| Delaware                                      |   | 94-2563513                  |
|-----------------------------------------------|--------|-----------------------------|
| (State      or other jurisdiction of          |   | (I.R.S.      employer       |
| incorporation      or organization)           |   | identification      number) |
|                                          |   |                        |
| 160      Broadway, New York, New York         |   | 10038                       |
| (Address      of principal executive offices) |   | (Zip      Code)             |

| Title of Each Class          |   | Name of Each Exchange on Which Traded |
|---------------------------------------------|--------|---------------------------------------------------------------------|
| Common      Stock, par value $.10 per share |   | The      NASDAQ Stock Market LLC                                    |
|                                        |   | (The      NASDAQ Global Market)                                     |

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

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| Branch Locations of The Berkshire BankDecember 31, 2009 |
|--------------------------------------------------------------------------------------------|
|                                                                                       |
| 4      East 39th StreetNew      York, NY                                                   |   | 2      South Church StreetGoshen,      NY |
|                                                                                       |   |   |
| 5      BroadwayNew      York, NY                                                           |   | 214      Harriman DriveGoshen,      NY |
|                                                                                       |   |   |
| 5010      13th AvenueBrooklyn,      NY                                                     |   | 80      Route 17MHarriman,      NY |
|                                                                                       |   |   |
| 1421      Kings HighwayBrooklyn,      NY                                                   |   | 60      Main StreetBloomingburg,      NY |
|                                                                                       |   |   |
| 4917      16th AvenueBrooklyn,      NY                                                     |   | 1119      Avenue JBrooklyn,      NY |
|                                                                                       |   |   |
| 600      Broad AvenueRidgefield,      NJ                                                   |   | 210      Pinehurst AvenueNew      York, NY 10033 |
|                                                                                       |   |   |
| 517      Cedar LaneTeaneck,      NJ                                                        |   |   |

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|                  |   |                                  |   |   | Approximate     |   |   | Approximate       |    |   |            |                      |
|-----------------------|--------|---------------------------------------|--------|--------|-----------------|--------|--------|-------------------|---------|--------|-----------------|---------------------------|
|                  |   |                                  |   |   | Floor Area |   |   | Annual Lease |    |   |            |                      |
| Location              |   | Operations                            |   |   | (Sq. Ft.)  |   |   | Rent              |    |   | Expiration      |                      |
| New      York, NY     |   | Executive      Offices                |   |   | 1,500           |   |   | $                 | 18,000  |   |            | (1)(3)                    |   |
| New      York, NY     |   | Main      Bank Office and Bank Branch |   |   | 9,729           |   |   | Owned             |    |   | March      2013 |                      |
| Brooklyn,      NY     |   | Bank      Branch                      |   |   | 4,500           |   |   | $                 | 229,029 |   |            | March      2013           |   |
| Brooklyn,      NY     |   | Bank      Branch                      |   |   | 2,866           |   |   | $                 | 83,898  |   |            | March      2013           |   |
| Brooklyn,      NY     |   | Bank      Branch                      |   |   | 2,592           |   |   | $                 | 118,245 |   |            | December      2012        |   |
| Brooklyn,      NY     |   | Bank      Branch                      |   |   | 1,640           |   |   | $                 | 79,433  |   |            | June      2015            |   |
| New      York, NY     |   | Bank      Branch                      |   |   | 9,924           |   |   | $                 | 353,315 |   |            | June      2010 (2)(3)     |   |
| New      York, NY     |   | Bank      Branch                      |   |   | 3,300           |   |   | $                 | 63,263  |   |            | November      2016 (2)(3) |   |
| Goshen,      NY       |   | Bank      Branch                      |   |   | 10,680          |   |   | Owned             |    |   |            |                      |
| Harriman,      NY     |   | Bank      Branch                      |   |   | 1,623           |   |   | Owned             |    |   |            |                      |
| Bloomingburg,      NY |   | Bank      Branch                      |   |   | 1,530           |   |   | $                 | 22,806  |   |            | August      2010          |   |
| Ridgefield,      NJ   |   | Bank      Branch                      |   |   | 6,120           |   |   | Owned             |    |   |            |                      |
| Teaneck,      NJ      |   | Bank      Branch                      |   |   | 2,200           |   |   | $                 | 44,000  |   |            | June      2014            |   |

----

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| Fiscal Year Ended December 31,      2008  |   | High   |   |   | Low    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|
| January      1, 2008 to March 31, 2008    |   | $      | 16.94  |   |   | $      | 13.52 |   |
| April      1, 2008 to June 30, 2008       |   |   | 15.98  |   |   |   | 12.05 |   |
| July      1, 2008 to September 30, 2008   |   |   | 14.71  |   |   |   | 4.71 |   |
| October      1, 2008 to December 31, 2008 |   |   | 8.99   |   |   |   | 4.16 |   |

| Fiscal Year Ended December 31,      2009  |   | High   |   |   | Low    |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|
| January      1, 2009 to March 31, 2009    |   | $      | 5.00   |   |   | $      | 3.30 |   |
| April      1, 2009 to June 30, 2009       |   |   | 6.00   |   |   |   | 4.00 |   |
| July      1, 2009 to September 30, 2009   |   |   | 8.98   |   |   |   | 4.86 |   |
| October      1, 2009 to December 31, 2009 |   |   | 7.78   |   |   |   | 5.23 |   |

| Declaration Date |   | Record Date      |   | Payment Date     |   |   | Per ShareAmount |   |
|-----------------------|--------|-----------------------|--------|-----------------------|--------|--------|----------------------|--------|
| April      2, 2007    |   | April      18, 2007   |   | April      26, 2007   |   |   | $                    | .09    |   |
|                  |   |                  |   |                  |   |   |                 |   |   |
| October      3, 2007  |   | October      18, 2007 |   | October      25, 2007 |   |   | $                    | .09    |   |
|                  |   |                  |   |                  |   |   |                 |   |   |
| April      2, 2008    |   | April      18, 2008   |   | April      28, 2008   |   |   | $                    | .10    |   |
|                  |   |                  |   |                  |   |   |                 |   |   |
| October      8, 2008  |   | October      23, 2008 |   | October      30, 2008 |   |   | $                    | .10    |   |

----

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----

|                         |   | As of and for theFiscal Year Ended December 31,                                           |   |
|------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                         |   | 2009                                                                                                                              |   |   | 2008 |   |   | %Inc/(Dec) |   |
|                         |   | (In millions, except per share data and percentagesand bank branch information) |   |
|                         |   |                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Total      Assets            |   | $                                                                                                                                 | 909.3  |   |   | $ | 943.7 |   |   |   | (4 | )% |
| Loans,      net              |   |                                                                                                                              | 418.9  |   |   |   | 457.5 |   |   |   | (8 | )% |
| Investment      Securities   |   |                                                                                                                              | 357.8  |   |   |   | 297.9 |   |   |   | 20 | % |
| Total      Liabilities       |   |                                                                                                                              | 824.0  |   |   |   | 877.8 |   |   |   | (6 | )% |
| Deposits                     |   |                                                                                                                              | 713.4  |   |   |   | 726.1 |   |   |   | (2 | )% |
| Borrowings                   |   |                                                                                                                              | 103.7  |   |   |   | 127.5 |   |   |   | (19 | )% |
| Stockholders'      Equity    |   |                                                                                                                              | 85.2   |   |   |   | 66.0 |   |   |   | 29 | % |
|                         |   |                                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Total      Income            |   |                                                                                                                              | 46.1   |   |   |   | 60.3 |   |   |   | (24 | )% |
| Interest      Income         |   |                                                                                                                              | 45.9   |   |   |   | 59.6 |   |   |   | (23 | )% |
| Total      Expense           |   |                                                                                                                              | 61.6   |   |   |   | 146.0 |   |   |   | (58 | )% |
| Interest      Expense        |   |                                                                                                                              | 17.1   |   |   |   | 30.5 |   |   |   | (44 | )% |
| Net      Interest Income     |   |                                                                                                                              | 28.8   |   |   |   | 29.1 |   |   |   | (1 | )% |
| Net      (Loss)              |   |                                                                                                                              | (7.0   | ) |   |   | (79.9 | ) |   |   | (91 | )% |
| (Loss)      Per Common Share |   |                                                                                                                              | (1.00  | ) |   |   | (11.45 | ) |   |   | (91 | )% |
| Bank      Branches           |   |                                                                                                                              | 13     |   |   |   | 12 |   |   |   | - |   |

----

|                                 |   | As of and for theFiscal Year Ended December 31,                                           |   |
|--------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                 |   | 2008                                                                                                                              |   |   | 2007 |   |   | %Inc/(Dec) |   |
|                                 |   | (In millions, except per share data and percentagesand bank branch information) |   |
|                                 |   |                                                                                                                              |   |   |   |   |   |   |   |
| Total      Income                    |   |                                                                                                                              | 60.3   |   |   |   | 60.2 |   |   |   | 0 | % |
| Interest      Income                 |   |                                                                                                                              | 59.6   |   |   |   | 58.5 |   |   |   | 2 | % |
| Total      Expense                   |   |                                                                                                                              | 146.0  |   |   |   | 52.5 |   |   |   | 178 | % |
| Interest      Expense                |   |                                                                                                                              | 30.5   |   |   |   | 37.8 |   |   |   | (19 | )% |
| Net      Interest Income             |   |                                                                                                                              | 29.1   |   |   |   | 20.7 |   |   |   | 41 | % |
| Net      Income (Loss)               |   |                                                                                                                              | (79.9  | ) |   |   | 5.4 |   |   |   | (1,580 | )% |
| Diluted      Income (Loss) Per Share |   |                                                                                                                              | (11.45 | ) |   |   | .76 |   |   |   | (1,607 | )% |
| Bank      Branches                   |   |                                                                                                                              | 12     |   |   |   | 12 |   |   |   | - |   |

----

|                                                                                       |   | Twelve Months EndedDecember 31, 2009 |    | Twelve Months EndedDecember 31, 2008 |   | Twelve Months EndedDecember 31, 2007 |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                                                       |   | AverageBalance                                           |    | InterestandDividends                                     |   | AverageYield/Rate                                        |   | AverageBalance |   | InterestandDividends |   | AverageYield/Rate |   | AverageBalance |   | InterestandDividends |   | AverageYield/Rate |   |
| INTEREST-EARNING      ASSETS:                                                              |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      (1)                                                                             |   | $                                                        | 448,394 |                                                     | $      | 29,777                                                   |   |   | 6.63 | % | $ | 461,678 |   | $ | 32,754 |   |   | 7.09 | % | $ | 389,520 |   | $ | 29,804 |   |   | 7.65 | % |
| Investment      securities                                                                 |   |                                                     | 312,966 |                                                     |   | 15,506                                                   |   |   | 4.95 |   |   | 464,927 |   |   | 25,456 |   |   | 5.48 |   |   | 558,742 |   |   | 27,178 |   |   | 4.86 |   |
| Other      (2)(5)                                                                          |   |                                                     | 61,496  |                                                     |   | 639                                                      |   |   | 1.04 |   |   | 54,157 |   |   | 1,380 |   |   | 2.55 |   |   | 31,678 |   |   | 1,553 |   |   | 4.90 |   |
| Total      interest-earning assets                                                         |   |                                                     | 822,856 |                                                     |   | 45,922                                                   |   |   | 5.58 |   |   | 980,762 |   |   | 59,590 |   |   | 6.08 |   |   | 979,940 |   |   | 58,535 |   |   | 5.97 |   |
| Noninterest-earning      assets                                                            |   |                                                     | 58,828  |                                                     |   |                                                     |   |   |   |   |   | 55,244 |   |   |   |   |   |   |   |   | 46,070 |   |   |   |   |   |   |   |
| Total      Assets                                                                          |   | $                                                        | 881,684 |                                                     |   |                                                     |   |   |   |   | $ | 1,036,006 |   |   |   |   |   |   |   | $ | 1,026,010 |   |   |   |   |   |   |   |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST-BEARING      LIABILITIES:                                                         |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                                                             |   |                                                     | 204,629 |                                                     |   | 2,316                                                    |   |   | 1.13 |   |   | 287,772 |   |   | 7,645 |   |   | 2.66 |   |   | 291,049 |   |   | 10,338 |   |   | 3.55 |   |
| Time      deposits                                                                         |   |                                                     | 426,892 |                                                     |   | 9,921                                                    |   |   | 2.32 |   |   | 456,803 |   |   | 17,323 |   |   | 3.79 |   |   | 449,754 |   |   | 21,745 |   |   | 4.83 |   |
| Other      borrowings                                                                      |   |                                                     | 115,869 |                                                     |   | 4,866                                                    |   |   | 4.20 |   |   | 127,343 |   |   | 5,555 |   |   | 4.36 |   |   | 103,112 |   |   | 5,710 |   |   | 5.54 |   |
| Total      interest-bearing liabilities                                                    |   |                                                     | 747,390 |                                                     |   | 17,103                                                   |   |   | 2.29 |   |   | 871,918 |   |   | 30,523 |   |   | 3.50 |   |   | 843,915 |   |   | 37,793 |   |   | 4.48 |   |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      deposits                                                                       |   |                                                     | 56,544  |                                                     |   |                                                     |   |   |   |   |   | 54,452 |   |   |   |   |   |   |   |   | 50,647 |   |   |   |   |   |   |   |
| Noninterest-bearing      liabilities                                                       |   |                                                     | 8,701   |                                                     |   |                                                     |   |   |   |   |   | 9,077 |   |   |   |   |   |   |   |   | 12,285 |   |   |   |   |   |   |   |
| Stockholders'      equity (5)                                                              |   |                                                     | 69,049  |                                                     |   |                                                     |   |   |   |   |   | 100,559 |   |   |   |   |   |   |   |   | 119,163 |   |   |   |   |   |   |   |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders'      equity                                  |   | $                                                        | 881,684 |                                                     |   |                                                     |   |   |   |   | $ | 1,036,006 |   |   |   |   |   |   |   | $ | 1,026,010 |   |   |   |   |   |   |   |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                                                                   |   |                                                     |    |                                                     | $      | 28,819                                                   |   |   |   |   |   |   |   | $ | 29,067 |   |   |   |   |   |   |   | $ | 20,742 |   |   |   |   |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-rate      spread (3)                                                              |   |                                                     |    |                                                     |   |                                                     |   |   | 3.29 | % |   |   |   |   |   |   |   | 2.58 | % |   |   |   |   |   |   |   | 1.49 | % |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest margin (4)                                                               |   |                                                     |    |                                                     |   |                                                     |   |   | 3.50 | % |   |   |   |   |   |   |   | 2.96 | % |   |   |   |   |   |   |   | 2.12 | % |
|                                                                                       |   |                                                     |    |                                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of average interest-earning assets to average interest bearing      liabilities |   |                                                     | 1.10    |                                                     |   |                                                     |   |   |   |   |   | 1.12 |   |   |   |   |   |   |   |   | 1.16 |   |   |   |   |   |   |   |

----

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|                               |   | Twelve Months Ended December 31, 2009VersusTwelve Months Ended December 31, 2008Increase (Decrease) Due To |    |
|------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                               |   | Rate                                                                                                                                                                        |    |   | Volume |   |   | Total |   |
|                               |   |                                                                                                                                                                        |    |   |   |   |   |   |   |
| Interest-earning      assets:      |   |                                                                                                                                                                        |    |   |   |   |   |   |   |
| Loans                              |   | $                                                                                                                                                                           | (2,124  | ) |   | $ | (853 | ) |   | $ | (2,977 | ) |
| Investment      securities         |   |                                                                                                                                                                        | (2,464  | ) |   |   | (7,486 | ) |   |   | (9,950 | ) |
| Other                              |   |                                                                                                                                                                        | (818    | ) |   |   | 77 |   |   |   | (741 | ) |
| Total                              |   |                                                                                                                                                                        | (5,406  | ) |   |   | (8,262 | ) |   |   | (13,668 | ) |
|                               |   |                                                                                                                                                                        |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities: |   |                                                                                                                                                                        |    |   |   |   |   |   |   |   |   |   |
| Deposit      accounts:             |   |                                                                                                                                                                        |    |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits     |   |                                                                                                                                                                        | (4,403  | ) |   |   | (926 | ) |   |   | (5,329 | ) |
| Time      deposits                 |   |                                                                                                                                                                        | (6,715  | ) |   |   | (687 | ) |   |   | (7,402 | ) |
| Other      borrowings              |   |                                                                                                                                                                        | (204    | ) |   |   | (485 | ) |   |   | (689 | ) |
| Total                              |   |                                                                                                                                                                        | (11,322 | ) |   |   | (2,098 | ) |   |   | (13,420 | ) |
|                               |   |                                                                                                                                                                        |    |   |   |   |   |   |   |   |   |   |
| Net      interest income           |   | $                                                                                                                                                                           | 5,916   |   |   | $ | (6,164 | ) |   | $ | (248 | ) |

|                               |   | Twelve Months Ended December 31, 2008VersusTwelve Months Ended December 31, 2007Increase (Decrease) Due To |   |
|------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                               |   | Rate                                                                                                                                                                        |   |   | Volume |   |   | Total |   |
|                               |   |                                                                                                                                                                        |   |   |   |   |   |   |   |
| Interest-earning      assets:      |   |                                                                                                                                                                        |   |   |   |   |   |   |   |
| Loans                              |   | $                                                                                                                                                                           | (2,181 | ) |   | $ | 5,131 |   |   | $ | 2,950 |   |
| Investment      securities         |   |                                                                                                                                                                        | 3,464  |   |   |   | (5,186 | ) |   |   | (1,722 | ) |
| Other                              |   |                                                                                                                                                                        | (744   | ) |   |   | 571 |   |   |   | (173 | ) |
| Total                              |   |                                                                                                                                                                        | 539    |   |   |   | 516 |   |   |   | 1,055 |   |
|                               |   |                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities: |   |                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Deposit      accounts:             |   |                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits     |   |                                                                                                                                                                        | (2,590 | ) |   |   | (103 | ) |   |   | (2,693 | ) |
| Time      deposits                 |   |                                                                                                                                                                        | (4,677 | ) |   |   | 255 |   |   |   | (4,422 | ) |
| Other      borrowings              |   |                                                                                                                                                                        | (1,217 | ) |   |   | 1,062 |   |   |   | (155 | ) |
| Total                              |   |                                                                                                                                                                        | (8,484 | ) |   |   | 1,214 |   |   |   | (7,270 | ) |
|                               |   |                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| Net      interest income           |   | $                                                                                                                                                                           | 9,023  |   |   | $ | (698 | ) |   | $ | 8,325 |   |

----

----

----

----

|                       |   | Fiscal 2009                        |   |   | Fiscal 2008 |   |
|----------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                       |   | InterestIncome                          |   |   | % ofTotal   |   |   | InterestIncome |   |   | % ofTotal |   |
|                       |   | (In      thousands, except percentages) |   |
|                       |   |                                    |   |
| Loans                      |   | $                                       | 29,777 |   |             |   | 64.84 | % |   | $ | 32,754 |   |   |   | 54.96 | % |
| Investment      Securities |   |                                    | 15,506 |   |             |   | 33.77 |   |   |   | 25,456 |   |   |   | 42.72 |   |
| Other                      |   |                                    | 639    |   |             |   | 1.39 |   |   |   | 1,380 |   |   |   | 2.32 |   |
| Total      Interest Income |   | $                                       | 45,922 |   |             |   | 100.00 | % |   | $ | 59,590 |   |   |   | 100.00 | % |

----

|                               |   | Fiscal 2009                        |    |   | Fiscal 2008 |   |
|------------------------------------|--------|-----------------------------------------|---------|--------|------------------|--------|
|                               |   | AverageAmount                           |    |   | % ofTotal   |   |   | AverageAmount |   |   | % ofTotal |   |
|                               |   | (In      thousands, except percentages) |    |
|                               |   |                                    |    |
| Loans                              |   | $                                       | 448,394 |   |             |   | 54.50 | % |   | $ | 461,678 |   |   |   | 47.08 | % |
| Investment      Securities         |   |                                    | 312,966 |   |             |   | 38.03 |   |   |   | 464,927 |   |   |   | 47.40 |   |
| Other                              |   |                                    | 61,496  |   |             |   | 7.47 |   |   |   | 54,157 |   |   |   | 5.52 |   |
| Total      Interest-Earning Assets |   | $                                       | 822,856 |   |             |   | 100.00 | % |   | $ | 980,762 |   |   |   | 100.00 | % |

----

|                           |   | Fiscal 2009                        |   |   | Fiscal 2008 |   |
|--------------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                           |   | InterestExpense                         |   |   | % ofTotal   |   |   | InterestExpense |   |   | % ofTotal |   |
|                           |   | (In      thousands, except percentages) |   |
|                           |   |                                    |   |
| Interest-Bearing      Deposits |   | $                                       | 2,316  |   |             |   | 13.54 | % |   | $ | 7,645 |   |   |   | 25.05 | % |
| Time      Deposits             |   |                                    | 9,921  |   |             |   | 58.01 |   |   |   | 17,323 |   |   |   | 56.75 |   |
| Other      Borrowings          |   |                                    | 4,866  |   |             |   | 28.45 |   |   |   | 5,555 |   |   |   | 18.20 |   |
| Total      Interest Expense    |   | $                                       | 17,103 |   |             |   | 100.00 | % |   | $ | 30,523 |   |   |   | 100.00 | % |

|                                    |   | Fiscal 2009                        |    |   | Fiscal 2008 |   |
|-----------------------------------------|--------|-----------------------------------------|---------|--------|------------------|--------|
|                                    |   | AverageAmount                           |    |   | % ofTotal   |   |   | AverageAmount |   |   | % ofTotal |   |
|                                    |   | (In      thousands, except percentages) |    |
|                                    |   |                                    |    |
| Interest-Bearing      Deposits          |   | $                                       | 204,629 |   |             |   | 27.38 | % |   | $ | 287,772 |   |   |   | 33.00 | % |
| Time      Deposits                      |   |                                    | 426,892 |   |             |   | 57.12 |   |   |   | 456,803 |   |   |   | 52.40 |   |
| Other      Borrowings                   |   |                                    | 115,869 |   |             |   | 15.50 |   |   |   | 127,343 |   |   |   | 14.60 |   |
| Total      Interest-Bearing Liabilities |   | $                                       | 747,390 |   |             |   | 100.00 | % |   | $ | 871,918 |   |   |   | 100.00 | % |

----

----

|                              |   | Fiscal 2009                        |   |   | Fiscal 2008 |   |
|-----------------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                              |   | Non-InterestIncome                      |   |   | % ofTotal   |   |   | Non-InterestIncome |   |   | % ofTotal |   |
|                              |   | (In      thousands, except percentages) |   |
|                              |   |                                    |   |
| Service      Charges on Deposits  |   | $                                       | 490    |   |             |   | 248.73 | % |   | $ | 585 |   |   |   | 77.18 | % |
| Investment      Securities Losses |   |                                    | (860   | )      |             |   | (436.55 | ) |   |   | (685 | ) |   |   | (90.37 | ) |
| Other                             |   |                                    | 567    |   |             |   | 287.82 |   |   |   | 858 |   |   |   | 113.19 |   |
| Total      Non-Interest Income    |   | $                                       | 197    |   |             |   | 100.00 | % |   | $ | 758 |   |   |   | 100.00 | % |

|                                                       |   | Fiscal 2009                        |   |   | Fiscal 2008 |   |
|------------------------------------------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                                                       |   | Non-InterestExpense                     |   |   | % ofTotal   |   |   | Non-InterestExpense |   |   | % ofTotal |   |
|                                                       |   | (In      thousands, except percentages) |   |
|                                                       |   |                                    |   |
| Salaries      and Employee Benefits                        |   | $                                       | 9,517  |   |             |   | 27.06 | % |   | $ | 9,366 |   |   |   | 8.46 | % |
| Net      Occupancy Expense                                 |   |                                    | 2,150  |   |             |   | 6.11 |   |   |   | 2,079 |   |   |   | 1.88 |   |
| Equipment      Expense                                     |   |                                    | 378    |   |             |   | 1.07 |   |   |   | 386 |   |   |   | 0.35 |   |
| FDIC      Assessment                                       |   |                                    | 1,928  |   |             |   | 5.48 |   |   |   | 1,082 |   |   |   | 0.98 |   |
| Data      Processing Expense                               |   |                                    | 452    |   |             |   | 1.29 |   |   |   | 442 |   |   |   | 0.40 |   |
| Other      than temporary impairment charges on securities |   |                                    | 17,435 |   |             |   | 49.58 |   |   |   | 94,346 |   |   |   | 85.29 |   |
| Other                                                      |   |                                    | 3,311  |   |             |   | 9.41 |   |   |   | 2,915 |   |   |   | 2.64 |   |
| Total      Non-Interest Expense                            |   | $                                       | 35,171 |   |             |   | 100.00 | % |   | $ | 110,616 |   |   |   | 100.00 | % |

----

|                       |   | Fiscal      2008                        |   |   | Fiscal      2007 |   |
|----------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                       |   | InterestIncome                          |   |   | %      ofTotal   |   |   | InterestIncome |   |   | %      ofTotal |   |
|                       |   | (In      thousands, except percentages) |   |
|                       |   |                                    |   |
| Loans                      |   | $                                       | 32,754 |   |             |   | 54.96 | % |   | $ | 29,804 |   |   |   | 50.92 | % |
| Investment      Securities |   |                                    | 25,456 |   |             |   | 42.72 |   |   |   | 27,178 |   |   |   | 46.43 |   |
| Other                      |   |                                    | 1,380  |   |             |   | 2.32 |   |   |   | 1,553 |   |   |   | 2.65 |   |
| Total      Interest Income |   | $                                       | 59,590 |   |             |   | 100.00 | % |   | $ | 58,535 |   |   |   | 100.00 | % |

----

|                               |   | Fiscal 2008                        |    |   | Fiscal 2007 |   |
|------------------------------------|--------|-----------------------------------------|---------|--------|------------------|--------|
|                               |   | AverageAmount                           |    |   | % ofTotal   |   |   | AverageAmount |   |   | % ofTotal |   |
|                               |   | (In      thousands, except percentages) |    |
|                               |   |                                    |    |
| Loans                              |   | $                                       | 461,678 |   |             |   | 47.08 | % |   | $ | 389,520 |   |   |   | 39.75 | % |
| Investment      Securities         |   |                                    | 464,927 |   |             |   | 47.40 |   |   |   | 558,742 |   |   |   | 57.02 |   |
| Other                              |   |                                    | 54,157  |   |             |   | 5.52 |   |   |   | 31,678 |   |   |   | 3.23 |   |
| Total      Interest-Earning Assets |   | $                                       | 980,762 |   |             |   | 100.00 | % |   | $ | 979,940 |   |   |   | 100.00 | % |

|                           |   | Fiscal 2008                        |   |   | Fiscal 2007 |   |
|--------------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                           |   | InterestExpense                         |   |   | % ofTotal   |   |   | InterestExpense |   |   | % ofTotal |   |
|                           |   | (In      thousands, except percentages) |   |
|                           |   |                                    |   |
| Interest-Bearing      Deposits |   | $                                       | 7,645  |   |             |   | 25.05 | % |   | $ | 10,338 |   |   |   | 27.35 | % |
| Time      Deposits             |   |                                    | 17,323 |   |             |   | 56.75 |   |   |   | 21,745 |   |   |   | 57.54 |   |
| Other      Borrowings          |   |                                    | 5,555  |   |             |   | 18.20 |   |   |   | 5,710 |   |   |   | 15.11 |   |
| Total      Interest Expense    |   | $                                       | 30,523 |   |             |   | 100.00 | % |   | $ | 37,793 |   |   |   | 100.00 | % |

----

|                                    |   | Fiscal 2008                        |    |   | Fiscal 2007 |   |
|-----------------------------------------|--------|-----------------------------------------|---------|--------|------------------|--------|
|                                    |   | AverageAmount                           |    |   | % ofTotal   |   |   | AverageAmount |   |   | % ofTotal |   |
|                                    |   | (In      thousands, except percentages) |    |
|                                    |   |                                    |    |
| Interest-Bearing      Deposits          |   | $                                       | 287,772 |   |             |   | 33.00 | % |   | $ | 291,049 |   |   |   | 34.49 | % |
| Time      Deposits                      |   |                                    | 456,803 |   |             |   | 52.40 |   |   |   | 449,754 |   |   |   | 53.29 |   |
| Other      Borrowings                   |   |                                    | 127,343 |   |             |   | 14.60 |   |   |   | 103,112 |   |   |   | 12.22 |   |
| Total      Interest-Bearing Liabilities |   | $                                       | 871,918 |   |             |   | 100.00 | % |   | $ | 843,915 |   |   |   | 100.00 | % |

----

|                                      |   | Fiscal 2008                        |   |   | Fiscal 2007 |   |
|-------------------------------------------|--------|-----------------------------------------|--------|--------|------------------|--------|
|                                      |   | Non-InterestIncome                      |   |   | % ofTotal   |   |   | Non-InterestIncome |   |   | % ofTotal |   |
|                                      |   | (In      thousands, except percentages) |   |
|                                      |   |                                    |   |
| Service      Charges on Deposits          |   | $                                       | 585    |   |             |   | 77.18 | % |   | $ | 658 |   |   |   | 39.66 | % |
| Investment      Securities (Losses) Gains |   |                                    | (685   | )      |             |   | (90.37 | ) |   |   | 86 |   |   |   | 5.18 |   |
| Other                                     |   |                                    | 858    |   |             |   | 113.19 |   |   |   | 915 |   |   |   | 55.16 |   |
| Total      Non-Interest Income            |   | $                                       | 758    |   |             |   | 100.00 | % |   | $ | 1,659 |   |   |   | 100.00 | % |

|                                                       |   | Fiscal      2008                        |    |   | Fiscal      2007 |   |
|------------------------------------------------------------|--------|-----------------------------------------|---------|--------|------------------|--------|
|                                                       |   | Non-InterestExpense                     |    |   | %      ofTotal   |   |   | Non-InterestExpense |   |   | %      ofTotal |   |
|                                                       |   | (In      thousands, except percentages) |    |
|                                                       |   |                                    |    |
| Salaries      and Employee Benefits                        |   | $                                       | 9,366   |   |             |   | 8.46 | % |   | $ | 8,971 |   |   |   | 62.66 | % |
| Net      Occupancy Expense                                 |   |                                    | 2,079   |   |             |   | 1.88 |   |   |   | 2,050 |   |   |   | 14.32 |   |
| Equipment      Expense                                     |   |                                    | 386     |   |             |   | 0.35 |   |   |   | 80 |   |   |   | 0.56 |   |
| FDIC      Assessment                                       |   |                                    | 1,082   |   |             |   | 0.98 |   |   |   | 86 |   |   |   | 0.60 |   |
| Data      Processing Expense                               |   |                                    | 442     |   |             |   | 0.40 |   |   |   | 417 |   |   |   | 2.91 |   |
| Other      than temporary impairment charges on securities |   |                                    | 94,346  |   |             |   | 85.29 |   |   |   | — |   |   |   |   |   |
| Other                                                      |   |                                    | 2,915   |   |             |   | 2.64 |   |   |   | 2,714 |   |   |   | 18.95 |   |
| Total      Non-Interest Expense                            |   | $                                       | 110,616 |   |             |   | 100.00 | % |   | $ | 14,318 |   |   |   | 100.00 | % |

----

----

|                          |   | December 31, 2009 |   |
|-------------------------------|--------|-----------------------------|--------|
|                          |   | AmortizedCost               |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                          |   |                        |   |   | (In      thousands) |   |   |   |   |
|                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies |   | $                           | 340    |   |   | $ | — |   |   | $ | (3 | ) |   | $ | 337 |   |

|                          |   | December 31, 2008 |   |
|-------------------------------|--------|-----------------------------|--------|
|                          |   | AmortizedCost               |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                          |   |                        |   |   | (In      thousands) |   |   |   |   |
|                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies |   | $                           | 360    |   |   | $ | 3 |   |   | $ | (1 | ) |   | $ | 362 |   |

|                                                  |   | December      31, 2009 |        |
|-------------------------------------------------------|--------|------------------------|-------------|
|                                                  |   | Amortized      Cost    |        |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                                  |   |                   |        |   | (In      thousands) |   |   |   |   |
| U.S.      Treasury Notes                              |   | $                      | 50,236      |   |   | $ | 35 |   |   | $ | (65 | ) |   | $ | 50,206 |   |
| U.S.      Government Agencies                         |   |                   | 76,259      |   |   |   | 59 |   |   |   | (793 | ) |   |   | 75,525 |   |
| Mortgage-backed      securities                       |   |                   | 134,810     |   |   |   | 1,943 |   |   |   | (710 | ) |   |   | 136,043 |   |
| Corporate      notes                                  |   |                   | 19,029      |   |   |   | 1,011 |   |   |   | (2,311 | ) |   |   | 17,729 |   |
| Single      Issuer Trust Preferred CDO                |   |                   | 1,021       |   |   |   | — |   |   |   | — |   |   |   | 1,021 |   |
| Pooled      Trust Preferred CDO                       |   |                   | 6,463       |   |   |   | — |   |   |   | (6,313 | ) |   |   | 150 |   |
| Municipal      securities                             |   |                   | 1,973       |   |   |   | 198 |   |   |   | — |   |   |   | 2,171 |   |
| Auction      rate securities                          |   |                   | 78,895      |   |   |   | — |   |   |   | (11,953 | ) |   |   | 66,942 |   |
| Marketable      equity securities      and other |   |                   |  7,648 |   |   |   |  69 |   |   |   | (26 | ) |   |   |  7,691 |   |
| Totals                                                |   | $                      | 376,334     |   |   | $ | 3,315 |   |   | $ | (22,171 | ) |   | $ | 357,478 |   |

----

|                                        |   | December 31, 2008 |    |
|---------------------------------------------|--------|-----------------------------|---------|
|                                        |   | AmortizedCost               |    |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                        |   |                        |    |   | (In      thousands) |   |   |   |   |
| U.S.      Government Agencies               |   | $                           | 91,429  |   |   | $ | 72 |   |   | $ | (380 | ) |   | $ | 91,121 |   |
| Mortgage-backed      securities             |   |                        | 83,882  |   |   |   | 1,037 |   |   |   | (1,061 | ) |   |   | 83,858 |   |
| Corporate      notes                        |   |                        | 51,150  |   |   |   | 112 |   |   |   | (13,138 | ) |   |   | 38,124 |   |
| Single      Issuer Trust Preferred CDO      |   |                        | 3,000   |   |   |   | — |   |   |   | (1,794 | ) |   |   | 1,206 |   |
| Pooled      Trust Preferred CDO             |   |                        | 10,000  |   |   |   | — |   |   |   | (7,006 | ) |   |   | 2,994 |   |
| Municipal      securities                   |   |                        | 1,973   |   |   |   | 125 |   |   |   | (495 | ) |   |   | 1,603 |   |
| Auction      rate securities                |   |                        | 101,110 |   |   |   | — |   |   |   | (38,030 | ) |   |   | 63,080 |   |
| Marketable      equity securities and other |   |                        | 16,708  |   |   |   | 80 |   |   |   | (1,238 | ) |   |   | 15,550 |   |
| Totals                                      |   | $                           | 359,252 |   |   | $ | 1,426 |   |   | $ | (63,142 | ) |   | $ | 297,536 |   |

----

|                                                         |   | 2009                |    |   | 2008            |   |
|--------------------------------------------------------------|--------|---------------------|---------|--------|-----------------|--------|
|                                                         |   | AmortizedCost       |    |   | Fair Value |   |   | AmortizedCost |   |   | Fair Value |   |
|                                                         |   | (In      thousands) |    |
| Federal      National Mortgage Association Preferred Shares  |   | $                   | — |   |            | $      | — |   |   | $ | 2,223 |   |   | $ | 728 |   |
| Federal      Home Loan Mortgage Corporation Preferred Shares |   |                | 1,895   |   |            |   | 1,895 |   |   |   | 3,904 |   |   |   | 704 |   |
| Preferred      Shares of Money Center Banks                  |   |                | 65,000  |   |            |   | 53,767 |   |   |   | 65,000 |   |   |   | 32,789 |   |
| Other      Assets of Money Center Banks                      |   |                | 10,000  |   |            |   | 9,280 |   |   |   | 10,000 |   |   |   | 8,876 |   |
| Public      Utility Debt and Equity Securities               |   |                | 2,000   |   |            |   | 2,000 |   |   |   | 15,000 |   |   |   | 15,000 |   |
| Other                                                        |   |                | -       |   |            |   | — |   |   |   | 4,983 |   |   |   | 4,983 |   |
| Totals                                                       |   | $                   | 78,895  |   |            | $      | 66,942 |   |   | $ | 101,110 |   |   | $ | 63,080 |   |
|                                                         |   |                |    |   |            |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

----

|                                     |   | AmortizedCost |   |   | Fair Value |   |   | UnrealizedGain (Loss) |   | Lowest CreditRating |
|------------------------------------------|--------|---------------|--------|--------|-----------------|--------|--------|----------------------------|--------|--------------------------|
| Single      Issuer Corporate      Bonds: |   |          |   |   |            |   |   |                       |   |                     |
| Airline      #1                          |   | $             | 1,597  |   |            | $      | 1,594  |                       |   | $                        | (3 | )    | Ba2 |
| Airline      #2                          |   |          | 552    |   |            |   | 552    |                       |   |                     | — |   | No      rating |
| Automobile                               |   |          | 800    |   |            |   | 1,506  |                       |   |                     | 706 |   | D |
| Commercial                               |   |          | 495    |   |            |   | 435    |                       |   |                     | (60 | ) | No      rating |
| Student      Lender                      |   |          | 5,000  |   |            |   | 3,920  |                       |   |                     | (1,080 | ) | Ba1 |
| Trust      Preferred Security            |   |          | 1,021  |   |            |   | 1,021  |                       |   |                     | — |   | No      rating |
| Auction      Rate Securities:            |   |          |   |   |            |   |   |                       |   |                     |   |   |   |
| Federal      Home Loan Bank Corporation  |   |          | 1,895  |   |            |   | 1,895  |                       |   |                     | — |   | Ca |
| Money      Center Banks                  |   |          | 24,000 |   |            |   | 17,537 |                       |   |                     | (6,463 | ) | Ba3 |
| Pooled      Issuers:                     |   |          |   |   |            |   |   |                       |   |                     |   |   |   |
| TPCDO                                    |   |          | 6,463  |   |            |   | 150    |                       |   |                     | (6,313 | ) | No      rating |
|                                     |   |          |   |   |            |   |   |                       |   |                     |   |   |   |

----

|      |   |  Industry          |   | Cost   |   |   | Fair Value |   |   | UnrealizedGain (Loss) |   |
|-----------|--------|-------------------------|--------|--------|--------|--------|-----------------|--------|--------|----------------------------|--------|
| Common    |   | Telecommunications      |   | $      | 91     |   |            | $      | 94     |                       |   | $ | 3 |   |
|      |   | Airline                 |   |   | 862    |   |            |   | 862    |                       |   |   | — |   |
|      |   |                    |   |   |   |   |            |   |   |                       |   |   |   |   |
| Preferred |   | Airline                 |   |   | 61     |   |            |   | 61     |                       |   |   | — |   |
|      |   | Flooring      and other |   |   | 35     |   |            |   | 34     |                       |   |   | (1 | ) |
|      |   | Mining                  |   |   | 27     |   |            |   | 91     |                       |   |   | 64 |   |
|      |   | Money      Center Banks |   |   | 2,008  |   |            |   | 1,984  |                       |   |   | (24 | ) |

----

|                                            |   | Less than 12 months |    |   | 12 months or longer |   |    | Total           |   |
|-------------------------------------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|---------|-----------------|--------|
|                                            |   | Fair Value                    |    |   | UnrealizedLosses                   |   |    | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Description      of Securities                  |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury Notes                        |   | $                                  | 30,048  |   |                               | $      | 65      |            |   | $ | — |   |   | $ | — |   |   | $ | 30,048 |   |   | $ | 65 |   |
| U.S.      Government Agencies                   |   |                               | 40,518  |   |                               |   | 748     |            |   |   | 19,948 |   |   |   | 45 |   |   |   | 60,466 |   |   |   | 793 |   |
| Mortgage-backed      securities                 |   |                               | 7,932   |   |                               |   | 43      |            |   |   | 15,661 |   |   |   | 667 |   |   |   | 23,593 |   |   |   | 710 |   |
| Corporate      notes                            |   |                               | 1,613   |   |                               |   | 13      |            |   |   | 7,522 |   |   |   | 2,298 |   |   |   | 9,135 |   |   |   | 2,311 |   |
| Pooled      Trust Preferred CDO                 |   |                               | — |   |                               |   | — |            |   |   | 150 |   |   |   | 6,313 |   |   |   | 150 |   |   |   | 6,313 |   |
| Auction      rate securities                    |   |                               | — |   |                               |   | — |            |   |   | 58,047 |   |   |   | 11,953 |   |   |   | 58,047 |   |   |   | 11,953 |   |
|                                            |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal,      debt securities                  |   |                               | 80,111  |   |                               |   | 869     |            |   |   | 101,328 |   |   |   | 21,276 |   |   |   | 181,439 |   |   |   | 22,145 |   |
| Marketable      equity securities and other     |   |                               | — |   |                               |   | — |            |   |   | 1,044 |   |   |   | 26 |   |   |   | 1,044 |   |   |   | 26 |   |
| Total      temporarily impaired      securities |   | $                                  | 80,111  |   |                               | $      | 869     |            |   | $ | 102,372 |   |   | $ | 21,302 |   |   | $ | 182,483 |   |   | $ | 22,171 |   |

----

|                                            |   | Less than 12 months |    |   | 12 months or longer |   |    | Total           |   |
|-------------------------------------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|---------|-----------------|--------|
|                                            |   | Fair Value                    |    |   | UnrealizedLosses                   |   |    | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Description      of Securities                  |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies                   |   | $                                  | 71,241  |   |                               | $      | 378     |            |   | $ | 5,072 |   |   | $ | 2 |   |   | $ | 76,313 |   |   | $ | 380 |   |
| Mortgage-backed      securities                 |   |                               | 6,135   |   |                               |   | 58      |            |   |   | 21,769 |   |   |   | 1,003 |   |   |   | 27,904 |   |   |   | 1,061 |   |
| Corporate      notes                            |   |                               | 14,480  |   |                               |   | 3,407   |            |   |   | 4,100 |   |   |   | 9,731 |   |   |   | 18,580 |   |   |   | 13,138 |   |
| Single      Issuer Trust Preferred CDO          |   |                               | — |   |                               |   | — |            |   |   | 1,149 |   |   |   | 1,794 |   |   |   | 1,149 |   |   |   | 1,794 |   |
| Pooled      Trust Preferred CDO                 |   |                               | — |   |                               |   | — |            |   |   | 2,981 |   |   |   | 7,006 |   |   |   | 2,981 |   |   |   | 7,006 |   |
| Municipal      securities                       |   |                               | — |   |                               |   | — |            |   |   | 1,478 |   |   |   | 495 |   |   |   | 1,478 |   |   |   | 495 |   |
| Auction      rate securities                    |   |                               | 38,098  |   |                               |   | 38,030  |            |   |   | — |   |   |   | — |   |   |   | 38,098 |   |   |   | 38,030 |   |
|                                            |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal,      debt securities                  |   |                               | 129,954 |   |                               |   | 41,873  |            |   |   | 36,549 |   |   |   | 20,031 |   |   |   | 166,503 |   |   |   | 61,904 |   |
| Marketable      equity securities and other     |   |                               | 1,681   |   |                               |   | 332     |            |   |   | 900 |   |   |   | 906 |   |   |   | 2,581 |   |   |   | 1,238 |   |
| Total      temporarily impaired      securities |   | $                                  | 131,635 |   |                               | $      | 42,205  |            |   | $ | 37,449 |   |   | $ | 20,937 |   |   | $ | 169,084 |   |   | $ | 63,142 |   |
|                                            |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                        |   | December 31, 2009  |        |
|---------------------------------------------|--------|------------------------------|-------------|
|                                        |   | Available for Sale |        |   | Held to Maturity |   |
|                                        |   | AmortizedCost                |        |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                        |   | (In      thousands)          |        |
| Due      in one year or less                |   | $                            | 23,070      |   |   | $ | 23,153 |   |   | $ | — |   |   | $ | — |   |
| Due      after one through five years       |   |                         | 56,766      |   |   |   | 56,101 |   |   |   | — |   |   |   | — |   |
| Due      after five through ten years       |   |                         | 21,857      |   |   |   | 21,784 |   |   |   |  — |   |   |   |  — |   |
| Due      after ten years                    |   |                         | 188,098     |   |   |   | 181,807 |   |   |   | 340 |   |   |   | 337 |   |
| Auction      rate securities                |   |                         | 78,895      |   |   |   | 66,942 |   |   |   | — |   |   |   | — |   |
| Marketable      equity securities and other |   |                         |  7,648 |   |   |   |  7,691 |   |   |   |  — |   |   |   |  — |   |
| Totals                                      |   | $                            | 376,334     |   |   | $ | 357,478 |   |   | $ | 340 |   |   | $ | 337 |   |

----

|                                             |   | December 31,   |    |
|--------------------------------------------------|--------|---------------------|---------|
|                                             |   | 2009                |    |   | 2008 |   |   | 2007 |   |
|                                             |   | Cost                |    |   | FairValue |   |   | Cost |   |   | FairValue |   |   | Cost |   |   | FairValue |   |
|                                             |   | (In      thousands) |    |
| Available-For-Sale                               |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury Notes                         |   | $                   | 50,236  |   |   | $ | 50,206 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| U.S.      Government Agencies                    |   |                | 76,259  |   |   |   | 75,525 |   |   |   | 91,466 |   |   |   | 91,158 |   |   |   | 272,789 |   |   |   | 272,318 |   |
| Mortgage-backed      securities                  |   |                | 134,810 |   |   |   | 136,043 |   |   |   | 83,845 |   |   |   | 83,821 |   |   |   | 53,886 |   |   |   | 53,057 |   |
| Corporate      notes                             |   |                | 19,029  |   |   |   | 17,729 |   |   |   | 51,150 |   |   |   | 38,124 |   |   |   | 71,147 |   |   |   | 67,601 |   |
| Single      Issuer Trust Preferred CDO           |   |                | 1,021   |   |   |   | 1,021 |   |   |   | 3,000 |   |   |   | 1,206 |   |   |   |   |   |   |   |   |   |
| Pooled      Trust Preferred CDO                  |   |                | 6,463   |   |   |   | 150 |   |   |   | 10,000 |   |   |   | 2,994 |   |   |   |   |   |   |   |   |   |
| Municipal      securities                        |   |                | 1,973   |   |   |   | 2,171 |   |   |   | 1,973 |   |   |   | 1,603 |   |   |   | 1,973 |   |   |   | 3,004 |   |
| Auction      rate securities                     |   |                | 78,895  |   |   |   | 66,942 |   |   |   | 101,110 |   |   |   | 63,080 |   |   |   | 184,597 |   |   |   | 184,597 |   |
| Marketable      equity securities      and other |   |                | 7,648   |   |   |   | 7,691 |   |   |   | 16,708 |   |   |   | 15,550 |   |   |   | 18,698 |   |   |   | 18,384 |   |
| Total                                            |   | $                   | 376,334 |   |   | $ | 357,478 |   |   | $ | 359,252 |   |   | $ | 297,536 |   |   | $ | 603,090 |   |   | $ | 598,961 |   |
|                                             |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-To-Maturity                                 |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies                    |   | $                   | 340     |   |   | $ | 337 |   |   | $ | 360 |   |   | $ | 362 |   |   | $ | 395 |   |   | $ | 405 |   |

----

|                                        |   | December 31, 2009 |   |
|---------------------------------------------|--------|-----------------------------|--------|
|                                        |   | WeightedAverageYield        |   |   | Cost |   |   | Fair Value |   |
|                                        |   | (Dollars      in thousands) |   |
| Available-For-Sale                          |   |                        |   |   |   |   |   |   |   |
| U.S.      Treasury Notes                    |   |                        |   |   |   |   |   |   |   |
| Due      within one year                    |   |                        | 1.93   | % |   | $ | 20,123 |   |   | $ | 20,158 |   |
| Due      after one through five years       |   |                        | 0.91   |   |   |   | 30,113 |   |   |   | 30,048 |   |
|                                        |   |                        |   |   |   |   | 50,236 |   |   |   | 50,206 |   |
| U.S.      Government Agencies Obligations   |   |                        |   |   |   |   |   |   |   |   |   |   |
| Due      after one year through five years  |   |                        | 3.26   |   |   |   | 9,973 |   |   |   | 10,028 |   |
| Due      after five years through ten years |   |                        | 4.38   |   |   |   | 20,567 |   |   |   | 20,526 |   |
| Due      after ten years                    |   |                        | 6.02   |   |   |   | 45,719 |   |   |   | 44,971 |   |
|                                        |   |                        |   |   |   |   | 76,259 |   |   |   | 75,525 |   |
| Municipal      Obligations                  |   |                        |   |   |   |   |   |   |   |   |   |   |
| Due      after ten years                    |   |                        | 9.41   |   |   |   | 1,973 |   |   |   | 2,171 |   |
|                                        |   |                        |   |   |   |   | 1,973 |   |   |   | 2,171 |   |
| Mortgage-backed      securities             |   |                        |   |   |   |   |   |   |   |   |   |   |
| Due      after one year through five years  |   |                        | 4.43   |   |   |   | 6,768 |   |   |   | 6,946 |   |
| Due      after five years through ten years |   |                        | 4.82   |   |   |   | 654 |   |   |   | 689 |   |
| Due      after ten years                    |   |                        | 5.64   |   |   |   | 127,388 |   |   |   | 128,408 |   |
|                                        |   |                        |   |   |   |   | 134,810 |   |   |   | 136,043 |   |
| Corporate      Notes (1)                    |   |                        |   |   |   |   |   |   |   |   |   |   |
| Due      within one year                    |   |                        | 3.38   |   |   |   | 3,442 |   |   |   | 3,430 |   |
| Due      after one year through five years  |   |                        | 5.70   |   |   |   | 9,912 |   |   |   | 9,079 |   |
| Due      after five years through ten years |   |                        | 8.45   |   |   |   | 1,188 |   |   |   | 1,122 |   |
| Due      after ten years                    |   |                        | 8.53   |   |   |   | 11,971 |   |   |   | 5,269 |   |
|                                        |   |                        |   |   |   |   | 26,513 |   |   |   | 18,900 |   |
| Auction      rate and other securities      |   |                        |   |   |   |   |   |   |   |   |   |   |
| Common      Stocks                          |   |                        | 0.11   |   |   |   | 953 |   |   |   | 956 |   |
| Preferred      Stocks                       |   |                        | 6.77   |   |   |   | 2,131 |   |   |   | 2,170 |   |
| Auction      Rate Securities                |   |                        | 4.90   |   |   |   | 78,895 |   |   |   | 66,942 |   |
| Money      market funds                     |   |                        | 0.31   |   |   |   | 2,250 |   |   |   | 2,250 |   |
| Federal      Home Loan Bank Stock           |   |                        | 7.43   |   |   |   | 2,314 |   |   |   | 2,315 |   |
|                                        |   |                        |   |   |   |   | 86,543 |   |   |   | 74,633 |   |
|                                        |   |                        |   |   |   | $ | 376,334 |   |   | $ | 357,478 |   |
|                                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Held-To-Maturity                            |   |                        |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies Obligations   |   |                        |   |   |   |   |   |   |   |   |   |   |
| Due      after ten years                    |   |                        | 6.58   |   |   |   | 340 |   |   |   | 337 |   |
|                                        |   |                        |   |   |   | $ | 340 |   |   | $ | 337 |   |

----

----

----

----

----

----

|                                           |   | December      31, |    |
|------------------------------------------------|--------|-------------------|---------|
|                                           |   | 2009              |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                           |   | Amount            |    |   | %      ofTotal |   |   | Amount |   |   | %      ofTotal |   |   | Amount |   |   | %      ofTotal |   |   | Amount |   |   | %      of Total |   |   | Amount |   |   | %      ofTotal |   |
| Commercial      and professional      loans    |   | $                 | 50,672  |   |   |   | 11.7 | % |   | $ | 68,418 |   |   |   | 14.6 | % |   | $ | 76,132 |   |   |   | 17.4 | % |   | $ | 63,331 |   |   |   | 17.0 | % |   | $ | 33,370 |   |   |   | 10.8 | % |
| Secured      by real estate                    |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1 -      4 family                              |   |              | 129,925 |   |   |   | 30.1 |   |   |   | 140,150 |   |   |   | 30.0 |   |   |   | 142,140 |   |   |   | 32.6 |   |   |   | 139,611 |   |   |   | 37.5 |   |   |   | 139,931 |   |   |   | 45.1 |   |
| Multi      family                              |   |              | 7,432   |   |   |   | 1.7 |   |   |   | 4,031 |   |   |   | 0.9 |   |   |   | 3,506 |   |   |   | 0.8 |   |   |   | 4,013 |   |   |   | 1.1 |   |   |   | 2,874 |   |   |   | 0.9 |   |
| Non-residential      (commercial)              |   |              | 242,927 |   |   |   |  56.4 |   |   |   | 254,831 |   |   |   |  54.4 |   |   |   | 212,850 |   |   |   |  48.8 |   |   |   | 160,417 |   |   |   |  43.1 |   |   |   | 132,142 |   |   |   |  42.6 |   |
| Consumer                                       |   |              | 396     |   |   |   | 0.1 |   |   |   | 460 |   |   |   | 0.1 |   |   |   | 1,691 |   |   |   | 0.4 |   |   |   | 4,763 |   |   |   | 1.3 |   |   |   | 2,018 |   |   |   | 0.6 |   |
|                                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans                               |   |              | 431,352 |   |   |   | 100.0 | % |   |   | 467,890 |   |   |   | 100.0 | % |   |   | 436,319 |   |   |   | 100.0 | % |   |   | 372,135 |   |   |   | 100.0 | % |   |   | 310,335 |   |   |   | 100.0 | % |
|                                           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Allowance for      loan losses |   |              | (11,416 | ) |   |   |   |   |   |   | (9,204 | ) |   |   |   |   |   |   | (4,183 | ) |   |   |   |   |   |   | (3,771 | ) |   |   |   |   |   |   | (3,266 | ) |   |   |   |   |
| Unearned      fees                             |   |              | (1,003  | ) |   |   |   |   |   |   | (1,137 | ) |   |   |   |   |   |   | (1,534 | ) |   |   |   |   |   |   | (1,212 | ) |   |   |   |   |   |   | (1,105 | ) |   |   |   |   |
| Loans,      net                                |   | $                 | 418,933 |   |   |   |   |   |   | $ | 457,549 |   |   |   |   |   |   | $ | 430,602 |   |   |   |   |   |   | $ | 367,152 |   |   |   |   |   |   | $ | 305,964 |   |   |   |   |   |

----

|                                                     |   | December      31,           |    |
|----------------------------------------------------------|--------|-----------------------------|---------|
|                                                     |   | 2009                        |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                     |   | (Dollars      in Thousands) |    |
| Nonaccrual      loans:                                   |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and professional      loans         |   | $                           | 1,700   |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| Consumer                                                 |   |                        | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 3 |   |
| Secured      by real estate                              |   |                        | 12,210  |   |   |   | 130 |   |   |   | 153 |   |   |   | 201 |   |   |   | 253 |   |
| Total      nonaccrual loans                              |   |                        | 13,910  |   |   |   | 130 |   |   |   | 153 |   |   |   | 201 |   |   |   | 256 |   |
| Accruing      loans delinquent 90      days or more |   |                        | — |   |   |   | 99 |   |   |   | 314 |   |   |   | — |   |   |   | 74 |   |
| Total      nonperforming loans                           |   | $                           | 13,910  |   |   | $ | 229 |   |   | $ | 467 |   |   | $ | 201 |   |   | $ | 330 |   |
| Total      nonperforming loans to      total assets |   |                        | 1.54    | % |   |   | .02 | % |   |   | .04 | % |   |   | .02 | % |   |   | .03 | % |

|                                      |   | December      31, 2009       |   |
|-------------------------------------------|--------|------------------------------|--------|
|                                      |   | Allowancefor      LoanLosses |   |   | Percent      of Allowance |   |   | Percent ofTotal Loans |   |
| Commercial      and professional loans    |   | $                            | 1,774  |   |   |   | 15.5 | % |   |   | 11.7 | % |
| Secured      by real estate               |   |                         |   |   |   |   |   |   |   |   |   |   |
| 1 -      4 family                         |   |                         | 651    |   |   |   | 5.7 |   |   |   | 30.1 |   |
| Multi      family                         |   |                         | 30     |   |   |   | 0.3 |   |   |   | 1.7 |   |
| Non-residential                           |   |                         | 8,194  |   |   |   | 71.7 |   |   |   | 56.4 |   |
| Consumer      and other                   |   |                         | 7      |   |   |   | 0.1 |   |   |   | 0.1 |   |
| General      allowance (1)                |   |                         | 760    |   |   |   | 6.7 |   |   |   |   |   |
| Total      allowance for loan losses |   | $                            | 11,416 |   |   |   | 100.0 | % |   |   | 100.0 | % |

----

|                                   |   | December      31, 2008       |   |
|----------------------------------------|--------|------------------------------|--------|
|                                   |   | Allowancefor      LoanLosses |   |   | Percent      ofAllowance |   |   | Percent ofTotal Loans |   |
| Commercial      and professional loans |   | $                            | 898    |   |   |   | 9.7 | % |   |   | 14.6 | % |
| Secured      by real estate            |   |                         |   |   |   |   |   |   |   |   |   |   |
| 1 -      4 family                      |   |                         | 696    |   |   |   | 7.6 |   |   |   | 30.0 |   |
| Multi      family                      |   |                         | 19     |   |   |   | 0.2 |   |   |   | 0.9 |   |
| Non-residential                        |   |                         | 7,512  |   |   |   | 81.6 |   |   |   | 54.4 |   |
| Consumer      and other                |   |                         | 4      |   |   |   | 0.1 |   |   |   | 0.1 |   |
| General      allowance (1)             |   |                         | 75     |   |   |   | 0.8 |   |   |   |   |   |
| Total      allowance for loan losses   |   | $                            | 9,204  |   |   |   | 100.0 | % |   |   | 100.0 | % |

|                                   |   | December 31, 2007  |   |
|----------------------------------------|--------|------------------------------|--------|
|                                   |   | Allowancefor LoanLosses |   |   | Percent ofAllowance |   |   | Percent ofTotal Loans |   |
| Commercial      and professional loans |   | $                            | 929    |   |   |   | 22.2 | % |   |   | 17.4 | % |
| Secured      by real estate            |   |                         |   |   |   |   |   |   |   |   |   |   |
| 1 -      4 family                      |   |                         | 591    |   |   |   | 14.2 |   |   |   | 32.6 |   |
| Multi      family                      |   |                         | 43     |   |   |   | 1.0 |   |   |   | 0.8 |   |
| Non-residential                        |   |                         | 2,597  |   |   |   | 62.1 |   |   |   | 48.8 |   |
| Consumer      and other                |   |                         | 21     |   |   |   | 0.5 |   |   |   | 0.4 |   |
| General      allowance (1)             |   |                         | 3      |   |   |   | 0.0 |   |   |   |   |   |
| Total      allowance for loan losses   |   | $                            | 4,183  |   |   |   | 100.0 | % |   |   | 100.0 | % |

|                             |   | December 31, 2009 |    |
|----------------------------------|--------|-----------------------------|---------|
|                             |   | Within 1 Year     |    |   | 1 to 5 Years |   |   | After 5 Years |   |   |  Total |   |
|                             |   | (In      thousands)         |    |
| Fixed      Rate                  |   |                        |    |   |   |   |   |   |   |   |   |   |
| Commercial      and professional |   | $                           | 7,904   |   |   | $ | 18,561 |   |   | $ | 893 |   |   | $ | 27,358 |   |
| Non-residential                  |   |                        | 25,556  |   |   |   | 7,100 |   |   |   | 47,303 |   |   |   | 79,959 |   |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      fixed rate            |   | $                           | 33,460  |   |   | $ | 25,661 |   |   | $ | 48,196 |   |   | $ | 107,317 |   |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable      Rate             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and professional |   |                        | 13,215  |   |   |   | 7,028 |   |   |   | 3,071 |   |   |   | 23,314 |   |
| Non-residential                  |   |                        | 61,280  |   |   |   | 23,624 |   |   |   | 78,064 |   |   |   | 162,968 |   |
|                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      adjustable rate       |   | $                           | 74,495  |   |   | $ | 30,652 |   |   | $ | 81,135 |   |   | $ | 186,282 |   |
| Total                            |   | $                           | 107,955 |   |   | $ | 56,313 |   |   | $ | 129,331 |   |   | $ | 293,599 |   |

----

|                                                                                        |   | Years      Ended December 31, |    |
|---------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                        |   | 2009                          |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Average      loans outstanding                                                              |   | $                             | 448,394 |   |   | $ | 461,678 |   |   | $ | 389,520 |   |   | $ | 327,210 |   |   | $ | 287,178 |   |
| Allowance      at beginning of      period                                             |   |                          | 9,204   |   |   |   | 4,183 |   |   |   | 3,771 |   |   |   | 3,266 |   |   |   | 2,927 |   |
| Charge-offs:                                                                                |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and other loans                                                        |   |                          | 1,169   |   |   |   | 1 |   |   |   | — |   |   |   | 42 |   |   |   | 26 |   |
| Real      estate loans                                                                      |   |                          | 6,025   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total      loans charged-off                                                                |   |                          | 7,194   |   |   |   | 1 |   |   |   | — |   |   |   | 42 |   |   |   | 26 |   |
| Recoveries:                                                                                 |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      and other loans                                                        |   |                          | 106     |   |   |   | 118 |   |   |   | 57 |   |   |   | 137 |   |   |   | 185 |   |
| Real      estate loans                                                                      |   |                          | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total      loans recovered                                                                  |   |                          | 106     |   |   |   | 118 |   |   |   | 57 |   |   |   | 137 |   |   |   | 185 |   |
| Net      recoveries (charge-offs)                                                      |   |                          | (7,088  | ) |   |   | 117 |   |   |   | 57 |   |   |   | 95 |   |   |   | 159 |   |
| Provision      for loan losses charged      to operating expenses                 |   |                          | 9,300   |   |   |   | 4,904 |   |   |   | 355 |   |   |   | 410 |   |   |   | 180 |   |
|                                                                                        |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      at end of period                                                             |   | $                             | 11,416  |   |   | $ | 9,204 |   |   | $ | 4,183 |   |   | $ | 3,771 |   |   | $ | 3,266 |   |
| Ratio      of net recoveries (charge-offs)      to average loans      outstanding |   |                          | (1.58   | )% |   |   | .03 | % |   |   | .01 | % |   |   | .03 | % |   |   | .06 | % |
| Allowance      as a percent of      total loans                                        |   |                          | 2.65    | % |   |   | 1.97 | % |   |   | 0.96 | % |   |   | 1.01 | % |   |   | 1.05 | % |
| Total      loans at end of      period                                                 |   | $                             | 431,352 |   |   | $ | 467,890 |   |   | $ | 436,319 |   |   | $ | 372,135 |   |   | $ | 310,335 |   |

----

|                      |   | December      31,           |    |
|---------------------------|--------|-----------------------------|---------|
|                      |   | 2009                        |    |   | 2008 |   |   | 2007 |   |
|                      |   | AverageAmount               |    |   | AverageYield |   |   | AverageAmount |   |   | AverageYield |   |   | AverageAmount |   |   | AverageYield |   |
|                      |   | (Dollars      in thousands) |
| Demand      deposits      |   | $                           | 56,544  |   |   |   | — |   |   | $ | 54,452 |   |   |   | — |   |   | $ | 50,647 |   |   |   | — |   |
| NOW      and money market |   |                        | 23,900  |   |   |   | 0.31 | % |   |   | 39,849 |   |   |   | 1.58 | % |   |   | 29,984 |   |   |   | 0.76 | % |
| Savings      deposits     |   |                        | 180,729 |   |   |   | 1.24 |   |   |   | 247,923 |   |   |   | 2.84 |   |   |   | 261,065 |   |   |   | 3.83 |   |
| Time      deposits        |   |                        | 426,892 |   |   |   | 2.32 |   |   |   | 456,803 |   |   |   | 3.79 |   |   |   | 449,754 |   |   |   | 4.83 |   |
| Total      deposits       |   | $                           | 688,065 |   |   |   | 1.78 | % |   | $ | 799,027 |   |   |   | 3.13 | % |   | $ | 791,450 |   |   |   | 4.04 | % |

|                                    |   | December      31,   |    |
|-----------------------------------------|--------|---------------------|---------|
|                                    |   | 2009                |    |   | 2008 |   |
|                                    |   | (In      thousands) |    |
| 3      months or less                   |   | $                   | 51,133  |   |   | $ | 121,288 |   |
| Over      3 months but within 6 months  |   |                | 60,658  |   |   |   | 69,751 |   |
| Over      6 months but within 12 months |   |                | 35,452  |   |   |   | 19,920 |   |
| Over      12 months                     |   |                | 44,078  |   |   |   | 2,619 |   |
| Total                                   |   | $                   | 191,321 |   |   | $ | 213,578 |   |

----

|                                                                                   |   | Years      Ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                                   |   | 2009                          |   |   | 2008 |   |   | 2007 |   |
|                                                                                   |   | (Dollars      in thousands)   |   |
| Securities      sold under repurchase agreements      and federal funds purchased |   |                          |   |   |   |   |   |   |   |
|                                                                                   |   |                          |   |   |   |   |   |   |   |
|     Balance      at year-end                                       |   | $                             | 50,000 |   |   | $ | 59,504 |   |   | $ | 76,842 |   |
|     Average      during the year                                   |   | $                             | 56,436 |   |   | $ | 61,162 |   |   | $ | 40,049 |   |
|     Maximum      month-end balance                                 |   | $                             | 57,000 |   |   | $ | 72,324 |   |   | $ | 76,842 |   |
|     Weighted      average rate during the year                     |   |                          | 4.08   | % |   |   | 3.83 | % |   |   | 4.93 | % |
|     Rate      at December 31                                       |   |                          | 4.02   | % |   |   | 3.76 | % |   |   | 4.65 | % |

----

----

|                           |   | Expiration      By Period |   |
|--------------------------------|--------|---------------------------|--------|
|                           |   | Total                     |   |   | LessThan1 Year |   |   | 1-3Years |   |   | 3-5Years |   |   | MoreThan5 Years |   |
|                           |   | (In      thousands)       |   |
| Lines      of Credit           |   | $                         | 7,859  |   |   | $ | 5,521 |   |   | $ | 28 |   |   | $ | 54 |   |   | $ | 2,256 |   |
| Standby      Letters of Credit |   |                      | 1,117  |   |   |   | 1,117 |   |   |   | 00 |   |   |   | 00 |   |   |   | 00 |   |
| Loan      Commitments          |   |                      | 1,292  |   |   |   | 1,292 |   |   |   | 00 |   |   |   | 00 |   |   |   | 00 |   |
|                           |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                          |   | $                         | 10,268 |   |   | $ | 7,930 |   |   | $ | 28 |   |   | $ | 54 |   |   | $ | 2,256 |   |

----

|                               |   | Payments      Due By Periods |    |
|------------------------------------|--------|------------------------------|---------|
|                               |   | Total                        |    |   | LessThan1 Year |   |   | 1-3Years |   |   | 3-5Years |   |   | MoreThan5 Years |   |
|                               |   | (In      thousands)          |    |
| Borrowings                         |   | $                            | 31,004  |   |   | $ | 16,000 |   |   | $ | 15,004 |   |   | $ | — |   |   | $ | — |   |
| Operating      Leases              |   |                         | 4,385   |   |   |   | 1,284 |   |   |   | 2,252 |   |   |   | 623 |   |   |   | 226 |   |
| Time      Deposits                 |   |                         | 427,777 |   |   |   | 343,279 |   |   |   | 82,259 |   |   |   | 2,239 |   |   |   | — |   |
| Total      Contractual Obligations |   | $                            | 463,166 |   |   | $ | 360,563 |   |   | $ | 99,515 |   |   | $ | 2,862 |   |   | $ | 226 |   |

----

----

|                                               |   | Berkshire Bancorp Inc.Interest Rate Sensitivity Gap at December 31, 2009(in thousands, except for percentages) |    |
|----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                               |   | 3 Monthsor Less                                                                                                                                                       |    |   | 3 Through12 Months |   |   | 1 Through3 Years |   |   | Over3 Years |   |   | Total |   |   | FairValue |   |
| Federal      funds sold                            |   |                                                                                                                                                                            | — |   |   |   |   |   |   |   |   |   |   |   |   | — |   |   |   |   |
| (Rate)                                             |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits in banks            |   |                                                                                                                                                                            | 55,376  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 55,376 |   |   |   | 55,376 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 0.43    | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 0.43 | % |   |   |   |   |
| Loans      (1)(2)                                  |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustable      rate loans                         |   |                                                                                                                                                                            | 103,268 |   |   |   | 17,904 |   |   |   | 60,091 |   |   |   | 27,660 |   |   |   | 208,923 |   |   |   | 204,030 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 5.09    | % |   |   | 6.03 | % |   |   | 7.02 | % |   |   | 6.58 | % |   |   | 5.91 | % |   |   |   |   |
| Fixed      rate loans                              |   |                                                                                                                                                                            | 12,990  |   |   |   | 20,690 |   |   |   | 27,852 |   |   |   | 160,897 |   |   |   | 222,429 |   |   |   | 224,936 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 5.15    | % |   |   | 6.74 | % |   |   | 7.33 | % |   |   | 6.25 | % |   |   | 6.35 | % |   |   |   |   |
| Total      loans                                   |   |                                                                                                                                                                            | 116,258 |   |   |   | 38,594.00 |   |   |   | 87,943 |   |   |   | 188,557 |   |   |   | 431,352 |   |   |   | 419,918 |   |
| Investments      (3)(4)                            |   |                                                                                                                                                                            | 121,651 |   |   |   | 22,777 |   |   |   | 36,656 |   |   |   | 194,996 |   |   |   | 376,080 |   |   |   | 357,815 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 4.69    | % |   |   | 2.42 | % |   |   | 1.67 | % |   |   | 5.49 | % |   |   | 4.67 | % |   |   |   |   |
| Total      rate-sensitive assets                   |   |                                                                                                                                                                            | 293,285 |   |   |   | 61,371.00 |   |   |   | 124,599 |   |   |   | 383,553 |   |   |   | 862,808 |   |   |   |   |   |
| Deposit      accounts (5)                          |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and NOW                               |   |                                                                                                                                                                            | 213,366 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 213,366 |   |   |   | 213,366 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 0.94    | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 0.94 | % |   |   |   |   |
| Money      market                                  |   |                                                                                                                                                                            | 9,431   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 9,431 |   |   |   | 9,431 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 0.43    | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 0.43 | % |   |   |   |   |
| Time      Deposits                                 |   |                                                                                                                                                                            | 115,942 |   |   |   | 227,336 |   |   |   | 82,259 |   |   |   | 2,240 |   |   |   | 427,777 |   |   |   | 429,449 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 1.56    | % |   |   | 1.65 | % |   |   | 2.27 | % |   |   | 1.80 | % |   |   | 1.75 | % |   |   |   |   |
| Total      deposit accounts                        |   |                                                                                                                                                                            | 338,739 |   |   |   | 227,336.00 |   |   |   | 82,259 |   |   |   | 2,240 |   |   |   | 650,574 |   |   |   |   |   |
| Repurchase      Agreements                         |   |                                                                                                                                                                            | — |   |   |   | 5,000 |   |   |   | 45,000 |   |   |   | — |   |   |   | 50,000 |   |   |   | 49,842 |   |
| (Rate)                                             |   |                                                                                                                                                                            |    |   |   |   | 4.68 | % |   |   | 3.89 | % |   |   |   |   |   |   | 3.97 | % |   |   |   |   |
| Other      borrowings                              |   |                                                                                                                                                                            | 2,000   |   |   |   | 14,000 |   |   |   | 15,004 |   |   |   | 22,681 |   |   |   | 53,685 |   |   |   | 54,437 |   |
| (Rate)                                             |   |                                                                                                                                                                            | 5.95    | % |   |   | 5.97 | % |   |   | 3.85 | % |   |   | 2.72 | % |   |   | 4.00 | % |   |   |   |   |
|                                               |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      rate-sensitive liabilities              |   |                                                                                                                                                                            | 340,739 |   |   |   | 246,336.00 |   |   |   | 142,263 |   |   |   | 24,921 |   |   |   | 754,259 |   |   |   |   |   |
|                                               |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate caps                            |   |                                                                                                                                                                            | 40,000  |   |   |   |   |   |   |   |   |   |   |   | (40,000 | ) |   |   |   |   |   |   |   |   |
| Gap      (repricing differences)                   |   |                                                                                                                                                                            | (87,454 | ) |   |   | (184,965 | ) |   |   | (17,664 | ) |   |   | 398,632 |   |   |   | 108,549 |   |   |   |   |   |
|                                               |   |                                                                                                                                                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative      Gap                                |   |                                                                                                                                                                            | (87,454 | ) |   |   | (272,419 | ) |   |   | (290,083 | ) |   |   | 108,549 |   |   |   |   |   |   |   |   |   |
| Cumulative      Gap to Total Rate Sensitive Assets |   |                                                                                                                                                                            | (10.14  | )% |   |   | (31.57 | )% |   |   | (33.62 | )% |   |   | 12.58 | % |   |   |   |   |   |   |   |   |

----

----

----

----

----

----

|                                                                                                                                                                                                                                                                                                                                                                                   |   | December      31,2009 |    |   | December      31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                                                                                 |   |                  |    |   |                  |   |
| Cash      and due from banks                                                                                                                                                                                                                                                                                                                                                           |   | $                     | 5,427   |   |                  | $      | 3,290 |   |
| Interest      bearing deposits                                                                                                                                                                                                                                                                                                                                                         |   |                  | 55,376  |   |                  |   | 69,097 |   |
| Federal      funds sold                                                                                                                                                                                                                                                                                                                                                                |   |                  | — |   |                  |   | 30,000 |   |
| Total      cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                   |   |                  | 60,803  |   |                  |   | 102,387 |   |
| Investment      Securities:                                                                                                                                                                                                                                                                                                                                                            |   |                  |    |   |                  |   |   |   |
|  Available-for-sale                                                                                                                                                                                                                                                                                                                                                               |   |                  | 357,478 |   |                  |   | 297,536 |   |
|  Held-to-maturity,      fair value of $337 in      2009 and $362 in 2008                                                                                                                                                                                                                                                                                                     |   |                  | 340     |   |                  |   | 360 |   |
| Total      investment securities                                                                                                                                                                                                                                                                                                                                                       |   |                  | 357,818 |   |                  |   | 297,896 |   |
| Loans,      net of unearned income                                                                                                                                                                                                                                                                                                                                                     |   |                  | 430,349 |   |                  |   | 466,753 |   |
|  Less:      allowance for loan losses                                                                                                                                                                                                                                                                                                                                             |   |                  | (11,416 | )      |                  |   | (9,204 | ) |
| Net      loans                                                                                                                                                                                                                                                                                                                                                                         |   |                  | 418,933 |   |                  |   | 457,549 |   |
| Accrued      interest receivable                                                                                                                                                                                                                                                                                                                                                       |   |                  | 4,253   |   |                  |   | 5,866 |   |
| Premises      and equipment, net                                                                                                                                                                                                                                                                                                                                                       |   |                  | 8,532   |   |                  |   | 8,844 |   |
| Goodwill,      net                                                                                                                                                                                                                                                                                                                                                                     |   |                  | 18,549  |   |                  |   | 18,549 |   |
| Trade      date securities receivable                                                                                                                                                                                                                                                                                                                                                  |   |                  | — |   |                  |   | 13,431 |   |
| Other      assets                                                                                                                                                                                                                                                                                                                                                                      |   |                  | 40,379  |   |                  |   | 39,190 |   |
| Total      assets                                                                                                                                                                                                                                                                                                                                                                      |   | $                     | 909,267 |   |                  | $      | 943,712 |   |
|                                                                                                                                                                                                                                                                                                                                                                                   |   |                  |    |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                                                                                              |   |                  |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                              |   |                  |    |   |                  |   |   |   |
|  Non-interest      bearing                                                                                                                                                                                                                                                                                                                                                        |   | $                     | 62,870  |   |                  | $      | 51,312 |   |
|  Interest      bearing                                                                                                                                                                                                                                                                                                                                                            |   |                  | 650,574 |   |                  |   | 674,797 |   |
| Total      deposits                                                                                                                                                                                                                                                                                                                                                                    |   |                  | 713,444 |   |                  |   | 726,109 |   |
| Securities      sold under agreements to repurchase                                                                                                                                                                                                                                                                                                                                    |   |                  | 50,000  |   |                  |   | 59,504 |   |
| Borrowings                                                                                                                                                                                                                                                                                                                                                                             |   |                  | 31,004  |   |                  |   | 45,272 |   |
| Subordinated      debt                                                                                                                                                                                                                                                                                                                                                                 |   |                  | 22,681  |   |                  |   | 22,681 |   |
| Accrued      interest payable                                                                                                                                                                                                                                                                                                                                                          |   |                  | 3,578   |   |                  |   | 6,522 |   |
| Other      liabilities                                                                                                                                                                                                                                                                                                                                                                 |   |                  | 3,324   |   |                  |   | 17,672 |   |
| Total      liabilities                                                                                                                                                                                                                                                                                                                                                                 |   |                  | 824,031 |   |                  |   | 877,760 |   |
|                                                                                                                                                                                                                                                                                                                                                                                   |   |                  |    |   |                  |   |   |   |
| Stockholders'      equity                                                                                                                                                                                                                                                                                                                                                              |   |                  |    |   |                  |   |   |   |
|  Preferred      stock - $.01 Par value:  Authorized   —      2,000,000 shares  Issued       —    60,000      shares  Outstanding  —   December      31, 2009, 60,000 shares   December      31, 2008, 60,000 shares |   |                  | 1       |   |                  |   | 1 |   |
|  Common      stock - $.10 par value  Authorized      — 25,000,000 shares  Issued     —  7,698,285      shares  Outstanding      —   December      31, 2009, 7,054,183 shares   December      31, 2008, 7,054,183 shares                                          |   |                  | 770     |   |                  |   | 770 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                                                        |   |                  | 150,985 |   |                  |   | 150,985 |   |
| Accumulated      Deficit                                                                                                                                                                                                                                                                                                                                                               |   |                  | (46,833 | )      |                  |   | (39,795 | ) |
| Accumulated      other comprehensive loss, net                                                                                                                                                                                                                                                                                                                                         |   |                  | (13,276 | )      |                  |   | (39,598 | ) |
| Treasury      Stock at cost December      31, 2009 and 2008, 644,102 shares                                                                                                                                                                                                                                                                                                            |   |                  | (6,411  | )      |                  |   | (6,411 | ) |
| Total      stockholders' equity                                                                                                                                                                                                                                                                                                                                                        |   |                  | 85,236  |   |                  |   | 65,952 |   |
| Total      liabilities and stockholders' equity                                                                                                                                                                                                                                                                                                                                        |   | $                     | 909,267 |   |                  | $      | 943,712 |   |

----

|                                                                                       |   | For      The Years Ended December 31, |    |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                       |   | 2009                                  |    |   | 2008 |   |   | 2007 |   |
| INTEREST      INCOME                                                                       |   |                                  |    |   |   |   |   |   |   |
| Federal      funds sold and interest bearing deposits                                      |   | $                                     | 639     |   |   | $ | 1,380 |   |   | $ | 1,553 |   |
| Investment      securities                                                                 |   |                                  | 15,506  |   |   |   | 25,456 |   |   |   | 27,178 |   |
| Loans,      including related fees                                                         |   |                                  | 29,777  |   |   |   | 32,754 |   |   |   | 29,804 |   |
| Total      interest income                                                                 |   |                                  | 45,922  |   |   |   | 59,590 |   |   |   | 58,535 |   |
| INTEREST      EXPENSE                                                                      |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                   |   |                                  | 12,237  |   |   |   | 24,968 |   |   |   | 32,083 |   |
| Securities      sold under agreements to repurchase                                        |   |                                  | 2,305   |   |   |   | 2,344 |   |   |   | 1,976 |   |
| Borrowings      and subordinated debt                                                      |   |                                  | 2,561   |   |   |   | 3,211 |   |   |   | 3,734 |   |
| Total      interest expense                                                                |   |                                  | 17,103  |   |   |   | 30,523 |   |   |   | 37,793 |   |
| Net      interest income                                                                   |   |                                  | 28,819  |   |   |   | 29,067 |   |   |   | 20,742 |   |
| PROVISION      FOR LOAN LOSSES                                                             |   |                                  | 9,300   |   |   |   | 4,904 |   |   |   | 355 |   |
| Net      interest income after provision      for loan losses                         |   |                                  | 19,519  |   |   |   | 24,163 |   |   |   | 20,387 |   |
| NON-INTEREST      INCOME                                                                   |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Service      charges on deposit accounts                                                   |   |                                  | 490     |   |   |   | 585 |   |   |   | 658 |   |
| Investment      securities gains (losses)                                                  |   |                                  | (860    | ) |   |   | (685 | ) |   |   | 86 |   |
| Other      income                                                                          |   |                                  | 567     |   |   |   | 858 |   |   |   | 915 |   |
| Total      non-interest income                                                             |   |                                  | 197     |   |   |   | 758 |   |   |   | 1,659 |   |
| NON-INTEREST      EXPENSE                                                                  |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total      other than temporary impairment ("OTTI") charges on    securities               |   |                                  | 23,748  |   |   |   | 94,346 |   |   |   | — |   |
| Less      non-credit portion of OTTI recorded in Accumulated other comprehensive      loss |   |                                  | 6,313   |   |   |   | — |   |   |   | — |   |
| Net      OTTI recognized in earnings                                                       |   |                                  | 17,435  |   |   |   | 94,346 |   |   |   | — |   |
| Salaries      and employee benefits                                                        |   |                                  | 9,517   |   |   |   | 9,366 |   |   |   | 8,971 |   |
| Net      occupancy expense                                                                 |   |                                  | 2,150   |   |   |   | 2,079 |   |   |   | 2,050 |   |
| Equipment      expense                                                                     |   |                                  | 378     |   |   |   | 386 |   |   |   | 80 |   |
| FDIC      assessment                                                                       |   |                                  | 1,928   |   |   |   | 1,082 |   |   |   | 86 |   |
| Data      processing expense                                                               |   |                                  | 452     |   |   |   | 442 |   |   |   | 417 |   |
| Other                                                                                      |   |                                  | 3,311   |   |   |   | 2,915 |   |   |   | 2,714 |   |
| Total      non-interest expense                                                            |   |                                  | 35,171  |   |   |   | 110,616 |   |   |   | 14,318 |   |
| Income      (loss) before provision for income taxes                                       |   |                                  | (15,455 | ) |   |   | (85,695 | ) |   |   | 7,728 |   |
| Provision      (benefit) for income taxes                                                  |   |                                  | (13,217 | ) |   |   | (5,790 | ) |   |   | 2,374 |   |
| Net      income (loss)                                                                     |   | $                                     | (2,238  | ) |   | $ | (79,905 | ) |   | $ | 5,354 |   |
| Dividends      on preferred stock                                                          |   |                                  | 4,800   |   |   |   | — |   |   |   | — |   |
| Income      (loss) allocated to common stockholders                                        |   | $                                     | (7,038  | ) |   | $ | (79,905 | ) |   | $ | 5,354 |   |
| Net      income (loss) per common share:                                                   |   |                                  |    |   |   |   |   |   |   |   |   |   |
|  Basic                                                                                |   | $                                     | (1.00   | ) |   | $ | (11.45 | ) |   | $ | .77 |   |
|  Diluted                                                                              |   | $                                     | (1.00   | ) |   | $ | (11.45 | ) |   | $ | .76 |   |
| Number      of shares used to compute net      income (loss) per common share:        |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Basic                                                                                      |   |                                  | 7,054   |   |   |   | 7,054 |   |   |   | 6,987 |   |
| Diluted                                                                                    |   |                                  | 7,054   |   |   |   | 7,054 |   |   |   | 7,005 |   |
| Dividends      per common share                                                            |   | $                                     | — |   |   | $ | .20 |   |   | $ | .18 |   |

----

|                                                                                             |   | CommonShares |   |   | Preferred Shares |   |   | CommonStockPar value |   |   | PreferredStockPar value |   |   | Additionalpaid-in capital |   |   | Accumulatedothercomprehensive (loss) net |   |    | RetainedEarnings(Accumulated deficit) |   |   | Treasury stock |   |   | Comprehensiveincome (loss) |    |   | Totalstockholders' equity |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|-----------------------|--------|--------|---------------------------|--------|--------|------------------------------|--------|--------|--------------------------------|--------|--------|----------------------------------------------------|--------|---------|--------------------------------------------|--------|--------|---------------------|--------|--------|---------------------------------|---------|--------|--------------------------------|--------|
| Balance      at January 1, 2007                                                                  |   |         | 7,698  |   |                  |   |   |                      | $      | 770    |                         |   | $      | —                        |   |   | $                                                  | 90,659 |    |                                       | $      | (4,772 | )                   |   | $      | 38,250                          |    |   | $                              | (8,165 | ) |   |   |   |   | $ | 116,742 |   |
| Net      income                                                                                  |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   | 5,354                           |    |   |                           |   |   |   | $ | 5,354 |   |   |   | 5,354 |   |
| Exercise      of stock options                                                                   |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               | (32    | )       |                                       |   |   |                |   |   |                            |    |   |                           | 1,754  |   |   |   |   |   |   |   | 1,722 |   |
| Tax      benefit from exercise of      stock options                                        |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               | 359    |    |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   |   |   |   |   |   | 359 |   |
| Other      comprehensive income net of      reclassification adjustment and      taxes |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   | 1,333  |                |   |   |                            |    |   |                           |   |   |   |   | 1,333 |   |   |   | 1,333 |   |
| Comprehensive      income                                                                        |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   | $ | 6,687 |   |   |   |   |   |
| Cash      dividends                                                                              |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   | (1,252                          | )       |   |                           |   |   |   |   |   |   |   |   | (1,252 | ) |
| Balance      at December 31, 2007                                                                |   |         | 7,698  |   |                  |   |   |                      |   | 770    |                         |   |   |                           |   |   |                                               | 90,986 |    |                                       |   | (3,439 | )                   |   |   | 42,352                          |    |   |                           | (6,411 | ) |   |   |   |   |   |   | 124,258 |   |
| Net      loss                                                                                    |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   | (79,905                         | )       |   |                           |   |   |   |   | (79,905 | ) |   |   | (79,905 | ) |
| Issuance      of Series A Preferred Stock                                                        |   |         |   |   |                  |   | 60     |                      |   |   |                         |   |   |                           | 1      |   |                                               |   | 59,999  |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   |   |   |   |   |   |   | 60,000 |   |
| Other      comprehensive loss net of      reclassification adjustment and      taxes   |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   | (36,159             | )      |   |                            |    |   |                           |   |   |   |   |   | (36,159 | ) |   |   | (36,159 | ) |
| Comprehensive      loss                                                                          |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   |   | $ | (116,064 | ) |   |   |   |   |
| Cash      dividends - Preferred Stock                                                            |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            | (837    | )      |                           |   |   |   |   |   |   |   |   |   | (837 | ) |
| Cash      dividends - Common Stock                                                               |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            | (1,405  | )      |                           |   |   |   |   |   |   |   |   |   | (1,405 | ) |
| Balance      at December 31, 2008                                                                |   |         | 7,698  |   |                  |   | 60     |                      |   | $      | 770                          |   |   | $                              | 1      |   |                                               | $      | 150,985 |                                       |   | $      | (39,598             | )      |   | $                               | (39,795 | )      |                           | $      | (6,411 | ) |   |   |   |   |   | $ | 65,952 |   |
| Net      loss                                                                                    |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            | (2,238  | )      |                           |   |   |   |   |   | (2,238 | ) |   |   | (2,238 | ) |
| Other      comprehensive income net of taxes                                                     |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   | 26,322              |   |   |                            |    |   |                           |   |   |   |   |   | 26,322 |   |   |   | 26,322 |   |
| Comprehensive      income                                                                        |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   |   | $ | 24,084 |   |   |   |   |   |
| Cash      dividends - Preferred Stock                                                            |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            | (4,800  | )      |                           |   |   |   |   |   |   |   |   |   | (4,800 | ) |
|                                                                                             |   |         |   |   |                  |   |   |                      |   |   |                         |   |   |                           |   |   |                                               |   |    |                                       |   |   |                |   |   |                            |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2009                                                                |   |         | 7,698  |   |                  |   | 60     |                      |   | $      | 770                          |   |   | $                              | 1      |   |                                               | $      | 150,985 |                                       |   | $      | (13,276             | )      |   | $                               | (46,833 | )      |                           | $      | (6,411 | ) |   |   |   |   |   | $ | 85,236 |   |

----

|                                                                                                                   |   | For      The Years Ended December 31, |     |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|----------|
|                                                                                                                   |   | 2009                                  |     |   | 2008 |   |   | 2007 |   |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                             |   |                                  |     |   |   |   |   |   |   |
| Net      (loss) income                                                                                                 |   | $                                     | (2,238   | ) |   | $ | (79,905 | ) |   | $ | 5,354 |   |
| Adjustments      to reconcile net (loss) income to      net cash (used in) provided by operating activities: |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Realized      losses (gains) on investment securities                                                                  |   |                                  | 860      |   |   |   | 685 |   |   |   | (86 | ) |
| Other      than temporary impairment charges on      securities                                                   |   |                                  | 17,435   |   |   |   | 94,346 |   |   |   | — |   |
| Net      amortization (accretion) of premiums of investment      securities                                       |   |                                  | 721      |   |   |   | (225 | ) |   |   | (1,339 | ) |
| Depreciation      and amortization                                                                                     |   |                                  | 533      |   |   |   | 604 |   |   |   | 739 |   |
| Provision      for loan losses                                                                                         |   |                                  | 9,300    |   |   |   | 4,904 |   |   |   | 355 |   |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| CHANGES      IN ASSETS AND LIABILITIES:                                                                                |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Decrease      (increase) in accrued interest      receivable                                                      |   |                                  | 1,613    |   |   |   | 2,757 |   |   |   | (2,205 | ) |
| Decrease      (increase) in other assets                                                                               |   |                                  | 11,015   |   |   |   | (45,767 | ) |   |   | 1,184 |   |
| (Decrease)      increase in accrued interest payable      and other liabilities                                   |   |                                  | (17,292  | ) |   |   | 12,280 |   |   |   | (439 | ) |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) operating      activities                                                     |   |                                  | 21,947   |   |   |   | (10,321 | ) |   |   | 3,563 |   |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                             |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Investment      securities available for sale                                                                          |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Purchases                                                                                                              |   |                                  | (295,440 | ) |   |   | (266,209 | ) |   |   | (237,820 | ) |
| Sales,      maturities and calls                                                                                       |   |                                  | 244,051  |   |   |   | 436,647 |   |   |   | 156,360 |   |
| Investment      securities held to maturity Maturities                                                            |   |                                  | —  |   |   |   | 35 |   |   |   | 93 |   |
| Net      decrease (increase) in loans                                                                                  |   |                                  | 29,316   |   |   |   | (31,851 | ) |   |   | (63,806 | ) |
| Acquisition      of premises and equipment                                                                             |   |                                  | (221     | ) |   |   | (86 | ) |   |   | (763 | ) |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by investing      activities                                                     |   |                                  | (22,294  | ) |   |   | 138,536 |   |   |   | (145,936 | ) |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                             |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in non interest bearing      deposits                                                |   |                                  | 11,558   |   |   |   | (2,493 | ) |   |   | 4,387 |   |
| Net      (decrease) increase in interest bearing      deposits                                                    |   |                                  | (24,223  | ) |   |   | (124,613 | ) |   |   | 167,339 |   |
| (Decrease)      increase in securities sold under      agreements to repurchase                                   |   |                                  | (9,504   | ) |   |   | (17,338 | ) |   |   | 14,190 |   |
| Proceeds      from borrowings                                                                                          |   |                                  | —  |   |   |   | 25,000 |   |   |   | 19,000 |   |
| Repayment      of borrowings                                                                                           |   |                                  | (14,268  | ) |   |   | (11,335 | ) |   |   | (40,131 | ) |
| Proceeds      from issuance of Series      A preferred stock, net                                                 |   |                                  | —  |   |   |   | 60,000 |   |   |   | — |   |
| Proceeds      from exercise of common stock      options                                                          |   |                                  | —  |   |   |   | — |   |   |   | 1,363 |   |
| Tax      benefits from exercise of common      stock options                                                      |   |                                  | —  |   |   |   | — |   |   |   | 359 |   |
| Dividends      paid on preferred stock                                                                                 |   |                                  | (4,800   | ) |   |   | (837 | ) |   |   | — |   |
| Dividends      paid on common stock                                                                                    |   |                                  | —  |   |   |   | (1,405 | ) |   |   | (1,252 | ) |
| Net      cash (used in) provided by financing      activities                                                     |   |                                  | (41,237  | ) |   |   | (73,021 | ) |   |   | 165,255 |   |
| Net      (decrease) increase in cash and cash      equivalents                                                         |   |                                  | (41,584  | ) |   |   | 55,194 |   |   |   | 22,882 |   |
| Cash      and cash equivalents at beginning      of year                                                          |   | $                                     | 102,387  |   |   | $ | 47,193 |   |   | $ | 24,311 |   |
| Cash      and cash equivalents at end      of year                                                                |   | $                                     | 60,803   |   |   | $ | 102,387 |   |   | $ | 47,193 |   |
|                                                                                                                   |   |                                  |     |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW      INFORMATION:                                                      |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      used to pay interest                                                                                         |   | $                                     | 20,047   |   |   | $ | 33,090 |   |   | $ | 36,814 |   |
| Cash      used to pay income taxes, net      of refunds                                                           |   | $                                     | 5,894    |   |   | $ | 1,280 |   |   | $ | 3,575 |   |
| SUPPLEMENTAL      DISCLOSURES OF NON-CASH      INVESTING ACTIVITIES                                               |   |                                  |     |   |   |   |   |   |   |   |   |   |
| Trade      date securities receivable                                                                                  |   | $                                     | —  |   |   | $ | 13,431 |   |   | $ | — |   |

----

----

| 1. | Basis of Financial Statement      Presentation |
|----|------------------------------------------------|

----

| 2. | Investment      Securities |
|----|----------------------------|

----

| 3. | Loans and Allowance for Loan      Losses |
|----|------------------------------------------|

----

----

| 4. | Interest Rate      Swap |
|----|-------------------------|

| 5. | Bank Premises and      Equipment |
|----|----------------------------------|

| 6. | Other Real Estate      Owned |
|----|------------------------------|

----

| 7. | Goodwill |
|----|----------|

| 8. | Income    Taxes |
|----|-----------------|

| 9. | Net Income (Loss) Per      Share |
|----|----------------------------------|

| 10. | Stock Based      Compensation |
|-----|-------------------------------|

| 11. | Cash      Equivalents |
|-----|-----------------------|

----

| 12. | Restrictions on Cash and Due      From Banks |
|-----|----------------------------------------------|

| 13. | Federal Home Loan Bank      Stock |
|-----|-----------------------------------|

| 14. | Comprehensive      Income |
|-----|---------------------------|

|                                                                                      |   | Year Ended December 31, 2009 |    |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                      |   | Before taxamount                            |    |   | Tax(expense)benefit |   |   | Net of taxAmount |   |
| Unrealized      gains (losses) on      investment securities:                        |   |                                             |    |   |   |   |   |   |   |
| Unrealized      holding gains (losses) arising      during period                    |   | $                                                | 24,565  |   |   | $ | (8,374 | ) |   | $ | 15,181 |   |
| Less      reclassification adjustment for gains      (losses) realized in net income |   |                                             | (18,295 | ) |   |   |  7,318 |   |   |   | (10,977 | ) |
| Unrealized      gain (loss) on investment securities                                      |   |                                             | 42,860  |   |   |   | (16,702 | ) |   |   | 26,158 |   |
| Change      in minimum pension liability                                                  |   |                                             | 164     |   |   |   | — |   |   |   | 164 |   |
| Other      comprehensive income, net                                                      |   | $                                                | 43,761  |   |   | $ | (16,702 | ) |   | $ | 26,322 |   |

----

|                                                                              |   | Year Ended December 31, 2008 |    |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                              |   | Before taxamount                            |    |   | Tax(expense)benefit |   |   | Net of taxAmount |   |
| Unrealized      gains (losses) on      investment securities:                |   |                                             |    |   |   |   |   |   |   |
| Unrealized      holding losses arising      during period                    |   | $                                                | (52,252 | ) |   | $ | 20,514 |   |   | $ | (31,738 | ) |
| Less      reclassification adjustment for losses      realized in net income |   |                                             | (5,361  | ) |   |   |  2,144 |   |   |   | (3,217 | ) |
| Unrealized      loss on investment securities                                     |   |                                             | (57,613 | ) |   |   | 22,658 |   |   |   | (34,955 | ) |
| Change      in minimum pension liability                                          |   |                                             | (1,204  | ) |   |   | — |   |   |   | (1,204 | ) |
| Other      comprehensive loss, net                                                |   | $                                                | (58,817 | ) |   | $ | 22,658 |   |   | $ | (36,159 | ) |

|                                                                             |   | Year Ended December 31, 2007 |     |
|----------------------------------------------------------------------------------|--------|--------------------------------------------------|----------|
|                                                                             |   | Before taxamount                            |     |   | Tax(expense)benefit |   |   | Net of taxAmount |   |
| Unrealized      gains (losses) on      investment securities:               |   |                                             |     |   |   |   |   |   |   |
| Unrealized      holding gains arising      during period                    |   | $                                                | 2,278    |   |   | $ | (964 | ) |   | $ | 1,314 |   |
| Less      reclassification adjustment for gains      realized in net income |   |                                             |  86 |   |   |   | (34 | ) |   |   |  52 |   |
| Unrealized      gain on investment securities                                    |   |                                             | 2,192    |   |   |   | (930 | ) |   |   | 1,262 |   |
| Change      in minimum pension liability                                         |   |                                             | 71       |   |   |   | — |   |   |   | 71 |   |
| Other      comprehensive income, net                                             |   | $                                                | 2,263    |   |   | $ | (930 | ) |   | $ | 1,333 |   |

----

|                          |   | December 31, 2009 |   |
|-------------------------------|--------|-----------------------------|--------|
|                          |   | AmortizedCost               |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                          |   |                        |   |   | (In      thousands) |   |   |   |   |
|                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies |   | $                           | 340    |   |   | $ | — |   |   | $ | (3 | ) |   | $ | 337 |   |

|                          |   | December 31, 2008 |   |
|-------------------------------|--------|-----------------------------|--------|
|                          |   | AmortizedCost               |   |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                          |   |                        |   |   | (In      thousands) |   |   |   |   |
|                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies |   | $                           | 360    |   |   | $ | 3 |   |   | $ | (1 | ) |   | $ | 362 |   |

|                                                        |   | December 31, 2009 |        |
|-------------------------------------------------------------|--------|-----------------------------|-------------|
|                                                        |   | AmortizedCost               |        |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                                        |   |                        |        |   | (In      thousands) |   |   |   |   |
| U.S.      Treasury Notes                                    |   | $                           | 50,236      |   |   | $ | 35 |   |   | $ | (65 | ) |   | $ | 50,206 |   |
| U.S.      Government Agencies                               |   |                        | 76,259      |   |   |   | 59 |   |   |   | (793 | ) |   |   | 75,525 |   |
| Mortgage-backed      securities                             |   |                        | 134,810     |   |   |   | 1,943 |   |   |   | (710 | ) |   |   | 136,043 |   |
| Corporate      notes                                        |   |                        | 19,029      |   |   |   | 1,011 |   |   |   | (2,311 | ) |   |   | 17,729 |   |
| Single      Issuer Trust Preferred CDO                      |   |                        | 1,021       |   |   |   | — |   |   |   | — |   |   |   | 1,021 |   |
| Pooled      Trust Preferred CDO                             |   |                        | 6,463       |   |   |   | — |   |   |   | (6,313 | ) |   |   | 150 |   |
| Municipal      securities                                   |   |                        | 1,973       |   |   |   | 198 |   |   |   | — |   |   |   | 2,171 |   |
| Auction      rate securities                                |   |                        | 78,895      |   |   |   | — |   |   |   | (11,953 | ) |   |   | 66,942 |   |
| Marketable      equity  securities      and other |   |                        |  7,648 |   |   |   |  69 |   |   |   | (26 | ) |   |   |  7,691 |   |
| Totals                                                      |   | $                           | 376,334     |   |   | $ | 3,315 |   |   | $ | (22,171 | ) |   | $ | 357,478 |   |

----

|                                                  |   | December 31, 2008 |         |
|-------------------------------------------------------|--------|-----------------------------|--------------|
|                                                  |   | AmortizedCost               |         |   | Grossunrealizedgains |   |   | Grossunrealizedlosses |   |   | Fairvalue |   |
|                                                  |   |                        |         |   | (In      thousands) |   |   |   |   |
| U.S.      Government Agencies                         |   | $                           | 91,429       |   |   | $ | 72 |   |   | $ | (380 | ) |   | $ | 91,121 |   |
| Mortgage-backed      securities                       |   |                        | 83,882       |   |   |   | 1,037 |   |   |   | (1,061 | ) |   |   | 83,858 |   |
| Corporate      notes                                  |   |                        | 51,150       |   |   |   | 112 |   |   |   | (13,138 | ) |   |   | 38,124 |   |
| Single      Issuer Trust Preferred CDO                |   |                        | 3,000        |   |   |   | — |   |   |   | (1,794 | ) |   |   | 1,206 |   |
| Pooled      Trust Preferred CDO                       |   |                        | 10,000       |   |   |   | — |   |   |   | (7,006 | ) |   |   | 2,994 |   |
| Municipal      securities                             |   |                        | 1,973        |   |   |   | 125 |   |   |   | (495 | ) |   |   | 1,603 |   |
| Auction      rate securities                          |   |                        | 101,110      |   |   |   | — |   |   |   | (38,030 | ) |   |   | 63,080 |   |
| Marketable      equity securities      and other |   |                        |  16,708 |   |   |   | 80 |   |   |   | (1,238 | ) |   |   | 15,550 |   |
| Totals                                                |   | $                           | 359,252      |   |   | $ | 1,426 |   |   | $ | (63,142 | ) |   | $ | 297,536 |   |

|   | *The      length of time and the extent to which the market value has been less than      cost; |
|--------|-------------------------------------------------------------------------------------------------|

|   | *The      financial condition of the issuer of the security as well as the near and      long-term prospect for the issuer; |
|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | *The      rating of the security by a national rating  agency; |
|--------|----------------------------------------------------------------|

|   | *Historical      volatility and movement in the fair market value of the security;      and |
|--------|---------------------------------------------------------------------------------------------|

|   | *Adverse      conditions relative to the security, issuer or  industry. |
|--------|-------------------------------------------------------------------------|

|                                                         |   | 2009                |    |   | 2008            |   |
|--------------------------------------------------------------|--------|---------------------|---------|--------|-----------------|--------|
|                                                         |   | AmortizedCost       |    |   | Fair Value |   |   | AmortizedCost |   |   | Fair Value |   |
|                                                         |   | (In thousands) |    |
| Federal      National Mortgage Association Preferred Shares  |   | $                   | — |   |            | $      | — |   |   | $ | 2,223 |   |   | $ | 728 |   |
| Federal      Home Loan Mortgage Corporation Preferred Shares |   |                | 1,895   |   |            |   | 1,895 |   |   |   | 3,904 |   |   |   | 704 |   |
| Preferred      Shares of Money Center Banks                  |   |                | 65,000  |   |            |   | 53,767 |   |   |   | 65,000 |   |   |   | 32,789 |   |
| Other      Assets of Money Center Banks                      |   |                | 10,000  |   |            |   | 9,280 |   |   |   | 10,000 |   |   |   | 8,876 |   |
| Public      Utility Debt and Equity Securities               |   |                | 2,000   |   |            |   | 2,000 |   |   |   | 15,000 |   |   |   | 15,000 |   |
| Other                                                        |   |                | -       |   |            |   | — |   |   |   | 4,983 |   |   |   | 4,983 |   |
| Totals                                                       |   | $                   | 78,895  |   |            | $      | 66,942 |   |   | $ | 101,110 |   |   | $ | 63,080 |   |

----

----

----

----

|                                    |   | AmortizedCost |   |   | Fair Value |   |   | UnrealizedGain (Loss) |   |   | Lowest CreditRating |   |
|-----------------------------------------|--------|---------------|--------|--------|-----------------|--------|--------|----------------------------|--------|--------|--------------------------|--------|
| Single      Issuer Corporate Bonds:     |   |          |   |   |            |   |   |                       |   |   |                     |   |
| Airline      #1                         |   | $             | 1,597  |   |            | $      | 1,594  |                       |   | $      | (3                       | )      |   | Ba2 |   |
| Airline      #2                         |   |          | 552    |   |            |   | 552    |                       |   |   | —                  |   |   | No      rating |   |
| Automobile                              |   |          | 800    |   |            |   | 1,506  |                       |   |   | 706                      |   |   | D |   |
| Commercial                              |   |          | 495    |   |            |   | 435    |                       |   |   | (60                      | )      |   | No      rating |   |
| Student      Lender                     |   |          | 5,000  |   |            |   | 3,920  |                       |   |   | (1,080                   | )      |   | Ba1 |   |
| Trust      Preferred Security           |   |          | 1,021  |   |            |   | 1,021  |                       |   |   | —                  |   |   | No      rating |   |
| Auction      Rate Securities:           |   |          |   |   |            |   |   |                       |   |   |                     |   |   |   |   |   |
| Federal      Home Loan Bank Corporation |   |          | 1,895  |   |            |   | 1,895  |                       |   |   | —                  |   |   | Ca |   |
| Money      Center Banks                 |   |          | 24,000 |   |            |   | 17,537 |                       |   |   | (6,463                   | )      |   | Ba3 |   |
| Pooled      Issuers:                    |   |          |   |   |            |   |   |                       |   |   |                     |   |   |   |   |   |
| TPCDO                                   |   |          | 6,463  |   |            |   | 150    |                       |   |   | (6,313                   | )      |   | No      rating |   |

----

|      | Industry                |   | Cost   |   |   | Fair Value |   |   | UnrealizedGain (Loss) |   |
|-----------|-------------------------|--------|--------|--------|--------|-----------------|--------|--------|----------------------------|--------|
| Common    | Telecommunications      |   | $      | 91     |   |            | $      | 94     |                       |   | $ | 3 |   |
|      | Airline                 |   |   | 862    |   |            |   | 862    |                       |   |   | — |   |
|      |                    |   |   |   |   |            |   |   |                       |   |   |   |   |
| Preferred | Airline                 |   |   | 61     |   |            |   | 61     |                       |   |   | — |   |
|      | Flooring      and other |   |   | 35     |   |            |   | 34     |                       |   |   | (1 | ) |
|      | Mining                  |   |   | 27     |   |            |   | 91     |                       |   |   | 64 |   |
|      | Money      Center Banks |   |   | 2,008  |   |            |   | 1,984  |                       |   |   | (24 | ) |

----

|                                            |   | Less than 12 months |    |   | 12 months or longer |   |    | Total           |   |
|-------------------------------------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|---------|-----------------|--------|
|                                            |   | Fair Value                    |    |   | UnrealizedLosses                   |   |    | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Description      of Securities                  |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury Notes                        |   | $                                  | 30,048  |   |                               | $      | 65      |            |   | $ | — |   |   | $ | — |   |   | $ | 30,048 |   |   | $ | 65 |   |
| U.S.      Government Agencies                   |   |                               | 40,518  |   |                               |   | 748     |            |   |   | 19,948 |   |   |   | 45 |   |   |   | 60,466 |   |   |   | 793 |   |
| Mortgage-backed      securities                 |   |                               | 7,932   |   |                               |   | 43      |            |   |   | 15,661 |   |   |   | 667 |   |   |   | 23,593 |   |   |   | 710 |   |
| Corporate      notes                            |   |                               | 1,613   |   |                               |   | 13      |            |   |   | 7,522 |   |   |   | 2,298 |   |   |   | 9,135 |   |   |   | 2,311 |   |
| Pooled      Trust Preferred CDO                 |   |                               | — |   |                               |   | — |            |   |   | 150 |   |   |   | 6,313 |   |   |   | 150 |   |   |   | 6,313 |   |
| Auction      rate securities                    |   |                               | — |   |                               |   | — |            |   |   | 58,047 |   |   |   | 11,953 |   |   |   | 58,047 |   |   |   | 11,953 |   |
|                                            |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal,      debt securities                  |   |                               | 80,111  |   |                               |   | 869     |            |   |   | 101,328 |   |   |   | 21,276 |   |   |   | 181,439 |   |   |   | 22,145 |   |
| Marketable      equity securities and other     |   |                               | — |   |                               |   | — |            |   |   | 1,044 |   |   |   | 26 |   |   |   | 1,044 |   |   |   | 26 |   |
| Total      temporarily impaired      securities |   | $                                  | 80,111  |   |                               | $      | 869     |            |   | $ | 102,372 |   |   | $ | 21,302 |   |   | $ | 182,483 |   |   | $ | 22,171 |   |

----

|                                            |   | Less than 12 months |    |   | 12 months or longer |   |    | Total           |   |
|-------------------------------------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|---------|-----------------|--------|
|                                            |   | Fair Value                    |    |   | UnrealizedLosses                   |   |    | Fair Value |   |   | UnrealizedLosses |   |   | Fair Value |   |   | UnrealizedLosses |   |
| Description      of Securities                  |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies                   |   | $                                  | 71,241  |   |                               | $      | 378     |            |   | $ | 5,072 |   |   | $ | 2 |   |   | $ | 76,313 |   |   | $ | 380 |   |
| Mortgage-backed      securities                 |   |                               | 6,135   |   |                               |   | 58      |            |   |   | 21,769 |   |   |   | 1,003 |   |   |   | 27,904 |   |   |   | 1,061 |   |
| Corporate      notes                            |   |                               | 14,480  |   |                               |   | 3,407   |            |   |   | 4,100 |   |   |   | 9,731 |   |   |   | 18,580 |   |   |   | 13,138 |   |
| Single      Issuer Trust Preferred CDO          |   |                               | — |   |                               |   | — |            |   |   | 1,149 |   |   |   | 1,794 |   |   |   | 1,149 |   |   |   | 1,794 |   |
| Pooled      Trust Preferred CDO                 |   |                               | — |   |                               |   | — |            |   |   | 2,981 |   |   |   | 7,006 |   |   |   | 2,981 |   |   |   | 7,006 |   |
| Municipal      securities                       |   |                               | — |   |                               |   | — |            |   |   | 1,478 |   |   |   | 495 |   |   |   | 1,478 |   |   |   | 495 |   |
| Auction      rate securities                    |   |                               | 38,098  |   |                               |   | 38,030  |            |   |   | — |   |   |   | — |   |   |   | 38,098 |   |   |   | 38,030 |   |
|                                            |   |                               |    |   |                               |   |    |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal,      debt securities                  |   |                               | 129,954 |   |                               |   | 41,873  |            |   |   | 36,549 |   |   |   | 20,031 |   |   |   | 166,503 |   |   |   | 61,904 |   |
| Marketable      equity securities and other     |   |                               | 1,681   |   |                               |   | 332     |            |   |   | 900 |   |   |   | 906 |   |   |   | 2,581 |   |   |   | 1,238 |   |
| Total      temporarily impaired      securities |   | $                                  | 131,635 |   |                               | $      | 42,205  |            |   | $ | 37,449 |   |   | $ | 20,937 |   |   | $ | 169,084 |   |   | $ | 63,142 |   |

----

|                                        |   | December 31, 2009  |        |
|---------------------------------------------|--------|------------------------------|-------------|
|                                        |   | Available for Sale |        |   | Held to Maturity |   |
|                                        |   | AmortizedCost                |        |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                        |   | (In      thousands)          |        |
| Due      in one year or less                |   | $                            | 23,070      |   |   | $ | 23,153 |   |   | $ | — |   |   | $ | — |   |
| Due      after one through five years       |   |                         | 56,766      |   |   |   | 56,101 |   |   |   | — |   |   |   | — |   |
| Due      after five through ten years       |   |                         | 21,857      |   |   |   | 21,784 |   |   |   |  — |   |   |   |  — |   |
| Due      after ten years                    |   |                         | 188,098     |   |   |   | 181,807 |   |   |   | 340 |   |   |   | 337 |   |
| Auction      rate securities                |   |                         | 78,895      |   |   |   | 66,942 |   |   |   | — |   |   |   | — |   |
| Marketable      equity securities and other |   |                         |  7,648 |   |   |   |  7,691 |   |   |   |  — |   |   |   |  — |   |
| Totals                                      |   | $                            | 376,334     |   |   | $ | 357,478 |   |   | $ | 340 |   |   | $ | 337 |   |

----

|                                             |   | December 31,   |        |
|--------------------------------------------------|--------|---------------------|-------------|
|                                             |   | 2009                |        |   | 2008 |   |   | 2007 |   |
|                                             |   | Cost                |        |   | FairValue |   |   | Cost |   |   | FairValue |   |   | Cost |   |   | FairValue |   |
|                                             |   | (In      thousands) |        |
|   Available-For-Sale                   |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury Notes                         |   | $                   | 50,236      |   |   | $ | 50,206 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| U.S.      Government Agencies                    |   |                | 76,259      |   |   |   | 75,525 |   |   |   | 91,466 |   |   |   | 91,158 |   |   |   | 272,789 |   |   |   | 272,318 |   |
| Mortgage-backed      securities                  |   |                | 134,810     |   |   |   | 136,043 |   |   |   | 83,845 |   |   |   | 83,821 |   |   |   | 53,886 |   |   |   | 53,057 |   |
| Corporate      notes                             |   |                | 19,029      |   |   |   | 17,729 |   |   |   | 51,150 |   |   |   | 38,124 |   |   |   | 71,147 |   |   |   | 67,601 |   |
| Single      Issuer Trust Preferred CDO           |   |                | 1,021       |   |   |   | 1,021 |   |   |   | 3,000 |   |   |   | 1,206 |   |   |   |   |   |   |   |   |   |
| Pooled      Trust Preferred CDO                  |   |                | 6,463       |   |   |   | 150 |   |   |   | 10,000 |   |   |   | 2,994 |   |   |   |   |   |   |   |   |   |
| Municipal      securities                        |   |                | 1,973       |   |   |   | 2,171 |   |   |   | 1,973 |   |   |   | 1,603 |   |   |   | 1,973 |   |   |   | 3,004 |   |
| Auction      rate securities                     |   |                | 78,895      |   |   |   | 66,942 |   |   |   | 101,110 |   |   |   | 63,080 |   |   |   | 184,597 |   |   |   | 184,597 |   |
| Marketable      equity securities      and other |   |                |  7,648 |   |   |   |  7,691 |   |   |   |  16,708 |   |   |   |  15,550 |   |   |   |  18,698 |   |   |   |  18,384 |   |
| Total                                            |   | $                   | 376,334     |   |   | $ | 357,478 |   |   | $ | 359,252 |   |   | $ | 297,536 |   |   | $ | 603,090 |   |   | $ | 598,961 |   |
|                                             |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Held-To-Maturity                     |   |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government Agencies                    |   | $                   | 340         |   |   | $ | 337 |   |   | $ | 360 |   |   | $ | 362 |   |   | $ | 395 |   |   | $ | 405 |   |

----

|                                   |   | December 31,2009 |    |   | December 31,2008 |   |
|----------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|                                   |   | (In thousands)   |    |
| Commercial      and professional loans |   | $                     | 50,672  |   |                  | $      | 68,418 |   |
| Secured      by real estate            |   |                  |    |   |                  |   |   |   |
| 1 -      4 family                      |   |                  | 129,925 |   |                  |   | 140,150 |   |
| Multi      family                      |   |                  | 7,432   |   |                  |   | 4,031 |   |
| Non-residential                        |   |                  | 242,927 |   |                  |   | 254,831 |   |
| Consumer                               |   |                  | 396     |   |                  |   | 460 |   |
|                                   |   |                  | 431,352 |   |                  |   | 467,890 |   |
| Deferred      loan fees                |   |                  | (1,003  | )      |                  |   | (1,137 | ) |
| Allowance      for loan losses         |   |                  | (11,416 | )      |                  |   | (9,204 | ) |
|                                   |   | $                     | 418,933 |   |                  | $      | 457,549 |   |

|                                        |   | For The Years Ended December 31, |   |
|---------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                        |   | 2009                                                      |   |   | 2008 |   |   | 2007 |   |
|                                        |   | (In thousands)                                       |   |
| Balance      at beginning of      year |   | $                                                         | 9,204  |   |   | $ | 4,183 |   |   | $ | 3,771 |   |
| Provision      charged to operations   |   |                                                      | 9,300  |   |   |   | 4,904 |   |   |   | 355 |   |
| Loans      charged off                      |   |                                                      | (7,194 | ) |   |   | (1 | ) |   |   | — |   |
| Recoveries                                  |   |                                                      | 106    |   |   |   | 118 |   |   |   | 57 |   |
|                                        |   |                                                      |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                 |   | $                                                         | 11,416 |   |   | $ | 9,204 |   |   | $ | 4,183 |   |

| Balance      at 12/31/08 |   | $      | 15,098 |   |
|--------------------------|--------|--------|--------|--------|
| New      Loans           |   |   | 5,024  |   |
| Repayments               |   |   | 643    |   |
| Balance      at 12/31/09 |   | $      | 19,479 |   |

----

|                                           | Estimateduseful lives |   | December 31,2009 |   |   | December 31,2008 |   |
|------------------------------------------------|----------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                           |                       |   | (In thousands)   |   |
| Land                                           | Indefinite                 |   | $                     | 3,572  |   |                  | $      | 3,572 |   |
| Buildings                                      | 39      years              |   |                  | 5,213  |   |                  |   | 5,203 |   |
| Furniture      and equipment                   | 3      to 10 years         |   |                  | 3,448  |   |                  |   | 3,315 |   |
| Leasehold      improvements                    | 2      to 10 years         |   |                  | 2,306  |   |                  |   | 2,226 |   |
|                                           |                       |   |                  | 14,539 |   |                  |   | 14,316 |   |
| Accumulated      depreciation and amortization |                       |   |                  | (6,007 | )      |                  |   | (5,472 | ) |
| Total                                          |                       |   | $                     | 8,532  |   |                  | $      | 8,844 |   |

|   |   | December 31, 2009 |    |
|--------|--------|-----------------------------|---------|
|   |   | (In thousands)         |    |
| 2010   |   | $                           | 343,279 |   |
| 2011   |   |                        | 70,394  |   |
| 2012   |   |                        | 11,864  |   |
| 2013   |   |                        | 2,234   |   |
| 2014   |   |                        | 5       |   |
|   |   | $                           | 427,776 |   |

----

|                                                                                   |   | Year Ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                   |   | 2009                                   |   |   | 2008 |   |   | 2007 |   |
|                                                                                   |   | (Dollars in Thousands)       |   |
| Securities      sold under repurchase agreements      and federal funds purchased |   |                                   |   |   |   |   |   |   |   |
|                                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Balance      at year-end                                                               |   | $                                      | 50,000 |   |   | $ | 59,504 |   |   | $ | 76,842 |   |
| Average      during the year                                                           |   | $                                      | 56,436 |   |   | $ | 61,162 |   |   | $ | 40,049 |   |
| Maximum      month-end balance                                                         |   | $                                      | 57,000 |   |   | $ | 72,324 |   |   | $ | 76,842 |   |
| Weighted      average rate during the year                                             |   |                                   | 4.08   | % |   |   | 3.83 | % |   |   | 4.93 | % |
| Rate      at December 31                                                               |   |                                   | 3.97   | % |   |   | 3.76 | % |   |   | 4.65 | % |

| Year   |   | Amount |    |
|--------|--------|--------|---------|
| 2010   |   | $      | 16,000  |   |
| 2011   |   |   | — |   |
| 2012   |   |   | 2,435   |   |
| 2013   |   |   | 12,569  |   |
|   |   |   |    |   |
| Total  |   | $      | 31,004  |   |

----

|                                             |   | Year Ended December 31, 2009(In thousands, except per share data) |   |
|--------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|
|                                             |   | Income(numerator)                                                                                              |   |   | Shares(denominator) |   |   | Per shareamount |   |
| Basic      earnings (loss) per share             |   |                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Net      (loss)                                  |   | $                                                                                                              | (2,238 | ) |   |   |   |   |   |   |   |   |
| Dividends      paid to preferred stockholders    |   |                                                                                                           | (4,800 | ) |   |   |   |   |   |   |   |   |
| Net      (loss) available to common stockholders |   | $                                                                                                              | (7,038 | ) |   |   | 7,054 |   |   | $ | (1.00 | ) |

|                                           |   | Year Ended December 31, 2008(In thousands, except per share data) |    |
|------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|---------|
|                                           |   | Income(loss) (numerator)                                                                                  |    |   | Shares(denominator) |   |   | Per shareamount |   |
| Basic      earnings (loss) per share           |   |                                                                                                           |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                  |   | $                                                                                                              | (79,905 | ) |   |   |   |   |   |   |   |   |
| Dividends      paid to preferred stockholders  |   |                                                                                                           | (837    | ) |   |   |   |   |   |   |   |   |
| Net      loss available to common shareholders |   | $                                                                                                              | (80,742 | ) |   |   | 7,054 |   |   | $ | (11.45 | ) |

|                                                                           |   | Year Ended December 31, 2007(In thousands, except per share data) |          |
|--------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|---------------|
|                                                                           |   | Income(numerator)                                                                                              |          |   | Shares(denominator) |   |   | Per shareamount |   |
| Basic      earnings per share                                                  |   |                                                                                                           |          |   |   |   |   |   |   |
| Net      income available to common stockholders                               |   | $                                                                                                              | 5,354         |   |   |   | 6,987 |   |   | $ | .77 |   |
| Effect      of dilutive securities Options                                     |   |                                                                                                           |  — |   |   |   |  18 |   |   |   | (.01 | ) |
| Diluted      earnings per share                                                |   |                                                                                                           |          |   |   |   |   |   |   |   |   |   |
| Net      income available to common stockholders plus assumed      conversions |   | $                                                                                                              | 5,354         |   |   |   |    7,005 |   |   | $ |  .76 |   |

----

|                          |   | Years Ended December 31, |    |
|-------------------------------|--------|-----------------------------------------|---------|
|                          |   | 2009                                    |    |   | 2008 |   |   | 2007 |   |
| Current                       |   | $                                       | (7,376  | ) |   | $ | (1,476 | ) |   | $ | 2,723 |   |
| Deferred      Taxes (Benefit) |   |                                    | (5,841  | ) |   |   | (4,314 | ) |   |   | (349 | ) |
|                          |   | $                                       | (13,217 | ) |   | $ | (5,790 | ) |   | $ | 2,374 |   |

|                                                    |   | Years Ended December 31, |    |
|---------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                    |   | 2009                                    |    |   | 2008 |   |   | 2007 |   |
| Effective      Tax Reconciliation                       |   |                                    |    |   |   |   |   |   |   |
| Tax      at statutory rate                              |   | $                                       | (5,254  | ) |   | $ | (29,136 | ) |   | $ | 2,627 |   |
| State      and City, net of federal income tax benefit  |   |                                    | 2,165   |   |   |   | (750 | ) |   |   | 1,195 |   |
| Permanent      items                                    |   |                                    | 3       |   |   |   | (2,244 | ) |   |   | (1,430 | ) |
| (Decrease)      increase in Federal valuation allowance |   |                                    | (8,156  | ) |   |   | 26,340 |   |   |   | — |   |
| Other                                                   |   |                                    | (1,975  | ) |   |   | — |   |   |   | (18 | ) |
| Actual      (benefit) provision for income taxes        |   | $                                       | (13,217 | ) |   | $ | (5,790 | ) |   | $ | 2,374 |   |

|                                                 |   | December 31, |        |
|------------------------------------------------------|--------|-------------------|-------------|
|                                                 |   | 2009              |        |   | 2008 |   |
| Net      deferred tax assets                         |   |              |        |   |   |   |
| Loan      loss provision                             |   | $                 | 5,142       |   |   | $ | 4,166 |   |
| Depreciation                                         |   |              | 397         |   |   |   | 299 |   |
| Non      accrual interest                            |   |              | 1,048       |   |   |   | — |   |
| Net      operating loss                              |   |              | 5,036       |   |   |   | — |   |
| Other                                                |   |              | 786         |   |   |   | 851 |   |
| Other      than temporary impairment                 |   |              | 28,530      |   |   |   | 35,396 |   |
| Valuation      reserve                               |   |              | (28,289     | ) |   |   | (33,903 | ) |
| Unrealized      loss on investment securities        |   |              |  7,353 |   |   |   |  23,045 |   |
| Net      deferred tax asset included in other assets |   | $                 | 20,003      |   |   | $ | 29,854 |   |

----

----

|                                                                |   | December 31, |    |
|---------------------------------------------------------------------|--------|-------------------|---------|
|                                                                |   | 2009              |    |   | 2008 |   |   | 2007 |   |
|                                                                |   | Shares            |    |   | WeightedAverageExercisePrice |   |   | Shares |   |   | WeightedAverageExercisePrice |   |   | Shares |   |   | WeightedAverageExercisePrice |   |
| Outstanding      at beginning of year                               |   |              | 2,076   |   |   | $ | 8.29 |   |   |   | 2,076 |   |   | $ | 8.29 |   |   |   | 185,878 |   |   | $ | 9.70 |   |
| Granted                                                             |   |              | — |   |   | $ | — |   |   |   | — |   |   | $ | — |   |   |   | — |   |   | $ | — |   |
| Cancelled                                                           |   |              | — |   |   | $ | — |   |   |   | — |   |   | $ | — |   |   |   | (7,500 | ) |   | $ | 10.00 |   |
| Exercised                                                           |   |              | — |   |   | $ | — |   |   |   | — |   |   | $ | — |   |   |   | (176,302 | ) |   | $ | 9.77 |   |
| Outstanding      at end of year                                     |   |              | 2,076   |   |   | $ | 8.29 |   |   |   | 2,076 |   |   | $ | 8.29 |   |   |   | 2,076 |   |   | $ | 8.29 |   |
| Exercisable      at end of year                                     |   |              | 2,076   |   |   | $ | 8.29 |   |   |   | 2,076 |   |   | $ | 8.29 |   |   |   | 2,076 |   |   | $ | 8.29 |   |
| Weighted      average fair value of options granted during the year |   |              |    |   |   | $ | — |   |   |   |   |   |   | $ | — |   |   |   |   |   |   | $ | — |   |

| Options Outstanding and Exercisable |   |
|----------------------------------------------------|--------|
| Range ofexercise prices                  |   | NumberoutstandingatDecember 31,2009 |   |   | Weightedaverageremainingcontractuallife (years) |   |   | Weightedaverageexerciseprice |   |
|                                               |   |   |   |   |   |   |   |   |   |
| $      5.98 - $8.64                                |   |   | 2,076 |   |   |   | 0.45 |   |   | $ | 8.29 |   |

----

| 1. | Retirement      Income Plan |
|----|-----------------------------|

|                                          |   | December 31,                      |    |
|-----------------------------------------------|--------|----------------------------------------|---------|
|                                          |   | 2009                                   |    |   | 2008 |   |
|                                          |   | Fair Value                        |    |   | % of Total |   |   | Fair Value |   |   | % of Total |   |
|                                          |   | (In      thousands, except percentages |    |
| Mutual      Funds                             |   |                                   |    |   |   |   |   |   |   |   |   |   |
| International      Equity Fund                |   | $                                      | — |   |   |   | — | % |   | $ | 72 |   |   |   | 2.97 | % |
| Large      Cap Equity Growth Fund             |   |                                   | — |   |   |   | — |   |   |   | 308 |   |   |   | 12.70 |   |
| International      Investment Grade Bond Fund |   |                                   | — |   |   |   | — |   |   |   | 874 |   |   |   | 36.03 |   |
| Small      Cap Equity Growth Fund             |   |                                   | — |   |   |   | — |   |   |   | 401 |   |   |   | 16.53 |   |
| Large      Cap Equity Value Fund              |   |                                   | — |   |   |   | — |   |   |   | 703 |   |   |   | 28.97 |   |
| Cash      and cash equivalents                |   |                                   | 4,390   |   |   |   | 100.00 |   |   |   | 68 |   |   |   | 2.80 |   |
|                                          |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Plan Assets                        |   | $                                      | 4,390   |   |   |   | 100.00 | % |   | $ | 2,426 |   |   |   | 100.00 | % |

----

|                               |   | December 31, |   |
|------------------------------------|--------|-------------------|--------|
|                               |   | 2009              |   |   | 2008 |   |
| Discount      rate                 |   |              | 4.15   | % |   |   | 6.10 | % |
| Rate      of compensation increase |   |              | 5.00   | % |   |   | 5.00 | % |

|                                |   | December 31, |   |
|-------------------------------------|--------|-------------------|--------|
|                                |   | 2009              |   |   | 2008 |   |
| Discount      rate                  |   |              | 6.10   | % |   |   | 6.30 | % |
| Rate      of compensation increase  |   |              | 5.00   | % |   |   | 5.00 | % |
| Expected      return on plan assets |   |              | 8.50   | % |   |   | 8.50 | % |
| Measurement      date               |   | 12/31/2009        |   |   | 12/31/2008 |   |

|                                                                                                                      |   | December 31, |      |
|---------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                                                                      |   | 2009              |      |   | 2008 |   |
| Change      in benefit obligation                                                                                         |   |              |      |   |   |   |
| Benefit      obligation at beginning of year                                                                              |   | $                 | 4,334,533 |   |   | $ | 3,560,406 |   |
| Service      cost                                                                                                         |   |              | 358,270   |   |   |   | 384,718 |   |
| Interest      cost                                                                                                        |   |              | 256,320   |   |   |   | 231,767 |   |
| Actuarial      (gain) loss                                                                                                |   |              | 347,528   |   |   |   | 291,131 |   |
| Benefits      paid                                                                                                        |   |              | (185,942  | ) |   |   | (133,489 | ) |
| Benefits      obligation at end of year                                                                                   |   | $                 | 5,110,709 |   |   | $ | 4,334,533 |   |
|                                                                                                                      |   |              |      |   |   |   |   |   |
| Change      in plan assets                                                                                                |   |              |      |   |   |   |   |   |
| Fair      value of plan assets at beginning of year                                                                       |   | $                 | 2,426,088 |   |   | $ | 2,450,590 |   |
| Actual      return on plan assets                                                                                         |   |              | 716,264   |   |   |   | (759,513 | ) |
| Employer      contribution                                                                                                |   |              | 1,433,900 |   |   |   | 868,500 |   |
| Benefits      paid                                                                                                        |   |              | (185,942  | ) |   |   | (133,489 | ) |
| Fair      value of plan assets at end of year                                                                             |   | $                 | 4,390,310 |   |   | $ | 2,426,088 |   |
| Funded      status at end of year                                                                                         |   | $                 | (720,399  | ) |   | $ | (1,908,445 | ) |
|                                                                                                                      |   |              |      |   |   |   |   |   |
| Amounts      recognized in the statement of financial  position      consist of:                                |   |              |      |   |   |   |   |   |
| Liabilities                                                                                                               |   | $                 | (720,399  | ) |   | $ | (1,908,445 | ) |
|                                                                                                                      |   |              |      |   |   |   |   |   |
| Net      amount recognized at year end                                                                                    |   | $                 | (720,399  | ) |   | $ | 1,908,445 |   |
|                                                                                                                      |   |              |      |   |   |   |   |   |
| Additional      year-end information for pension plans with accumulated benefit      obligations in excess of plan assets |   |              |      |   |   |   |   |   |
| Projected      benefit obligation                                                                                         |   | $                 | 5,110,709 |   |   | $ | 4,334,533 |   |
| Accumulated      benefit obligation                                                                                       |   |              | 5,110,709 |   |   |   | 4,334,533 |   |
| Fair      value of plan assets                                                                                            |   |              | 4,390,310 |   |   |   | 2,426,088 |   |

----

|                           |   | December 31, |     |
|--------------------------------|--------|-------------------|----------|
|                           |   | 2009              |     |   | 2008 |   |   | 2007 |   |
| Service      cost              |   | $                 | 358,270  |   |   | $ | 384,718 |   |   | $ | 407,623 |   |
| Interest      cost             |   |              | 256,320  |   |   |   | 231,767 |   |   |   | 177,221 |   |
| Expected      return on assets |   |              | (276,027 | ) |   |   | (245,909 | ) |   |   | (182,142 | ) |
| Amortization                   |   |              |     |   |   |   |   |   |   |   |   |   |
| Prior      service cost        |   |              | 18,370   |   |   |   | 18,370 |   |   |   | 18,370 |   |
| (Gain)      loss               |   |              | 167,506  |   |   |   | 61,810 |   |   |   | 52,649 |   |
| Curtailments                   |   |              | 47,394   |   |   |   | — |   |   |   | — |   |
| Net      periodic pension cost |   | $                 | 571,833  |   |   | $ | 450,756 |   |   | $ | 473,721 |   |

|                                                                                     |   | December 31, |     |
|------------------------------------------------------------------------------------------|--------|-------------------|----------|
|                                                                                     |   | 2009              |     |   | 2008 |   |
| Net      loss (gain)                                                                     |   | $                 | (92,709  | ) |   | $ | 1,296,553 |   |
| Prior      service cost                                                                  |   |              | N/A      |   |   |   | N/A |   |
| Amortization      of prior service cost                                                  |   |              | (18,370  | ) |   |   | (18,370 | ) |
| Amortization      of net (loss) gain                                                     |   |              | (167,506 | ) |   |   | (61,810 | ) |
| Curtailments                                                                             |   |              | (47,394  | ) |   |   | — |   |
| Total      recognized in other comprehensive (income)                                    |   |              | (325,979 | ) |   |   | 1,216,373 |   |
| Total      recognized in net periodic benefit cost and other comprehensive      (income) |   | $                 | 245,854  |   |   | $ | 1,667,129 |   |

----

----

| 2. | Postretirement      Welfare Plan |
|----|----------------------------------|

|                                                      |   | December 31,   |    |
|-----------------------------------------------------------|--------|---------------------|---------|
|                                                      |   | 2009                |    |   | 2008 |   |
|                                                      |   | (In      thousands) |    |
| Change      in benefit obligation                         |   |                |    |   |   |   |
| Benefit      obligation at beginning of year              |   | $                   | 708     |   |   | $ | 678 |   |
| Service      cost                                         |   |                | — |   |   |   | — |   |
| Interest      cost                                        |   |                | 42      |   |   |   | 42 |   |
| Adjustment      for measurement date change               |   |                | — |   |   |   | 11 |   |
| Actual      loss (gain)                                   |   |                | 33      |   |   |   | 33 |   |
| Benefits      paid                                        |   |                | (61     | ) |   |   | (56 | ) |
| Benefits      obligation at end of year                   |   |                | 722     |   |   |   | 708 |   |
|                                                      |   |                |    |   |   |   |   |   |
| Change      in plan assets                                |   |                |    |   |   |   |   |   |
| Fair      value of plan assets at beginning of year       |   |                | — |   |   |   | — |   |
| Actual      return on plan assets                         |   |                | — |   |   |   | — |   |
| Employer      contribution                                |   |                | 61      |   |   |   | 56 |   |
| Benefits      paid                                        |   |                | (61     | ) |   |   | (56 | ) |
| Fair      value of plan assets at end of year             |   |                | — |   |   |   | — |   |
| Funded      status                                        |   |                | (722    | ) |   |   | (708 | ) |
| Unrecognized      net actuarial loss                      |   |                | N/A     |   |   |   | N/A |   |
| Accrued      benefit cost (included in other liabilities) |   | $                   | 722     |   |   | $ | 708 |   |

|                                                               |   | Year Ended December 31, |     |
|--------------------------------------------------------------------|--------|----------------------------------------|----------|
|                                                               |   | 2009                                   |     |   | 2008 |   |
|                                                               |   | (In      thousands)                    |     |
| Service      cost                                                  |   | $                                      | —  |   |   | $ | — |   |
| Interest      cost on projected  benefit      obligation |   |                                   |  42 |   |   |   | 42 |   |
| Actual      return on plan assets                                  |   |                                   | —  |   |   |   | — |   |
| Net      periodic benefit cost                                     |   | $                                      | 42       |   |   | $ | 42 |   |

----

| 3. | 401(k)      Plans |
|----|-------------------|

| 4. | Deferred      Compensation Arrangements |
|----|-----------------------------------------|

| 1. | Leases      and      Other Commitments |
|----|----------------------------------------|

| Year EndingDecember 31, |   |   |   |
|-----------------------------------|--------|--------|--------|
| 2010                              |   | $      | 1,284  |   |
| 2011                              |   |   | 1,115  |   |
| 2012                              |   |   | 1,137  |   |
| 2013                              |   |   | 420    |   |
| 2014                              |   |   | 204    |   |
| Thereafter                        |   |   | 225    |   |
|                              |   | $      | 4,385  |   |

----

|                               |   | December 31,   |    |
|------------------------------------|--------|---------------------|---------|
|                               |   | 2009                |    |   | 2008 |   |
|                               |   | Carryingamount      |    |   | Estimatedfair value |   |   | Carryingamount |   |   | Estimatedfair value |   |
|                               |   | (In      thousands) |    |
| Investment      securities         |   | $                   | 357,818 |   |   | $ | 357,815 |   |   | $ | 297,896 |   |   | $ | 297,898 |   |
| Loans,      net of unearned income |   |                | 430,349 |   |   |   | 428,990 |   |   |   | 466,753 |   |   |   | 465,664 |   |
| Time      Deposits                 |   |                | 427,777 |   |   |   | 429,449 |   |   |   | 464,931 |   |   |   | 467,756 |   |
| Repurchase      Agreements         |   |                | 50,000  |   |   |   | 49,842 |   |   |   | 59,504 |   |   |   | 64,519 |   |
| Long-term      Debt                |   |                | 31,004  |   |   |   | 31,756 |   |   |   | 67,953 |   |   |   | 69,739 |   |

----

----

|                                          |   | Fair Value Measurement Using                                                     |   |
|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|
|                                          |   | Quoted Prices inActive Marketsfor IdenticalAssets/Liabilities(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | BalanceDecember 31,2009 |   |
|                                          |   | (Dollars      in thousands)                                                                     |   |
| Assets                                        |   |                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Investment      securities available for sale |   | $                                                                                               | 56,006 |   |   | $ | 235,793 |   |   | $ | 66,942 |   |   | $ | 358,741 |   |
| Total      assets                             |   | $                                                                                               | 56,006 |   |   | $ | 235,793 |   |   | $ | 66,942 |   |   | $ | 358,741 |   |

----

|                                          |   | Fair Value Measurement Using                                                     |   |
|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------------|--------|
|                                          |   | Quoted Prices inActive Marketsfor IdenticalAssets/Liabilities(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   |  BalanceDecember 31,2008 |   |
|                                          |   | (Dollars      in thousands)                                                                     |   |
| Assets                                        |   |                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Investment      securities available for sale |   | $                                                                                               | 4,290  |   |   | $ | 231,393 |   |   | $ | 63,080 |   |   | $ | 298,763 |   |
| Total      assets                             |   | $                                                                                               | 4,290  |   |   | $ | 231,393 |   |   | $ | 63,080 |   |   | $ | 298,763 |   |

----

|  (Dollars      in thousands)                                                                                                                                                                 |   | InvestmentSecuritiesAvailablefor Sale |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                                                                                                                                              |   |                                  |    |
| Balance,      January 1, 2009                                                                                                                                                                     |   | $                                     | 63,080  |   |
| Total      gains/losses (realized/unrealized)                                                                                                                                                     |   |                                  |    |   |
| Included      in earnings                                                                                                                                                                         |   |                                  | — |   |
| Included      in other comprehensive income                                                                                                                                                       |   |                                  | 26,076  |   |
| Purchases,      Sales, Issuances and Settlements                                                                                                                                                  |   |                                  | (2,205  | ) |
| Redemptions                                                                                                                                                                                       |   |                                  | (18,000 | ) |
| Interest                                                                                                                                                                                          |   |                                  | — |   |
| Other      than temporary impairment expense                                                                                                                                                      |   |                                  | (2,009  | ) |
| Capital      deductions for operating expenses                                                                                                                                                    |   |                                  | — |   |
| Balance,      December 31, 2009                                                                                                                                                                   |   | $                                     | 66,942  |   |
|                                                                                                                                                                                              |   |                                  |    |   |
| The      amount of total gains (losses) for the period included in earnings      attributable to the change in unrealized gains or losses relating to      assets still held at December 31, 2009 |   | $                                     | — |   |

| Note      N - | FINANCIAL      INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND CONCENTRATIONS OF CREDIT      RISK |
|---------------|-----------------------------------------------------------------------------------------------|

----

|                                                            |   | December 31,   |    |
|-----------------------------------------------------------------|--------|---------------------|---------|
|                                                            |   | 2009                |    |   | 2008 |   |
|                                                            |   | (In      thousands) |    |
| Unused      lines of credit                                     |   | $                   | 7,859   |   |   | $ | 29,533 |   |
| Commitments      to extend credit                               |   |                | 1,292   |   |   |   | 12,491 |   |
| Trade      date securities                                      |   |                | — |   |   |   | 13,431 |   |
| Standby      letters of credit and financial guarantees written |   |                | 1,117   |   |   |   | 1,349 |   |
|                                                            |   | $                   | 10,268  |   |   | $ | 56,804 |   |
| Interest      rate caps-notional amount                         |   | $                   | 40,000  |   |   | $ | 40,000 |   |

----

----

|                                          |   | Actual |    |   | For capitaladequacy purposes |   |   | To be wellcapitalized underprompt correctiveaction provisions |   |
|-----------------------------------------------|--------|--------|---------|--------|----------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                                          |   | Amount |    |   | Ratio                                  |   |   | Amount                                                                                 |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                          |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| December      31, 2009                        |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| Total      Capital (to Risk-Weighted Assets)  |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| Company                                       |   | $      | 106,884 |   |                                   |   | 19.3   | %                                                                                      |   | $ | 44,356 |   | ≥8.0 | %  |   | $ | — |   |   |   | N/A |   |
| Bank                                          |   |   | 90,751  |   |                                   |   | 16.9   | %                                                                                      |   |   | 43,080 |   | ≥8.0 | %  |   |   | 53,850 |   |   | ≥10.0 | %  |
| Tier      I Capital (to Risk-Weighted Assets) |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                       |   |   | 99,954  |   |                                   |   | 18.0   | %                                                                                      |   |   | 22,178 |   | ≥4.0 | %  |   |   | — |   |   |   | N/A |   |
| Bank                                          |   |   | 84,002  |   |                                   |   | 15.6   | %                                                                                      |   |   | 21,540 |   | ≥4.0 | %  |   |   | 32,310 |   |   | ≥6.0 | %  |
| Tier      I Capital (to Average Assets)       |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                       |   |   | 99,954  |   |                                   |   | 11.3   | %                                                                                      |   |   | 35,267 |   | ≥4.0 | %  |   |   | — |   |   |   | N/A |   |
| Bank                                          |   |   | 84,002  |   |                                   |   | 9.8    | %                                                                                      |   |   | 34,313 |   | ≥4.0 | %  |   |   | 42,891 |   |   | ≥5.0 | %  |

|                                          |   | Actual |    |   | For capitaladequacy purposes |   |   | To be wellcapitalized underprompt correctiveaction provisions |   |
|-----------------------------------------------|--------|--------|---------|--------|----------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                                          |   | Amount |    |   | Ratio                                  |   |   | Amount                                                                                 |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                          |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| December      31, 2008                        |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| Total      Capital (to Risk-Weighted Assets)  |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |
| Company                                       |   | $      | 111,533 |   |                                   |   | 16.9   | %                                                                                      |   | $ | 52,830 |   | ≥8.0 | %  |   | $ | — |   |   |   | N/A |   |
| Bank                                          |   |   | 87,178  |   |                                   |   | 13.4   | %                                                                                      |   |   | 51,948 |   | ≥8.0 | %  |   |   | 64,935 |   |   | ≥10.0 | %  |
| Tier      I Capital (to Risk-Weighted Assets) |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                       |   |   | 102,329 |   |                                   |   | 15.5   | %                                                                                      |   |   | 26,415 |   | ≥4.0 | %  |   |   | — |   |   |   | N/A |   |
| Bank                                          |   |   | 79,129  |   |                                   |   | 12.2   | %                                                                                      |   |   | 25,974 |   | ≥4.0 | %  |   |   | 38,961 |   |   | ≥6.0 | %  |
| Tier      I Capital (to Average Assets)       |   |   |    |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                       |   |   | 102,329 |   |                                   |   | 9.9    | %                                                                                      |   |   | 41,440 |   | ≥4.0 | %  |   |   | — |   |   |   | N/A |   |
| Bank                                          |   |   | 79,129  |   |                                   |   | 8.9    | %                                                                                      |   |   | 35,774 |   | ≥4.0 | %  |   |   | 44,718 |   |   | ≥5.0 | %  |

----

|                                             |   | December 31, |    |
|--------------------------------------------------|--------|-------------------|---------|
|                                             |   | 2009              |    |   | 2008 |   |
| ASSETS                                           |   |              |    |   |   |   |
|                                             |   |              |    |   |   |   |
| Cash                                             |   | $                 | 6,924   |   |   | $ | 10,877 |   |
| Equity      investment in subsidiaries           |   |              | 92,079  |   |   |   | 67,746 |   |
| Investment      in securities available for sale |   |              | 5,807   |   |   |   | 4,290 |   |
| Accrued      interest receivable                 |   |              | 38      |   |   |   | 230 |   |
| Other      assets                                |   |              | 3,704   |   |   |   | 7,715 |   |
| Total      assets                                |   | $                 | 108,552 |   |   | $ | 90,858 |   |
|                                             |   |              |    |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY        |   |              |    |   |   |   |   |   |
|                                             |   |              |    |   |   |   |   |   |
| Subordinated      debt                           |   | $                 | 22,681  |   |   | $ | 22,681 |   |
| Other      liabilities                           |   |              | 635     |   |   |   | 2,225 |   |
| Total      liabilities                           |   |              | 23,316  |   |   |   | 24,906 |   |
|                                             |   |              |    |   |   |   |   |   |
| Stockholders'      equity                        |   |              |    |   |   |   |   |   |
| Common      stock                                |   |              | 770     |   |   |   | 770 |   |
| Series      A preferred stock                    |   |              | 1       |   |   |   | 1 |   |
| Additional      paid-in capital                  |   |              | 150,985 |   |   |   | 150,985 |   |
| Retained      earnings (accumulated deficit)     |   |              | (46,833 | ) |   |   | (39,795 | ) |
| Accumulated      other comprehensive loss, net   |   |              | (13,276 | ) |   |   | (39,598 | ) |
| Common      stock in treasury, at cost           |   |              | (6,411  | ) |   |   | (6,411 | ) |
| Total      stockholders' equity                  |   |              | 85,236  |   |   |   | 65,952 |   |
|                                             |   | $                 | 108,552 |   |   | $ | 90,858 |   |

----

|                                                                                         |   | For The Years Ended December 31, |    |
|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|
|                                                                                         |   | 2009                                                      |    |   | 2008 |   |   | 2007 |   |
| INCOME                                                                                       |   |                                                      |    |   |   |   |   |   |   |
| Interest      income from the Bank                                                           |   | $                                                         | 7       |   |   | $ | 32 |   |   | $ | 51 |   |
| Interest      income                                                                         |   |                                                      | 549     |   |   |   | 1,175 |   |   |   | 1,271 |   |
| Gain      on sales of investment      securities                                        |   |                                                      | — |   |   |   | — |   |   |   | 125 |   |
| Other      income                                                                            |   |                                                      | 330     |   |   |   | 319 |   |   |   | 235 |   |
| Total      income                                                                            |   |                                                      | 886     |   |   |   | 1,526 |   |   |   | 1,682 |   |
|                                                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                                                     |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                                                          |   |                                                      | 893     |   |   |   | 761 |   |   |   | 771 |   |
| Interest      expense                                                                        |   |                                                      | 784     |   |   |   | 1,234 |   |   |   | 1,840 |   |
| Other      than temporary credit impairment charges on securities                            |   |                                                      | 8,948   |   |   |   | — |   |   |   | — |   |
| Other      expenses                                                                          |   |                                                      | 1,090   |   |   |   | 732 |   |   |   | 746 |   |
| Total      expenses                                                                          |   |                                                      | 11,715  |   |   |   | 2,727 |   |   |   | 3,357 |   |
| Loss      before income taxes and equity in undistributed net (loss) income of the      Bank |   |                                                      | (10,829 | ) |   |   | (1,201 | ) |   |   | (1,675 | ) |
| Equity      in undistributed net income (loss) of the Bank                                   |   |                                                      | 7,638   |   |   |   | (78,866 | ) |   |   | 6,727 |   |
| (Loss)      income before taxes                                                              |   |                                                      | (3,191  | ) |   |   | (80,067 | ) |   |   | 5,052 |   |
| (Benefit)      provision for income taxes                                                    |   |                                                      | (953    | ) |   |   | (162 | ) |   |   | (302 | ) |
| Net      (loss) income                                                                       |   | $                                                         | (2,238  | ) |   | $ | (79,905 | ) |   | $ | 5,354 |   |

----

|                                                                                                         |   | For The Years Ended December 31, |    |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|
|                                                                                                         |   | 2009                                                      |    |   | 2008 |   |   | 2007 |   |
| Operating      activities:                                                                                   |   |                                                      |    |   |   |   |   |   |   |
| Net      (loss) income                                                                                       |   | $                                                         | (2,238  | ) |   | $ | (79,905 | ) |   | $ | 5,354 |   |
| Adjustments      to reconcile net (loss) income to net cash provided by (used in) operating      activities: |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Gain      on sales of investment securities                                                                  |   |                                                      | — |   |   |   | — |   |   |   | (125 | ) |
| Equity      in undistributed net (income) loss of the Bank                                                   |   |                                                      | (7,638  | ) |   |   | 78,866 |   |   |   | (6,727 | ) |
| Equity      in undistributed net income of East 39, LLC                                                      |   |                                                      | (329    | ) |   |   | (319 | ) |   |   | (235 | ) |
| Dividends      received from the Bank                                                                        |   |                                                      | 2,790   |   |   |   | 2,013 |   |   |   | 1,810 |   |
| Decrease      in other liabilities                                                                           |   |                                                      | (1,590  | ) |   |   | (359 | ) |   |   | (1,748 | ) |
| Decrease      in other assets                                                                                |   |                                                      | 904     |   |   |   | 16 |   |   |   | 136 |   |
|                                                                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by operating activities                                                     |   |                                                      | (8,101  | ) |   |   | 312 |   |   |   | (1,535 | ) |
|                                                                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Investing      activities:                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Investment      securities available for sale                                                                |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Purchases                                                                                                    |   |                                                      | — |   |   |   | — |   |   |   | (1,635 | ) |
| Sales      and redemptions                                                                                   |   |                                                      | — |   |   |   | 47 |   |   |   | 6,670 |   |
| Other      than temporary credit impairment charges on securities                                            |   |                                                      | 8,948   |   |   |   | — |   |   |   | — |   |
| Contributions      to the Bank                                                                               |   |                                                      | — |   |   |   | (59,718 | ) |   |   | — |   |
| Net      cash provided by (used in) investing activities                                                     |   |                                                      | 8,948   |   |   |   | (59,671 | ) |   |   | 2,028 |   |
|                                                                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Financing      activities:                                                                                   |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Proceeds      from exercise of common stock options                                                          |   |                                                      | — |   |   |   | — |   |   |   | 1,363 |   |
| Tax      benefits from exercise of common stock options                                                      |   |                                                      | — |   |   |   | — |   |   |   | 359 |   |
| Issuance      of Series A Preferred Stock                                                                    |   |                                                      | — |   |   |   | 60,000 |   |   |   | — |   |
| Dividends      paid on preferred stock                                                                       |   |                                                      | (4,800  | ) |   |   | (837 | ) |   |   | — |   |
| Dividends      paid on common stock                                                                          |   |                                                      | — |   |   |   | (1,405 | ) |   |   | (1,252 | ) |
| Net      cash (used in) provided by financing activities                                                     |   |                                                      | (4,800  | ) |   |   | 57,758 |   |   |   | 470 |   |
|                                                                                                         |   |                                                      |    |   |   |   |   |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents                                                    |   |                                                      | (3,953  | ) |   |   | (1,061 | ) |   |   | 963 |   |
| Cash      and cash equivalents at beginning of year                                                          |   |                                                      | 10,877  |   |   |   | 12,478 |   |   |   | 11,515 |   |
| Cash      and cash equivalents at end of year                                                                |   | $                                                         | 6,924   |   |   | $ | 10,877 |   |   | $ | 12,478 |   |

----

----

| ITEM      9. | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure. |
|--------------|-------------------------------------------------------------------------------------------------|

----

----

| Name                       |   | Age |   | Position(s)                                                                      |
|----------------------------|--------|-----|--------|----------------------------------------------------------------------------------|
| Steven      Rosenberg      |   | 61  |   | President,      Chief Executive Officer, Chief Financial Officer and    Director |
| William      L. Cohen      |   | 68  |   | Director                                                                         |
| Martin      A. Fischer     |   | 72  |   | Director                                                                         |
| Moses      Marx            |   | 74  |   | Director                                                                         |
| Randolph      B. Stockwell |   | 63  |   | Director                                                                         |
| Moses      Krausz          |   | 69  |   | President      of The Berkshire Bank and Director                                |
| David      Lukens          |   | 60  |   | Executive      Vice President, Chief Financial Officer of The Berkshire    Bank  |

----

----

----

| Name and PrincipalPosition                                                 |   | Year   |   | Salary$ |    |   | Bonus$ |   |    | NonqualifiedDeferredCompensationEarnings$ |   |   | All OtherCompensation$ |   |   | Total$ |    |
|--------------------------------------------------------------------------------------|--------|--------|--------|---------|---------|--------|--------|--------|---------|-------------------------------------------|--------|--------|-----------------------------|--------|--------|--------|---------|
|                                                                                 |   |   |   |    |    |   |   |   |    |                                      |   |   |                        |   |   |   |    |
| Steven      Rosenberg                                                                |   | 2008   |   |    | 230,000 |   |   |   | 30,000  |                                      |   |   | 356,393                     |   |   |   | — |   |   |   | 616,393 |   |
| President,      Chief Executive Officer and Chief Financial Officer                  |   | 2009   |   |    | 241,500 |   |   |   | 45,000  |                                      |   |   | 278,445                     |   |   |   | — |   |   |   | 564,945 |   |
|                                                                                 |   |   |   |    |    |   |   |   |    |                                      |   |   |                        |   |   |   |    |   |   |   |   |   |
| Moses      Krausz                                                                    |   | 2008   |   |    | 465,398 |   |   |   | 150,000 |                                      |   |   | 13,740                      |   |   |   | 11,725  |   |   |   | 640,863 |   |
| President      and Chief Executive Officer of The Berkshire Bank                     |   | 2009   |   |    | 481,418 |   |   |   | 200,000 |                                      |   |   | 16,678                      |   |   |   | 7,756   |   |   |   | 705,852 |   |
|                                                                                 |   |   |   |    |    |   |   |   |    |                                      |   |   |                        |   |   |   |    |   |   |   |   |   |
| David      Lukens                                                                    |   | 2008   |   |    | 192,000 |   |   |   | 30,000  |                                      |   |   | 20,127                      |   |   |   | 9,258   |   |   |   | 251,385 |   |
| Executive      Vice President and Chief Financial Officer of The Berkshire      Bank |   | 2009   |   |    | 192,000 |   |   |   | 30,000  |                                      |   |   | 21,147                      |   |   |   | 7,882   |   |   |   | 251,029 |   |

----

----

| Name                       |   | Fees Earnedor Paid inCash$ |   |   | Total$ |   |
|----------------------------|--------|-------------------------------------------|--------|--------|--------|--------|
| William      L. Cohen      |   |                                      | 30,000 |   |   |   | 30,000 |   |
| Moses      Marx            |   |                                      | 26,500 |   |   |   | 26,500 |   |
| Martin      A. Fischer     |   |                                      | 32,500 |   |   |   | 32,500 |   |
| Randolph      B. Stockwell |   |                                      | 30,500 |   |   |   | 30,500 |   |

----

| Title of Class |   | Name and Address ofBeneficial Owner                  |   | Amount and Natureof BeneficialOwnership |            |   | Percentof Class |   |
|--------------------------|--------|--------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------------|--------|----------------------|--------|
| Common      Stock        |   | William      L. Cohen                                                    |   |                                                   | 0               |   |                 |   | * |   |
| Common      Stock        |   | Martin      A. Fischer                                                   |   |                                                   | 10,800          |   |                 |   | * |   |
| Common      Stock        |   | Moses      Krausz                                                        |   |                                                   | 90,464          | (1)    |                 |   | 1.3 | % |
| Common      Stock        |   | David      Lukens                                                        |   |                                                   | 600             |   |                 |   | * |   |
| Common      Stock        |   | Moses      Marx160      BroadwayNew      York, NY 10038                  |   |                                                   | 3,850,484       | (2)    |                 |   | 54.6 | % |
| Common      Stock        |   | Steven      Rosenberg                                                    |   |                                                   | 62,580          |   |                 |   | * |   |
| Common      Stock        |   | Randolph      B. Stockwell                                               |   |                                                   | 21,000          |   |                 |   | * |   |
| Common      Stock        |   | All      executive officers and directors as a group    (7 persons) |   |                                                   |  4,035,928 |   |                 |   | 57.2 | % |

----

| Plan Category                                                        |   | (a)Number of securities tobe issued upon exerciseof outstanding options,warrants and rights |    |   | (b)Weighted-averageexercise price ofoutstanding options,warrants and rights |   |    | (c)Number of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (a)) |   |
|---------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|------------------------------------------------------------------------------------------------------|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                      |   |                                                                                                                                          |    |   |                                                                                                 |   |    |                                                                                                                                                                                                  |   |   |   |   |
| Equity      compensation plans      approved by security      holders     |   |                                                                                                                                          | 2,076   |   |                                                                                                 | $      | 8.29    |                                                                                                                                                                                                  |   |   | — |   |
| Equity      compensation plans      not approved by security      holders |   |                                                                                                                                          | — |   |                                                                                                 |   | — |                                                                                                                                                                                                  |   |   | — |   |
| Total                                                                     |   |                                                                                                                                          | 2,076   |   |                                                                                                 | $      | 8.29    |                                                                                                                                                                                                  |   |   | — |   |

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| ITEM      13. | Certain      Relationships and Related Transactions and Director      Independence. |
|---------------|-------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                |   | Fiscal Year EndedDecember 31, 2009 |    |   | Fiscal Year EndedDecember 31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|---------|--------|--------------------------------------------------------|--------|
|                                                                                                                                                                                                                                |   |                                                   |    |   |                                                   |   |
| Audit      Fees                                                                                                                                                                                                                     |   | $                                                      | 432,163 |   |                                                   | $      | 338,379 |   |
|                                                                                                                                                                                                                                |   |                                                   |    |   |                                                   |   |   |   |
| Audit Related Fees:      Professional services rendered for employee benefit plan audits,      accounting assistance in connection with acquisitions and consultations      related to financial accounting and reporting standards |   |                                                   | — |   |                                                   |   | — |   |
|                                                                                                                                                                                                                                |   |                                                   |    |   |                                                   |   |   |   |
| Tax Fees: Tax      consulting, preparation of returns                                                                                                                                                                               |   |                                                   | 81,480  |   |                                                   |   | 71,695 |   |
|                                                                                                                                                                                                                                |   |                                                   |    |   |                                                   |   |   |   |
| All Other Fees:      Professional services rendered for corporate support                                                                                                                                                           |   |                                                   | — |   |                                                   |   | — |   |

----

----

| Number |   | Description |   |
|--------|--------|-------------|--------|

| Exhibit |   |        |
|---------|--------|-------------|
| Number  |   | Description |
|    |   |        |   |
| 2.1     |   |        | Agreement      and Plan of Reorganization, dated as of August 16, 2000, by and between      Berkshire Bancorp Inc., Greater American Finance Group, Inc., The      Berkshire Bank, GSB Financial Corporation and Goshen Savings Bank      (incorporated by reference to the Companies Registration Statement on Form      S-4 dated October 13, 2000. |
| 3.1     |   |        | Amended      and Restated Certificate of Incorporation of the Company (incorporated by      reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated      March 30, 1999, and the Company's Quarterly Report on Form 10-Q for the      Quarterly Period Ended June 30, 2004). |
| 3.2     |   |        | Certificate      of Amendment to the Certificate of Incorporation of the Company effective      December 15, 2008 (incorporated by reference to Exhibit 3.1 to the      Company's Current Report on Form 8-K dated December 16,    2008). |
| 3.3     |   |        | Certificate      of Designations of the Series A Preferred Stock of the Company      (incorporated by reference to Exhibit 3.1 to the Company's Current Report      on Form 8-K dated November 5, 2008). |
| 3.4     |   |        | Amended      and Restated By-laws of the Company (incorporated by reference to Exhibit      3.2 to the Company's Current Report on Form 8-K dated March 30,      1999). |
| 10.1    |   |        | 1999      Stock Incentive Plan of the Company (incorporated by reference to Exhibit      10.8 to the Company's Current Report on Form 8-K dated March 30,      1999).+ |
| 10.2    |   |        | Employment      Agreement, dated as of May 1, 1999, between The Berkshire Bank and Moses      Krausz (incorporated by reference to Exhibit 10.3 to the Company's Annual      Report on Form 10-K for the Fiscal Year Ended December 31,      2000).+ |
| 10.3    |   |        | Amendment      No. 3, dated as of July 31, 2007, to Employment Agreement, dated as of May      1, 1999, by and between The Berkshire Bank and Moses Krausz (incorporated      by reference to Exhibit 10.1 to the Company's Quarterly Report on Form      10-Q for the Quarterly Period Ended June 30,  2007).+ |

----

| Exhibit |   |        |
|---------|--------|-------------|
| Number  |   | Description |
|    |   |        |   |
| 10.4    |   |        | Employment      Agreement, dated as of January 1, 2001, between The Berkshire Bank and      David Lukens (incorporated by reference to Exhibit 10.4 to the Company's      Annual Report on Form 10-K for the Fiscal Year Ended December 31,      2000).+ |
| 10.5    |   |        | Amendment      No. 3, dated as of May 1, 2008, to Employment Agreement, dated as of      January 1, 2001, by and between The Berkshire Bank and David Lukens      (incorporated by reference to Exhibit 10.1 to the Company's Quarterly      Report on Form 10-Q for the Quarterly Period Ended March 31,      2008).+ |
| 10.6    |   |        | Lease      Agreement, dated October 26, 1999, between Braun Management, Inc. as agent      for Bowling Green Associates, L.P., and The Berkshire Bank (incorporated      by reference to Exhibit 10.5 to the Company's Quarterly Report on Form      10-Q for the Quarterly Period Ended March 31, 2001). |
| 10.7    |   |        | Deferred      Compensation Plan of The Berkshire Bank, effective July 1, 2006,      (incorporated by reference to Exhibit 10.2 to the Company's Quarterly      Report on Form 10-Q for the Quarterly Period Ended June 30,      2006).+ |
| 10.8    |   |        | Amendment      No. 1 to Deferred Compensation of The Berkshire Bank, dated August 17,      2006 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly      Report on Form 10-Q for the Quarterly Period Ended September 30,      2006).+ |
| 10.9    |   |        | Amendment      No. 2 to Deferred Compensation of The Berkshire Bank, dated November 29,      2007 (incorporated by reference to Exhibit 10.9 to the Company's Annual      Report on Form 10-K for the Fiscal Year Ended December 31,      2007). |
| 10.10   |   |        | Amendment      No. 3 to Deferred Compensation of The Berkshire Bank, dated December 31,      2008 (incorporated by reference to Exhibit 10.10 to the Company's Annual      Report on Form 10-K for the Fiscal Year Ended December 31,      2008).+ |
| 10.11   |   |        | Stock      Purchase Agreement by and among Berkshire Bancorp Inc. and the Purchasers      named therein, dated October 30, 2008 (incorporated by reference to      Exhibit 10.11 to the Company's Annual Report on Form 10-K for the Fiscal      Year Ended December 31, 2008). |
| 10.12   |   |        | Registration      Rights Agreement among Berkshire Bancorp Inc. and the Purchasers named      therein, dated as of October 30, 2008 (incorporated by reference to      Exhibit 10.12 to the Company's Annual Report on Form 10-K for the Fiscal      Year Ended December 31, 2008). |
| 10.13   |   |        | Amendment      No. 4, dated as of November 4, 2009, to Employment Agreement, dated as of      May 1, 1999, by and between The Berkshire Bank and Moses      Krausz. |
| 10.14   |   |        | Amendment      No. 4, dated as of November 2, 2009, to Employment Agreement, dated as of      January 1, 2001, by and between The Berkshire Bank and David      Lukens. |
| 21.     |   |        | Subsidiaries      of the Company. |
| 23.     |   |        | Consent      of Independent Registered Public Accounting Firm |
| 31.     |   |        | Certification      of Principal Executive and Financial Officer pursuant to Section 302 of      the Sarbanes-Oxley Act of 2002. |
| 32.     |   |        | Certification      of Principal Executive and Financial Officer pursuant to Section 906 of      the Sarbanes-Oxley Act of2002. |

----

|   | BERKSHIRE      BANCORP INC. |
|--------|-----------------------------|
|   |                        |   |
|   | By:                         | /s/    Steven      Rosenberg |
|   |                        | Steven      Rosenberg |
|   |                        | President,      (Chief Executive Officer) |
|   |                        |   |
|   | Date:                       | June 9,      2010 |

| Signature                  |   | Title                      |   | Date              |
|----------------------------|--------|----------------------------|--------|-------------------|
|                       |   |                       |   |              |
|                       |   | President,      (Chief     |   |              |
|                       |   | Executive      Officer,    |   |              |
|                       |   | Principal      Financial   |   |              |
|                       |   | Officer      and Principal |   |              |
|                       |   | Accounting      Officer);  |   |              |
| /s/ Steven Rosenberg       |   | Director                   |   | June      9, 2010 |
| Steven      Rosenberg      |   |                       |   |              |
|                       |   |                       |   |              |
| /s/ William L. Cohen       |   | Director                   |   | June      9, 2010 |
| William      L. Cohen      |   |                       |   |              |
|                       |   |                       |   |              |
| /s/ Martin A. Fischer      |   | Director                   |   | June      9, 2010 |
| Martin      A. Fischer     |   |                       |   |              |
|                       |   |                       |   |              |
| /s/ Moses Krausz           |   | Director                   |   | June      9 2010  |
| Moses      Krausz          |   |                       |   |              |
|                       |   |                       |   |              |
| /s/ Moses Marx             |   | Director                   |   | June      9, 2010 |
| Moses      Marx            |   |                       |   |              |
|                       |   |                       |   |              |
| /s/ Randolph B. Stockwell  |   | Director                   |   | June      9, 2010 |
| Randolph      B. Stockwell |   |                       |   |              |

----