| R      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
|--------|--------------------------------------------------------------------|
|   | EXCHANGE ACT OF 1934                                               |
|   |                                                               |
|   | For the quarterly period ended March 31, 2011                      |

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

| Maryland                          |   | 20-0154352          |
|-----------------------------------|--------|---------------------|
| (State or other jurisdiction      |   | (I.R.S. Employer    |
| of incorporation or organization) |   | Identification No.) |

|   | 1525 Pointer Ridge Place                 | 20716      |
|--------|------------------------------------------|------------|
|   | Bowie, Maryland                          | (Zip Code) |
|   | (Address of principal executive offices) |       |

|   | Yes | R | No | £ |
|--------|-----|---|----|--------|

|   | Yes | £ | No | £ |
|--------|-----|--------|----|--------|

| Large accelerated filer o                                   | Accelerated filer o           |
|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
|                                                                       |                                                                                 |
| Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company þ                                                |

|   | Yes | £ | No | R |
|--------|-----|--------|----|---|

----

| Old Line Bancshares, Inc. & Subsidiaries                                                                                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated Balance Sheets                                                                                                                                                                |   |
|                                                                                                                                                                                       |   |   |   |   |   |   |
|                                                                                                                                                                                       |   | March 31,2011 |   |   | December 31,2010 |   |
|                                                                                                                                                                                       |   | (Unaudited) |   |   |   |   |
|  Assets                                                                                                                                                                               |   |   |   |   |   |   |
|  Cash and due from banks                                                                                                                                                              |   | $ | 8,512,884 |   |   | $ | 14,325,266 |   |
|  Interest bearing accounts                                                                                                                                                            |   |   | 115,680 |   |   |   | 109,170 |   |
|  Federal funds sold                                                                                                                                                                   |   |   | 558,214 |   |   |   | 180,536 |   |
|            Total cash and cash equivalents                                                                                          |   |   | 9,186,778 |   |   |   | 14,614,972 |   |
|  Time deposits in other banks                                                                                                                                                         |   |   | 99,000 |   |   |   | 297,000 |   |
|  Investment securities available for sale                                                                                                                                             |   |   | 37,658,830 |   |   |   | 33,049,795 |   |
|  Investment securities held to maturity                                                                                                                                               |   |   | 20,267,496 |   |   |   | 21,736,469 |   |
|  Loans, less allowance for loan losses                                                                                                                                                |   |   | 306,653,965 |   |   |   | 299,606,430 |   |
|  Restricted equity securities at cost                                                                                                                                                 |   |   | 2,596,650 |   |   |   | 2,562,750 |   |
|  Premises and equipment                                                                                                                                                               |   |   | 16,703,016 |   |   |   | 16,867,561 |   |
|  Accrued interest receivable                                                                                                                                                          |   |   | 1,239,489 |   |   |   | 1,252,970 |   |
|  Prepaid income taxes                                                                                                                                                                 |   |   | - |   |   |   | 189,523 |   |
|  Deferred income taxes                                                                                                                                                                |   |   | 190,186 |   |   |   | 265,551 |   |
|  Bank owned life insurance                                                                                                                                                            |   |   | 8,765,616 |   |   |   | 8,703,175 |   |
|  Other real estate owned                                                                                                                                                              |   |   | 1,976,516 |   |   |   | 1,153,039 |   |
|  Other assets                                                                                                                                                                         |   |   | 2,214,039 |   |   |   | 1,610,715 |   |
|                         Total assets                               |   | $ | 407,551,581 |   |   | $ | 401,909,950 |   |
|                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|  Liabilities and Stockholders' Equity                                                                                                                                                 |   |   |   |   |   |   |   |   |
|  Deposits                                                                                                                                                                             |   |   |   |   |   |   |   |   |
|     Non-interest bearing                                                                                                                                               |   | $ | 56,827,155 |   |   | $ | 67,494,744 |   |
|     Interest bearing                                                                                                                                                   |   |   | 281,811,895 |   |   |   | 273,032,442 |   |
|            Total deposits                                                                                                           |   |   | 338,639,050 |   |   |   | 340,527,186 |   |
|  Short term borrowings                                                                                                                                                                |   |   | 6,584,128 |   |   |   | 5,669,332 |   |
|  Long term borrowings                                                                                                                                                                 |   |   | 16,349,219 |   |   |   | 16,371,947 |   |
|  Accrued interest payable                                                                                                                                                             |   |   | 363,763 |   |   |   | 434,656 |   |
|  Income tax payable                                                                                                                                                                   |   |   | 56,415 |   |   |   | - |   |
|  Other liabilities                                                                                                                                                                    |   |   | 1,220,714 |   |   |   | 1,248,079 |   |
|                         Total liabilities                          |   |   | 363,213,289 |   |   |   | 364,251,200 |   |
|                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|  Stockholders' equity                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Common stock, par value $0.01 per share; authorized 15,000,000 shares;                                                                                                                     |   |   |   |   |   |
|       issued and outstanding 4,677,363 in 2011 and 3,891,705 in 2010                                                                                         |   |   | 46,774 |   |   |   | 38,917 |   |
|   Additional paid-in capital                                                                                                                                                     |   |   | 35,582,975 |   |   |   | 29,206,617 |   |
|   Retained earnings                                                                                                                                                              |   |   | 7,917,628 |   |   |   | 7,535,268 |   |
|   Accumulated other comprehensive income                                                                                                                                         |   |   | 208,879 |   |   |   | 272,956 |   |
|            Total Old Line Bancshares, Inc. stockholders' equity                                                                     |   |   | 43,756,256 |   |   |   | 37,053,758 |   |
|   Non-controlling interest                                                                                                                                                       |   |   | 582,036 |   |   |   | 604,992 |   |
|            Total stockholders' equity                                                                                               |   |   | 44,338,292 |   |   |   | 37,658,750 |   |
|                         Total liabilities and stockholders' equity |   | $ | 407,551,581 |   |   | $ | 401,909,950 |   |

----

| Old Line Bancshares, Inc. & Subsidiaries                                            |   |
|-----------------------------------------------------------------------------------------|--------|
| Consolidated Statements of Income                                                       |   |
| (Unaudited)                                                                             |   |
|                                                                                    |   |
|                                                                                    |   | Three Months Ended March 31, |   |
|                                                                                    |   | 2011 |   |   | 2010 |   |
| Interest revenue                                                                        |   |   |   |   |   |   |
|   Loans, including fees                                                       |   | $ | 4,195,866 |   |   | $ | 3,953,356 |   |
|   U.S. government agency securities                                           |   |   | 26,117 |   |   |   | 54,555 |   |
|   Mortgage backed securities                                                  |   |   | 379,418 |   |   |   | 275,216 |   |
|   Municipal securities                                                        |   |   | 19,704 |   |   |   | 19,633 |   |
|   Federal funds sold                                                          |   |   | 1,831 |   |   |   | 643 |   |
|   Other                                                                       |   |   | 24,926 |   |   |   | 86,726 |   |
|       Total interest revenue                              |   |   | 4,647,862 |   |   |   | 4,390,129 |   |
| Interest expense                                                                        |   |   |   |   |   |   |   |   |
|   Deposits                                                                    |   |   | 875,976 |   |   |   | 974,929 |   |
|   Borrowed funds                                                              |   |   | 184,623 |   |   |   | 273,544 |   |
|       Total interest expense                              |   |   | 1,060,599 |   |   |   | 1,248,473 |   |
|       Net interest income                                 |   |   | 3,587,263 |   |   |   | 3,141,656 |   |
| Provision for loan losses                                                               |   |   | 150,000 |   |   |   | 70,000 |   |
|       Net interest income after provision for loan losses |   |   | 3,437,263 |   |   |   | 3,071,656 |   |
| Non-interest revenue                                                                    |   |   |   |   |   |   |   |   |
|   Service charges on deposit accounts                                         |   |   | 82,450 |   |   |   | 74,820 |   |
|   Gains on sales of investment securities                                     |   |   | 38,070 |   |   |   | - |   |
|   Earnings on bank owned life insurance                                       |   |   | 79,038 |   |   |   | 86,123 |   |
|   Gain on sale of other real estate owned                                     |   |   | 2,985 |   |   |   | - |   |
|   Other fees and commissions                                                  |   |   | 122,337 |   |   |   | 131,946 |   |
|       Total non-interest revenue                          |   |   | 324,880 |   |   |   | 292,889 |   |
| Non-interest expense                                                                    |   |   |   |   |   |   |   |   |
|   Salaries                                                                    |   |   | 1,133,787 |   |   |   | 1,165,415 |   |
|   Employee benefits                                                           |   |   | 366,924 |   |   |   | 350,135 |   |
|   Occupancy                                                                   |   |   | 366,023 |   |   |   | 333,406 |   |
|   Equipment                                                                   |   |   | 93,891 |   |   |   | 106,876 |   |
|   Data processing                                                             |   |   | 129,750 |   |   |   | 94,426 |   |
|   FDIC insurance and State of Maryland assessments                            |   |   | 151,504 |   |   |   | 115,115 |   |
|   Merger and integration expenses                                             |   |   | 90,060 |   |   |   | - |   |
|   Other operating                                                             |   |   | 595,235 |   |   |   | 529,409 |   |
|       Total non-interest expense                          |   |   | 2,927,174 |   |   |   | 2,694,782 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Income before income taxes                                                              |   |   | 834,969 |   |   |   | 669,763 |   |
|    Income taxes                                                          |   |   | 335,243 |   |   |   | 230,069 |   |
| Net income                                                                              |   |   | 499,726 |   |   |   | 439,694 |   |
|    Less: Net loss attributable to the noncontrolling interest            |   |   | (22,956 | ) |   |   | (24,840 | ) |
| Net income attributable to Old Line Bancshares, Inc.                                    |   | $ | 522,682 |   |   | $ | 464,534 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
| Basic earnings per common share                                                         |   | $ | 0.12 |   |   | $ | 0.12 |   |
| Diluted earnings per common share                                                       |   | $ | 0.12 |   |   | $ | 0.12 |   |
| Dividend per common share                                                               |   | $ | 0.03 |   |   | $ | 0.03 |   |

----

| Old Line Bancshares, Inc. & Subsidiaries                                |   |
|-----------------------------------------------------------------------------|--------|
| Consolidated Statement of Changes in Stockholders' Equity                   |   |
| Three Months Ended March 31, 2011                                           |   |
| (Unaudited)                                                                 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   Common stock |   |   | Additionalpaid-in |   |   | Retained |   |   | Accumulated other comprehensive |   |   |   Comprehensive |   |   | Non-controlling |   |
|                                                                        |   | Shares |   |   | Par value |   |   | capital |   |   | earnings |   |   |  income |   |   | income |   |   | Interest |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2010                                                  |   |   | 3,891,705 |   |   | $ | 38,917 |   |   | $ | 29,206,617 |   |   | $ | 7,535,268 |   |   | $ | 272,956 |   |   |   |   |   | $ | 604,992 |   |
| Net income attributable    to Old Line Bancshares, Inc. |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 522,682 |   |   |   | - |   |   | $ | 522,682 |   |   |   | - |   |
| Unrealized loss on                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities available for sale, net of income tax benefit of $41,739    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (64,077 | ) |   |   | (64,077 | ) |   |   | - |   |
| Comprehensive income                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   | $ | 458,605 |   |   |   | - |   |
| Net loss attributable    to non-controlling interest    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | (22,956 | ) |
| Stock based compensation awards                                             |   |   | - |   |   |   | - |   |   |   | 43,514 |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |
| Restricted stock issued                                                     |   |   | 8,786 |   |   |   | 88 |   |   |   | (88 | ) |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |
| Private placement                                                           |   |   | 776,872 |   |   |   | 7,769 |   |   |   | 6,332,932 |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |
| Common stock cash dividend    $0.03 per share           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (140,322 | ) |   |   | - |   |   |   |   |   |   |   | - |   |
| Balance March 31, 2011                                                      |   |   | 4,677,363 |   |   | $ | 46,774 |   |   | $ | 35,582,975 |   |   | $ | 7,917,628 |   |   | $ | 208,879 |   |   |   |   |   |   | $ | 582,036 |   |

----

| Old Line Bancshares, Inc. & Subsidiaries                                            |   |
|-----------------------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows                                                   |   |
| (Unaudited)                                                                             |   |
| Three Months Ended March 31,                                                            |   | 2011 |   |   | 2010 |   |
|                                                                                    |   |   |   |   |   |   |
|  Cash flows from operating activities                                              |   |   |   |   |   |   |
|     Interest received                                               |   | $ | 4,746,447 |   |   | $ | 4,259,662 |   |
|     Fees and commissions received                                   |   |   | 221,384 |   |   |   | 219,933 |   |
|     Interest paid                                                   |   |   | (1,131,492 | ) |   |   | (1,282,557 | ) |
|     Cash paid to suppliers and employees                            |   |   | (3,315,887 | ) |   |   | (2,447,341 | ) |
|     Income taxes paid                                               |   |   | 27,799 |   |   |   | (506,144 | ) |
|                                                                                    |   |   | 548,251 |   |   |   | 243,553 |   |
|  Cash flows from investing activities                                              |   |   |   |   |   |   |   |   |
|    Net change in time deposits in other banks                            |   |   | 198,000 |   |   |   | 1,658,831 |   |
|    Purchase of investment securities                                     |   |   |   |   |   |   |   |   |
|       Held to maturity                                    |   |   | - |   |   |   | (16,620,595 | ) |
|       Available for sale                                  |   |   | (14,812,374 | ) |   |   | (3,140,625 | ) |
|     Proceeds from disposal of investment securities                 |   |   |   |   |   |   |   |   |
|        Held to maturity at maturity or call          |   |   | 1,427,498 |   |   |   | 427,831 |   |
|        Available for sale at maturity or call        |   |   | 2,318,135 |   |   |   | 1,606,397 |   |
|        Available for sale securities sold            |   |   | 7,684,037 |   |   |   | - |   |
|        Gain on sale of available for sale securities |   |   | 38,070 |   |   |   | - |   |
|     Loans made, net of principal collected                          |   |   | (7,969,291 | ) |   |   | (6,030,826 | ) |
|     Proceeds from sale of other real estate owned                   |   |   | 2,985 |   |   |   | - |   |
|     Redemption (Purchase) of equity securities                      |   |   | (33,900 | ) |   |   | - |   |
|     Purchase of premises, equipment and software                    |   |   | (33,917 | ) |   |   | (113,541 | ) |
|                                                                                    |   |   | (11,180,757 | ) |   |   | (22,212,528 | ) |
|  Cash flows from financing activities                                              |   |   |   |   |   |   |   |   |
|    Net increase (decrease) in                                            |   |   |   |   |   |   |   |   |
|      Time deposits                                             |   |   | 830,123 |   |   |   | 3,593,546 |   |
|      Other deposits                                            |   |   | (2,718,258 | ) |   |   | 12,209,674 |   |
|    Increase in short term borrowings                                     |   |   | 914,796 |   |   |   | 14,593,406 |   |
|    Decrease in long term borrowings                                      |   |   | (22,728 | ) |   |   | (21,432 | ) |
|    Private placement - common stock                                      |   |   | 6,340,701 |   |   |   | - |   |
|    Cash dividends paid-preferred stock                                   |   |   | - |   |   |   | - |   |
|    Cash dividends paid-common stock                                      |   |   | (140,322 | ) |   |   | (116,399 | ) |
|    Distributions to minority members                                     |   |   | - |   |   |   | (4,875 | ) |
|                                                                                    |   |   | 5,204,312 |   |   |   | 30,253,920 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
|  Net increase (decrease) in cash and cash equivalents                              |   |   | (5,428,194 | ) |   |   | 8,284,945 |   |
|                                                                                    |   |   |   |   |   |   |   |   |
|  Cash and cash equivalents at beginning of period                                  |   |   | 14,614,972 |   |   |   | 11,436,587 |   |
|  Cash and cash equivalents at end of period                                        |   | $ | 9,186,778 |   |   | $ | 19,721,532 |   |

----

| Old Line Bancshares, Inc. & Subsidiaries                                |   |
|-----------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows                                       |   |
| (Unaudited)                                                                 |   |
|                                                                        |   |   |   |   |   |   |
| Three Months Ended March 31,                                                |   | 2011 |   |   | 2010 |   |
|                                                                        |   |   |   |   |   |   |
| Reconciliation of net income to net cash                                    |   |   |   |   |   |   |
|  provided by operating activities                                      |   |   |   |   |   |   |
|    Net income                                                |   | $ | 499,726 |   |   | $ | 439,694 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net income to net                                  |   |   |   |   |   |   |   |   |
|   cash provided by operating activities                           |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |   |
|      Depreciation and amortization                 |   |   | 198,462 |   |   |   | 199,154 |   |
|      Provision for loan losses                     |   |   | 150,000 |   |   |   | 70,000 |   |
|      Gain on sale of other real estate owned       |   |   | (2,985 | ) |   |   | - |   |
|      Change in deferred loan fees net of costs     |   |   | (51,721 | ) |   |   | (16,063 | ) |
|      Gain on sale of securities                    |   |   | (38,070 | ) |   |   | - |   |
|      Amortization of premiums and discounts        |   |   | 136,825 |   |   |   | 27,744 |   |
|      Deferred income taxes                         |   |   | 117,104 |   |   |   | (11,650 | ) |
|      Stock based compensation awards               |   |   | 43,514 |   |   |   | 40,270 |   |
|      Increase (decrease) in                        |   |   |   |   |   |   |   |   |
|         Accrued interest payable    |   |   | (70,893 | ) |   |   | (34,084 | ) |
|         Income tax payable          |   |   | 56,415 |   |   |   | (175,543 | ) |
|         Other liabilities           |   |   | (27,365 | ) |   |   | (28,141 | ) |
|      Decrease (increase) in                        |   |   |   |   |   |   |   |   |
|         Accrued interest receivable |   |   | 13,481 |   |   |   | (142,148 | ) |
|         Bank owned life insurance   |   |   | (62,441 | ) |   |   | (72,956 | ) |
|         Prepaid income taxes        |   |   | 189,523 |   |   |   | (88,882 | ) |
|         Other assets                |   |   | (603,324 | ) |   |   | 36,158 |   |
|                                                                        |   | $ | 548,251 |   |   | $ | 243,553 |   |
| Supplemental Disclosure:                                                    |   |   |   |   |   |   |   |   |
|      Loans transferred to other real estate owned  |   | $ | 825,289 |   |   | $ | 223,169 |   |

----

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

----

| 2. | INVESTMENT SECURITIES |
|----|-----------------------|

| March 31, 2011                     |   | Amortizedcost |       |   | Grossunrealizedgains |   |    | Grossunrealizedlosses |   |   | Estimatedfair value |   |
|------------------------------------|--------|---------------|------------|--------|----------------------|--------|---------|-----------------------|--------|--------|---------------------|--------|
| Available for sale                 |   |          |       |   |                 |   |    |                  |   |   |                |   |
|   U.S. government agency |   | $             | 3,616,091  |   |                 | $      | 76,188  |                  |   | $      | -                   |   |   | $ | 3,692,279 |   |
|   Municipal securities   |   |          | 1,302,125  |   |                 |   | 44,972  |                  |   |   | (84                 | )      |   |   | 1,347,013 |   |
|   Mortgage backed        |   |          | 32,395,673 |   |                 |   | 366,559 |                  |   |   | (142,694            | )      |   |   | 32,619,538 |   |
|                               |   | $             | 37,313,889 |   |                 | $      | 487,719 |                  |   | $      | (142,778            | )      |   | $ | 37,658,830 |   |
|                               |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
| Held to maturity                   |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
|   Municipal securities   |   | $             | 983,107    |   |                 | $      | 11,546  |                  |   | $      | (9,961              | )      |   | $ | 984,692 |   |
|   Mortgage backed        |   |          | 19,284,389 |   |                 |   | 316,376 |                  |   |   | (3,704              | )      |   |   | 19,597,061 |   |
|                               |   | $             | 20,267,496 |   |                 | $      | 327,922 |                  |   | $      | (13,665             | )      |   | $ | 20,581,753 |   |
| December 31, 2010                  |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
| Available for sale                 |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
|   U.S. government agency |   | $             | 3,716,858  |   |                 | $      | 90,881  |                  |   | $      | (3,942              | )      |   | $ | 3,803,797 |   |
|   Municipal securities   |   |          | 1,302,630  |   |                 |   | 24,746  |                  |   |   | (169                | )      |   |   | 1,327,207 |   |
|   Mortgage backed        |   |          | 27,579,549 |   |                 |   | 519,919 |                  |   |   | (180,677            | )      |   |   | 27,918,791 |   |
|                               |   | $             | 32,599,037 |   |                 | $      | 635,546 |                  |   | $      | (184,788            | )      |   | $ | 33,049,795 |   |
|                               |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
| Held to maturity                   |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |
|   Municipal securities   |   | $             | 983,783    |   |                 | $      | 11,569  |                  |   | $      | (39,568             | )      |   | $ | 955,784 |   |
|   Mortgage backed        |   |          | 20,752,686 |   |                 |   | 290,747 |                  |   |   | (33,636             | )      |   |   | 21,009,797 |   |
|                               |   | $             | 21,736,469 |   |                 | $      | 302,316 |                  |   | $      | (73,204             | )      |   | $ | 21,965,581 |   |
|                               |   |          |       |   |                 |   |    |                  |   |   |                |   |   |   |   |   |

----

| March 31, 2011                                 |   | Fairvalue |       |   | Unrealizedlosses |   |
|------------------------------------------------|--------|-----------|------------|--------|------------------|--------|
| Unrealized losses less than 12 months          |   |      |       |   |             |   |
|    Municipal securities         |   | $         | 470,483    |   |             | $      | 9,961 |   |
|   Mortgage backed                    |   |      | 18,986,996 |   |             |   | 146,398 |   |
| Total unrealized losses less than 12 months    |   |      | 19,457,479 |   |             |   | 156,359 |   |
|                                           |   |      |       |   |             |   |   |   |
| Unrealized losses greater than 12 months       |   |      |       |   |             |   |   |   |
|   Municipal securities               |   |      | 200,350    |   |             |   | 84 |   |
|   Mortgage backed                    |   |      | -          |   |             |   | - |   |
| Total unrealized losses greater than 12 months |   |      | 200,350    |   |             |   | 84 |   |
|                                           |   |      |       |   |             |   |   |   |
| Total unrealized losses                        |   |      |       |   |             |   |   |   |
|   Municipal securities               |   |      | 670,833    |   |             |   | 10,045 |   |
|   Mortgage backed                    |   |      | 18,986,996 |   |             |   | 146,398 |   |
| Total unrealized losses                        |   | $         | 19,657,829 |   |             | $      | 156,443 |   |
|                                           |   |      |       |   |             |   |   |   |

----

|                               |   | Available for Sale |       |   | Held to Maturity |   |
|------------------------------------|--------|--------------------|------------|--------|------------------|--------|
| March 31, 2011                     |   | Amortizedcost      |       |   | Fairvalue        |   |   | Amortizedcost |   |   | Fairvalue |   |
|                               |   |               |       |   |             |   |   |   |   |   |   |   |
| Maturing                           |   |               |       |   |             |   |   |   |   |   |   |   |
|   Within one year        |   | $                  | 1,006,883  |   |             | $      | 1,031,890 |   |   | $ | - |   |   | $ | - |   |
|   Over one to five years |   |               | 1,950,400  |   |             |   | 2,028,554 |   |   |   | 301,977 |   |   |   | 305,769 |   |
|   Over five to ten years |   |               | 11,162,445 |   |             |   | 11,374,524 |   |   |   | 6,200,411 |   |   |   | 6,438,573 |   |
|   Over ten years         |   |               | 23,194,161 |   |             |   | 23,223,862 |   |   |   | 13,765,108 |   |   |   | 13,837,411 |   |
|                               |   | $                  | 37,313,889 |   |             | $      | 37,658,830 |   |   | $ | 20,267,496 |   |   | $ | 20,581,753 |   |
| Pledged securities                 |   | $                  | -          |   |             | $      | - |   |   | $ | - |   |   | $ | - |   |
|                               |   |               |       |   |             |   |   |   |   |   |   |   |   |   |   |   |

| Balance Sheets       |   | March 31,                   |      |   | December 31, |   |
|----------------------|--------|-----------------------------|-----------|--------|--------------|--------|
|                 |   | 2011                        |      |   | 2010         |   |
|                 |   |                        |      |   |         |   |
| Current assets       |   | $                           | 724,906   |   |         | $      | 758,257 |   |
| Non-current assets   |   |                        | 7,203,631 |   |         |   | 7,252,413 |   |
| Liabilities          |   |                        | 6,376,442 |   |         |   | 6,397,360 |   |
| Equity               |   |                        | 1,552,095 |   |         |   | 1,613,310 |   |
|                 |   |                        |      |   |         |   |   |   |
|                 |   | Three Months EndedMarch 31, |      |
|                 |   |  2011                  |      |   |  2010   |   |
| Statements of Income |   |                        |      |   |         |   |   |   |
| Revenue              |   | $                           | 205,732   |   |         | $      | 197,539 |   |
| Expenses             |   |                        | 266,947   |   |         |   | 263,780 |   |
| Net loss             |   | $                           | (61,215   | )      |         | $      | (66,241 | ) |

----

| 4. | INCOME TAXES |
|----|--------------|

| 5. | LOANS |
|----|-------|

|                                 |   | March 31,2011 |        |   | December 31,2010 |   |
|--------------------------------------|--------|---------------|-------------|--------|------------------|--------|
|                                 |   |          |        |   |             |   |
|  Real estate                    |   |          |        |   |             |   |
|     Commercial   |   | $             | 158,590,978 |   |             | $      | 153,526,907 |   |
|     Construction |   |          | 28,633,846  |   |             |   | 24,377,690 |   |
|     Residential  |   |          | 27,956,682  |   |             |   | 27,081,399 |   |
|  Commercial                     |   |          | 81,240,269  |   |             |   | 83,523,056 |   |
|  Consumer                       |   |          | 11,818,932  |   |             |   | 13,079,878 |   |
|                                 |   |          | 308,240,707 |   |             |   | 301,588,930 |   |
|  Allowance for loan losses      |   |          | (2,124,439  | )      |             |   | (2,468,476 | ) |
|  Deferred loan costs, net       |   |          | 537,697     |   |             |   | 485,976 |   |
|                                 |   | $             | 306,653,965 |   |             | $      | 299,606,430 |   |

----

| 5. | LOANS (Continued) |
|----|-------------------|

----

| 5. | LOANS (Continued) |
|----|-------------------|

----

| 5. | LOANS (Continued) |
|----|-------------------|

| Non-Accrual and Past Due Loans        |   |
|--------------------------------------------|--------|
| (000's)                               |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | March 31,2011 |   |   | December 31,2010 |   |
|                                       |   | # of Borrowers |   |   | Account Balance |   |   | Interest Not Accrued |   |   | # of Borrowers |   |   | Account Balance |   |   | Interest Not Accrued |   |
| Real Estate                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial               |   |   | 1 |   |   | $ | 1,169,337 |   |   | $ | 129,143 |   |   |   | 2 |   |   | $ | 2,426,608 |   |   | $ | 314,804 |   |
|    Construction             |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
|    Residential              |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Commercial                                 |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Consumer                                   |   |   |   |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 284,011 |   |   |   | 3,728 |   |
| Total non-performing loans                 |   |   | 1 |   |   | $ | 1,169,337 |   |   | $ | 129,143 |   |   |   | 3 |   |   | $ | 2,710,619 |   |   | $ | 318,532 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing past due loans:                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    30-89 days past due      |   |   | 4 |   |   | $ | 1,129,554 |   |   |   |   |   |   |   |   |   |   | $ | - |   |   |   |   |   |
|    90 or more days past due |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |
| Total accruing past due loans              |   |   | 4 |   |   | $ | 1,129,554 |   |   |   |   |   |   |   |   |   |   | $ | - |   |   |   |   |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| 5. | LOANS (Continued) |
|----|-------------------|

----

| 5. | LOANS (Continued) |
|----|-------------------|

|   | o | Risk rating 1 (Highest Quality) is normally assigned to investment grade risks, meaning that level of risk is associated with entities having access (or capable of access) to the public capital markets and the loan underwriting in question conforms to the standards of institutional credit providers.  We also include in this category loans with a perfected security interest in U.S. government securities, investment grade government sponsored entities’ bonds, investment grade municipal bonds, insured savings accounts, and insured certificates of deposits drawn on high quality financial institutions. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk rating 2 (Good Quality) is normally assigned to a loan with a sound primary and secondary source of repayment.  The borrower may have access to alternative sources of financing.  This loan carries a normal level of risk, with minimal loss exposure.  The borrower has the ability to perform according to the terms of the credit facility.   Cash flow coverage is greater than 1.25:1 but may be vulnerable to more rapid deterioration than the higher quality loans.  We may also include loans secured by high quality traded stocks, lower grade municipal bonds and uninsured certificates of deposit. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk rating 3 (Acceptable Quality) is normally assigned when the borrower is a reasonable credit risk and demonstrates the ability to repay the debt from normal business operations.  Risk factors may include reliability of margins and cash flows, liquidity, dependence on a single product or industry, cyclical trends, depth of management, or limited access to alternative financing sources.  Historic financial information may indicate erratic performance, but current trends are positive.  Quality of financial information is adequate, but is not as detailed and sophisticated as information found on higher graded loans.  If adverse circumstances arise, the impact on the borrower may be significant.  We classify many small business loans in this category unless deterioration occurs or we believe the loan requires additional monitoring, such as construction loans, asset based (accounts receivable/inventory) loans, and Small Business Administration (SBA) loans. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk rating 4  (Pass/Watch) These loans exhibit all the characteristics of a loan graded as a “3” with the exception that there is a greater than normal concern that an external factor may impact the viability of the borrower at some later date; or that the Bank is uncertain because of the lack of financial information available.  We will generally grant this risk rating to credits that require additional monitoring such as construction loans, SBA loans and other loans deemed in need of additional monitoring. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk ratings 5 (Special Mention) is assigned to risks in need of close monitoring.  These are defined as classified assets.  Loans generally in this category may have either inadequate information, lack sufficient cash flow or some other problem that requires close scrutiny.  The current worth and debt service capacity of the borrower or of any pledged collateral are insufficient to ensure repayment of the loan.  These risk ratings may also apply to an improving credit previously criticized but some risk factors remain.  All loans in this classification or below should have an action plan. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk rating 6 (Substandard) is assigned to loans where there is insufficient debt service capacity.  These obligations, even if apparently protected by collateral value, have well defined weaknesses related to adverse financial, managerial, economic, market, or political conditions that have clearly jeopardized repayment of principal and interest as originally intended.  There is also the possibility that the Bank will sustain some future loss if the weaknesses are not corrected.  Clear loss potential, however, does not have to exist in any individual loan we may classify as substandard. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 5. | LOANS (Continued) |
|----|-------------------|

|   | o | Risk rating 7 (Doubtful) corresponds to the doubtful asset categories defined by regulatory authorities. A loan classified as doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full improbable.  The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors that may work to strengthening of the asset we have deferred its classification as loss until we may determine a more exact status and estimation of the potential loss. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Risk rating 8 (Loss) is assigned to charged off loans. We consider assets classified as loss as uncollectible and of such little value that their continuance as bankable assets is not warranted.  This classification does not mean that the asset has no recovery value, but that it is not practical to defer writing off the worthless assets, even though partial recoveries may occur in the future.  We charge off assets in this category.  We consider suggestions from our external loan review firm and bank examiners when determining which loans to charge off.  We automatically charge off consumer loan accounts based on regulatory requirements. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | March 31, 2011 |        |   | December 31, 2010                     |   |
|---------------------|--------|----------------|-------------|--------|---------------------------------------|--------|
|                |   | AccountBalance |        |   | AllocationofAllowance for Loan Losses |   |   | AccountBalance |   |   | AllocationofAllowance for Loan Losses |   |
| Risk Rating         |   |           |        |   |                                  |   |   |   |   |   |   |   |
| Pass (1-4)          |   | $              | 294,415,161 |   |                                  | $      | 1,868,346 |   |   | $ | 281,901,972 |   |   | $ | 1,529,356 |   |
| Special Mention (5) |   |           | 6,121,811   |   |                                  |   | 191,093 |   |   |   | 13,777,303 |   |   |   | 489,120 |   |
| Substandard (6)     |   |           | 7,703,735   |   |                                  |   | 65,000 |   |   |   | 5,909,655 |   |   |   | 450,000 |   |
| Doubtful (7)        |   |           | -           |   |                                  |   | - |   |   |   | - |   |   |   | - |   |
| Loss (8)            |   |           | -           |   |                                  |   | - |   |   |   | - |   |   |   | - |   |
| Total               |   | $              | 308,240,707 |   |                                  | $      | 2,124,439 |   |   | $ | 301,588,930 |   |   | $ | 2,468,476 |   |

----

| 5. | LOANS (Continued) |
|----|-------------------|

| March 31, 2011                                                                                                                                                                             |   | RealEstate |      |   | Commercial |   |     | Boats  |   |   | OtherConsumer |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|--------|------------|--------|----------|--------|--------|--------|---------------|--------|--------|--------|--------|
| Beginning balance                                                                                                                                                                          |   | $          | 1,748,122 |   |       | $      | 417,198  |   |   | $      | 294,723       |   |   | $      | 8,433  |   |   | $ | 2,468,476 |   |
| Provision for loan losses                                                                                                                                                                  |   |       | (235,445  | )      |       |   | 293,080  |   |   |   | 90,221        |   |   |   | 2,144  |   |   |   | 150,000 |   |
| Recoveries                                                                                                                                                                                 |   |       | -         |   |       |   | -        |   |   |   | -             |   |   |   | 204    |   |   |   | 204 |   |
|                                                                                                                                                                                       |   |       | 1,512,677 |   |       |   | 710,278  |   |   |   | 384,944       |   |   |   | 10,781 |   |   |   | 2,618,680 |   |
| Loans charged off                                                                                                                                                                          |   |       | (446,980  | )      |       |   | -        |   |   |   | (47,261       | )      |   |   | -      |   |   |   | (494,241 | ) |
| Ending Balance                                                                                                                                                                             |   | $          | 1,065,697 |   |       | $      | 710,278  |   |   | $      | 337,683       |   |   | $      | 10,781 |   |   | $ | 2,124,439 |   |
|                                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| Amount allocated to:                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |
|    Loans individually evaluated        for impairment with specific         allocation |   | $          | 65,000    |   |       | $      | -        |   |   | $      | -             |   |   | $      | -      |   |   | $ | 65,000 |   |
|    Loans collectively evaluated        for impairment                                                                               |   |       | 1,000,697 |   |       |   | 710,278  |   |   |   | 337,683       |   |   |   | 10,781 |   |   |   | 2,059,439 |   |
| Ending balance                                                                                                                                                                             |   | $          | 1,065,697 |   |       | $      | 710,278  |   |   | $      | 337,683       |   |   | $      | 10,781 |   |   | $ | 2,124,439 |   |
|                                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| December 31, 2010                                                                                                                                                                          |   | RealEstate |      |   | Commercial |   |     | Boats  |   |   | OtherConsumer |   |   | Total  |   |
| Beginning balance                                                                                                                                                                          |   | $          | 1,845,126 |   |       | $      | 544,854  |   |   | $      | 81,417        |   |   | $      | 10,319 |   |   | $ | 2,481,716 |   |
| Provision for loan losses                                                                                                                                                                  |   |       | 857,818   |   |       |   | 9,495    |   |   |   | 213,306       |   |   |   | 1,381  |   |   |   | 1,082,000 |   |
| Recoveries                                                                                                                                                                                 |   |       | 3,650     |   |       |   | -        |   |   |   | -             |   |   |   | 927    |   |   |   | 4,577 |   |
|                                                                                                                                                                                       |   |       | 2,706,594 |   |       |   | 554,349  |   |   |   | 294,723       |   |   |   | 12,627 |   |   |   | 3,568,293 |   |
| Loans charged off                                                                                                                                                                          |   |       | (958,472  | )      |       |   | (137,151 | )      |   |   | -             |   |   |   | (4,194 | ) |   |   | (1,099,817 | ) |
| Ending Balance                                                                                                                                                                             |   | $          | 1,748,122 |   |       | $      | 417,198  |   |   | $      | 294,723       |   |   | $      | 8,433  |   |   | $ | 2,468,476 |   |
|                                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| Amount allocated to:                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |
|    Loans individually evaluated        for impairment with specific         allocation |   | $          | 450,000   |   |       | $      | -        |   |   | $      | -             |   |   | $      | -      |   |   | $ | 450,000 |   |
|    Loans collectively evaluated        for impairment                                                                               |   |       | 1,298,122 |   |       |   | 417,198  |   |   |   | 294,723       |   |   |   | 8,433  |   |   |   | 2,018,476 |   |
| Ending balance                                                                                                                                                                             |   | $          | 1,748,122 |   |       | $      | 417,198  |   |   | $      | 294,723       |   |   | $      | 8,433  |   |   | $ | 2,468,476 |   |
|                                                                                                                                                                                       |   |       |      |   |       |   |     |   |   |   |          |   |   |   |   |   |   |   |   |   |

----

| 5. | LOANS (Continued) |
|----|-------------------|

| March 31, 2011                                                                                                                                                                             |   | RealEstate |        |   | Commercial |   |       | Boats  |   |   | OtherConsumer |   |   | Total  |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-------------|--------|------------|--------|------------|--------|--------|--------|---------------|--------|--------|--------|-----------|
| Loans individually evaluated        for impairment with            specific reserve    |   | $          | 1,169,337   |   |       | $      | -          |   |   | $      | -             |   |   | $      | -         |   |   |   | 1,169,337 |   |
| Loans individually evaluated        for impairment without            specific reserve |   |       | 4,539,446   |   |       |   | 1,994,952  |   |   |   | -             |   |   |   | -         |   |   |   | 6,534,398 |   |
| Loans collectively evaluated        for impairment                                                                                                 |   |       | 209,472,723 |   |       |   | 79,245,317 |   |   |   | 10,408,608    |   |   |   | 1,410,324 |   |   |   | 300,536,972 |   |
| Ending balance                                                                                                                                                                             |   | $          | 215,181,506 |   |       | $      | 81,240,269 |   |   | $      | 10,408,608    |   |   | $      | 1,410,324 |   |   | $ | 308,240,707 |   |
|                                                                                                                                                                                       |   |       |        |   |       |   |       |   |   |   |          |   |   |   |      |   |   |   |   |   |
| December 31, 2010                                                                                                                                                                          |   | RealEstate |        |   | Commercial |   |       | Boats  |   |   | OtherConsumer |   |   | Total  |      |
| Loans individually evaluated        for impairment with            specific reserve    |   | $          | 1,616,317   |   |       | $      | -          |   |   | $      | -             |   |   | $      | -         |   |   |   | 1,616,317 |   |
| Loans individually evaluated        for impairment without            specific reserve |   |       | 2,273,029   |   |       |   | 2,020,309  |   |   |   | -             |   |   |   | -         |   |   |   | 4,293,338 |   |
| Loans collectively evaluated        for impairment                                                                                                 |   |       | 201,096,650 |   |       |   | 81,502,747 |   |   |   | 11,621,392    |   |   |   | 1,458,486 |   |   |   | 295,679,275 |   |
| Ending balance                                                                                                                                                                             |   | $          | 204,985,996 |   |       | $      | 83,523,056 |   |   | $      | 11,621,392    |   |   | $      | 1,458,486 |   |   | $ | 301,588,930 |   |
|                                                                                                                                                                                       |   |       |        |   |       |   |       |   |   |   |          |   |   |   |      |   |   |   |   |   |

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

| 6. | EARNINGS PER COMMON SHARE |
|----|---------------------------|

|                                    | Three Months EndedMarch 31,                                                                |
|-----------------------------------------|--------------------------------------------------------------------------------------------|
|                                    |                                                                                       |   |
|                                    | 2011                                                                                       | 2010 |
|                                    |                                                                                       |   |
|  Weighted average number of shares |         4,428,629                                  |         3,873,537 |
|  Dilutive average number of shares |               36,933 |                14,239 |

----

| 7. | STOCK BASED COMPENSATION |
|----|--------------------------|

|                             |   | March 31, |    |
|----------------------------------|--------|-----------|---------|
|                             |   | 2011      |    |   | 2010 |   |
|                             |   |      |    | Weighted |   |   |   |   | Weighted |   |
|                             |   | Number    |    | average |   |   | Number |   | average |   |
|                             |   | of shares |    | exercise price |   |   | of shares |   | exercise price |   |
|                             |   |      |    |   |   |   |   |   |   |   |   |   |
| Outstanding, beginning of period |   |      | 310,151 |   |   | $ | 8.60 |   |   |   | 299,270 |   |   | $ | 8.50 |   |
| Options granted                  |   |      | 23,280  |   |   |   | 7.82 |   |   |   | 22,581 |   |   |   | 7.13 |   |
| Options forfeited                |   |      | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding, end of period       |   |      | 333,431 |   |   | $ | 8.54 |   |   |   | 321,851 |   |   | $ | 8.41 |   |

----

| 7. | STOCK-BASED COMPENSATION(Continued) |
|----|-------------------------------------|

|                                                                                   |   |   | Outstanding options              |    |    | Exercisable options          |   |
|----------------------------------------------------------------------------------------|--------|--------|----------------------------------|---------|---------|------------------------------|--------|
| Exerciseprice                                                                          |   |   | Numberof shares atMarch 31, 2011 |    |    | Weightedaverageremainingterm |   |   | Weightedaverageexerciseprice |   |   | Numberof shares atMarch 31, 2011 |   |   | Weightedaverageexerciseprice |   |
| $4.39-$5.00                                                                            |   |   |                             | 18,000  |    |                         |   | 1.30 |   |   | $ | 4.69 |   |   |   | 18,000 |   |   | $ | 4.69 |   |
| $5.01-$7.64                                                                            |   |   |                             | 85,231  |    |                         |   | 8.09 |   |   |   | 6.52 |   |   |   | 77,704 |   |   |   | 6.46 |   |
| $7.65-$8.65                                                                            |   |   |                             | 60,580  |    |                         |   | 7.99 |   |   |   | 7.78 |   |   |   | 44,519 |   |   |   | 7.76 |   |
| $8.66-$10.00                                                                           |   |   |                             | 46,620  |    |                         |   | 3.39 |   |   |   | 9.74 |   |   |   | 46,620 |   |   |   | 9.74 |   |
| $10.01-$11.31                                                                          |   |   |                             | 123,000 |    |                         |   | 5.06 |   |   |   | 10.43 |   |   |   | 119,000 |   |   |   | 10.42 |   |
|                                                                                   |   |   |                             |    | 333,431 |                         |   |   | 5.93 |   |   | $ | 8.54 |   |   |   | 305,843 |   |   | $ | 8.58 |   |
|                                                                                   |   |   |                             |    |    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                   |   |   |                             |    |    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Intrinsic value of outstanding optionswhere the market value exceeds theexercise price |   |   | $                                | 423,587 |    |                         |   |   |   |   |   |   |   |   |   |   |   |
| Intrinsic value of exercisable optionswhere the market value exceeds theexercise price |   |   | $                                | 381,832 |    |                         |   |   |   |   |   |   |   |   |   |   |   |

----

| 7. | STOCK-BASED COMPENSATION(Continued) |
|----|-------------------------------------|

|                                                                                                  |   | March 31, |    |                 | March 31, |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------|---------|----------------------|-----------|--------|
|                                                                                                  |   | 2011      |    |                 | 2010      |   |
|                                                                                                  |   | Number    |    | Weighted             |      |   | Number |   |   | Weighted |   |
|                                                                                                  |   | of shares |    | average              |      |   | of shares |   |   | average |   |
|                                                                                                  |   |      |    | grant datefair value |      |   |   |   |   | grant datefair value |   |
| Outstanding, beginning of period                                                                      |   |      | 17,641  |                 |      | $      | 7.13 |   |   |   | - |   |   | $ | - |   |
| Restricted stock granted                                                                              |   |      | 8,786   |                 |      |   | 7.82 |   |   |   | 17,641 |   |   |   | 7.13 |   |
| Restricted stock vested                                                                               |   |      | 8,279   |                 |      |   | 7.13 |   |   |   | - |   |   |   | - |   |
| Restricted stock forfeited                                                                            |   |      | -       |                 |      |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding, end of period                                                                            |   |      | 18,148  |                 |      | $      | 7.46 |   |   |   | 17,641 |   |   | $ | 7.46 |   |
|                                                                                                  |   |      |    |                 |      |   |   |   |   |   |   |   |   |   |   |   |
| Vested, end of period                                                                                 |   |      | -       |                 |      |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                  |   |      |    |                 |      |   |   |   |   |   |   |   |   |   |   |   |
| Intrinsic value of outstanding restrictedstock awardswhere the market value exceeds theexercise price |   | $         | 170,147 |                 |      |   |   |   |   | $ | 113,170 |   |
| Intrinsic value of vested restrictedstock awardswhere the market value exceeds theexercise price      |   | $         | 77,574  |                 |      |   |   |   |   | $ | 29,016 |   |

| GrantDate    | VestingDate |   | # of RestrictedShares |   |
|--------------|-------------|--------|-----------------------|--------|
| 1/28/2010    | 1/28/2012   |   |                  | 4,680  |   |
| 1/28/2010    | 1/28/2013   |   |                  | 4,681  |   |
| 1/27/2011    | 12/31/2011  |   |                  | 2,457  |   |
| 1/27/2011    | 1/27/2012   |   |                  | 2,110  |   |
| 1/27/2011    | 1/27/2013   |   |                  | 2,110  |   |
| 1/27/2011    | 1/27/2014   |   |                  | 2,110  |   |
| Total Issued |        |   |                  | 18,148 |   |

| 8. | RETIREMENT PLAN |
|----|-----------------|

----

| 9. | FAIR VALUE MEASUREMENTS |
|----|-------------------------|

|                                     |   | Total Fair ValueMarch 31, 2011 |   |   | Level 1Inputs |   |   | Level 2Inputs |   |   | Level 3Inputs |   |
|------------------------------------------|--------|--------------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
| Investment securities available for sale |   | $                              | 37,659 |   |          | $      | 2,091  |          |   | $      | 35,568        |   |   | $ | - |   |

| Other Real Estate Owned |   |   |      |
|-------------------------|--------|--------|-----------|
| Beginning balance       |   | $      | 1,153,039 |   |
| Transferred in          |   |   | 825,290   |   |
| Payment received        |   |   | (1,813    | ) |
| Total end of period     |   | $      | 1,976,516 |   |

----

| 9. | FAIR VALUE MEASUREMENTS (Continued) |
|----|-------------------------------------|

|                                        |   | March 31, 2011 |        |   | December 31, 2010 |   |
|---------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                        |   | Carrying       |        |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                        |   | amount         |        |   | value             |   |   | amount |   |   | value |   |
|  Financial assets                      |   |           |        |   |              |   |   |   |   |   |   |   |
|    Time deposits             |   | $              | 99,000      |   |              | $      | 99,186 |   |   | $ | 297,000 |   |   | $ | 297,482 |   |
|    Investment securities     |   |           | 57,926,326  |   |              |   | 58,240,583 |   |   |   | 54,786,264 |   |   |   | 55,015,376 |   |
|    Loans                     |   |           | 306,653,965 |   |              |   | 307,126,471 |   |   |   | 299,606,430 |   |   |   | 301,862,245 |   |
|                                        |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
|  Financial liabilities                 |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Interest bearing deposits |   |           | 281,811,895 |   |              |   | 283,679,890 |   |   | $ | 273,032,442 |   |   | $ | 274,003,958 |   |
|    Short term borrowings     |   |           | 6,584,128   |   |              |   | 6,584,128 |   |   |   | 5,669,332 |   |   |   | 5,669,332 |   |
|    Long term borrowings      |   |           | 16,349,219  |   |              |   | 16,967,895 |   |   |   | 16,371,947 |   |   |   | 17,080,540 |   |

----

| 10. | ACCOUNTING STANDARDS UPDATES |
|-----|------------------------------|

----

| 10. | ACCOUNTING STANDARDS UPDATES (Continued) |
|-----|------------------------------------------|

----

|   | · | On September 1, 2010, we announced that we had executed a merger agreement that provided for the acquisition of Maryland Bankcorp, Inc. The merger became effective April 1, 2011. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We did not place any new loans on non-accrual status and we charged off $494,241 on two loans that we previously reported as non-accrual loans. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | At March 31, 2011, we had one loan on non-accrual status with a total balance due of $1.2 million (0.29% of total assets) compared to three borrowers with total balances due of $2.7 million 0.67%) at December 31, 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | At first quarter end, we had four other loans past due between 30 and 89 days in the amount of approximately $1.1 million.  Subsequent to quarter end, we received the payments due from all of these borrowers. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We increased the provision for loan losses by $80,000 compared to the first quarter of 2010. |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | Average total loans grew approximately $33.0 million or 12.27% for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Average non-interest bearing deposits grew $15.0 million or 32.08% for the quarter ended March 31, 2011 relative to the same period in 2010. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We maintained liquidity and by all regulatory measures remained “well capitalized”. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | We recognized a loss on our investment in Pointer Ridge of approximately $38,000. |
|--------|--------|-----------------------------------------------------------------------------------|

----

|                                                                       |   | Three months ended March 31, |    |
|----------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                       |   | (Dollars in thousands)       |    |
|                                                                       |   |                         |    |   |   |   |   |   |   |   |   |   |
|                                                                       |   | 2011                         |    |   | 2010 |   |   | $ Change |   |   | % Change |   |
|                                                                       |   |                         |    |   |   |   |   |   |   |   |   |   |
| Net income available to common stockholders                                |   | $                            | 523     |   |   | $ | 465 |   |   | $ | 58 |   |   |   | 12.47 | % |
| Interest revenue                                                           |   |                         | 4,648   |   |   |   | 4,390 |   |   |   | 258 |   |   |   | 5.88 |   |
| Interest expense                                                           |   |                         | 1,061   |   |   |   | 1,248 |   |   |   | (187 | ) |   |   | (14.98 | ) |
| Net interest income after provision    for loan losses |   |                         | 3,437   |   |   |   | 3,072 |   |   |   | 365 |   |   |   | 11.88 |   |
| Non-interest revenue                                                       |   |                         | 325     |   |   |   | 293 |   |   |   | 32 |   |   |   | 10.92 |   |
| Non-interest expense                                                       |   |                         | 2,927   |   |   |   | 2,695 |   |   |   | 232 |   |   |   | 8.61 |   |
| Average total loans                                                        |   |                         | 301,602 |   |   |   | 268,629 |   |   |   | 32,973 |   |   |   | 12.27 |   |
| Average interest earning assets                                            |   |                         | 367,123 |   |   |   | 333,611 |   |   |   | 33,512 |   |   |   | 10.05 |   |
| Average total interest bearing deposits                                    |   |                         | 277,107 |   |   |   | 242,884 |   |   |   | 34,223 |   |   |   | 14.09 |   |
| Average non-interest bearing deposits                                      |   |                         | 61,770  |   |   |   | 46,768 |   |   |   | 15,002 |   |   |   | 32.08 |   |
| Net interest margin (1)                                                    |   |                         | 4.01    | % |   |   | 3.87 | % |   |   |   |   |   |   |   |   |
| Return on average equity                                                   |   |                         | 5.33    | % |   |   | 5.17 | % |   |   |   |   |   |   |   |   |
| Basic earnings per common share                                            |   | $                            | 0.12    |   |   | $ | 0.12 |   |   | $ | - |   |   |   | - |   |
| Diluted earnings per common share                                          |   |                         | 0.12    |   |   |   | 0.12 |   |   |   | - |   |   |   | - |   |

----

----

----

|                                                                  |   | Average Balances, Interest and Yields |        |
|-----------------------------------------------------------------------|--------|---------------------------------------|-------------|
|  Three Months Ended March 31,                                    |   | 2011                                  |        |   | 2010 |   |
|                                                                  |   | Average                               |        |   |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |
|                                                                  |   | balance                               |        |   | Interest |   |   | Yield |   |   | balance |   |   | Interest |   |   | Yield |   |
|  Assets:                                                         |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Federal funds sold(1)                                           |   | $                                     | 3,356,545   |   |   | $ | 1,831 |   |   |   | 0.22 | % |   | $ | 1,748,352 |   |   | $ | 643 |   |   |   | 0.15 | % |
|  Interest bearing deposits                                       |   |                                  | 7,644,227   |   |   |   | 7,009 |   |   |   | 0.37 |   |   |   | 27,225,642 |   |   |   | 66,554 |   |   |   | 0.99 |   |
|  Investment securities(1)(2)                                     |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S. government agency                        |   |                                  | 3,689,403   |   |   |   | 27,622 |   |   |   | 3.04 |   |   |   | 7,087,111 |   |   |   | 57,700 |   |   |   | 3.30 |   |
|     Mortgage backed securities                    |   |                                  | 48,454,718  |   |   |   | 379,419 |   |   |   | 3.18 |   |   |   | 26,224,492 |   |   |   | 275,216 |   |   |   | 4.26 |   |
|     Municipal securities                          |   |                                  | 2,285,989   |   |   |   | 29,136 |   |   |   | 5.17 |   |   |   | 2,354,600 |   |   |   | 28,283 |   |   |   | 4.87 |   |
|     Other                                         |   |                                  | 2,564,257   |   |   |   | 18,222 |   |   |   | 2.88 |   |   |   | 2,833,656 |   |   |   | 20,426 |   |   |   | 2.92 |   |
|  Total investment securities                                     |   |                                  | 56,994,367  |   |   |   | 454,399 |   |   |   | 3.23 |   |   |   | 38,499,859 |   |   |   | 381,625 |   |   |   | 4.02 |   |
|  Loans: (1) (3)                                                  |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial                                    |   |                                  | 83,195,488  |   |   |   | 1,049,627 |   |   |   | 5.12 |   |   |   | 72,995,285 |   |   |   | 1,014,893 |   |   |   | 5.64 |   |
|     Mortgage                                      |   |                                  | 205,454,739 |   |   |   | 3,000,543 |   |   |   | 5.92 |   |   |   | 180,888,945 |   |   |   | 2,765,783 |   |   |   | 6.20 |   |
|     Consumer                                      |   |                                  | 12,951,854  |   |   |   | 172,965 |   |   |   | 5.42 |   |   |   | 14,744,834 |   |   |   | 200,346 |   |   |   | 5.51 |   |
|       Total loans                       |   |                                  | 301,602,081 |   |   |   | 4,223,135 |   |   |   | 5.68 |   |   |   | 268,629,064 |   |   |   | 3,981,022 |   |   |   | 6.01 |   |
|     Allowance for loan losses                     |   |                                  | 2,473,958   |   |   |   | - |   |   |   |   |   |   |   | 2,492,377 |   |   |   | - |   |   |   |   |   |
|  Total loans, net of allowance                                   |   |                                  | 299,128,123 |   |   |   | 4,223,135 |   |   |   | 5.73 |   |   |   | 266,136,687 |   |   |   | 3,981,022 |   |   |   | 6.07 |   |
|  Total interest earning assets(1)                                |   |                                  | 367,123,262 |   |   |   | 4,686,374 |   |   |   | 5.18 |   |   |   | 333,610,540 |   |   |   | 4,429,844 |   |   |   | 5.39 |   |
|     Non-interest bearing cash                     |   |                                  | 8,691,969   |   |   |   |   |   |   |   |   |   |   |   | 9,720,531 |   |   |   |   |   |   |   |   |   |
|     Premises and equipment                        |   |                                  | 16,805,170  |   |   |   |   |   |   |   |   |   |   |   | 17,286,712 |   |   |   |   |   |   |   |   |   |
|     Other assets                                  |   |                                  | 12,785,287  |   |   |   |   |   |   |   |   |   |   |   | 11,946,739 |   |   |   |   |   |   |   |   |   |
|  Total assets                                                    |   | $                                     | 405,405,688 |   |   |   |   |   |   |   |   |   |   | $ | 372,564,522 |   |   |   |   |   |   |   |   |   |
|  Liabilities and Stockholders' Equity:                           |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Interest bearing deposits                                       |   |                                  |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Savings                                       |   | $                                     | 9,259,200   |   |   |   | 5,137 |   |   |   | 0.23 |   |   | $ | 7,569,600 |   |   |   | 6,684 |   |   |   | 0.36 |   |
|     Money market and NOW                          |   |                                  | 74,851,199  |   |   |   | 149,493 |   |   |   | 0.81 |   |   |   | 43,015,595 |   |   |   | 83,267 |   |   |   | 0.79 |   |
|     Other time deposits                           |   |                                  | 192,996,118 |   |   |   | 721,346 |   |   |   | 1.52 |   |   |   | 192,299,113 |   |   |   | 884,978 |   |   |   | 1.87 |   |
|  Total interest bearing deposits                                 |   |                                  | 277,106,517 |   |   |   | 875,976 |   |   |   | 1.28 |   |   |   | 242,884,308 |   |   |   | 974,929 |   |   |   | 1.63 |   |
|     Borrowed funds                                |   |                                  | 23,910,483  |   |   |   | 184,623 |   |   |   | 3.13 |   |   |   | 44,891,310 |   |   |   | 273,544 |   |   |   | 2.47 |   |
|  Total interest bearing liabilities                              |   |                                  | 301,017,000 |   |   |   | 1,060,599 |   |   |   | 1.43 |   |   |   | 287,775,618 |   |   |   | 1,248,473 |   |   |   | 1.76 |   |
|  Non-interest bearing deposits                                   |   |                                  | 61,770,178  |   |   |   |   |   |   |   |   |   |   |   | 46,768,076 |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                                  | 362,787,178 |   |   |   |   |   |   |   |   |   |   |   | 334,543,694 |   |   |   |   |   |   |   |   |   |
|  Other liabilities                                               |   |                                  | 2,275,957   |   |   |   |   |   |   |   |   |   |   |   | 1,608,587 |   |   |   |   |   |   |   |   |   |
|  Non-controlling interest                                        |   |                                  | 590,886     |   |   |   |   |   |   |   |   |   |   |   | 673,250 |   |   |   |   |   |   |   |   |   |
|  Stockholders' equity                                            |   |                                  | 39,751,667  |   |   |   |   |   |   |   |   |   |   |   | 35,738,991 |   |   |   |   |   |   |   |   |   |
|  Total liabilities and stockholders' equity                      |   | $                                     | 405,405,688 |   |   |   |   |   |   |   |   |   |   | $ | 372,564,522 |   |   |   |   |   |   |   |   |   |
|  Net interest spread(1)                                          |   |                                  |        |   |   |   |   |   |   |   | 3.75 |   |   |   |   |   |   |   |   |   |   |   | 3.63 |   |
|  Net interest income and   Net interest margin(1) |   |                                  |        |   |   | $ | 3,625,775 |   |   |   | 4.01 | % |   |   |   |   |   | $ | 3,181,371 |   |   |   | 3.87 | % |

|   | (1) | Interest revenue is presented on a fully taxable equivalent (FTE) basis.  The FTE basis adjusts for the tax favored status of these types of assets.  Management believes providing this information on a FTE basis provides investors with a more accurate picture of our net interest spread and net interest income and we believe it to be the preferred industry measurement of these calculations.  See “Reconciliation of Non-GAAP Measures.” |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Available for sale investment securities are presented at amortized cost. |
|--------|-----|---------------------------------------------------------------------------|

|   | (3) | Average non-accruing loans for the three month periods ended March 31, 2011 and 2010 were $1,724,674 and $1,914,079, respectively. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------|

----

| Rate/Volume Variance Analysis                                    |   |
|------------------------------------------------------------------|--------|
|                                                             |   |   |   |   |   |   |   |   |   |
|                                                             |   | Three months Ended March 31, |   |
|                                                             |   | 2011 compared to 2010 |   |
|                                                             |   | Variance due to: |   |
|                                                             |   |   |   |   |   |   |   |   |   |
|                                                             |   | Total |   |   | Rate |   |   | Volume |   |
|                                                             |   |   |   |   |   |   |   |   |   |
| Interest earning assets:                                         |   |   |   |   |   |   |   |   |   |
|    Federal funds sold(1)                          |   | $ | 1,188 |   |   | $ | 809 |   |   | $ | 379 |   |
|    Interest bearing deposits                      |   |   | (59,545 | ) |   |   | (46,382 | ) |   |   | (13,163 | ) |
|  Investment Securities(1)                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|    U.S. government agency                         |   |   | (30,078 | ) |   |   | (12,176 | ) |   |   | (17,902 | ) |
|    Mortgage backed securities                     |   |   | 104,203 |   |   |   | (198,752 | ) |   |   | 302,955 |   |
|    Municipal securities                           |   |   | 853 |   |   |   | 2,238 |   |   |   | (1,385 | ) |
|    Other                                          |   |   | (2,204 | ) |   |   | (831 | ) |   |   | (1,373 | ) |
| Loans:(1)                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial                                     |   |   | 34,734 |   |   |   | (181,392 | ) |   |   | 216,126 |   |
|    Mortgage                                       |   |   | 234,760 |   |   |   | (295,652 | ) |   |   | 530,412 |   |
|    Consumer                                       |   |   | (27,381 | ) |   |   | (9,964 | ) |   |   | (17,417 | ) |
|       Total interest revenue (1)   |   |   | 256,530 |   |   |   | (742,102 | ) |   |   | 998,632 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings                                        |   |   | (1,547 | ) |   |   | (3,946 | ) |   |   | 2,399 |   |
|    Money market and NOW                           |   |   | 66,226 |   |   |   | 9,815 |   |   |   | 56,411 |   |
|    Other time deposits                            |   |   | (163,632 | ) |   |   | (169,242 | ) |   |   | 5,610 |   |
|    Borrowed funds                                 |   |   | (88,921 | ) |   |   | 116,513 |   |   |   | (205,434 | ) |
|        Total interest expense |   |   | (187,874 | ) |   |   | (46,860 | ) |   |   | (141,014 | ) |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income(1)                                           |   | $ | 444,404 |   |   | $ | (695,242 | ) |   | $ | 1,139,646 |   |

----

----

----

| Allowance for Loan Losses                     |   |
|-----------------------------------------------|--------|
|                                          |   | Three Months Ended |   |   | Year Ended |   |
|                                          |   | March 31, |   |   | December 31, |   |
|                                          |   | 2011 |   |   | 2010 |   |   | 2010 |   |
|                                          |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period                  |   | $ | 2,468,476 |   |   | $ | 2,481,716 |   |   | $ | 2,481,716 |   |
| Provision for loan losses                     |   |   | 150,000 |   |   |   | 70,000 |   |   |   | 1,082,000 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Chargeoffs:                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial                  |   |   | - |   |   |   | - |   |   |   | (137,151 | ) |
|    Mortgage                    |   |   | (446,980 | ) |   |   | (11,733 | ) |   |   | (958,472 | ) |
|    Consumer                    |   |   | (47,261 | ) |   |   | (1,223 | ) |   |   | (4,194 | ) |
| Total chargeoffs                              |   |   | (494,241 | ) |   |   | (12,956 | ) |   |   | (1,099,817 | ) |
| Recoveries:                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Mortgage                    |   |   | - |   |   |   | - |   |   |   | 3,650 |   |
|    Consumer                    |   |   | 204 |   |   |   | 206 |   |   |   | 927 |   |
| Total recoveries                              |   |   | 204 |   |   |   | 206 |   |   |   | 4,577 |   |
| Net (chargeoffs) recoveries                   |   |   | (494,037 | ) |   |   | (12,750 | ) |   |   | (1,095,240 | ) |
| Balance, end of period                        |   | $ | 2,124,439 |   |   | $ | 2,538,966 |   |   | $ | 2,468,476 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of allowance for loan losses to:        |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total gross loans     |   |   | 0.69 | % |   |   | 0.93 | % |   |   | 0.82 | % |
|     Non-accrual loans     |   |   | 181.68 | % |   |   | 169.21 | % |   |   | 91.07 | % |
| Ratio of net-chargeoffs during period to      |   |   |   |   |   |   |   |   |   |   |   |   |
|   average total loans during period |   |   | 0.164 | % |   |   | 0.005 | % |   |   | 0.384 | % |

----

| Allocation of Allowance for Loan Losses |   |
|-----------------------------------------|--------|
|                                    |   | March 31, |   |   | December 31, |   |
|                                    |   | 2011 |   |   | 2010 |   |   | 2010 |   |
|                                    |   | Amount |   |   | % of Loansin EachCategory |   |   | Amount |   |   | % of Loansin EachCategory |   |   | Amount |   |   | % of Loansin EachCategory |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer & others                   |   | $ | 10,781 |   |   |   | 0.42 | % |   | $ | 10,174 |   |   |   | 0.54 | % |   | $ | 8,433 |   |   |   | 0.48 | % |
| Boat                                    |   |   | 337,683 |   |   |   | 3.41 |   |   |   | 109,359 |   |   |   | 4.72 |   |   |   | 294,723 |   |   |   | 3.86 |   |
| Mortgage                                |   |   | 1,065,697 |   |   |   | 69.81 |   |   |   | 2,102,088 |   |   |   | 67.28 |   |   |   | 1,748,122 |   |   |   | 67.97 |   |
| Commercial                              |   |   | 710,278 |   |   |   | 26.36 |   |   |   | 317,345 |   |   |   | 27.46 |   |   |   | 417,198 |   |   |   | 27.69 |   |
|                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                   |   | $ | 2,124,439 |   |   |   | 100.00 | % |   | $ | 2,538,966 |   |   |   | 100.00 | % |   | $ | 2,468,476 |   |   |   | 100.00 | % |

|                                    |   | March 31,2011 |    |   | March 31, 2010 |   |    | $ Change |   |   | % Change |   |
|-----------------------------------------|--------|---------------|---------|--------|----------------|--------|---------|----------|--------|--------|----------|--------|
| Service charges on deposit accounts     |   | $             | 82,450  |   |           | $      | 74,820  |     |   | $      | 7,630    |   |   |   | 10.20 | % |
| Gain on sales of investment securities  |   |          | 38,070  |   |           |   | -       |     |   |   | 38,070   |   |   |   | - |   |
| Earnings on bank owned life insurance   |   |          | 79,038  |   |           |   | 86,123  |     |   |   | (7,085   | )      |   |   | (8.23 | ) |
| Pointer Ridge rent and other revenue    |   |          | 68,155  |   |           |   | 63,970  |     |   |   | 4,185    |   |   |   | 6.54 |   |
| Gain on sale of other real estate owned |   |          | 2,985   |   |           |   | -       |     |   |   | 2,985    |   |   |   | - |   |
| Other fees and commissions              |   |          | 54,182  |   |           |   | 67,976  |     |   |   | (13,794  | )      |   |   | (20.29 | ) |
| Total non-interest revenue              |   | $             | 324,880 |   |           | $      | 292,889 |     |   | $      | 31,991   |   |   |   | 10.92 | % |

----

|                                            |   | March 31,2011 |      |   | March 31,2010 |   |      | $ Change |   |   | % Change |   |
|-------------------------------------------------|--------|---------------|-----------|--------|---------------|--------|-----------|----------|--------|--------|----------|--------|
| Salaries                                        |   | $             | 1,133,787 |   |          | $      | 1,165,415 |     |   | $      | (31,628  | )      |   |   | (2.71 | ) % |
| Employee benefits                               |   |          | 366,924   |   |          |   | 350,135   |     |   |   | 16,789   |   |   |   | 4.80 |   |
| Occupancy                                       |   |          | 366,023   |   |          |   | 333,406   |     |   |   | 32,617   |   |   |   | 9.78 |   |
| Equipment                                       |   |          | 93,891    |   |          |   | 106,876   |     |   |   | (12,985  | )      |   |   | (12.15 | ) |
| Data processing                                 |   |          | 129,750   |   |          |   | 94,426    |     |   |   | 35,324   |   |   |   | 37.41 |   |
| Pointer Ridge other operating                   |   |          | 118,222   |   |          |   | 113,770   |     |   |   | 4,452    |   |   |   | 3.91 |   |
| FDIC insurance andState of Maryland assessments |   |          | 151,504   |   |          |   | 115,115   |     |   |   | 36,389   |   |   |   | 31.61 |   |
| Merger and integration expenses                 |   |          | 90,060    |   |          |   | -         |     |   |   | 90,060   |   |   |   | - |   |
| Other operating                                 |   |          | 477,013   |   |          |   | 415,639   |     |   |   | 61,374   |   |   |   | 14.77 |   |
| Total non-interest expenses                     |   | $             | 2,927,174 |   |          | $      | 2,694,782 |     |   | $      | 232,392  |   |   |   | 8.62 | % |

----

----

| Loan Portfolio                 |   |
|--------------------------------|--------|
| (Dollars in thousands)         |   |
|                           |   | March 31,2011 |   |   | December 31,2010 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Real Estate                    |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial   |   | $ | 158,591 |   |   |   | 51.45 | % |   | $ | 153,527 |   |   |   | 50.91 | % |
|    Construction |   |   | 28,634 |   |   |   | 9.29 |   |   |   | 24,378 |   |   |   | 8.08 |   |
|    Residential  |   |   | 27,957 |   |   |   | 9.07 |   |   |   | 27,081 |   |   |   | 8.98 |   |
| Commercial                     |   |   | 81,240 |   |   |   | 26.36 |   |   |   | 83,523 |   |   |   | 27.69 |   |
| Consumer                       |   |   | 11,819 |   |   |   | 3.83 |   |   |   | 13,080 |   |   |   | 4.34 |   |
|                           |   |   | 308,241 |   |   |   | 100.00 | % |   |   | 301,589 |   |   |   | 100.00 | % |
| Allowance for loan losses      |   |   | (2,125 | ) |   |   |   |   |   |   | (2,469 | ) |   |   |   |   |
| Deferred loan costs, net       |   |   | 538 |   |   |   |   |   |   |   | 486 |   |   |   |   |   |
|                           |   | $ | 306,654 |   |   |   |   |   |   | $ | 299,606 |   |   |   |   |   |

----

| Loans With Interest Paid From Loan Advances |   |
|---------------------------------------------|--------|
| (000's)                                     |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | March 31,2011 |   |   | December 31,2010 |   |
|                                        |   | # ofBorrowers |   |   |   |   |   | # ofBorrowers |   |   |   |   |
| Hotels                                      |   |   | 1 |   |   | $ | 979 |   |   |   | 1 |   |   | $ | 979 |   |
| Single family acquisition & development |   |   | 1 |   |   |   | 2,276 |   |   |   | 1 |   |   |   | 2,336 |   |
|                                        |   |   | 2 |   |   | $ | 3,255 |   |   |   | 2 |   |   | $ | 3,315 |   |

| Non-Accrual Loans(000's)               |   |          |   |   |        |   |
|----------------------------------------|--------|---------------|--------|--------|-------------|--------|
|                                   |   | # ofBorrowers |   |   | LoanBalance |   |
| Beginning Balance                      |   |          | 3      |   |        | $      | 2,711 |   |
| Added to non-accrual                   |   |          |   |   |        |   | - |   |
| Charged-off                            |   |          |   |   |        |   | (494 | ) |
| Repossessed                            |   |          | (1     | )      |        |   | (237 | ) |
| Transferred to other real estate owned |   |          | (1     | )      |        |   | (810 | ) |
| Ending balance non-accrual loans       |   |          | 1      |   |        | $      | 1,170 |   |

----

----

| Non-Performing Assets and Past Due Loans                  |   |
|----------------------------------------------------------------|--------|
| (Dollars in thousands)                                         |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |
|                                                           |   |   | March 31, 2011 |   |   |   | December 31, 2010 |   |
|                                                           |   |   | # |   |   | Balance |   |   |  Interest Not Accrued |   |   |   | # |   |   | Balance |   |   | Interest Not Accrued |   |
| Real Estate                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial                                   |   |   | 1 |   |   | $ | 1,169 |   |   | $ | 129 |   |   |   | 2 |   |   | $ | 2,427 |   |   | $ | 315 |   |
|    Construction                                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Residential                                  |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 284 |   |   |   | 4 |   |
| Other real estate owned                                        |   |   | 3 |   |   |   | 1,978 |   |   |   | - |   |   |   | 2 |   |   |   | 1,153 |   |   |   | - |   |
| Total non-performing assets                                    |   |   | 4 |   |   | $ | 3,147 |   |   | $ | 129 |   |   |   | 5 |   |   | $ | 3,864 |   |   | $ | 319 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing assets as a percentage of total assets     |   |   |   | 0.77 | % |   |   |   |   |   |   |   |   |   |   | 0.96 | % |   |   |   |   |
| Non-performing loans as a percentage of total gross loans |   |   |   | 0.38 | % |   |   |   |   |   |   |   |   |   |   | 0.59 | % |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing past due loans:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    30-89 days past due                          |   |   | 4 |   |   | $ | 1,130 |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |
|    90 or more days past due                     |   |   | - |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Total accruing past due loans                                  |   |   | 4 |   |   | $ | 1,130 |   |   |   |   |   |   |   | 0 |   |   | $ | - |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of accruing past due loans to total loans:          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    30-89 days past due                          |   |   |   |   |   |   | 0.37 | % |   |   |   |   |   |   |   |   |   |   | - | % |   |   |   |   |
|    90 or more days past due                     |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |
| Total accruing past due loans                                  |   |   |   |   |   |   | 0.37 | % |   |   |   |   |   |   |   |   |   |   | - | % |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| Borrowings                  |   |
|-----------------------------|--------|
|                        |   | March 31,2011 |   |   | December 31,2010 |   |
|                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
| Short term promissory notes |   | $ | 6,584,128 |   |   |   | 0.50 | % |   | $ | 5,669,332 |   |   |   | 0.50 | % |
| FHLB advance due Dec. 2012  |   |   | 5,000,000 |   |   |   | 3.58 | % |   |   | 5,000,000 |   |   |   | 3.58 | % |
| FHLB advance due Dec. 2012  |   |   | 5,000,000 |   |   |   | 3.12 | % |   |   | 5,000,000 |   |   |   | 3.12 | % |
| Senior note, fixed at 6.28% |   |   | 6,349,219 |   |   |   | 6.28 | % |   |   | 6,371,947 |   |   |   | 6.28 | % |
| Total                       |   | $ | 22,933,347 |   |   |   |   |   |   | $ | 22,041,279 |   |   |   |   |   |

----

----

| Contractual Obligations, Commitments, Contingent LiabilitiesandOff Balance Sheet Arragements |   |
|----------------------------------------------------------------------------------------------|--------|
|                                                                                         |   | March 31,2011 |   |   | December 31,2010 |   |
|                                                                                         |   | (000's) |   |
|                                                                                         |   |   |   |   |   |   |
|  Commitments to extend credit and available credit lines:                               |   |   |   |   |   |   |
|    Commercial                                                                 |   | $ | 38,831 |   |   | $ | 34,485 |   |
|    Real estate undisbursed development and construction                       |   |   | 15,680 |   |   |   | 11,512 |   |
|    Consumer                                                                   |   |   | 7,861 |   |   |   | 7,256 |   |
|                                                                                         |   |   |   |   |   |   |   |   |
|                                                                                         |   | $ | 62,372 |   |   | $ | 53,253 |   |

----

|                                                |   | Net InterestIncome |      |   | Yield  |   |   | NetInterestSpread |   |
|-----------------------------------------------------|--------|--------------------|-----------|--------|--------|--------|--------|-------------------|--------|
| GAAP net interest income                            |   | $                  | 3,587,263 |   |   |   | 3.71   | %                 |   |   | 3.97 | % |
| Tax equivalent adjustment                           |   |               |      |   |   |   |   |              |   |   |   |   |
|      Federal funds sold    |   |               | -         |   |   |   | 0.00   |              |   |   | 0.00 |   |
|      Investment securities |   |               | 11,243    |   |   |   | 0.01   |              |   |   | 0.01 |   |
|      Loans                 |   |               | 27,269    |   |   |   | 0.03   |              |   |   | 0.03 |   |
| Total tax equivalent adjustment                     |   |               | 38,512    |   |   |   | 0.04   |              |   |   | 0.04 |   |
| Tax equivalent interest yield                       |   | $                  | 3,625,775 |   |   |   | 3.75   | %                 |   |   | 4.01 | % |

|                                                |   | Net InterestIncome |      |   | Yield  |   |   | NetInterestSpread |   |
|-----------------------------------------------------|--------|--------------------|-----------|--------|--------|--------|--------|-------------------|--------|
| GAAP net interest income                            |   | $                  | 3,141,656 |   |   |   | 3.82   | %                 |   |   | 3.58 | % |
| Tax equivalent adjustment                           |   |               |      |   |   |   |   |              |   |   |   |   |
|      Federal funds sold    |   |               | -         |   |   |   | -      |              |   |   | - |   |
|      Investment securities |   |               | 12,049    |   |   |   | 0.01   |              |   |   | 0.01 |   |
|      Loans                 |   |               | 27,666    |   |   |   | 0.04   |              |   |   | 0.04 |   |
| Total tax equivalent adjustment                     |   |               | 39,715    |   |   |   | 0.05   |              |   |   | 0.05 |   |
| Tax equivalent interest yield                       |   | $                  | 3,181,371 |   |   |   | 3.87   | %                 |   |   | 3.63 | % |

----

----

----

|   | 10.45 | Agreement of Lease by and between Millbank Partners-Riva Limited Partnership and Old Line Bank (filed by Old Line Bancshares, Inc. as a part of, and incorporated by reference from Old Line Bancshares, Inc.’s Current Report on Form 8-K filed on January 4, 2011) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1 | Rule 13a-14(a) Certification of Chief Executive Officer |
|--------|------|---------------------------------------------------------|

|   | 31.2 | Rule 13a-14(a) Certification of Chief Financial Officer |
|--------|------|---------------------------------------------------------|

|   | 32 | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer |
|--------|----|-----------------------------------------------------------------------------------|

----

|                               |   | Old Line Bancshares, Inc. |
|------------------------------------|--------|---------------------------|
|                               |   |                      |
|                               |   |                      |   |
| Date:   May 9, 2011 |   | By:                       | /s/ James W. Cornelsen |
|                               |   |                      | James W. Cornelsen,President and Chief Executive Officer |
|                               |   |                      | (Principal Executive Officer) |
|                               |   |                      |   |
|                               |   |                      |   |
| Date:  May 9, 2011       |   | By:                       | /s/ Christine M. Rush |
|                               |   |                      | Christine M. Rush,Executive Vice President and Chief Financial Officer |
|                               |   |                      | (Principal Accounting and Financial Officer) |
|                               |   |                      |   |

----