----

----

----

|                                                |   | September      30,2008                                        |    |   | December      31, 2007 |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------|---------|--------|-----------------------------|--------|
|                                                |   | (Unaudited)(Dollars      in thousands, except per share data) |    |
| Cash      and due from banks                        |   | $                                                             | 8,415   |   |                        | $      | 6,646 |   |
| Short-term      investments                         |   |                                                          | 4,278   |   |                        |   | 59 |   |
| Cash      and cash equivalents                      |   |                                                          | 12,693  |   |                        |   | 6,705 |   |
|                                                |   |                                                          |    |   |                        |   |   |   |
| Securities      available for sale, at fair value   |   |                                                          | 6,598   |   |                        |   | 6,966 |   |
| Securities      held to maturity, at amortized cost |   |                                                          | 33,434  |   |                        |   | 30,886 |   |
| Federal      Home Loan Bank stock, at cost          |   |                                                          | 5,018   |   |                        |   | 4,163 |   |
|  Loans                                         |   |                                                          | 326,442 |   |                        |   | 295,483 |   |
| Allowance      for loan losses                      |   |                                                          | (2,741  | )      |                        |   | (2,399 | ) |
| Loans, net                                          |   |                                                          | 323,701 |   |                        |   | 293,084 |   |
|  Premises      and equipment, net              |   |                                                          | 9,456   |   |                        |   | 5,849 |   |
| Accrued      interest receivable                    |   |                                                          | 1,343   |   |                        |   | 1,269 |   |
| Net      deferred tax asset                         |   |                                                          | 2,737   |   |                        |   | 2,313 |   |
| Bank-owned      life insurance                      |   |                                                          | 9,812   |   |                        |   | 9,274 |   |
| Other      assets                                   |   |                                                          | 411     |   |                        |   | 750 |   |
| Total      assets                                   |   | $                                                             | 405,203 |   |                        | $      | 361,259 |   |

| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                              |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|
| Deposits                                                                                                                     |   | $ | 226,786 |   |   | $ | 193,285 |   |
| Short-term      borrowings                                                                                                   |   |   | 2,752 |   |   |   | 5,809 |   |
| Long-term      borrowings                                                                                                    |   |   | 116,593 |   |   |   | 99,547 |   |
| Accrued      expenses and other liabilities                                                                                  |   |   | 2,558 |   |   |   | 3,666 |   |
| Total      liabilities                                                                                                       |   |   | 348,689 |   |   |   | 302,307 |   |
|                                                                                                                         |   |   |   |   |   |   |   |   |
| Preferred      stock, $.01 par value; 1,000,000 shares authorized;       none      issued |   |   | - |   |   |   | - |   |
| Common      stock, $.01 par value; 19,000,000 shares authorized; 4,878,349 shares      issued                                |   |   | 49 |   |   |   | 49 |   |
| Additional      paid in capital                                                                                              |   |   | 50,786 |   |   |   | 50,023 |   |
| Retained      earnings                                                                                                       |   |   | 16,933 |   |   |   | 17,234 |   |
| Unearned      compensation (513,852 and 533,365 shares at                                                                    |   |   |   |   |   |   |   |   |
|     September      30, 2008 and December 31, 2007, respectively)                                         |   |   | (4,515 | ) |   |   | (5,548 | ) |
| Treasury      stock, at cost (523,838 and 213,660 shares at                                                                  |   |   |   |   |   |   |   |   |
|     September      30, 2008 and December 31, 2007, respectively)                                         |   |   | (6,481 | ) |   |   | (2,655 | ) |
| Accumulated      other comprehensive loss                                                                                    |   |   | (258 | ) |   |   | (151 | ) |
| Total stockholders’      equity                                                                                        |   |   | 56,514 |   |   |   | 58,952 |   |
| Total liabilities and      stockholders’ equity                                                                        |   | $ | 405,203 |   |   | $ | 361,259 |   |

----

|                                                                                                  |   | Three      Months EndedSeptember      30,                     |   |   | Nine      Months EndedSeptember      30, |   |
|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                  |   | 2008                                                          |   |   | 2007                                     |   |   | 2008 |   |   | 2007 |   |
|                                                                                                  |   | (Unaudited)(Dollars      in thousands, except per share data) |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |
| Interest      and dividend income:                                                                    |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |
| Loans                                                                                                 |   | $                                                             | 4,831  |   |                                     | $      | 4,360 |   |   | $ | 14,310 |   |   | $ | 12,641 |   |
| Securities                                                                                            |   |                                                          | 482    |   |                                     |   | 107 |   |   |   | 1,457 |   |   |   | 316 |   |
| Federal Home Loan Bank      stock                                                                     |   |                                                          | 37     |   |                                     |   | 45 |   |   |   | 142 |   |   |   | 126 |   |
| Other interest-earning      assets                                                                    |   |                                                          | 24     |   |                                     |   | 24 |   |   |   | 88 |   |   |   | 41 |   |
| Total interest and dividend      income                                                               |   |                                                          | 5,374  |   |                                     |   | 4,536 |   |   |   | 15,997 |   |   |   | 13,124 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                                                                                |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest on      deposits                                                                             |   |                                                          | 1,226  |   |                                     |   | 1,218 |   |   |   | 3,591 |   |   |   | 3,639 |   |
| Interest on short-term      borrowings                                                                |   |                                                          | 4      |   |                                     |   | 34 |   |   |   | 32 |   |   |   | 314 |   |
| Interest on long-term      borrowings                                                                 |   |                                                          | 1,165  |   |                                     |   | 678 |   |   |   | 3,459 |   |   |   | 1,538 |   |
| Total interest      expense                                                                           |   |                                                          | 2,395  |   |                                     |   | 1,930 |   |   |   | 7,082 |   |   |   | 5,491 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                                                                              |   |                                                          | 2,979  |   |                                     |   | 2,606 |   |   |   | 8,915 |   |   |   | 7,633 |   |
| Provision      for loan losses                                                                        |   |                                                          | 119    |   |                                     |   | 126 |   |   |   | 345 |   |   |   | 286 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income, after      provision for loan losses                                             |   |                                                          | 2,860  |   |                                     |   | 2,480 |   |   |   | 8,570 |   |   |   | 7,347 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      income:                                                                             |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Customer service      fees                                                                            |   |                                                          | 473    |   |                                     |   | 461 |   |   |   | 1,376 |   |   |   | 1,376 |   |
|         Impairment      loss on available for sale securities |   |                                                          | (480   | )      |                                     |   | - |   |   |   | (480 | ) |   |   | - |   |
|         Bank-owned      life insurance                        |   |                                                          | 101    |   |                                     |   | 97 |   |   |   | 303 |   |   |   | 288 |   |
|  Miscellaneous                                                                                   |   |                                                          | 25     |   |                                     |   | 26 |   |   |   | 75 |   |   |   | 73 |   |
| Total non-interest      income                                                                        |   |                                                          | 119    |   |                                     |   | 584 |   |   |   | 1,274 |   |   |   | 1,737 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      expenses:                                                                           |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee      benefits                                                                   |   |                                                          | 1,979  |   |                                     |   | 1,414 |   |   |   | 5,954 |   |   |   | 4,236 |   |
| Occupancy and equipment,      net                                                                     |   |                                                          | 349    |   |                                     |   | 323 |   |   |   | 1,007 |   |   |   | 948 |   |
| Data processing                                                                                       |   |                                                          | 292    |   |                                     |   | 255 |   |   |   | 809 |   |   |   | 762 |   |
| Professional    fees                                                                                  |   |                                                          | 120    |   |                                     |   | 143 |   |   |   | 390 |   |   |   | 408 |   |
| Marketing                                                                                             |   |                                                          | 396    |   |                                     |   | 321 |   |   |   | 948 |   |   |   | 862 |   |
| Other general and      administrative                                                                 |   |                                                          | 260    |   |                                     |   | 171 |   |   |   | 643 |   |   |   | 522 |   |
| Total non-interest      expenses                                                                      |   |                                                          | 3,396  |   |                                     |   | 2,627 |   |   |   | 9,751 |   |   |   | 7,738 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) before income taxes                                                                |   |                                                          | (417   | )      |                                     |   | 437 |   |   |   | 93 |   |   |   | 1,346 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                                                                       |   |                                                          | 58     |   |                                     |   | 176 |   |   |   | 332 |   |   |   | 542 |   |
|                                                                                                  |   |                                                          |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                |   | $                                                             | (475   | )      |                                     | $      | 261 |   |   | $ | (239 | ) |   | $ | 804 |   |

| Weighted-average      shares outstanding: |   |   |       |   |   |   |      |   |   |   |       |   |
|-------------------------------------------|--------|--------|------------|--------|--------|--------|-----------|--------|--------|--------|------------|--------|
| Basic                                     |   |   | 4,071,727  |   |   |   | 4,513,336 |   |   |   | 4,181,159  |   |   |   | 4,517,506 |   |
| Diluted                                   |   |   | 4,071,727  |   |   |   | 4,513,336 |   |   |   | 4,181,159  |   |   |   | 4,517,506 |   |
|                                      |   |   |       |   |   |   |      |   |   |   |       |   |   |   |   |   |
| Earnings      (loss) per share:           |   |   |       |   |   |   |      |   |   |   |       |   |   |   |   |   |
| Basic                                     |   | $      | (      .12 | )      |   | $      | .06       |   |   | $      | (      .06 | )      |   | $ | .18 |   |
| Diluted                                   |   | $      | (      .12 | )      |   | $      | .06       |   |   | $      | (      .06 | )      |   | $ | .18 |   |