | % |   |   | 4,616 |   |   |   | 3.56 | % |
|  Due in 5 to 10 years               |   |               | 25,102  |   |              |   | 3.22 | % |   |   | 3,199 |   |   |   | 5.30 | % |
|  Due after 10 years                 |   |               | 187,323 |   |              |   | 3.24 | % |   |   | 52,939 |   |   |   | 4.07 | % |
|   Total                        |   |               | 221,524 |   |              |   | 3.19 | % |   |   | 60,836 |   |   |   | 4.10 | % |
|  State & Political Subdivisions |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | 199     |   |              |   | 6.85 | % |   |   | 145 |   |   |   | 7.38 | % |
|  Due in 1 to 5 years                |   |               | 3,547   |   |              |   | 7.25 | % |   |   | 5,717 |   |   |   | 6.32 | % |
|  Due in 5 to 10 years               |   |               | 997     |   |              |   | 6.27 | % |   |   | 15,363 |   |   |   | 6.43 | % |
|  Due after 10 years                 |   |               | 60,419  |   |              |   | 6.47 | % |   |   | 27,639 |   |   |   | 6.30 | % |
|   Total                        |   |               | 65,162  |   |              |   | 6.51 | % |   |   | 48,864 |   |   |   | 6.35 | % |
|  Corporate Securities               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Due in 1 year or less              |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due in 1 to 5 years                |   |               | -       |   |              |   | 0.00 | % |   |   | 300 |   |   |   | 1.25 | % |
|  Due in 5 to 10 years               |   |               | -       |   |              |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |
|  Due after 10 years                 |   |               | 936     |   |              |   | 1.29 | % |   |   | - |   |   |   | 0.00 | % |
|   Total                        |   |               | 936     |   |              |   | 1.29 | % |   |   | 300 |   |   |   | 1.25 | % |
|  Equity Securities                  |   |               | 533     |   |              |   | 5.54 | % |   |   |   |   |   |   |   |   |
|                                     |   | $                  | 304,278 |   |              |   | 4.01 | % |   | $ | 122,970 |   |   |   | 4.95 | % |

----

|                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total  |   |
|----------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                             |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| In thousands of dollars          |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.S. Treasury and agency         |   | $                   | 12,784 |   |              | $      | (186   | )      |   | $ | - |   |   | $ | - |   |   | $ | 12,784 |   |   | $ | (186 | ) |
| Mortgage-backed securities       |   |                | 71,157 |   |              |   | (1,044 | )      |   |   | 3,681 |   |   |   | (262 | ) |   |   | 74,838 |   |   |   | (1,306 | ) |
| State and political subdivisions |   |                | 12,050 |   |              |   | (142   | )      |   |   | 1,489 |   |   |   | (311 | ) |   |   | 13,539 |   |   |   | (453 | ) |
| Corporate securities             |   |                | -      |   |              |   | -      |   |   |   | 936 |   |   |   | (169 | ) |   |   | 936 |   |   |   | (169 | ) |
| Other equity securities          |   |                | 247    |   |              |   | (15    | )      |   |   | 48 |   |   |   | (5 | ) |   |   | 295 |   |   |   | (20 | ) |
|                             |   | $                   | 96,238 |   |              | $      | (1,387 | )      |   | $ | 6,154 |   |   | $ | (747 | ) |   | $ | 102,392 |   |   | $ | (2,134 | ) |

----

----

| Dollars in thousands           |   | June 30, 2011 |    |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|---------------|---------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 263,337 |   |              |   | 29.7   | %             |   | $ | 245,540 |   |   |   | 27.7 | % |   | $ | 260,799 |   |   |   | 28.0 | % |
|    Construction |   |          | 29,386  |   |              |   | 3.3    | %             |   |   | 41,869 |   |   |   | 4.7 | % |   |   | 35,932 |   |   |   | 3.9 | % |
|    Other        |   |          | 102,499 |   |              |   | 11.6   | %             |   |   | 101,462 |   |   |   | 11.4 | % |   |   | 113,831 |   |   |   | 12.2 | % |
| Municipal                      |   |          | 19,974  |   |              |   | 2.3    | %             |   |   | 21,833 |   |   |   | 2.5 | % |   |   | 23,795 |   |   |   | 2.6 | % |
| Residential                    |   |          |    |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 335,807 |   |              |   | 37.9   | %             |   |   | 337,927 |   |   |   | 38.1 | % |   |   | 359,774 |   |   |   | 38.4 | % |
|    Construction |   |          | 11,063  |   |              |   | 1.2    | %             |   |   | 15,512 |   |   |   | 1.7 | % |   |   | 18,302 |   |   |   | 2.0 | % |
| Home equity line of credit     |   |          | 107,224 |   |              |   | 12.0   | %             |   |   | 105,297 |   |   |   | 11.9 | % |   |   | 100,450 |   |   |   | 10.8 | % |
| Consumer                       |   |          | 17,639  |   |              |   | 2.0    | %             |   |   | 18,156 |   |   |   | 2.0 | % |   |   | 19,127 |   |   |   | 2.1 | % |
| Total loans                    |   | $             | 886,929 |   |              |   | 100.0  | %             |   | $ | 887,596 |   |   |   | 100.0 | % |   | $ | 932,010 |   |   |   | 100.0 | % |

| In thousands of dollars        |   | < 1 Year |   |   | 1 - 5 Years |   |   | 5 - 10 Years |   |   | > 10 Years |   |   | Total  |    |
|--------------------------------|--------|-------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------|---------|
| Commercial                     |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |
|    Real estate  |   | $           | 11,917 |   |        | $      | 17,081 |         |   | $      | 20,956        |   |   | $      | 213,383 |   |   | $ | 263,337 |   |
|    Construction |   |        | 13,655 |   |        |   | 2,694  |         |   |   | 155           |   |   |   | 12,882  |   |   |   | 29,386 |   |
|    Other        |   |        | 13,937 |   |        |   | 32,511 |         |   |   | 21,423        |   |   |   | 34,628  |   |   |   | 102,499 |   |
| Municipal                      |   |        | 2,353  |   |        |   | 4,147  |         |   |   | 6,392         |   |   |   | 7,082   |   |   |   | 19,974 |   |
| Residential                    |   |        |   |   |        |   |   |         |   |   |          |   |   |   |    |   |   |   |   |   |
|    Term         |   |        | 3,185  |   |        |   | 14,956 |         |   |   | 23,168        |   |   |   | 294,498 |   |   |   | 335,807 |   |
|    Construction |   |        | 4,242  |   |        |   | 62     |         |   |   | -             |   |   |   | 6,759   |   |   |   | 11,063 |   |
| Home equity line of credit     |   |        | 1,860  |   |        |   | 1,791  |         |   |   | 472           |   |   |   | 103,101 |   |   |   | 107,224 |   |
| Consumer                       |   |        | 8,048  |   |        |   | 6,283  |         |   |   | 967           |   |   |   | 2,341   |   |   |   | 17,639 |   |
| Total loans                    |   | $           | 59,197 |   |        | $      | 79,525 |         |   | $      | 73,533        |   |   | $      | 674,674 |   |   | $ | 886,929 |   |

----

|                           |   | Fixed-Rate |    |   | Adjustable-Rate |   |   | Total  |   |
|--------------------------------|--------|------------|---------|--------|-----------------|--------|--------|--------|--------|
| Dollars in thousands           |   | Amount     |    |   | % of total      |   |   | Amount |   |   | % of total |   |   | Amount |   |   | % of total |   |
| Commercial                     |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $          | 46,434  |   |            |   | 5.2    | %      |   | $ | 216,903 |   |   |   | 24.6 | % |   | $ | 263,337 |   |   |   | 29.7 | % |
|    Construction |   |       | -       |   |            |   | 0.0    | %      |   |   | 29,386 |   |   |   | 3.4 | % |   |   | 29,386 |   |   |   | 3.3 | % |
|    Other        |   |       | 51,080  |   |            |   | 5.8    | %      |   |   | 51,419 |   |   |   | 5.8 | % |   |   | 102,499 |   |   |   | 11.6 | % |
| Municipal                      |   |       | 19,974  |   |            |   | 2.3    | %      |   |   | - |   |   |   | 0.0 | % |   |   | 19,974 |   |   |   | 2.3 | % |
| Residential                    |   |       |    |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |       | 119,597 |   |            |   | 13.5   | %      |   |   | 216,210 |   |   |   | 24.4 | % |   |   | 335,807 |   |   |   | 37.9 | % |
|    Construction |   |       | 3,131   |   |            |   | 0.4    | %      |   |   | 7,932 |   |   |   | 0.9 | % |   |   | 11,063 |   |   |   | 1.2 | % |
| Home equity line of credit     |   |       | 3,780   |   |            |   | 0.4    | %      |   |   | 103,444 |   |   |   | 11.7 | % |   |   | 107,224 |   |   |   | 12.0 | % |
| Consumer                       |   |       | 14,235  |   |            |   | 1.6    | %      |   |   | 3,404 |   |   |   | 0.4 | % |   |   | 17,639 |   |   |   | 2.0 | % |
| Total loans                    |   | $          | 258,231 |   |            |   | 29.2   | %      |   | $ | 628,698 |   |   |   | 71.2 | % |   | $ | 886,929 |   |   |   | 100.0 | % |

----

----

| Dollars in thousands           |   | June 30, 2011 |   |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |
|    Real estate  |   | $             | 6,927  |   |              |   | 29.7   | %             |   | $ | 5,260 |   |   |   | 27.7 | % |   | $ | 5,553 |   |   |   | 28.0 | % |
|    Construction |   |          | 702    |   |              |   | 3.3    | %             |   |   | 1,012 |   |   |   | 4.7 | % |   |   | 708 |   |   |   | 3.9 | % |
|    Other        |   |          | 3,323  |   |              |   | 11.6   | %             |   |   | 2,377 |   |   |   | 11.4 | % |   |   | 2,796 |   |   |   | 12.2 | % |
| Municipal                      |   |          | 19     |   |              |   | 2.3    | %             |   |   | 19 |   |   |   | 2.5 | % |   |   | 21 |   |   |   | 2.6 | % |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Term         |   |          | 1,356  |   |              |   | 37.9   | %             |   |   | 1,408 |   |   |   | 38.1 | % |   |   | 1,270 |   |   |   | 38.4 | % |
|    Construction |   |          | 35     |   |              |   | 1.2    | %             |   |   | 44 |   |   |   | 1.7 | % |   |   | 361 |   |   |   | 2.0 | % |
| Home equity line of credit     |   |          | 652    |   |              |   | 12.0   | %             |   |   | 670 |   |   |   | 11.9 | % |   |   | 488 |   |   |   | 10.8 | % |
| Consumer                       |   |          | 664    |   |              |   | 2.0    | %             |   |   | 646 |   |   |   | 2.0 | % |   |   | 733 |   |   |   | 2.1 | % |
| Unallocated                    |   |          | 1,356  |   |              |   | 0.0    | %             |   |   | 1,880 |   |   |   | 0.0 | % |   |   | 2,235 |   |   |   | 0.0 | % |
| Total                          |   | $             | 15,034 |   |              |   | 100.0  | %             |   | $ | 13,316 |   |   |   | 100.0 | % |   | $ | 14,165 |   |   |   | 100.0 | % |

----

|  Dollars in thousands     |   | Specific Reserves on Loans Evaluated Individually for Impairment |   |   | General Reserves Based on Historical Loss Experience |   |   | Reserves for Qualitative Factors |   |   | UnallocatedReserves |   |   | Total Reserves |   |
|--------------------------------|--------|------------------------------------------------------------------|--------|--------|------------------------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------|--------|--------|----------------|--------|
| Commercial                     |   |                                                             |   |   |                                                 |   |   |                             |   |   |                |   |   |           |   |
|    Real estate  |   | $                                                                | 613    |   |                                                 | $      | 2,463  |                             |   | $      | 3,851               |   |   | $              | -      |   |   | $ | 6,927 |   |
|    Construction |   |                                                             | -      |   |                                                 |   | 274    |                             |   |   | 428                 |   |   |           | -      |   |   |   | 702 |   |
|    Other        |   |                                                             | 857    |   |                                                 |   | 962    |                             |   |   | 1,504               |   |   |           | -      |   |   |   | 3,323 |   |
| Municipal                      |   |                                                             | -      |   |                                                 |   | -      |                             |   |   | 19                  |   |   |           | -      |   |   |   | 19 |   |
| Residential                    |   |                                                             |   |   |                                                 |   |   |                             |   |   |                |   |   |           |   |   |   |   |   |   |
|    Term         |   |                                                             | 265    |   |                                                 |   | 505    |                             |   |   | 586                 |   |   |           | -      |   |   |   | 1,356 |   |
|    Construction |   |                                                             | -      |   |                                                 |   | 16     |                             |   |   | 19                  |   |   |           | -      |   |   |   | 35 |   |
| Home equity line of credit     |   |                                                             | 165    |   |                                                 |   | 85     |                             |   |   | 402                 |   |   |           | -      |   |   |   | 652 |   |
| Consumer                       |   |                                                             | 65     |   |                                                 |   | 264    |                             |   |   | 335                 |   |   |           | -      |   |   |   | 664 |   |
| Unallocated                    |   |                                                             | -      |   |                                                 |   | -      |                             |   |   | -                   |   |   |           | 1,356  |   |   |   | 1,356 |   |
|                           |   | $                                                                | 1,965  |   |                                                 | $      | 4,569  |                             |   | $      | 7,144               |   |   | $              | 1,356  |   |   | $ | 15,034 |   |

----

| Dollars in thousands                                          |   | June 30,2011 |   |   | December 31,2010 |   |   | June 30,2010 |   |
|---------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|--------|--------------|--------|
| Balance at beginning of year                                  |   | $            | 13,316 |   |             | $      | 13,637 |         |   | $ | 13,637 |   |
| Loans charged off:                                            |   |         |   |   |             |   |   |         |   |   |   |   |
| Commercial                                                    |   |         |   |   |             |   |   |         |   |   |   |   |
|    Real estate                                 |   |         | 835    |   |             |   | 4,005  |         |   |   | 2,678 |   |
|    Construction                                |   |         | -      |   |             |   | 175    |         |   |   | 175 |   |
|    Other                                       |   |         | 319    |   |             |   | 1,125  |         |   |   | 566 |   |
| Municipal                                                     |   |         | 13     |   |             |   | -      |         |   |   | - |   |
| Residential                                                   |   |         |   |   |             |   |   |         |   |   |   |   |
|    Term                                        |   |         | 697    |   |             |   | 392    |         |   |   | 291 |   |
|    Construction                                |   |         | 505    |   |             |   | 2,361  |         |   |   | - |   |
| Home equity line of credit                                    |   |         | 45     |   |             |   | 8      |         |   |   | 8 |   |
| Consumer                                                      |   |         | 156    |   |             |   | 951    |         |   |   | 420 |   |
| Total                                                         |   |         | 2,570  |   |             |   | 9,017  |         |   |   | 4,138 |   |
| Recoveries on loans previously charged off                    |   |         |   |   |             |   |   |         |   |   |   |   |
| Commercial                                                    |   |         |   |   |             |   |   |         |   |   |   |   |
|    Real estate                                 |   |         | 5      |   |             |   | 4      |         |   |   | 2 |   |
|    Construction                                |   |         | -      |   |             |   | -      |         |   |   | - |   |
|    Other                                       |   |         | 21     |   |             |   | 69     |         |   |   | 29 |   |
| Municipal                                                     |   |         | 12     |   |             |   | -      |         |   |   | - |   |
| Residential                                                   |   |         |   |   |             |   |   |         |   |   |   |   |
|    Term                                        |   |         | 4      |   |             |   | 4      |         |   |   | 2 |   |
|    Construction                                |   |         | -      |   |             |   | -      |         |   |   | - |   |
| Home equity line of credit                                    |   |         | 1      |   |             |   | -      |         |   |   | - |   |
| Consumer                                                      |   |         | 145    |   |             |   | 219    |         |   |   | 133 |   |
| Total                                                         |   |         | 188    |   |             |   | 296    |         |   |   | 166 |   |
| Net loans charged off                                         |   |         | 2,382  |   |             |   | 8,721  |         |   |   | 3,972 |   |
| Provision for loan losses                                     |   |         | 4,100  |   |             |   | 8,400  |         |   |   | 4,500 |   |
| Balance at end of period                                      |   | $            | 15,034 |   |             | $      | 13,316 |         |   | $ | 14,165 |   |
| Ratio of net loans charged off to average loans outstanding1  |   |         | 0.54   | %      |             |   | 0.94   | %            |   |   | 0.86 | % |
| Ratio of allowance for loan losses to total loans outstanding |   |         | 1.70   | %      |             |   | 1.50   | %            |   |   | 1.52 | % |

----

| In thousands of dollars                                                             |   | June 30, 2011 |   |   | December 31, 2010 |   |   | June 30, 2010 |   |
|-------------------------------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                                                                          |   |          |   |   |              |   |   |          |   |
|    Real estate                                                       |   | $             | 6,746  |   |              | $      | 5,946  |          |   | $ | 7,333 |   |
|    Construction                                                      |   |          | 771    |   |              |   | 937    |          |   |   | 472 |   |
|    Other                                                             |   |          | 2,133  |   |              |   | 2,277  |          |   |   | 2,505 |   |
| Municipal                                                                           |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                                                                         |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term                                                              |   |          | 11,569 |   |              |   | 8,932  |          |   |   | 11,247 |   |
|    Construction                                                      |   |          | 334    |   |              |   | 3,567  |          |   |   | 2,936 |   |
| Home equity line of credit                                                          |   |          | 740    |   |              |   | 519    |          |   |   | 170 |   |
| Consumer                                                                            |   |          | 111    |   |              |   | 113    |          |   |   | 326 |   |
| Non-performing loans plus loans 90 or more days past dueand still accruing interest |   | $             | 22,404 |   |              | $      | 22,291 |          |   | $ | 24,989 |   |
| Non-performing loans included in above total                                        |   | $             | 22,049 |   |              | $      | 21,175 |          |   | $ | 23,607 |   |

| ·   | The borrower demonstrates financial difficulty; common indicators include past due status with bank obligations, substandard credit bureau reports, or an inability to refinance with another lender, and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The Bank has granted a concession; common concession types include maturity date extension, interest rate adjustments to below market pricing, and deferment of payments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Dollars in thousands           |   | June 30, 2011 |   |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Commercial                     |   |          |   |   |              |   |   |          |   |
|    Real estate  |   | $             | 6,746  |   |              | $      | 5,946  |          |   | $ | 7,344 |   |
|    Construction |   |          | 772    |   |              |   | 937    |          |   |   | 459 |   |
|    Other        |   |          | 2,095  |   |              |   | 1,753  |          |   |   | 2,901 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   |   |   |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term         |   |          | 16,191 |   |              |   | 12,455 |          |   |   | 11,976 |   |
|    Construction |   |          | 334    |   |              |   | 3,567  |          |   |   | 3,176 |   |
| Home equity line of credit     |   |          | 740    |   |              |   | 519    |          |   |   | 161 |   |
| Consumer                       |   |          | 103    |   |              |   | 106    |          |   |   | 69 |   |
| Total                          |   | $             | 26,981 |   |              | $      | 25,283 |          |   | $ | 26,086 |   |

----

| Dollars in thousands                                  |   | June 30,2011 |   |   | December 31, 2010 |   |   | June 30, 2010 |   |
|-------------------------------------------------------|--------|--------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Commercial                                            |   |         |   |   |              |   |   |               |   |
|    Real estate                         |   | $            | 6,278  |   |              | $      | 6,055  |               |   | $ | 8,014 |   |
|    Construction                        |   |         | 117    |   |              |   | 1,057  |               |   |   | 646 |   |
|    Other                               |   |         | 1,541  |   |              |   | 4,440  |               |   |   | 1,147 |   |
| Municipal                                             |   |         | -      |   |              |   | -      |               |   |   | - |   |
| Residential                                           |   |         |   |   |              |   |   |               |   |   |   |   |
|    Term                                |   |         | 16,009 |   |              |   | 12,231 |               |   |   | 13,344 |   |
|    Construction                        |   |         | 334    |   |              |   | 1,828  |               |   |   | 1,166 |   |
| Home equity line of credit                            |   |         | 1,608  |   |              |   | 2,038  |               |   |   | 1,574 |   |
| Consumer                                              |   |         | 266    |   |              |   | 266    |               |   |   | 628 |   |
| Total                                                 |   | $            | 26,153 |   |              | $      | 27,915 |               |   | $ | 26,519 |   |
| Loans 30-89 days past due to total loans              |   |         | 1.14   | %      |              |   | 1.32   | %                  |   |   | 0.96 | % |
| Loans 90+ days past due and accruing to total loans   |   |         | 0.04   | %      |              |   | 0.13   | %                  |   |   | 0.15 | % |
| Loans 90+ days past due on non-accrual to total loans |   |         | 1.77   | %      |              |   | 1.70   | %                  |   |   | 1.74 | % |
| Total past due loans to total loans                   |   |         | 2.95   | %      |              |   | 3.15   | %                  |   |   | 2.85 | % |

----

| In thousands of dollars        |   | June 30, 2011 |   |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|---------------|--------|
| Carrying Value                 |   |          |   |   |              |   |   |          |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | 1,761  |   |              |   | 424    |          |   |   | 950 |   |
|    Other        |   |          | 2,747  |   |              |   | 1,795  |          |   |   | 1,310 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term         |   |          | 3,351  |   |              |   | 2,842  |          |   |   | 3,122 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 7,859  |   |              | $      | 5,061  |          |   | $ | 5,382 |   |
| Related Allowance              |   |          |   |   |              |   |   |          |   |   |   |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | 400 |   |
|    Other        |   |          | -      |   |              |   | 66     |          |   |   | - |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term         |   |          | 136    |   |              |   | 66     |          |   |   | 188 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 136    |   |              | $      | 132    |          |   | $ | 588 |   |
| Net Value                      |   |          |   |   |              |   |   |          |   |   |   |   |
| Commercial                     |   |          |   |   |              |   |   |          |   |   |   |   |
|    Real estate  |   | $             | -      |   |              | $      | -      |          |   | $ | - |   |
|    Construction |   |          | 1,761  |   |              |   | 424    |          |   |   | 550 |   |
|    Other        |   |          | 2,747  |   |              |   | 1,729  |          |   |   | 1,310 |   |
| Municipal                      |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Residential                    |   |          |   |   |              |   |   |          |   |   |   |   |
|    Term         |   |          | 3,215  |   |              |   | 2,776  |          |   |   | 2,934 |   |
|    Construction |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Home equity line of credit     |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Consumer                       |   |          | -      |   |              |   | -      |          |   |   | - |   |
| Total                          |   | $             | 7,723  |   |              | $      | 4,929  |          |   | $ | 4,794 |   |

----

----

| Dollars in thousands                              |   | Total  |    |   | Less than1 year |   |    | 1-3 years |   |   | 3-5 years |   |   | More than 5 years |    |
|---------------------------------------------------|--------|--------|---------|--------|-----------------|--------|---------|-----------|--------|--------|-----------|--------|--------|-------------------|---------|
| Borrowed funds                                    |   | $      | 249,336 |   |            | $      | 119,170 |      |   | $      | 10,000    |   |   | $                 | 70,000  |   |   | $ | 50,166 |   |
| Operating leases                                  |   |   | 581     |   |            |   | 96      |      |   |   | 180       |   |   |              | 111     |   |   |   | 194 |   |
| Certificates of deposit                           |   |   | 633,298 |   |            |   | 410,470 |      |   |   | 85,889    |   |   |              | 136,939 |   |   |   | - |   |
| Total                                             |   | $      | 883,215 |   |            | $      | 529,736 |      |   | $      | 96,069    |   |   | $                 | 207,050 |   |   | $ | 50,360 |   |
| Total loan commitments and unused lines of credit |   | $      | 117,249 |   |            | $      | 117,249 |      |   | $      | -         |   |   | $                 | -       |   |   | $ | - |   |

----

|                                                  |   |   | 0-90    |   |   |   | 90-365  |   |   |   | 1-5     |   |   |   | 5+       |   |
|-------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|
| Dollars in thousands                             |   | Days   |    |   | Days   |   |    | Years  |   |   | Years   |   |
| Investment securities at amortized cost               |   | $      | 19,675  |   |   | $      | 46,773  |   |   | $      | 162,813 |   |   | $      | 197,987  |   |
| Federal Home Loan Bank and Federal Reserve Bank Stock |   |   | -       |   |   |   | -       |   |   |   | 14,031  |   |   |   | 1,412    |   |
| Loans held for sale                                   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | 419      |   |
| Loans                                                 |   |   | 458,319 |   |   |   | 153,853 |   |   |   | 233,076 |   |   |   | 41,681   |   |
| Other interest-earning assets                         |   |   | -       |   |   |   | 10,116  |   |   |   | -       |   |   |   | -        |   |
| Non-rate-sensitive assets                             |   |   | 5,465   |   |   |   | -       |   |   |   | -       |   |   |   | 85,418   |   |
|  Total assets                                    |   |   | 483,459 |   |   |   | 210,742 |   |   |   | 409,920 |   |   |   | 326,917  |   |
| Interest-bearing deposits                             |   |   | 318,120 |   |   |   | 162,748 |   |   |   | 222,822 |   |   |   | 224,128  |   |
| Borrowed funds                                        |   |   | 110,007 |   |   |   | 10,009  |   |   |   | 80,048  |   |   |   | 50,104   |   |
| Non-rate-sensitive liabilities and equity             |   |   | 1,900   |   |   |   | 5,700   |   |   |   | 32,350  |   |   |   | 213,102  |   |
|  Total liabilities and equity                    |   |   | 430,027 |   |   |   | 178,457 |   |   |   | 335,220 |   |   |   | 487,334  |   |
| Period gap                                            |   | $      | 53,432  |   |   | $      | 32,285  |   |   | $      | 74,700  |   |   | $      | (160,417 | )      |
| Percent of total assets                               |   |   | 3.73    | %      |   |   | 2.26    | %      |   |   | 5.22    | %      |   |   | -11.21   | %      |
| Cumulative gap (current)                              |   |   | 53,432  |   |   |   | 85,717  |   |   |   | 160,417 |   |   |   | -        |   |
| Percent of total assets                               |   |   | 3.73    | %      |   |   | 5.99    | %      |   |   | 11.21   | %      |   |   | 0.00     | %      |

----

| Changes in Net Interest Income             | June 30, 2011 | December 31, 2010 |
|--------------------------------------------|---------------|-------------------|
| Year 1                                     |          |              |
| Projected change if rates decrease by 1.0% | -0.80%        | 0.60%             |
| Projected change if rates increase by 2.0% | -0.50%        | -1.50%            |
| Year 2                                     |          |              |
| Projected change if rates decrease by 1.0% | -5.20%        | -2.20%            |
| Projected change if rates increase by 2.0% | -2.10%        | -4.70%            |

----

----

----

----

----