|                      | FORM 10-Q                                                                         |                                    |
|---------------------------|-----------------------------------------------------------------------------------|-----------------------------------------|
|                      |                                                                              |                                    |
|                      | SECURITIES AND EXCHANGE COMMISSION                                                |                                    |
|                      | Washington, D.C.  20549                                                 |                                    |
|                      |                                                                              |                                    |
| (Mark One)                |                                                                              |
|     T      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                           |                                    |
|                      | SECURITIES EXCHANGE ACT OF 1934                                                   |                                    |
|                      |                                                                              |                                    |
|                      | For the quarterly period ended March 31, 2011                                     |                                    |
|                      |                                                                              |                                    |
|                      | OR                                                                                |                                    |
|                      |                                                                              |                                    |
|     £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                          |                                    |
|                      | SECURITIES EXCHANGE ACT OF 1934                                                   |                                    |
|                      | For the transition period from _____________ to _____________                     |                                    |
|                      |                                                                              |                                    |
|                      | Commission file number:  0-26480                                        |                                    |
|                      |                                                                              |                                    |
|                      | PSB HOLDINGS, INC.                                                                |                                    |
|                      | (Exact name of registrant as specified in charter)                                |                                    |
|                      |                                                                              |                                    |
|                      | WISCONSIN                                                                         | 39-1804877                              |   |
|                      | (State of incorporation)                                                          | (I.R.S. Employer Identification Number) |   |
|                      |                                                                              |                                    |
|                      | 1905 West Stewart Avenue                                                          |                                    |
|                      | Wausau, Wisconsin 54401                                                           |                                    |
|                      | (Address of principal executive office)                                           |                                    |
|                      |                                                                              |                                    |
|                      | Registrant’s telephone number, including area code:  715-842-2191 |                                    |
|                      |                                                                              |                                    |
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                    |   |

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

| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                        | Yes | £ |   | No | £ |   |

| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                               | Large accelerated filer | £ |   | Accelerated filer | £ |   |
|                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                               | Non-accelerated filer | £ |   | Smaller reporting company | T |   |
|                                                                                                                                                                                                                                                                                                                                               | (Do not check if a smaller reporting company) |

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

|                                                                         |
|------------------------------------------------------------------------------|
|   The number of common shares outstanding at May 9, 2011 was 1,573,255. |

----

D

|     |                  | Page No.                                                                                    |
|----------|-----------------------|---------------------------------------------------------------------------------------------|
| PART I.  | FINANCIAL INFORMATION |                                                                                        |   |
|     |                  |                                                                                        |   |
|     | Item 1.               | Financial Statements                                                                        |   |   |
|     |                  |                                                                                        |   |   |
|     |                  | Consolidated Balance Sheets                                                                 |   |   |
|     |                  | March 31, 2011 (unaudited) and December 31, 2010                                            |   |   |
|     |                  | (derived from audited financial statements)                                                 |   1 |   |
|     |                  |                                                                                        |   |   |
|     |                  | Consolidated Statements of Income                                                           |   |   |
|     |                  | Three Months Ended March 31, 2011 and 2010 (unaudited)                                      |   2 |   |
|     |                  |                                                                                        |   |   |
|     |                  | Consolidated Statement of Changes in Stockholders’ Equity                             |   |   |
|     |                  | Three Months Ended March 31, 2011 (unaudited)                                               |   3 |   |
|     |                  |                                                                                        |   |   |
|     |                  | Consolidated Statements of Cash Flows                                                       |   |   |
|     |                  | Three Months Ended March 31, 2011 and 2010 (unaudited)                                      |   4 |   |
|     |                  |                                                                                        |   |   |
|     |                  | Notes to Consolidated Financial Statements                                                  |   6 |   |
|     |                  |                                                                                        |   |   |
|     | Item 2.               | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |   |
|     |                  |                                                                                        |   |   |
|     | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                  | 47 |   |
|     |                  |                                                                                        |   |   |
|     | Item 4.               | Controls and Procedures                                                                     | 47 |   |
|     |                  |                                                                                        |   |   |
|     |                  |                                                                                        |   |   |
| PART II. | OTHER INFORMATION     |                                                                                        |   |
|     |                  |                                                                                        |   |   |
|     | Item 1A.              | Risk Factors                                                                                | 48 |   |
|     |                  |                                                                                        |   |   |
|     | Item 6.               | Exhibits                                                                                    | 48 |   |

----

Index

A

s

e

|                                                                                   |   | March 31, |    |   | December 31, |   |
|----------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (dollars in thousands, except per share data)                                          |   | 2011      |    |   | 2010         |   |
| Assets                                                                                 |   |      |    |   |         |   |
|                                                                                   |   |      |    |   |         |   |
| Cash and due from banks                                                                |   | $         | 7,443   |   |         | $      | 9,601 |   |
| Interest-bearing deposits and money market funds                                       |   |      | 486     |   |         |   | 227 |   |
| Federal funds sold                                                                     |   |      | – |   |         |   | 30,503 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Cash and cash equivalents                                                              |   |      | 7,929   |   |         |   | 40,331 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Securities available for sale (at fair value)                                          |   |      | 62,840  |   |         |   | 55,273 |   |
| Securities held to maturity (fair value of $51,435 and $51,662, respectively)          |   |      | 52,448  |   |         |   | 53,106 |   |
| Other investments                                                                      |   |      | 2,484   |   |         |   | 2,484 |   |
| Loans held for sale                                                                    |   |      | – |   |         |   | 436 |   |
| Loans receivable, net                                                                  |   |      | 436,002 |   |         |   | 431,801 |   |
| Accrued interest receivable                                                            |   |      | 2,344   |   |         |   | 2,238 |   |
| Foreclosed assets                                                                      |   |      | 4,828   |   |         |   | 4,967 |   |
| Premises and equipment, net                                                            |   |      | 10,306  |   |         |   | 10,464 |   |
| Mortgage servicing rights, net                                                         |   |      | 1,268   |   |         |   | 1,100 |   |
| Federal Home Loan Bank stock (at cost)                                                 |   |      | 3,250   |   |         |   | 3,250 |   |
| Cash surrender value of bank-owned life insurance                                      |   |      | 11,098  |   |         |   | 10,899 |   |
| Other assets                                                                           |   |      | 4,645   |   |         |   | 4,744 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| TOTAL ASSETS                                                                           |   | $         | 599,442 |   |         | $      | 621,093 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Liabilities                                                                            |   |      |    |   |         |   |   |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Non-interest-bearing deposits                                                          |   | $         | 51,062  |   |         | $      | 57,932 |   |
| Interest-bearing deposits                                                              |   |      | 393,221 |   |         |   | 407,325 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
|    Total deposits                                                       |   |      | 444,283 |   |         |   | 465,257 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Federal Home Loan Bank advances                                                        |   |      | 61,101  |   |         |   | 57,434 |   |
| Other borrowings                                                                       |   |      | 27,454  |   |         |   | 31,511 |   |
| Senior subordinated notes                                                              |   |      | 7,000   |   |         |   | 7,000 |   |
| Junior subordinated debentures                                                         |   |      | 7,732   |   |         |   | 7,732 |   |
| Accrued expenses and other liabilities                                                 |   |      | 3,956   |   |         |   | 5,469 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
|    Total liabilities                                                    |   |      | 551,526 |   |         |   | 574,403 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Stockholders’ equity                                                             |   |      |    |   |         |   |   |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| Preferred stock – no par value:                                                  |   |      |    |   |         |   |   |   |
|    Authorized – 30,000 shares; no shares issued or outstanding    |   |      | – |   |         |   | – |   |
| Common stock – no par value with a stated value of $1 per share:                 |   |      |    |   |         |   |   |   |
|    Authorized – 3,000,000 shares; Issued – 1,751,431 shares |   |      |    |   |         |   |   |   |
|    Outstanding – 1,573,255 and 1,564,297 shares, respectively     |   |      | 1,751   |   |         |   | 1,751 |   |
| Additional paid-in capital                                                             |   |      | 5,293   |   |         |   | 5,506 |   |
| Retained earnings                                                                      |   |      | 43,256  |   |         |   | 41,974 |   |
| Accumulated other comprehensive income, net of tax                                     |   |      | 2,442   |   |         |   | 2,528 |   |
| Treasury stock, at cost – 178,176 and 187,134 shares, respectively               |   |      | (4,826  | )      |         |   | (5,069 | ) |
|                                                                                   |   |      |    |   |         |   |   |   |
|    Total stockholders’ equity                                     |   |      | 47,916  |   |         |   | 46,690 |   |
|                                                                                   |   |      |    |   |         |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                       |   | $         | 599,442 |   |         | $      | 621,093 |   |

----

Index

|                                                            |   | Three Months Ended |   |
|-----------------------------------------------------------------|--------|--------------------|--------|
|                                                            |   | March 31,          |   |
| (dollars in thousands, except per share data – unaudited) |   | 2011               |   |   | 2010 |   |
|                                                            |   |               |   |   |   |   |
| Interest and dividend income:                                   |   |               |   |   |   |   |
| Loans, including fees                                           |   | $                  | 6,044  |   |   | $ | 6,129 |   |
| Securities:                                                     |   |               |   |   |   |   |   |   |
| Taxable                                                         |   |               | 678    |   |   |   | 755 |   |
| Tax-exempt                                                      |   |               | 297    |   |   |   | 328 |   |
| Other interest and dividends                                    |   |               | 24     |   |   |   | 2 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Total interest and dividend income                              |   |               | 7,043  |   |   |   | 7,214 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Interest expense:                                               |   |               |   |   |   |   |   |   |
| Deposits                                                        |   |               | 1,429  |   |   |   | 1,883 |   |
| FHLB advances                                                   |   |               | 457    |   |   |   | 460 |   |
| Other borrowings                                                |   |               | 167    |   |   |   | 231 |   |
| Senior subordinated notes                                       |   |               | 142    |   |   |   | 142 |   |
| Junior subordinated debentures                                  |   |               | 84     |   |   |   | 113 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Total interest expense                                          |   |               | 2,279  |   |   |   | 2,829 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Net interest income                                             |   |               | 4,764  |   |   |   | 4,385 |   |
| Provision for loan losses                                       |   |               | 360    |   |   |   | 460 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Net interest income after provision for loan losses             |   |               | 4,404  |   |   |   | 3,925 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Noninterest income:                                             |   |               |   |   |   |   |   |   |
| Service fees                                                    |   |               | 379    |   |   |   | 348 |   |
| Mortgage banking                                                |   |               | 425    |   |   |   | 263 |   |
| Investment and insurance sales commissions                      |   |               | 130    |   |   |   | 139 |   |
| Increase in cash surrender value of life insurance              |   |               | 106    |   |   |   | 101 |   |
| Other noninterest income                                        |   |               | 357    |   |   |   | 240 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Total noninterest income                                        |   |               | 1,397  |   |   |   | 1,091 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Noninterest expense:                                            |   |               |   |   |   |   |   |   |
| Salaries and employee benefits                                  |   |               | 2,110  |   |   |   | 2,052 |   |
| Occupancy and facilities                                        |   |               | 453    |   |   |   | 534 |   |
| Loss on foreclosed assets                                       |   |               | 295    |   |   |   | 111 |   |
| Data processing and other office operations                     |   |               | 313    |   |   |   | 226 |   |
| Advertising and promotion                                       |   |               | 61     |   |   |   | 74 |   |
| FDIC insurance premiums                                         |   |               | 189    |   |   |   | 232 |   |
| Other noninterest expenses                                      |   |               | 532    |   |   |   | 611 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Total noninterest expense                                       |   |               | 3,953  |   |   |   | 3,840 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Income before provision for income taxes                        |   |               | 1,848  |   |   |   | 1,176 |   |
| Provision for income taxes                                      |   |               | 563    |   |   |   | 295 |   |
|                                                            |   |               |   |   |   |   |   |   |
| Net income                                                      |   | $                  | 1,285  |   |   | $ | 881 |   |
| Basic earnings per share                                        |   | $                  | 0.82   |   |   | $ | 0.56 |   |
| Diluted earnings per share                                      |   | $                  | 0.82   |   |   | $ | 0.56 |   |

----

Index

m

|                                              |   |   |   |   |       |   |   |     |   |   | Accumulated   |   |   |     |   |   |   |   |
|---------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|---------------|--------|--------|----------|--------|--------|--------|--------|
|                                              |   |   |   |   |       |   |   |     |   |   | Other         |   |   |     |   |   |   |   |
|                                              |   |   |   |   | Additional |   |   |     |   |   | Comprehensive |   |   |     |   |   |   |   |
|                                              |   | Common |   |   | Paid-in    |   |   | Retained |   |   | Income        |   |   | Treasury |   |   |   |   |
| (dollars in thousands)                            |   | Stock  |   |   | Capital    |   |   | Earnings |   |   | (Loss)        |   |   | Stock    |   |   | Totals |   |
|                                              |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |
| Balance January 1, 2011                           |   | $      | 1,751  |   |       | $      | 5,506  |     |   | $      | 41,974        |   |   | $        | 2,528  |   |   | $      | (5,069 | ) |   | $ | 46,690 |   |
|                                              |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                             |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Net income                                        |   |   |   |   |       |   |   |     |   |   | 1,285         |   |   |     |   |   |   |   |   |   |   |   | 1,285 |   |
| Unrealized loss on securities                     |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of tax                    |   |   |   |   |       |   |   |     |   |   |          |   |   |     | (53    | )      |   |   |   |   |   |   | (53 | ) |
| Amortization of unrealized gain on securities     |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| available for sale transferred to securities held |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| to maturity included in net income, net of tax    |   |   |   |   |       |   |   |     |   |   |          |   |   |     | (86    | )      |   |   |   |   |   |   | (86 | ) |
| Unrealized gain on interest rate swap, net of tax |   |   |   |   |       |   |   |     |   |   |          |   |   |     | 26     |   |   |   |   |   |   |   | 26 |   |
| Reclassification of interest rate swap            |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| settlements included in earnings, net of tax      |   |   |   |   |       |   |   |     |   |   |          |   |   |     | 27     |   |   |   |   |   |   |   | 27 |   |
|                                              |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Total comprehensive income                        |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   | 1,199 |   |
|                                              |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Exercise of stock options                         |   |   |   |   |       |   | (3     | )        |   |   |          |   |   |     |   |   |   |   | 7 |   |   |   | 4 |   |
| Issuance of new restricted stock grants           |   |   |   |   |       |   | (236   | )        |   |   |          |   |   |     |   |   |   |   | 236 |   |   |   | – |   |
| Vesting of existing restricted stock grants       |   |   |   |   |       |   | 26     |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   | 26 |   |
| Cash dividends declared on unvested               |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| restricted stock grants                           |   |   |   |   |       |   |   |     |   |   | (3            | )      |   |     |   |   |   |   |   |   |   |   | (3 | ) |
|                                              |   |   |   |   |       |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Balance March 31, 2011                            |   | $      | 1,751  |   |       | $      | 5,293  |     |   | $      | 43,256        |   |   | $        | 2,442  |   |   | $      | (4,826 | ) |   | $ | 47,916 |   |

----

Index

F

| (dollars in thousands)                                                            |   | 2011   |    |   | 2010   |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                              |   |   |    |   |   |   |
| Cash flows from operating activities:                                             |   |   |    |   |   |   |
|                                                                              |   |   |    |   |   |   |
| Net income                                                                        |   | $      | 1,285   |   |   | $      | 881 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |    |   |   |   |   |   |
| Provision for depreciation and net amortization                                   |   |   | 535     |   |   |   | 491 |   |
| Provision for loan losses                                                         |   |   | 360     |   |   |   | 460 |   |
| Deferred net loan origination costs                                               |   |   | (75     | )      |   |   | (76 | ) |
| Gain on sale of loans                                                             |   |   | (205    | )      |   |   | (188 | ) |
| Provision for (recapture of) servicing right valuation allowance                  |   |   | (141    | )      |   |   | 9 |   |
| Loss on sale of foreclosed assets                                                 |   |   | 200     |   |   |   | 5 |   |
| Increase in cash surrender value of life insurance                                |   |   | (106    | )      |   |   | (101 | ) |
| Changes in operating assets and liabilities:                                      |   |   |    |   |   |   |   |   |
| Accrued interest receivable                                                       |   |   | (106    | )      |   |   | (286 | ) |
| Other assets                                                                      |   |   | 115     |   |   |   | 482 |   |
| Other liabilities                                                                 |   |   | (1,427  | )      |   |   | (1,144 | ) |
|                                                                              |   |   |    |   |   |   |   |   |
| Net cash provided by operating activities                                         |   |   | 435     |   |   |   | 533 |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |   |    |   |   |   |   |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Proceeds from sale and maturities of:                                             |   |   |    |   |   |   |   |   |
| Securities available for sale                                                     |   |   | 4,631   |   |   |   | 5,905 |   |
| Securities held to maturity                                                       |   |   | 945     |   |   |   | – |   |
| Payment for purchase of:                                                          |   |   |    |   |   |   |   |   |
| Securities available for sale                                                     |   |   | (12,428 | )      |   |   | (7,862 | ) |
| Securities held to maturity                                                       |   |   | (442    | )      |   |   | – |   |
| Net (increase) decrease in loans                                                  |   |   | (4,142  | )      |   |   | 1,667 |   |
| Capital expenditures                                                              |   |   | (19     | )      |   |   | (371 | ) |
| Proceeds from sale of foreclosed assets                                           |   |   | 74      |   |   |   | 10 |   |
| Purchase of bank-owned life insurance                                             |   |   | (93     | )      |   |   | – |   |
|                                                                              |   |   |    |   |   |   |   |   |
| Net cash used in investing activities                                             |   |   | (11,474 | )      |   |   | (651 | ) |

----

Index

| (dollars in thousands)                                     |   | 2011   |    |   | 2010   |   |
|------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                       |   |   |    |   |   |   |
| Cash flows from financing activities:                      |   |   |    |   |   |   |
|                                                       |   |   |    |   |   |   |
| Net decrease in non-interest-bearing deposits              |   |   | (6,870  | )      |   |   | (7,153 | ) |
| Net increase (decrease) in interest-bearing deposits       |   |   | (14,104 | )      |   |   | 7,505 |   |
| Net increase (decrease) in FHLB advances                   |   |   | 3,667   |   |   |   | (725 | ) |
| Net decrease in other borrowings                           |   |   | (4,057  | )      |   |   | (5,284 | ) |
| Dividends declared                                         |   |   | (3      | )      |   |   | (1 | ) |
| Proceeds from exercise of stock options                    |   |   | 4       |   |   |   | – |   |
|                                                       |   |   |    |   |   |   |   |   |
| Net cash used in financing activities                      |   |   | (21,363 | )      |   |   | (5,658 | ) |
|                                                       |   |   |    |   |   |   |   |   |
| Net decrease in cash and cash equivalents                  |   |   | (32,402 | )      |   |   | (5,776 | ) |
| Cash and cash equivalents at beginning                     |   |   | 40,331  |   |   |   | 26,337 |   |
|                                                       |   |   |    |   |   |   |   |   |
| Cash and cash equivalents at end                           |   | $      | 7,929   |   |   | $      | 20,561 |   |
|                                                       |   |   |    |   |   |   |   |   |
| Supplemental cash flow information:                        |   |   |    |   |   |   |   |   |
|                                                       |   |   |    |   |   |   |   |   |
| Cash paid (refunded) during the period for:                |   |   |    |   |   |   |   |   |
| Interest                                                   |   | $      | 2,353   |   |   | $      | 2,899 |   |
| Income taxes                                               |   |   | 475     |   |   |   | (6 | ) |
|                                                       |   |   |    |   |   |   |   |   |
| Noncash investing and financing activities:                |   |   |    |   |   |   |   |   |
|                                                       |   |   |    |   |   |   |   |   |
| Loans charged off                                          |   | $      | 946     |   |   | $      | 424 |   |
| Loans transferred to foreclosed assets                     |   |   | 135     |   |   |   | 1,225 |   |
| Issuance of unvested restricted stock grants at fair value |   |   | 200     |   |   |   | 75 |   |
| Vesting of restricted stock grants                         |   |   | 26      |   |   |   | 10 |   |

----

Index

n

|                                                                                  |   |      |   |   | Gross      |   |    | Gross      |   |   | Estimated |   |
|---------------------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|---------|------------|--------|--------|-----------|--------|
|                                                                                  |   | Amortized |   |   | Unrealized |   |    | Unrealized |   |   | Fair      |   |
|                                                                                  |   | Cost      |   |   | Gains      |   |    | Losses     |   |   | Value     |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |
| March 31, 2011                                                                        |   |      |   |   |       |   |    |       |   |   |      |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |
| Securities available for sale                                                         |   |      |   |   |       |   |    |       |   |   |      |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |
| U.S. Treasury securities and obligations of U.S. government corporations and agencies |   | $         | 503    |   |       | $      | 29      |       |   | $      | –   |   |   | $ | 532 |   |
| U.S. agency issued residential mortgage-backed securities                             |   |      | 17,266 |   |       |   | 1,067   |       |   |   | –   |   |   |   | 18,333 |   |
| U.S. agency issued residential collateralized mortgage obligations                    |   |      | 42,628 |   |       |   | 654     |       |   |   | 111       |   |   |   | 43,171 |   |
| Privately issued residential collateralized mortgage obligations                      |   |      | 738    |   |       |   | 18      |       |   |   | 3         |   |   |   | 753 |   |
| Other equity securities                                                               |   |      | 51     |   |       |   | – |       |   |   | –   |   |   |   | 51 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Totals                                                                                |   | $         | 61,186 |   |       | $      | 1,768   |       |   | $      | 114       |   |   | $ | 62,840 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Securities held to maturity                                                           |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Obligations of states and political subdivisions                                      |   | $         | 50,572 |   |       | $      | 26      |       |   | $      | 798       |   |   | $ | 49,800 |   |
| Nonrated trust preferred securities                                                   |   |      | 1,472  |   |       |   | 24      |       |   |   | 261       |   |   |   | 1,235 |   |
| Nonrated senior subordinated notes                                                    |   |      | 404    |   |       |   | – |       |   |   | 4         |   |   |   | 400 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Totals                                                                                |   | $         | 52,448 |   |       | $      | 50      |       |   | $      | 1,063     |   |   | $ | 51,435 |   |

----

Index

|                                                                                  |   |      |   |   | Gross      |   |    | Gross      |   |   | Estimated |   |
|---------------------------------------------------------------------------------------|--------|-----------|--------|--------|------------|--------|---------|------------|--------|--------|-----------|--------|
|                                                                                  |   | Amortized |   |   | Unrealized |   |    | Unrealized |   |   | Fair      |   |
|                                                                                  |   | Cost      |   |   | Gains      |   |    | Losses     |   |   | Value     |   |
| December 31, 2010                                                                     |   |      |   |   |       |   |    |       |   |   |      |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |
| Securities available for sale                                                         |   |      |   |   |       |   |    |       |   |   |      |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |
| U.S. Treasury securities and obligations of U.S. government corporations and agencies |   | $         | 1,003  |   |       | $      | 38      |       |   | $      | –   |   |   | $ | 1,041 |   |
| U.S. agency issued residential mortgage-backed securities                             |   |      | 16,580 |   |       |   | 1,110   |       |   |   | –   |   |   |   | 17,690 |   |
| U.S. agency issued residential collateralized mortgage obligations                    |   |      | 34,934 |   |       |   | 652     |       |   |   | 75        |   |   |   | 35,511 |   |
| Privately issued residential collateralized mortgage obligations                      |   |      | 964    |   |       |   | 18      |       |   |   | 2         |   |   |   | 980 |   |
| Other equity securities                                                               |   |      | 51     |   |       |   | – |       |   |   | –   |   |   |   | 51 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Totals                                                                                |   | $         | 53,532 |   |       | $      | 1,818   |       |   | $      | 77        |   |   | $ | 55,273 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Securities held to maturity                                                           |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Obligations of states and political subdivisions                                      |   | $         | 51,234 |   |       | $      | 7       |       |   | $      | 1,435     |   |   | $ | 49,806 |   |
| Nonrated trust preferred securities                                                   |   |      | 1,468  |   |       |   | 25      |       |   |   | 37        |   |   |   | 1,456 |   |
| Nonrated senior subordinated notes                                                    |   |      | 404    |   |       |   | – |       |   |   | 4         |   |   |   | 400 |   |
|                                                                                  |   |      |   |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Totals                                                                                |   | $         | 53,106 |   |       | $      | 32      |       |   | $      | 1,476     |   |   | $ | 51,662 |   |

|                                                                                |   | Three months ended |   |
|-------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                |   | March 31,          |   |
| (dollars in thousands – unaudited)                                            |   | 2011               |   |   | 2010 |   |
|                                                                                |   |               |   |   |   |   |
| Net income                                                                          |   | $                  | 1,285  |   |   | $ | 881 |   |
| Unrealized gain (loss) on securities available for sale, net of tax                 |   |               | (53    | ) |   |   | 122 |   |
| Amortization of unrealized gain on securities available for sale transferred to     |   |               |   |   |   |   |   |   |
| securities held to maturity included in net income, net of tax                      |   |               | (86    | ) |   |   | – |   |
| Unrealized gain on interest rate swap, net of tax                                   |   |               | 26     |   |   |   | – |   |
| Reclassification of interest rate swap settlements included in earnings, net of tax |   |               | 27     |   |   |   | – |   |
|                                                                                |   |               |   |   |   |   |   |   |
| Comprehensive income (loss)                                                         |   | $                  | 1,199  |   |   | $ | 1,003 |   |

----

Index

|                                  |   | March 31, 2011 |    |   | December 31, 2010 |   |
|---------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                  |   |           |    |   |              |   |
| Commercial, industrial, and municipal |   | $              | 126,990 |   |              | $      | 129,063 |   |
| Commercial real estate mortgage       |   |           | 185,587 |   |              |   | 180,937 |   |
| Construction and development          |   |           | 33,410  |   |              |   | 35,310 |   |
| Residential real estate mortgage      |   |           | 75,229  |   |              |   | 71,675 |   |
| Residential real estate home equity   |   |           | 24,018  |   |              |   | 23,774 |   |
| Consumer and individual               |   |           | 4,073   |   |              |   | 3,929 |   |
|                                  |   |           |    |   |              |   |   |   |
| Subtotals - Gross loans               |   |           | 449,307 |   |              |   | 444,688 |   |
| Loans in process of disbursement      |   |           | (6,160  | )      |              |   | (5,177 | ) |
|                                  |   |           |    |   |              |   |   |   |
| Subtotals - Disbursed loans           |   |           | 443,147 |   |              |   | 439,511 |   |
| Net deferred loan origination costs   |   |           | 232     |   |              |   | 250 |   |
| Allowance for loan losses             |   |           | (7,377  | )      |              |   | (7,960 | ) |
|                                  |   |           |    |   |              |   |   |   |
| Net loans receivable                  |   | $              | 436,002 |   |              | $      | 431,801 |   |

----

Index

|                                             |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                             |   |           |   |   |              |   |
| Impaired loans without a valuation allowance     |   | $              | 4,537  |   |              | $      | 8,773 |   |
| Impaired loans with a valuation allowance        |   |           | 8,883  |   |              |   | 2,643 |   |
|                                             |   |           |   |   |              |   |   |   |
| Total impaired loans before valuation allowances |   |           | 13,420 |   |              |   | 11,416 |   |
| Valuation allowance related to impaired loans    |   |           | 3,057  |   |              |   | 1,496 |   |
|                                             |   |           |   |   |              |   |   |   |
| Net impaired loans                               |   | $              | 10,363 |   |              | $      | 9,920 |   |

|                                  |   | March 31, 2011 |    |   | March 31, 2010        |   |
|---------------------------------------|--------|----------------|---------|--------|-----------------------|--------|
| Allowance for loan losses:            |   | Commercial     |    |   | CommercialReal Estate |   |   | ResidentialReal Estate |   |   | Consumer |   |   | Unallocated |   |   | Total |   |   | Total |   |
|                                  |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                     |   | $              | 3,862   |   |                  | $      | 3,674 |   |   | $ | 211 |   |   | $ | 213 |   |   | $ | – |   |   | $ | 7,960 |   |   | $ | 7,611 |   |
| Provision                             |   |           | 650     |   |                  |   | (868 | ) |   |   | 672 |   |   |   | (94 | ) |   |   | – |   |   |   | 360 |   |   |   | 460 |   |
| Recoveries                            |   |           | 1       |   |                  |   | – |   |   |   | – |   |   |   | 2 |   |   |   | – |   |   |   | 3 |   |   |   | 2 |   |
| Charge offs                           |   |           | (725    | )      |                  |   | (132 | ) |   |   | (82 | ) |   |   | (7 | ) |   |   | – |   |   |   | (946 | ) |   |   | (424 | ) |
|                                  |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $              | 3,788   |   |                  | $      | 2,674 |   |   | $ | 801 |   |   | $ | 114 |   |   | $ | – |   |   | $ | 7,377 |   |   | $ | 7,649 |   |
| Individually evaluated for impairment |   | $              | 1,844   |   |                  | $      | 820 |   |   | $ | 349 |   |   | $ | 44 |   |   | $ | – |   |   | $ | 3,057 |   |   |   |   |   |
| Collectively evaluated for impairment |   | $              | 1,944   |   |                  | $      | 1,854 |   |   | $ | 452 |   |   | $ | 70 |   |   | $ | – |   |   | $ | 4,320 |   |   |   |   |   |
|                                  |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable (gross):             |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |           |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $              | 6,813   |   |                  | $      | 4,985 |   |   | $ | 1,150 |   |   | $ | 472 |   |   | $ | – |   |   | $ | 13,420 |   |   |   |   |   |
| Collectively evaluated for impairment |   | $              | 120,177 |   |                  | $      | 207,101 |   |   | $ | 105,008 |   |   | $ | 3,601 |   |   | $ | – |   |   | $ | 435,887 |   |   |   |   |   |

----

Index

|                                |   |       |    |   | Commercial  |   |    | Construction & |   |   |         |   |   |       |    |   |   |   |
|-------------------------------------|--------|------------|---------|--------|-------------|--------|---------|--------------------|--------|--------|--------------|--------|--------|------------|---------|--------|--------|--------|
| At March 31, 2011                   |   | Commercial |    |   | Real Estate |   |    | Development        |   |   | Agricultural |   |   | Government |    |   | Total  |   |
|                                |   |       |    |   |        |   |    |               |   |   |         |   |   |       |    |   |   |   |
| High quality (credit risk rating 1) |   | $          | 13      |   |        | $      | – |               |   | $      | –      |   |   | $          | – |   |   | $      | – |   |   | $ | 13 |   |
| Minimal risk (2)                    |   |       | 4,009   |   |        |   | 25,959  |               |   |   | 451          |   |   |       | 659     |   |   |   | 1,809 |   |   |   | 32,887 |   |
| Average risk (3)                    |   |       | 55,986  |   |        |   | 108,131 |               |   |   | 16,984       |   |   |       | 1,566   |   |   |   | 5,987 |   |   |   | 188,654 |   |
| Acceptable risk (4)                 |   |       | 37,236  |   |        |   | 39,597  |               |   |   | 8,617        |   |   |       | 410     |   |   |   | – |   |   |   | 85,860 |   |
| Watch risk (5)                      |   |       | 9,603   |   |        |   | 6,365   |               |   |   | 46           |   |   |       | – |   |   |   | – |   |   |   | 16,014 |   |
| Substandard risk (6)                |   |       | 2,899   |   |        |   | 951     |               |   |   | –      |   |   |       | – |   |   |   | – |   |   |   | 3,850 |   |
| Impaired loans (7)                  |   |       | 6,455   |   |        |   | 4,584   |               |   |   | 401          |   |   |       | 358     |   |   |   | – |   |   |   | 11,798 |   |
|                                |   |       |    |   |        |   |    |               |   |   |         |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Total                               |   | $          | 116,201 |   |        | $      | 185,587 |               |   | $      | 26,499       |   |   | $          | 2,993   |   |   | $      | 7,796 |   |   | $ | 339,076 |   |

|                                |   |       |    |   |        |   |    |              |   |   |         |   |   |       |    |   |   |   |
|-------------------------------------|--------|------------|---------|--------|-------------|--------|---------|-------------------|--------|--------|--------------|--------|--------|------------|---------|--------|--------|--------|
|                                |   |       |    |   | Commercial  |   |    | Construction      |   |   |         |   |   |       |    |   |   |   |
| At December 31, 2010                |   | Commercial |    |   | Real Estate |   |    | & Development |   |   | Agricultural |   |   | Government |    |   | Total  |   |
|                                |   |       |    |   |        |   |    |              |   |   |         |   |   |       |    |   |   |   |
| High quality (credit risk rating 1) |   | $          | 83      |   |        | $      | – |              |   | $      | –      |   |   | $          | – |   |   | $      | – |   |   | $ | 83 |   |
| Minimal risk (2)                    |   |       | 3,854   |   |        |   | 27,792  |              |   |   | 1,055        |   |   |       | 664     |   |   |   | 1,922 |   |   |   | 35,287 |   |
| Average risk (3)                    |   |       | 57,667  |   |        |   | 107,639 |              |   |   | 7,865        |   |   |       | 1,507   |   |   |   | 6,024 |   |   |   | 180,702 |   |
| Acceptable risk (4)                 |   |       | 37,373  |   |        |   | 33,482  |              |   |   | 12,594       |   |   |       | 293     |   |   |   | – |   |   |   | 83,742 |   |
| Watch risk (5)                      |   |       | 10,303  |   |        |   | 6,560   |              |   |   | 145          |   |   |       | – |   |   |   | – |   |   |   | 17,008 |   |
| Substandard risk (6)                |   |       | 4,797   |   |        |   | 3,010   |              |   |   | 237          |   |   |       | – |   |   |   | – |   |   |   | 8,044 |   |
| Impaired loans (7)                  |   |       | 4,218   |   |        |   | 2,454   |              |   |   | 345          |   |   |       | 358     |   |   |   | – |   |   |   | 7,375 |   |
|                                |   |       |    |   |        |   |    |              |   |   |         |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Total                               |   | $          | 118,295 |   |        | $      | 180,937 |              |   | $      | 22,241       |   |   | $          | 2,822   |   |   | $      | 7,946 |   |   | $ | 332,241 |   |

|              |   | Residential – |   | Residential – |   | Construction & |   |     |   |   |
|-------------------|--------|---------------------|--------|---------------------|--------|--------------------|--------|----------|--------|--------|
| At March 31, 2011 |   | Prime               |   | HELOC               |   | Development        |   | Consumer |   | Total  |
|              |   |                |   |                |   |               |   |     |   |   |
| Performing        |   | $                   | 74,190 |                |   | $                  | 23,917 |     |   | $      | 6,813 |   |   | $ | 3,997 |   |   | $ | 108,917 |   |
| Nonperforming     |   |                | 1,039  |                |   |               | 101    |     |   |   | 98 |   |   |   | 76 |   |   |   | 1,314 |   |
|              |   |                |   |                |   |               |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Total             |   | $                   | 75,229 |                |   | $                  | 24,018 |     |   | $      | 6,911 |   |   | $ | 4,073 |   |   | $ | 110,231 |   |

|                 |   |                |   |                |   |               |   |     |   |   |
|----------------------|--------|---------------------|--------|---------------------|--------|--------------------|--------|----------|--------|--------|
|                 |   | Residential – |   | Residential – |   | Construction & |   |     |   |   |
| At December 31, 2010 |   | Prime               |   | HELOC               |   | Development        |   | Consumer |   | Total  |
|                 |   |                |   |                |   |               |   |     |   |   |
| Performing           |   | $                   | 70,242 |                |   | $                  | 23,632 |     |   | $      | 12,928 |   |   | $ | 3,851 |   |   | $ | 110,653 |   |
| Nonperforming        |   |                | 1,433  |                |   |               | 142    |     |   |   | 141 |   |   |   | 78 |   |   |   | 1,794 |   |
|                 |   |                |   |                |   |               |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                |   | $                   | 71,675 |                |   | $                  | 23,774 |     |   | $      | 13,069 |   |   | $ | 3,929 |   |   | $ | 112,447 |   |

----

Index

|                                             |   | 30-59  |    |   | 60-89  |   |    |  90+ |   |   | Total    |   |   |    |    |   | Total  |   |    | 90+ and  |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|-----------|--------|--------|----------|--------|--------|---------|---------|--------|--------|--------|---------|----------|--------|
| Loan Class at March 31, 2011                     |   | Days   |    |   | Days   |   |    | Days      |   |   | Past Due |   |   | Current |    |   | Loans  |   |    | Accruing |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |
| Commercial:                                      |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |
| Commercial and industrial                        |   | $      | 865     |   |   | $      | 1,141   |      |   | $      | 2,275    |   |   | $       | 4,281   |   |   | $      | 111,920 |     |   | $ | 116,201 |   |   | $ | – |   |
| Agricultural                                     |   |   | – |   |   |   | – |      |   |   | 58       |   |   |    | 58      |   |   |   | 2,935   |     |   |   | 2,993 |   |   |   | – |   |
| Government                                       |   |   | – |   |   |   | – |      |   |   | –  |   |   |    | – |   |   |   | 7,796   |     |   |   | 7,796 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Commercial real estate:                          |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Commercial real estate                           |   |   | 474     |   |   |   | – |      |   |   | 1,200    |   |   |    | 1,674   |   |   |   | 183,913 |     |   |   | 185,587 |   |   |   | – |   |
| Commercial construction and development          |   |   | – |   |   |   | – |      |   |   | 239      |   |   |    | 239     |   |   |   | 21,666  |     |   |   | 21,905 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Residential real estate:                         |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Residential – prime                        |   |   | 1,026   |   |   |   | 115     |      |   |   | 577      |   |   |    | 1,718   |   |   |   | 73,511  |     |   |   | 75,229 |   |   |   | – |   |
| Residential – HELOC                        |   |   | 79      |   |   |   | 7       |      |   |   | 45       |   |   |    | 131     |   |   |   | 23,887  |     |   |   | 24,018 |   |   |   | – |   |
| Residential – construction and development |   |   | – |   |   |   | – |      |   |   | 76       |   |   |    | 76      |   |   |   | 5,269   |     |   |   | 5,345 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Consumer                                         |   |   | 28      |   |   |   | 3       |      |   |   | 70       |   |   |    | 101     |   |   |   | 3,972   |     |   |   | 4,073 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |      |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Total                                            |   | $      | 2,472   |   |   | $      | 1,266   |      |   | $      | 4,540    |   |   | $       | 8,278   |   |   | $      | 434,869 |     |   | $ | 443,147 |   |   | $ | – |   |

|                                             |   | 30-59  |    |   | 60-89  |   |    | 90+    |   |   | Total    |   |   |    |    |   | Total  |   |    | 90+ and  |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|----------|--------|--------|---------|---------|--------|--------|--------|---------|----------|--------|
| Loan Class at December 31, 2010                  |   | Days   |    |   | Days   |   |    | Days   |   |   | Past Due |   |   | Current |    |   | Loans  |   |    | Accruing |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |
| Commercial:                                      |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |
| Commercial and industrial                        |   | $      | 2,235   |   |   | $      | 694     |   |   | $      | 2,305    |   |   | $       | 5,234   |   |   | $      | 113,061 |     |   | $ | 118,295 |   |   | $ | – |   |
| Agricultural                                     |   |   | – |   |   |   | – |   |   |   | 72       |   |   |    | 72      |   |   |   | 2,750   |     |   |   | 2,822 |   |   |   | – |   |
| Government                                       |   |   | – |   |   |   | – |   |   |   | –  |   |   |    | – |   |   |   | 7,946   |     |   |   | 7,946 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Commercial real estate:                          |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Commercial real estate                           |   |   | 178     |   |   |   | 355     |   |   |   | 1,545    |   |   |    | 2,078   |   |   |   | 178,859 |     |   |   | 180,937 |   |   |   | – |   |
| Commercial construction and development          |   |   | – |   |   |   | 145     |   |   |   | 448      |   |   |    | 593     |   |   |   | 17,930  |     |   |   | 18,523 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Residential real estate:                         |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Residential – prime                        |   |   | 649     |   |   |   | 267     |   |   |   | 758      |   |   |    | 1,674   |   |   |   | 70,001  |     |   |   | 71,675 |   |   |   | – |   |
| Residential – HELOC                        |   |   | 26      |   |   |   | 35      |   |   |   | 78       |   |   |    | 139     |   |   |   | 23,635  |     |   |   | 23,774 |   |   |   | – |   |
| Residential – construction and development |   |   | 17      |   |   |   | – |   |   |   | 99       |   |   |    | 116     |   |   |   | 11,494  |     |   |   | 11,610 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Consumer                                         |   |   | 8       |   |   |   | 3       |   |   |   | 78       |   |   |    | 89      |   |   |   | 3,840   |     |   |   | 3,929 |   |   |   | – |   |
|                                             |   |   |    |   |   |   |    |   |   |   |     |   |   |    |    |   |   |   |    |     |   |   |   |   |   |   |   |   |
| Total                                            |   | $      | 3,113   |   |   | $      | 1,499   |   |   | $      | 5,383    |   |   | $       | 9,995   |   |   | $      | 429,516 |     |   | $ | 439,511 |   |   | $ | – |   |

----

Index

|                                       |   | Unpaid    |    |   |      |   |    |       |   |   | Average    |   |   | Interest   |   |
|--------------------------------------------|--------|-----------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                       |   | Principal |    |   | Related   |   |    | Recorded   |   |   | Recorded   |   |   | Income     |   |
| At March 31, 2011                          |   | Balance   |    |   | Allowance |   |    | Investment |   |   | Investment |   |   | Recognized |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |
| With no related allowance recorded:        |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |
| Commercial & industrial                |   | $         | 2,928   |   |      | $      | – |       |   | $      | 2,928      |   |   | $          | 3,070  |   |   | $ | 27 |   |
| Commercial real estate                     |   |      | 1,198   |   |      |   | – |       |   |   | 1,198      |   |   |       | 3,261  |   |   |   | 27 |   |
| Commercial construction & development  |   |      | 239     |   |      |   | – |       |   |   | 239        |   |   |       | 239    |   |   |   | – |   |
| Agricultural                               |   |      | – |   |      |   | – |       |   |   | –    |   |   |       | 150    |   |   |   | 4 |   |
| Residential – prime                  |   |      | 73      |   |      |   | – |       |   |   | 73         |   |   |       | 351    |   |   |   | 3 |   |
| Residential – HELOC                  |   |      | – |   |      |   | – |       |   |   | –    |   |   |       | 23     |   |   |   | – |   |
| Residential construction & development |   |      | 99      |   |      |   | – |       |   |   | 99         |   |   |       | 61     |   |   |   | – |   |
| Consumer                                   |   |      | – |   |      |   | – |       |   |   | –    |   |   |       | 11     |   |   |   | – |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
| With an allowance recorded:                |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial & industrial                |   | $         | 3,827   |   |      | $      | 1,796   |       |   | $      | 2,031      |   |   | $          | 1,458  |   |   | $ | 10 |   |
| Commercial real estate                     |   |      | 3,548   |   |      |   | 820     |       |   |   | 2,728      |   |   |       | 1,495  |   |   |   | 22 |   |
| Commercial construction & development  |   |      | – |   |      |   | – |       |   |   | –    |   |   |       | 156    |   |   |   | 1 |   |
| Agricultural                               |   |      | 58      |   |      |   | 48      |       |   |   | 10         |   |   |       | 10     |   |   |   | – |   |
| Residential – prime                  |   |      | 896     |   |      |   | 314     |       |   |   | 582        |   |   |       | 542    |   |   |   | 1 |   |
| Residential – HELOC                  |   |      | 82      |   |      |   | 35      |       |   |   | 47         |   |   |       | 54     |   |   |   | – |   |
| Residential construction & development |   |      |    |   |      |   | – |       |   |   | –    |   |   |       | 20     |   |   |   | – |   |
| Consumer                                   |   |      | 472     |   |      |   | 44      |       |   |   | 428        |   |   |       | 224    |   |   |   | – |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Totals:                                    |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
|                                       |   |      |    |   |      |   |    |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial & industrial                |   | $         | 6,755   |   |      | $      | 1,796   |       |   | $      | 4,959      |   |   | $          | 4,528  |   |   | $ | 37 |   |
| Commercial real estate                     |   |      | 4,746   |   |      |   | 820     |       |   |   | 3,926      |   |   |       | 4,756  |   |   |   | 49 |   |
| Commercial construction & development  |   |      | 239     |   |      |   | – |       |   |   | 239        |   |   |       | 395    |   |   |   | 1 |   |
| Agricultural                               |   |      | 58      |   |      |   | 48      |       |   |   | 10         |   |   |       | 160    |   |   |   | 4 |   |
| Residential – prime                  |   |      | 969     |   |      |   | 314     |       |   |   | 655        |   |   |       | 893    |   |   |   | 4 |   |
| Residential – HELOC                  |   |      | 82      |   |      |   | 35      |       |   |   | 47         |   |   |       | 77     |   |   |   | – |   |
| Residential construction & development |   |      | 99      |   |      |   | – |       |   |   | 99         |   |   |       | 81     |   |   |   | – |   |
| Consumer                                   |   |      | 472     |   |      |   | 44      |       |   |   | 428        |   |   |       | 235    |   |   |   | – |   |

----

Index

|                                               |   | March 31, 2011 |   |   | December 31, 2010 |   |
|----------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                               |   |           |   |   |              |   |
| Commercial:                                        |   |           |   |   |              |   |
|                                               |   |           |   |   |              |   |
| Commercial and industrial                          |   | $              | 4,266  |   |              | $      | 4,546 |   |
| Agricultural                                       |   |           | 70     |   |              |   | 72 |   |
|                                               |   |           |   |   |              |   |   |   |
| Commercial real estate:                            |   |           |   |   |              |   |   |   |
|                                               |   |           |   |   |              |   |   |   |
| Commercial real estate                             |   |           | 1,453  |   |              |   | 2,119 |   |
| Commercial  construction and development |   |           | 450    |   |              |   | 508 |   |
|                                               |   |           |   |   |              |   |   |   |
| Residential real estate:                           |   |           |   |   |              |   |   |   |
|                                               |   |           |   |   |              |   |   |   |
| Residential - prime                                |   |           | 1,039  |   |              |   | 1,433 |   |
| Residential - HELOC                                |   |           | 101    |   |              |   | 142 |   |
| Residential construction and development           |   |           | 98     |   |              |   | 141 |   |
|                                               |   |           |   |   |              |   |   |   |
| Consumer                                           |   |           | 76     |   |              |   | 78 |   |
|                                               |   |           |   |   |              |   |   |   |
| Total                                              |   | $              | 7,553  |   |              | $      | 9,039 |   |

|                                                           |   | 2011   |    |   | 2010   |   |
|----------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                           |   |   |    |   |   |   |
| Balance at beginning of period                                 |   | $      | 4,967   |   |   | $      | 3,776 |   |
|                                                           |   |   |    |   |   |   |   |   |
| Transfer of loans at net realizable value to foreclosed assets |   |   | 135     |   |   |   | 1,225 |   |
| Sale proceeds                                                  |   |   | (74     | )      |   |   | (10 | ) |
| Loans made on sale of foreclosed assets                        |   |   | – |   |   |   | – |   |
| Net gain (loss) from sale of foreclosed assets                 |   |   | 24      |   |   |   | – |   |
| Provision for write-down charged to operations                 |   |   | (224    | )      |   |   | (5 | ) |
|                                                           |   |   |    |   |   |   |   |   |
| Balance at end of period                                       |   | $      | 4,828   |   |   | $      | 4,986 |   |

----

Index

|                               |   | March 31, 2011 |    |   | December 31, 2010 |   |
|------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                               |   |           |    |   |              |   |
| Non-interest bearing demand        |   | $              | 51,062  |   |              | $      | 57,932 |   |
| Interest bearing demand (NOWs)     |   |           | 100,031 |   |              |   | 106,569 |   |
| Savings                            |   |           | 26,610  |   |              |   | 24,662 |   |
| Money market                       |   |           | 99,571  |   |              |   | 105,866 |   |
| Retail time                        |   |           | 100,068 |   |              |   | 103,397 |   |
| Wholesale market and national time |   |           | 66,941  |   |              |   | 66,831 |   |
|                               |   |           |    |   |              |   |   |   |
| Total deposits                     |   | $              | 444,283 |   |              | $      | 465,257 |   |

|                                       |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                       |   |           |   |   |              |   |
| Federal funds purchased                    |   | $              | 4,220  |   |              | $      | – |   |
| Short-term repurchase agreements           |   |           | 9,734  |   |              |   | 18,011 |   |
| Wholesale structured repurchase agreements |   |           | 13,500 |   |              |   | 13,500 |   |
|                                       |   |           |   |   |              |   |   |   |
| Total other borrowings                     |   | $              | 27,454 |   |              | $      | 31,511 |   |

|                                              |   | Three months ended |
|---------------------------------------------------|--------|--------------------|
|                                              |   | March 31, 2011     |   | March 31, 2010 |
|                                              |   |               |   |   |
| As of end of period – weighted average rate |   |               | 2.42 | % |   |   | 3.01 | % |
| For the quarterly period:                         |   |               |   |   |   |   |   |   |
| Highest month-end balance                         |   | $                  | 32,644 |   |   | $ | 30,185 |   |
| Daily average balance                             |   | $                  | 30,714 |   |   | $ | 27,070 |   |
| Weighted average rate                             |   |               | 2.21 | % |   |   | 3.46 | % |

----

Index

|                               | March 31, 2011              | December 31, 2010 |
|------------------------------------|-----------------------------|-------------------|
|                               |                        |              |
| Notional amount:                   | $ 7,500                |              | $ 7,500  |   |
| Pay fixed rate:                    | 2.72%                       |              | 2.72% |   |
| Receive variable rate:             | 0.31%                       |              | 0.30% |   |
| Maturity:                          | September 2017              | September 2017    |
| Unrealized gain (loss) fair value: | $    61 |              | $    (25) |   |

|                               | March 31, 2011              |
|------------------------------------|-----------------------------|
|                               |                        |
| Notional amount:                   | $ 8,180           |   |
| Receive fixed rate (average):      | 2.14%                       |   |
| Pay variable rate (average):       | 0.25%                       |   |
| Maturity:                          | March 2015                  |
| Unrealized gain (loss) fair value: | $   93  |   |

|                               | March 31, 2011                |
|------------------------------------|-------------------------------|
|                               |                          |
| Notional amount:                   | $ 8,180             |   |
| Pay fixed rate (average):          | 2.14%                         |   |
| Receive variable rate (average):   | 0.25%                         |   |
| Maturity:                          | March 2015                    |
| Unrealized gain (loss) fair value: | $    (93) |   |

----

Index

|                            |   |   |   |   | Weighted    |   |
|---------------------------------|--------|--------|--------|--------|-------------|--------|
|                            |   |   |   |   | Average     |   |
|                            |   | Shares |   |   | Grant Price |   |
|                            |   |   |   |   |        |   |
| January 1, 2010                 |   |   | 14,332 |   |        | $      | 17.44 |   |
| Restricted stock granted        |   |   | 4,983  |   |        |   | 15.05 |   |
| Restricted stock legally vested |   |   | (785   | )      |        |   | (25.53 | ) |
|                            |   |   |   |   |        |   |   |   |
| March 31, 2010                  |   |   | 18,530 |   |        | $      | 16.46 |   |
|                            |   |   |   |   |        |   |   |   |
| January 1, 2011                 |   |   | 18,530 |   |        | $      | 16.46 |   |
| Restricted stock granted        |   |   | 8,695  |   |        |   | 23.00 |   |
| Restricted stock legally vested |   |   | (2,867 | )      |        |   | (17.45 | ) |
|                            |   |   |   |   |        |   |   |   |
| March 31, 2011                  |   |   | 24,358 |   |        | $      | 18.67 |   |

| 2011       |   | $      | 78     |   |
|------------|--------|--------|--------|--------|
| 2012       |   |   | 85     |   |
| 2013       |   |   | 105    |   |
| 2014       |   |   | 85     |   |
| 2015       |   |   | 55     |   |
| Thereafter |   |   | 40     |   |
|       |   |   |   |   |
| Totals     |   | $      | 448    |   |

----

Index

|                                                            |   | Three months ended |      |
|-----------------------------------------------------------------|--------|--------------------|-----------|
| (dollars in thousands, except per share data – unaudited) |   | March 31,          |      |
|                                                            |   | 2011               |      |   | 2010 |   |
|                                                            |   |               |      |   |   |   |
| Net income                                                      |   | $                  | 1,285     |   |   | $ | 881 |   |
|                                                            |   |               |      |   |   |   |   |   |
| Weighted average shares outstanding                             |   |               | 1,572,825 |   |   |   | 1,564,131 |   |
| Effect of dilutive stock options outstanding                    |   |               | 1,227     |   |   |   | 627 |   |
|                                                            |   |               |      |   |   |   |   |   |
| Diluted weighted average shares outstanding                     |   |               | 1,574,052 |   |   |   | 1,564,758 |   |
|                                                            |   |               |      |   |   |   |   |   |
| Basic earnings per share                                        |   | $                  | 0.82      |   |   | $ | 0.56 |   |
| Diluted earnings per share                                      |   | $                  | 0.82      |   |   | $ | 0.56 |   |

----

Index

|                                                                | Portfolio Range              | 2011 Originations |
|---------------------------------------------------------------------|------------------------------|-------------------|
|                                                                |                         |              |
| Direct annual servicing cost per loan                               | $60 – $100             | $100              |
| Direct annual servicing cost per foreclosed loan                    | $0 – $500              | $500              |
| Cash flow discount rate                                             | 8.25%  – 12% | 12%               |
| Short-term reinvestment on float of payments to investors           | .5% – 5.25%            | .25%              |
| Estimated future delinquent loans as a percentage of serviced loans | 0 – .70%               | .70%              |
| Estimated foreclosed principal as a percentage of serviced loans    | 0 – .25%               | .25%              |
| Late fee assessed as a percentage of principal on delinquent loans  | 5%                           | 5%                |

|   | · | Estimated failure to close on 10% of period-end rate lock commitments |
|--------|--------|-----------------------------------------------------------------------|

|   | · | Estimated combined cash gain on sale of principal and originated mortgage servicing rate equal to 1% of mortgage rate lock loan principal |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                                       |   |              |   |   | Recurring Fair Value Measurements Using |   |
|--------------------------------------------|--------|-------------------|--------|--------|-----------------------------------------|--------|
|                                       |   |              |   |   | Quoted Prices in                        |   |   |   |   |   |   |   |
|                                       |   |              |   |   | Active Markets                          |   |   | Significant Other |   |   | Significant |   |
|                                       |   |              |   |   | for Identical                           |   |   | Observable |   |   | Unobservable |   |
|                                       |   |              |   |   | Assets                                  |   |   | Inputs |   |   | Inputs |   |
|                                       |   | ($000s)           |   |   | (Level 1)                               |   |   | (Level 2) |   |   | (Level 3) |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |
| Assets:                                    |   | March 31, 2011    |   |   |                                    |   |   |   |   |   |   |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |
| Securities available for sale:             |   |              |   |   |                                    |   |   |   |   |   |   |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |
| U.S. Treasury and agency debentures        |   | $                 | 532    |   |                                    |   | – |   |   | $ | 532 |   |   | $ | – |   |
| U.S. agency issued residential MBS and CMO |   |              | 61,504 |   |                                    |   | – |   |   |   | 61,504 |   |   |   | – |   |
| Other equity securities                    |   |              | 51     |   |                                    |   | – |   |   |   | – |   |   |   | 51 |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale        |   |              | 62,840 |   |                                    |   | – |   |   |   | 62,789 |   |   |   | 51 |   |
| Assets – interest rate swaps         |   |              | 154    |   |                                    |   | – |   |   |   | 154 |   |   |   | – |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                               |   |              | 62,994 |   |                                    |   | – |   |   |   | 62,943 |   |   |   | 51 |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities – Interest rate swaps    |   | $                 | 93     |   |                                    | $      | – |   |   | $ | 93 |   |   | $ | – |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                    |   | December 31, 2010 |   |   |                                    |   |   |   |   |   |   |   |   |   |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale:             |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury and agency debentures        |   | $                 | 1,041  |   |                                    | $      | – |   |   | $ | 1,041 |   |   | $ | – |   |
| U.S. agency issued residential MBS and CMO |   |              | 53,201 |   |                                    |   | – |   |   |   | 53,201 |   |   |   | – |   |
| Privately issued residential MBS and CMO   |   |              | 980    |   |                                    |   | – |   |   |   | 980 |   |   |   | – |   |
| Other equity securities                    |   |              | 51     |   |                                    |   | – |   |   |   | – |   |   |   | 51 |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Total securities available for sale        |   |              | 55,273 |   |                                    |   | – |   |   |   | 55,222 |   |   |   | 51 |   |
|                                       |   |              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities – Interest rate swaps    |   | $                 | 25     |   |                                    | $      | – |   |   | $ | 25 |   |   | $ | – |   |

----

Index

|                                                                                 |   | Securities |
|--------------------------------------------------------------------------------------|--------|------------|
|                                                                                 |   |       | Available |
| (dollars in thousands)                                                               |   |       | For Sale |
|                                                                                 |   |       |   |
| Balance at January 1, 2010:                                                          |   | $          | 1,609 |   |
| Total realized/unrealized gains and (losses):                                        |   |       |   |   |
| Included in earnings                                                                 |   |       | –     |   |
| Included in other comprehensive income                                               |   |       | (126) |   |
| Purchases                                                                            |   |       | 400  |   |
|                                                                                 |   |       |   |   |
| Balance at March 31, 2010                                                            |   | $          | 1,883 |   |
|                                                                                 |   |       |   |
| Total gains or (losses) for the period included in earnings attributable to the      |   |       |
| change in unrealized gains or losses relating to assets still held at March 31, 2010 | $      | –    |   |
|                                                                                 |   |       |   |   |
| Balance at January 1, 2011                                                           |   | $          | 51 |   |
| Total realized/unrealized gains and (losses):                                        |   |       |   |   |
| Included in earnings                                                                 |   |       | – |   |
| Included in other comprehensive income                                               |   |       | – |   |
| Purchases, maturities, and sales                                                     |   |       | – |   |
| Transferred from Level 2 to Level 3                                                  |   |       | – |   |
|                                                                                 |   |       |   |   |
| Balance at March 31, 2011                                                            |   | $          | 51 |   |
|                                                                                 |   |       |   |   |
| Total gains or (losses) for the period included in earnings attributable to the      |   |       |   |
| change in unrealized gains or losses relating to assets still held at March 31, 2011 | $      | –    |   |

|                           |   |              |   |   | Nonrecurring Fair Value Measurements Using |   |
|--------------------------------|--------|-------------------|--------|--------|--------------------------------------------|--------|
|                           |   |              |   |   | Quoted Prices in                           |   |   |   |   |   |   |   |
|                           |   |              |   |   | Active Markets                             |   |   | Significant Other |   |   | Significant |   |
|                           |   |              |   |   | for Identical                              |   |   | Observable |   |   | Unobservable |   |
|                           |   |              |   |   | Assets                                     |   |   | Inputs |   |   | Inputs |   |
|                           |   | ($000s)           |   |   | (Level 1)                                  |   |   | (Level 2) |   |   | (Level 3) |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |
| Assets:                        |   | March 31, 2011    |   |   |                                       |   |   |   |   |   |   |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |
| Impaired loans                 |   | $                 | 3,034  |   |                                       | $      | – |   |   | $ | – |   |   | $ | 3,034 |   |
| Foreclosed assets              |   |              | 4,828  |   |                                       |   | – |   |   |   | – |   |   |   | 4,828 |   |
| Mortgage servicing rights      |   |              | 1,268  |   |                                       |   | – |   |   |   | – |   |   |   | 1,268 |   |
| Mortgage rate lock commitments |   |              | 16     |   |                                       |   | – |   |   |   | – |   |   |   | 16 |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                   |   | $                 | 9,146  |   |                                       | $      | – |   |   | $ | – |   |   | $ | 9,146 |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                        |   | December 31, 2010 |   |   |                                       |   |   |   |   |   |   |   |   |   |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                 |   | $                 | 1,147  |   |                                       | $      | – |   |   | $ | – |   |   | $ | 1,147 |   |
| Foreclosed assets              |   |              | 4,967  |   |                                       |   | – |   |   |   | – |   |   |   | 4,967 |   |
| Mortgage servicing rights      |   |              | 1,100  |   |                                       |   | – |   |   |   | – |   |   |   | 1,100 |   |
| Mortgage rate lock commitments |   |              | 57     |   |                                       |   | – |   |   |   | – |   |   |   | 57 |   |
|                           |   |              |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                   |   | $                 | 7,271  |   |                                       | $      | – |   |   | $ | – |   |   | $ | 7,271 |   |

----

Index

----

Index

|                                         |   | March 31, 2011 |    |   | December 31, 2010 |   |
|----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                         |   | Carrying       |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                         |   | Amount         |    |   | Fair Value        |   |   | Amount |   |   | Fair Value |   |
| Financial assets:                            |   |           |    |   |              |   |   |   |   |   |   |   |
|                                         |   |           |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                    |   | $              | 7,929   |   |              | $      | 7,929 |   |   | $ | 40,331 |   |   | $ | 40,331 |   |
| Securities                                   |   |           | 115,288 |   |              |   | 114,275 |   |   |   | 108,379 |   |   |   | 106,935 |   |
| Other investments                            |   |           | 2,484   |   |              |   | 2,529 |   |   |   | 2,484 |   |   |   | 2,510 |   |
| Net loans receivable and loans held for sale |   |           | 436,002 |   |              |   | 443,201 |   |   |   | 432,237 |   |   |   | 441,157 |   |
| Accrued interest receivable                  |   |           | 2,344   |   |              |   | 2,344 |   |   |   | 2,238 |   |   |   | 2,238 |   |
| Mortgage servicing rights                    |   |           | 1,268   |   |              |   | 1,268 |   |   |   | 1,100 |   |   |   | 1,100 |   |
| Mortgage rate lock commitments               |   |           | 16      |   |              |   | 16 |   |   |   | 57 |   |   |   | 57 |   |
| FHLB stock                                   |   |           | 3,250   |   |              |   | 3,250 |   |   |   | 3,250 |   |   |   | 3,250 |   |
| Cash surrender value of life insurance       |   |           | 11,098  |   |              |   | 11,098 |   |   |   | 10,899 |   |   |   | 10,899 |   |
| Interest rate swap agreements                |   |           | 154     |   |              |   | 154 |   |   |   | – |   |   |   | – |   |
|                                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                       |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                     |   | $              | 444,283 |   |              | $      | 446,994 |   |   | $ | 465,257 |   |   | $ | 468,331 |   |
| FHLB advances                                |   |           | 61,101  |   |              |   | 63,369 |   |   |   | 57,434 |   |   |   | 59,909 |   |
| Other borrowings                             |   |           | 27,454  |   |              |   | 28,796 |   |   |   | 31,511 |   |   |   | 33,105 |   |
| Senior subordinated notes                    |   |           | 7,000   |   |              |   | 6,625 |   |   |   | 7,000 |   |   |   | 6,695 |   |
| Junior subordinated debentures               |   |           | 7,732   |   |              |   | 4,037 |   |   |   | 7,732 |   |   |   | 3,986 |   |
| Interest rate swap agreements                |   |           | 93      |   |              |   | 93 |   |   |   | 25 |   |   |   | 25 |   |
| Accrued interest payable                     |   |           | 774     |   |              |   | 774 |   |   |   | 848 |   |   |   | 848 |   |

----

Index

e

|   | · | Provide a narrative explanation of our financial statements that enables investors to see the company through the eyes of management. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Enhance the overall financial disclosure and provide the context within which our financial information should be analyzed. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | Provide information about the quality of, and potential variability of, our earnings and cash flow, so that investors can ascertain the likelihood that past performance is, or is not, indicative of future performance. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

----

Index

| (dollars in thousands, except per share data)                      |   | Quarter ended |      |
|--------------------------------------------------------------------|--------|---------------|-----------|
|                                                               |   | March 31,     |      |   | Dec. 31, |   |   | Sept. 30, |   |   | June 30, |   |   | March 31, |   |
| Earnings and dividends:                                            |   | 2011          |      |   | 2010 |   |   | 2010 |   |   | 2010 |   |   | 2010 |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                |   | $             | 4,764     |   |   | $ | 4,900 |   |   | $ | 5,019 |   |   | $ | 4,795 |   |   | $ | 4,385 |   |
| Provision for loan losses                                          |   | $             | 360       |   |   | $ | 240 |   |   | $ | 510 |   |   | $ | 585 |   |   | $ | 460 |   |
| Other noninterest income                                           |   | $             | 1,397     |   |   | $ | 1,512 |   |   | $ | 1,463 |   |   | $ | 1,297 |   |   | $ | 1,091 |   |
| Other noninterest expense                                          |   | $             | 3,953     |   |   | $ | 4,305 |   |   | $ | 3,979 |   |   | $ | 3,801 |   |   | $ | 3,840 |   |
| Net income                                                         |   | $             | 1,285     |   |   | $ | 1,334 |   |   | $ | 1,331 |   |   | $ | 1,208 |   |   | $ | 881 |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per share(3)                                        |   | $             | 0.82      |   |   | $ | 0.85 |   |   | $ | 0.85 |   |   | $ | 0.77 |   |   | $ | 0.56 |   |
| Diluted earnings per share(3)                                      |   | $             | 0.82      |   |   | $ | 0.85 |   |   | $ | 0.85 |   |   | $ | 0.77 |   |   | $ | 0.56 |   |
| Dividends declared per share(3)                                    |   | $             | –   |   |   | $ | 0.36 |   |   | $ | – |   |   | $ | 0.36 |   |   | $ | – |   |
| Net book value per share                                           |   | $             | 30.46     |   |   | $ | 29.85 |   |   | $ | 29.43 |   |   | $ | 28.16 |   |   | $ | 27.67 |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Semi-annual dividend payout ratio                                  |   |          | n/a       |   |   |   | 21.13 | % |   |   | n/a |   |   |   | 27.04 | % |   |   | n/a |   |
| Average common shares outstanding                                  |   |          | 1,572,825 |   |   |   | 1,564,297 |   |   |   | 1,564,297 |   |   |   | 1,564,297 |   |   |   | 1,564,131 |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance sheet – average balances:                            |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable, net of allowances for loss                       |   | $             | 431,139   |   |   | $ | 430,923 |   |   | $ | 438,111 |   |   | $ | 435,509 |   |   | $ | 436,989 |   |
| Assets                                                             |   | $             | 617,818   |   |   | $ | 610,577 |   |   | $ | 604,298 |   |   | $ | 597,730 |   |   | $ | 603,988 |   |
| Deposits                                                           |   | $             | 463,773   |   |   | $ | 454,735 |   |   | $ | 459,265 |   |   | $ | 454,832 |   |   | $ | 457,055 |   |
| Stockholders’ equity                                         |   | $             | 47,352    |   |   | $ | 47,219 |   |   | $ | 45,136 |   |   | $ | 43,737 |   |   | $ | 42,902 |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance ratios:                                                |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average assets(1)                                        |   |          | 0.84      | % |   |   | 0.87 | % |   |   | 0.87 | % |   |   | 0.81 | % |   |   | 0.59 | % |
| Return on average stockholders’ equity(1)                    |   |          | 11.01     | % |   |   | 11.21 | % |   |   | 11.70 | % |   |   | 11.08 | % |   |   | 8.33 | % |
| Average stockholders’ equity less accumulated                |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   other comprehensive income (loss) to average assets(4) |   |          | 7.29      | % |   |   | 7.34 | % |   |   | 7.11 | % |   |   | 7.03 | % |   |   | 6.82 | % |
| Net loan charge-offs to average loans(1)                           |   |          | 0.86      | % |   |   | 0.26 | % |   |   | 0.16 | % |   |   | 0.51 | % |   |   | 0.38 | % |
| Nonperforming loans to gross loans                                 |   |          | 2.21      | % |   |   | 2.60 | % |   |   | 2.14 | % |   |   | 2.14 | % |   |   | 2.53 | % |
| Allowance for loan losses to gross loans                           |   |          | 1.66      | % |   |   | 1.81 | % |   |   | 1.82 | % |   |   | 1.71 | % |   |   | 1.73 | % |
| Nonperforming assets to tangible equity                            |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   plus the allowance for loan losses(4)                  |   |          | 28.43     | % |   |   | 30.61 | % |   |   | 28.57 | % |   |   | 31.33 | % |   |   | 32.49 | % |
| Net interest rate margin(1)(2)                                     |   |          | 3.45      | % |   |   | 3.53 | % |   |   | 3.65 | % |   |   | 3.57 | % |   |   | 3.28 | % |
| Net interest rate spread(1)(2)                                     |   |          | 3.23      | % |   |   | 3.27 | % |   |   | 3.40 | % |   |   | 3.31 | % |   |   | 3.02 | % |
| Service fee revenue as a percent of                                |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   average demand deposits(1)                             |   |          | 2.84      | % |   |   | 3.01 | % |   |   | 3.44 | % |   |   | 3.67 | % |   |   | 2.65 | % |
| Noninterest income as a percent of gross revenue                   |   |          | 16.55     | % |   |   | 17.03 | % |   |   | 16.12 | % |   |   | 14.79 | % |   |   | 13.14 | % |
| Efficiency ratio(2)                                                |   |          | 62.18     | % |   |   | 65.15 | % |   |   | 59.54 | % |   |   | 60.37 | % |   |   | 67.55 | % |
| Noninterest expenses to average assets(1)                          |   |          | 2.59      | % |   |   | 2.80 | % |   |   | 2.61 | % |   |   | 2.55 | % |   |   | 2.58 | % |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock price information:                                           |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                               |   | $             | 27.00     |   |   | $ | 24.50 |   |   | $ | 25.00 |   |   | $ | 22.50 |   |   | $ | 22.50 |   |
| Low                                                                |   | $             | 22.10     |   |   | $ | 21.00 |   |   | $ | 19.64 |   |   | $ | 19.20 |   |   | $ | 15.05 |   |
| Last trade value at quarter-end                                    |   | $             | 24.00     |   |   | $ | 23.00 |   |   | $ | 23.50 |   |   | $ | 20.00 |   |   | $ | 20.00 |   |

----

Index

|                                                   |   | Three months ended |    |
|--------------------------------------------------------|--------|--------------------|---------|
| Increase (decrease) in assets ($000s)                  |   | March 31, 2011     |    |
|                                                   |   | $                  |    |   | % |   |
|                                                   |   |               |    |   |   |   |
| Investment securities                                  |   | $                  | 6,909   |   |   |   | 6.4 | % |
| Commercial real estate mortgage loans                  |   |               | 6,487   |   |   |   | 3.3 | % |
| Residential real estate mortgage and home equity loans |   |               | 2,813   |   |   |   | 2.6 | % |
| Other assets (various categories)                      |   |               | 745     |   |   |   | 3.7 | % |
| Bank-owned life insurance                              |   |               | 199     |   |   |   | 1.8 | % |
| Foreclosed assets                                      |   |               | (139    | ) |   |   | -2.8 | % |
| Commercial, industrial and agricultural loans          |   |               | (6,263  | ) |   |   | -4.7 | % |
| Cash and cash equivalents                              |   |               | (32,402 | ) |   |   | -80.3 | % |
|                                                   |   |               |    |   |   |   |   |   |
| Total decrease in assets                               |   | $                  | (21,651 | ) |   |   | -3.5 | % |

|                                                         |   | Three months ended |    |
|--------------------------------------------------------------|--------|--------------------|---------|
| Increase (decrease) in liabilities and equity ($000s)        |   | March 31, 2011     |    |
|                                                         |   | $                  |    |   | % |   |
|                                                         |   |               |    |   |   |   |
| FHLB advances                                                |   | $                  | 3,667   |   |   |   | 6.4 | % |
| Stockholders’ equity                                   |   |               | 1,226   |   |   |   | 2.6 | % |
| Wholesale deposits                                           |   |               | 110     |   |   |   | 0.2 | % |
| Other liabilities and debt (various categories)              |   |               | (1,513  | ) |   |   | -7.5 | % |
| Retail certificates of deposit > $100                     |   |               | (2,128  | ) |   |   | -4.1 | % |
| Other borrowings                                             |   |               | (4,057  | ) |   |   | -12.9 | % |
| Core deposits (including MMDA)                               |   |               | (18,956 | ) |   |   | -5.5 | % |
|                                                         |   |               |    |   |   |   |   |   |
| Total decrease in liabilities and stockholders’ equity |   | $                  | (21,651 | ) |   |   | -3.5 | % |

----

Index

|                                        |   | March 31, |    |   | March 31, |   |    | December 31, 2010   |   |
|---------------------------------------------|--------|-----------|---------|--------|-----------|--------|---------|---------------------|--------|
|                                        |   | Dollars   |    |   | Dollars   |   |    | Percentage of total |   |   |   |   |   | Percentage |   |
| (dollars in thousands)                      |   | 2011      |    |   | 2010      |   |    | 2011                |   |   | 2010 |   |   | Dollars |   |   | of total |   |
|                                        |   |      |    |   |      |   |    |                |   |   |   |   |   |   |   |   |   |   |
| Commercial, industrial and agricultural     |   | $         | 126,990 |   |      | $      | 129,565 |                |   |   | 28.6 | % |   |   | 29.3 | % |   | $ | 133,253 |   |   |   | 30.3 | % |
| Commercial real estate mortgage             |   |      | 202,008 |   |      |   | 204,772 |                |   |   | 45.6 | % |   |   | 46.4 | % |   |   | 195,520 |   |   |   | 44.4 | % |
| Residential real estate mortgage            |   |      | 86,290  |   |      |   | 80,195  |                |   |   | 19.5 | % |   |   | 18.1 | % |   |   | 83,285 |   |   |   | 18.9 | % |
| Residential real estate loans held for sale |   |      | – |   |      |   | – |                |   |   | 0.0 | % |   |   | 0.0 | % |   |   | 436 |   |   |   | 0.1 | % |
| Consumer home equity                        |   |      | 24,018  |   |      |   | 23,322  |                |   |   | 5.4 | % |   |   | 5.3 | % |   |   | 23,774 |   |   |   | 5.4 | % |
| Consumer and installment                    |   |      | 4,073   |   |      |   | 4,127   |                |   |   | 0.9 | % |   |   | 0.9 | % |   |   | 3,929 |   |   |   | 0.9 | % |
|                                        |   |      |    |   |      |   |    |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                      |   | $         | 443,379 |   |      | $      | 441,981 |                |   |   | 100.0 | % |   |   | 100.0 | % |   | $ | 440,197 |   |   |   | 100.0 | % |

----

Index

|                                                 |   | March 31, |    |   | December 31, |   |
|------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (dollars in thousands)                               |   | 2011      |    |   | 2010         |   |   | 2010 |   |
|                                                 |   |      |    |   |         |   |   |   |   |
| Nonaccrual loans (excluding restructured loans)      |   | $         | 5,921   |   |         | $      | 10,006 |   |   | $ | 7,127 |   |
| Nonaccrual restructured loans                        |   |      | 1,632   |   |         |   | 1,186 |   |   |   | 1,912 |   |
| Restructured loans not on nonaccrual                 |   |      | 2,228   |   |         |   | – |   |   |   | 2,383 |   |
| Accruing loans past due 90 days or more              |   |      | – |   |         |   | – |   |   |   | – |   |
|                                                 |   |      |    |   |         |   |   |   |   |   |   |   |
| Total nonperforming loans                            |   |      | 9,781   |   |         |   | 11,192 |   |   |   | 11,422 |   |
| Nonaccrual trust preferred investment security       |   |      | 750     |   |         |   | – |   |   |   | – |   |
| Foreclosed assets                                    |   |      | 4,828   |   |         |   | 4,986 |   |   |   | 4,967 |   |
|                                                 |   |      |    |   |         |   |   |   |   |   |   |   |
| Total nonperforming assets                           |   | $         | 15,359  |   |         | $      | 16,178 |   |   | $ | 16,389 |   |
|                                                 |   |      |    |   |         |   |   |   |   |   |   |   |
| Nonperforming loans as a % of gross loans receivable |   |      | 2.21    | %      |         |   | 2.53 | % |   |   | 2.60 | % |
| Total nonperforming assets as a % of total assets    |   |      | 2.56    | %      |         |   | 2.69 | % |   |   | 2.64 | % |

|                                                          |        |   | Gross     |   |   | Specific |   |
|---------------------------------------------------------------|-------------|--------|-----------|--------|--------|----------|--------|
| Collateral Description                                        | Asset Type  |   | Principal |   |   | Reserves |   |
|                                                          |        |   |      |   |   |     |   |
| Vacation home/recreational properties (three)                 | Foreclosed  |   | $         | 1,767  |   |     |   | n/a |   |
| Non-owner occupied multi use, multi-tenant real estate        | Foreclosed  |   |      | 1,450  |   |     |   | n/a |   |
| Multi-family rental apartment units and vacant land           | Accrual TDR |   |      | 1,172  |   |     |   | 369 |   |
| Owner occupied cabinetry contractor real estate and equipment | Accrual TDR |   |      | 926    |   |     |   | 346 |   |
| Johnson Financial Group (WI) Capital Trust III debentures     | Nonaccrual  |   |      | 750    |   |     |   | – |   |
| Owner occupied restaurant real estate and business assets     | Nonaccrual  |   |      | 699    |   |     |   | 250 |   |
| Out of area condo land development – participation      | Foreclosed  |   |      | 587    |   |     |   | n/a |   |
|                                                          |        |   |      |   |   |     |   |   |   |
| Total listed nonperforming assets                             |        |   | $         | 7,351  |   |     | $      | 965 |   |
| Total bank wide nonperforming assets                          |        |   | $         | 15,359 |   |     | $      | 2,753 |   |
| Listed assets as a % of total nonperforming assets            |        |   |      | 48     | %      |     |   | 35 | % |

----

Index

|                                                         |       |   | Gross     |   |   | Specific |   |
|--------------------------------------------------------------|------------|--------|-----------|--------|--------|----------|--------|
| Collateral Description                                       | Asset Type |   | Principal |   |   | Reserves |   |
|                                                         |       |   |      |   |   |     |   |
| Cranberry producing agricultural real estate                 | Impaired   |   | $         | 1,577  |   |     | $      | – |   |
| Owner occupied manufacturer real estate & equipment      | Impaired   |   |      | 651    |   |     |   | – |   |
|                                                         |       |   |      |   |   |     |   |   |   |
| Total listed performing, but impaired loans                  |       |   | $         | 2,228  |   |     | $      | – |   |
| Total performing, but impaired loans                         |       |   | $         | 3,639  |   |     | $      | 304 |   |
| Listed assets as a % of total performing, but impaired loans |       |   |      | 61     | %      |     |   | 0 | % |

----

Index

|                                       |   | Three months ended |
|--------------------------------------------|--------|--------------------|
|                                       |   | March 31,          |
| (dollars in thousands)                     |   | 2011               |   | 2010 |
|                                       |   |               |   |   |
| Allowance for loan losses at beginning     |   | $                  | 7,960 |   |   | $ | 7,611 |   |
|                                       |   |               |   |   |   |   |   |   |
| Provision for loan losses                  |   |               | 360 |   |   |   | 460 |   |
| Recoveries on loans previously charged-off |   |               | 3 |   |   |   | 2 |   |
| Loans charged off                          |   |               | (946 | ) |   |   | (424 | ) |
|                                       |   |               |   |   |   |   |   |   |
| Allowance for loan losses at end           |   | $                  | 7,377 |   |   | $ | 7,649 |   |

----

Index

|   | · | Residential mortgages |
|--------|--------|-----------------------|

|   | · | Home equity lines of credit |
|--------|--------|-----------------------------|

|   | · | Consumer and individual loans |
|--------|--------|-------------------------------|

|   | · | Commercial real estate loans – credit risk grades 1 (“high quality”) through grade 4 (“acceptable risk”) |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Commercial and industrial loans – grades 1 through 4 |
|--------|--------|------------------------------------------------------------|

|   | · | Commercial real estate loans – grade 5 (“watch”) and grade 6 (“substandard”) loans |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | Commercial and industrial loans – grade 5 (“watch”) and grade 6 (“substandard”) loans |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | Commercial real estate loans - grade 7 (“impaired”) |
|--------|--------|-----------------------------------------------------------------|

|   | · | Commercial and industrial loans – grade 7 (“impaired”) |
|--------|--------|--------------------------------------------------------------------------|

|   | · | Residential mortgage, consumer, and other personal loans – grade 7 (“impaired”) |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | Weighted average historical net charge-off of principal by category during the past 12 quarters. |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | Additional contingency reserves based on subjective assessment of external factors including: changes in economic conditions, changes in nature/volume of portfolio, changes in collateral values, changes in regulatory requirements, and changes in peer data. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Additional contingency reserves based on subjective assessment of internal factors including: changes in bank policies, changes in underwriting criteria, changes in volume of past due loans, changes in internal local review processes, and management turnover. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

| (dollars in thousands)                       |   | Quarter ended March 31, 2011 |    |     | Quarter ended March 31, 2010 |   |
|----------------------------------------------|--------|------------------------------|---------|----------|------------------------------|--------|
|                                         |   | Average                      |    |     |                         |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                         |   | Balance                      |    | Interest |                         | Rate   |   |   | Balance |   | Interest |   | Rate |   |
| Assets                                       |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                     |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans(1)(2)                                  |   | $                            | 439,148 |     |                         | $      | 6,087 |   |   |   | 5.62 | % |   | $ | 444,718 |   |   | $ | 6,169 |   |   |   | 5.63 | % |
| Taxable securities                           |   |                         | 78,432  |     |                         |   | 678 |   |   |   | 3.51 | % |   |   | 68,284 |   |   |   | 755 |   |   |   | 4.48 | % |
| Tax-exempt securities(2)                     |   |                         | 34,020  |     |                         |   | 450 |   |   |   | 5.36 | % |   |   | 37,482 |   |   |   | 497 |   |   |   | 5.38 | % |
| FHLB stock                                   |   |                         | 3,250   |     |                         |   | 2 |   |   |   | 0.25 | % |   |   | 3,250 |   |   |   | – |   |   |   | 0.00 | % |
| Other                                        |   |                         | 28,063  |     |                         |   | 22 |   |   |   | 0.32 | % |   |   | 14,589 |   |   |   | 2 |   |   |   | 0.06 | % |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total(2)                                     |   |                         | 582,913 |     |                         |   | 7,239 |   |   | 5.04 | % |   |   | 568,323 |   |   |   | 7,423 |   |   | 5.30 | % |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-earning assets:                 |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                      |   |                         | 8,399   |     |                         |   |   |   |   |   |   |   |   |   | 9,717 |   |   |   |   |   |   |   |   |   |
| Premises and equipment, net                  |   |                         | 10,396  |     |                         |   |   |   |   |   |   |   |   |   | 10,319 |   |   |   |   |   |   |   |   |   |
| Cash surrender value insurance               |   |                         | 10,980  |     |                         |   |   |   |   |   |   |   |   |   | 10,527 |   |   |   |   |   |   |   |   |   |
| Other assets                                 |   |                         | 13,139  |     |                         |   |   |   |   |   |   |   |   |   | 12,831 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                    |   | (8,009                       | )       |     |                         |   |   |   |   |   |   |   |   | (7,729 | ) |   |   |   |   |   |   |   |   |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                        | $      | 617,818                      |    |     |                         |   |   |   |   |   |   |   | $ | 603,988 |   |   |   |   |   |   |   |   |   |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities & stockholders’ equity |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and demand deposits                  |   | $                            | 131,800 |     |                         | $      | 290 |   |   |   | 0.89 | % |   | $ | 124,667 |   |   | $ | 329 |   |   |   | 1.07 | % |
| Money market deposits                        |   |                         | 110,157 |     |                         |   | 235 |   |   |   | 0.87 | % |   |   | 95,344 |   |   |   | 314 |   |   |   | 1.34 | % |
| Time deposits                                |   |                         | 167,692 |     |                         |   | 904 |   |   |   | 2.19 | % |   |   | 183,874 |   |   |   | 1,240 |   |   |   | 2.73 | % |
| FHLB borrowings                              |   |                         | 56,831  |     |                         |   | 457 |   |   |   | 3.26 | % |   |   | 58,614 |   |   |   | 460 |   |   |   | 3.18 | % |
| Other borrowings                             |   |                         | 30,714  |     |                         |   | 167 |   |   |   | 2.21 | % |   |   | 27,070 |   |   |   | 231 |   |   |   | 3.46 | % |
| Senior subordinated notes                    |   |                         | 7,000   |     |                         |   | 142 |   |   |   | 8.23 | % |   |   | 7,000 |   |   |   | 142 |   |   |   | 8.23 | % |
| Junior subordinated debentures               |   |                         | 7,732   |     |                         |   | 84 |   |   |   | 4.41 | % |   |   | 7,732 |   |   |   | 113 |   |   |   | 5.93 | % |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                        |   |                         | 511,926 |     |                         |   | 2,279 |   |   | 1.81 | % |   |   | 504,301 |   |   |   | 2,829 |   |   | 2.28 | % |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing liabilities:            |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                              |   |                         | 54,124  |     |                         |   |   |   |   |   |   |   |   |   | 53,170 |   |   |   |   |   |   |   |   |   |
| Other liabilities                            |   |                         | 4,416   |     |                         |   |   |   |   |   |   |   |   |   | 3,615 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                   |   | 47,352                       |    |     |                         |   |   |   |   |   |   |   |   | 42,902 |   |   |   |   |   |   |   |   |   |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                        | $      | 617,818                      |    |     |                         |   |   |   |   |   |   |   | $ | 603,988 |   |   |   |   |   |   |   |   |   |
|                                         |   |                         |    |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                          |   |                         | $       | 4,960    |                         |   |   |   |   |   |   |   | $ | 4,594 |   |   |   |   |   |
| Rate spread                                  |   |                         |    |     |                         |   |   |   |   |   | 3.23 | % |   |   |   |   |   |   |   |   |   |   | 3.02 | % |
| Net yield on interest-earning assets         |   |                         |    |     |                         |   |   |   |   |   | 3.45 | % |   |   |   |   |   |   |   |   |   |   | 3.28 | % |

----

Index

|                           |   | 2011 compared to 2010          |    |
|--------------------------------|--------|--------------------------------|---------|
|                           |   | increase (decrease) due to (1) |    |
| (dollars in thousands)         |   | Volume                         |    |   | Rate |   |   | Net |   |
|                           |   |                           |    |   |   |   |   |   |   |
| Interest earned on:            |   |                           |    |   |   |   |   |   |   |
| Loans(2)                       |   | $                              | (77     | ) |   | $ | (5 | ) |   | $ | (82 | ) |
| Taxable securities             |   |                           | 88      |   |   |   | (165 | ) |   |   | (77 | ) |
| Tax-exempt securities(2)       |   |                           | (46     | ) |   |   | (1 | ) |   |   | (47 | ) |
| FHLB stock                     |   |                           | – |   |   |   | 2 |   |   |   | 2 |   |
| Other interest income          |   |                           | 11      |   |   |   | 9 |   |   |   | 20 |   |
|                           |   |                           |    |   |   |   |   |   |   |   |   |   |
| Total                          |   |                           | (24     | ) |   |   | (160 | ) |   |   | (184 | ) |
|                           |   |                           |    |   |   |   |   |   |   |   |   |   |
| Interest paid on:              |   |                           |    |   |   |   |   |   |   |   |   |   |
| Savings and demand deposits    |   |                           | 16      |   |   |   | (55 | ) |   |   | (39 | ) |
| Money market deposits          |   |                           | 32      |   |   |   | (111 | ) |   |   | (79 | ) |
| Time deposits                  |   |                           | (87     | ) |   |   | (249 | ) |   |   | (336 | ) |
| FHLB borrowings                |   |                           | (14     | ) |   |   | 11 |   |   |   | (3 | ) |
| Other borrowings               |   |                           | 20      |   |   |   | (84 | ) |   |   | (64 | ) |
| Senior subordinated notes      |   |                           | – |   |   |   | – |   |   |   | – |   |
| Junior subordinated debentures |   |                           | – |   |   |   | (29 | ) |   |   | (29 | ) |
|                           |   |                           |    |   |   |   |   |   |   |   |   |   |
| Total                          |   |                           | (33     | ) |   |   | (517 | ) |   |   | (550 | ) |
|                           |   |                           |    |   |   |   |   |   |   |   |   |   |
| Net interest earnings          |   | $                              | 9       |   |   | $ | 357 |   |   | $ | 366 |   |

| 1. | Public or government fund MMDA and NOW accounts are considered fully repriced within 60 days.  Higher yielding retail and non-governmental money market and NOW deposit accounts are considered fully repriced within 90 days.  Rewards Checking NOW accounts and lower rate money market deposit accounts are considered fully repriced within |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

| 2. | Nonaccrual loans are considered to reprice beyond 5 years. |
|----|------------------------------------------------------------|

| 3. | Assets and liabilities with contractual calls or prepayment options are repriced according to the likelihood of the call or prepayment being exercised in the current interest rate environment. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Measurements taking into account the impact of rising or falling interest rates are based on a parallel yield curve change that is fully implemented within a 12-month time horizon. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | March 31, 2011 |    |
|--------------------------------------|--------|----------------|---------|
| (dollars in thousands)               |   | 0-90 Days      |    |   | 91-180 days |   |   | 181-365 days |   |   | 1-2 yrs. |   |   | 2-5 yrs. |   |   | Beyond 5 yrs. |   |   | Total |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earning assets:                      |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                |   | $              | 164,843 |   |   | $ | 31,280 |   |   | $ | 52,472 |   |   | $ | 89,391 |   |   | $ | 76,881 |   |   | $ | 28,512 |   |   | $ | 443,379 |   |
| Securities                           |   |           | 6,206   |   |   |   | 3,871 |   |   |   | 9,266 |   |   |   | 16,882 |   |   |   | 34,934 |   |   |   | 44,129 |   |   |   | 115,288 |   |
| FHLB stock                           |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,250 |   |   |   | 3,250 |   |
| CSV bank-owned life ins.             |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 11,098 |   |   |   | 11,098 |   |
| Other earning assets                 |   |           | 486     |   |   |   |   |   |   |   |   |   |   |   | 500 |   |   |   | 1,984 |   |   |   |   |   |   |   | 2,970 |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                |   | $              | 171,535 |   |   | $ | 35,151 |   |   | $ | 61,738 |   |   | $ | 106,773 |   |   | $ | 113,799 |   |   | $ | 86,989 |   |   | $ | 575,985 |   |
| Cumulative rate sensitive assets     |   | $              | 171,535 |   |   | $ | 206,686 |   |   | $ | 268,424 |   |   | $ | 375,197 |   |   | $ | 488,996 |   |   | $ | 575,985 |   |   |   |   |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities         |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits            |   | $              | 149,867 |   |   | $ | 30,242 |   |   | $ | 98,985 |   |   | $ | 29,686 |   |   | $ | 48,191 |   |   | $ | 36,250 |   |   | $ | 393,221 |   |
| FHLB advances                        |   |           | 5,977   |   |   |   |   |   |   |   | 7,000 |   |   |   | 10,000 |   |   |   | 37,124 |   |   |   | 1,000 |   |   |   | 61,101 |   |
| Other borrowings                     |   |           | 13,954  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 8,000 |   |   |   | 5,500 |   |   |   | 27,454 |   |
| Senior subordinated notes            |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,000 |   |   |   | 7,000 |   |
| Junior subordinated debentures       |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 7,732 |   |   |   | 7,732 |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                |   | $              | 169,798 |   |   | $ | 30,242 |   |   | $ | 105,985 |   |   | $ | 39,686 |   |   | $ | 93,315 |   |   | $ | 57,482 |   |   | $ | 496,508 |   |
| Cumulative interest                  |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| sensitive liabilities                |   | $              | 169,798 |   |   | $ | 200,040 |   |   | $ | 306,025 |   |   | $ | 345,711 |   |   | $ | 439,026 |   |   | $ | 496,508 |   |   |   |   |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap for         |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| the individual period                |   | $              | 1,737   |   |   | $ | 4,909 |   |   | $ | (44,247 | ) |   | $ | 67,087 |   |   | $ | 20,484 |   |   | $ | 29,507 |   |   |   |   |   |
| Ratio of rate sensitive assets to    |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| rate sensitive liabilities for       |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| the individual period                |   |           | 101.0   | % |   |   | 116.2 | % |   |   | 58.3 | %  |   |   | 269.0 | % |   |   | 122.0 | % |   |   | 151.3 | % |   |   |   |   |
|                                 |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative interest                  |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| sensitivity gap                      |   | $              | 1,737   |   |   | $ | 6,646 |   |   | $ | (37,601 | ) |   | $ | 29,486 |   |   | $ | 49,970 |   |   | $ | 79,477 |   |   |   |   |   |
| Cumulative ratio of rate sensitive   |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| assets to rate sensitive liabilities |   |           | 101.0   | % |   |   | 103.3 | % |   |   | 87.7 | % |   |   | 108.5 | % |   |   | 111.4 | % |   |   | 116.0 | % |   |   |   |   |

----

Index

| Period Ended:                                | March 2011                   | March 2010 | December 2010 |
|----------------------------------------------|------------------------------|------------|---------------|
|                                         |                         |       |          |
| Cumulative 1 year gap ratio                  |                         |       |          |
|                                         | Base                         | 88%        |          | 90% |   | 93% |   |
|                                         | Up 200                       | 84%        |          | 86% |   | 89% |   |
|                                         | Down 100                     | 90%        |          | 93% |   | 95% |   |
|                                         |                         |       |          |   |   |   |   |
| Change in Net Interest Income – Year 1 |                         |       |          |   |   |   |
|                                         | Up 200 during the year       | -3.9%      |          | -3.3% |   | -2.5% |   |
|                                         | Down 100 during the year     | -0.7%      |          | -0.6% |   | -1.0% |   |
|                                         |                         |       |          |   |   |   |   |
| Change in Net Interest Income – Year 2 |                         |       |          |   |   |   |
|                                         | No rate change (base case)   | -2.9%      |          | -0.5% |   | -2.4% |   |
|                                         | Following up 200 in year 1   | -4.4%      |          | -3.0% |   | -2.6% |   |
|                                         | Following down 100 in year 1 | -7.6%      |          | -5.3% |   | -7.5% |   |

----

Index

|     | $      | %      |
|----------|---------------------------------|---------------------------------|
|     |                            |                            |
| Year 1 - | $   134          | 0.7%                            |
| Year 2 - | $   944          | 4.9%                            |
| Year 3 - | $1,633                          | 8.5%                            |
| Year 4 - | $2,126                          | 10.9%                           |
| Year 5 - | $2,351                          | 11.9%                           |

----

Index

|                                               |   | March 31, |    |   | December 31, |   |
|----------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (dollars in thousands)                             |   | 2011      |    |   | 2010         |   |   | 2010 |   |
|                                               |   | $         |    |   | %            |   |   | $ |   |   | % |   |   | $ |   |   | % |   |
|                                               |   |      |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing demand                        |   | $         | 51,062  |   |         |   | 11.5 | % |   | $ | 52,850 |   |   |   | 11.5 | % |   | $ | 57,932 |   |   |   | 12.5 | % |
| Interest-bearing demand and savings                |   |      | 126,641 |   |         |   | 28.5 | % |   |   | 108,226 |   |   |   | 23.6 | % |   |   | 131,231 |   |   |   | 28.1 | % |
| Money market deposits                              |   |      | 99,571  |   |         |   | 22.4 | % |   |   | 92,476 |   |   |   | 20.1 | % |   |   | 105,866 |   |   |   | 22.8 | % |
| Retail time deposits less than $100                |   |      | 49,792  |   |         |   | 11.2 | % |   |   | 56,512 |   |   |   | 12.3 | % |   |   | 50,993 |   |   |   | 11.0 | % |
|                                               |   |      |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total core deposits                                |   |      | 327,066 |   |         |   | 73.6 | % |   |   | 310,064 |   |   |   | 67.5 | % |   |   | 346,022 |   |   |   | 74.4 | % |
| Wholesale interest-bearing demand                  |   |      | – |   |         |   | 0.0 | % |   |   | 9,501 |   |   |   | 2.1 | % |   |   | – |   |   |   | 0.0 | % |
| Retail time deposits $100 and over                 |   |      | 50,276  |   |         |   | 11.3 | % |   |   | 63,589 |   |   |   | 13.9 | % |   |   | 52,404 |   |   |   | 11.3 | % |
| Broker & national time deposits less than $100 |   |      | 930     |   |         |   | 0.2 | % |   |   | 1,051 |   |   |   | 0.2 | % |   |   | 1,028 |   |   |   | 0.2 | % |
| Broker & national time deposits $100 and over  |   |      | 66,011  |   |         |   | 14.9 | % |   |   | 74,878 |   |   |   | 16.3 | % |   |   | 65,803 |   |   |   | 14.1 | % |
| Totals                                             |   | $         | 444,283 |   |         |   | 100.0 | % |   | $ | 459,083 |   |   |   | 100.0 | % |   | $ | 465,257 |   |   |   | 100.0 | % |

----

Index

|                                           |   | March 31, |    |   | December 31, |   |
|------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
| (dollars in thousands)                         |   | 2011      |    |   | 2010         |   |   | 2010 |   |
|                                           |   |      |    |   |         |   |   |   |   |
| Total time deposits $100 and over              |   | $         | 116,287 |   |         | $      | 138,467 |   |   | $ | 118,207 |   |
| Total broker and wholesale deposits            |   |      | 66,941  |   |         |   | 85,430 |   |   |   | 66,831 |   |
| Total retail time deposits                     |   |      | 100,068 |   |         |   | 120,101 |   |   |   | 103,397 |   |
| Core deposits, including money market deposits |   |      | 327,066 |   |         |   | 310,064 |   |   |   | 346,022 |   |

|                                           |   | March 31, 2010                        |    |   | December 31, 2010 |   |
|------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------|--------|
| (dollars in thousands)                         |   | $       |    |   | %                 |   |   | $       |   |   | % |   |
|                                           |   |                                  |    |   |              |   |   |   |   |   |   |   |
| Total time deposits $100 and over              |   | $                                     | (22,180 | )      |              |   | -16.0 | % |   | $ | (1,920 | ) |   |   | -1.6 | % |
| Total broker and wholesale deposits            |   |                                  | (18,489 | )      |              |   | -21.6 | % |   |   | 110 |   |   |   | 0.2 | % |
| Total retail time deposits                     |   |                                  | (20,033 | )      |              |   | -16.7 | % |   |   | (3,329 | ) |   |   | -3.2 | % |
| Core deposits, including money market deposits |   |                                  | 17,002  |   |              |   | 5.5 | % |   |   | (18,956 | ) |   |   | -5.5 | % |

----

Index

|                              | Normal      | Moderately   | Highly       |
|-----------------------------------|-------------|--------------|--------------|
|                              | Operating   | Stressed     | Stressed     |
|                              | Environment | Environment  | Environment  |
|                              |        |         |         |
| Repurchase Agreements             | Yes         | Likely*      | Not Likely   |
| FHLB (primary 1-4 REM collateral) | Yes         | Yes*         | Less Likely* |
| FHLB (secondary loan collateral)  | Yes         | Likely*      | Not Likely   |
| Brokered CDs                      | Yes         | Likely*      | Not Likely   |
| National CDs                      | Yes         | Likely*      | Not Likely   |
| Federal Funds Lines               | Yes         | Less Likely* | Not Likely   |
| FRB (Borrow-In-Custody)           | Yes         | Yes          | Less Likely* |
| FRB (Discount Window securities)  | Yes         | Yes          | Yes          |
| Holding Company line of credit    | Yes         | Yes          | Less Likely* |

|                                          |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                          |   | Unused, but    |    |   | Amount            |   |   | Unused, but |   |   | Amount |   |
| (dollars in thousands)                        |   | Available      |    |   | Used              |   |   | Available |   |   | Used |   |
|                                          |   |           |    |   |              |   |   |   |   |   |   |   |
| Overnight federal funds purchased             |   | $              | 21,280  |   |              | $      | 4,220 |   |   | $ | 25,500 |   |   | $ | – |   |
| Federal Reserve discount window advances      |   |           | 95,111  |   |              |   | – |   |   |   | 94,980 |   |   |   | – |   |
| FHLB advances under blanket mortgage lien     |   |           | 13,607  |   |              |   | 61,101 |   |   |   | 15,056 |   |   |   | 57,434 |   |
| Repurchase agreements and other FHLB advances |   |           | 30,170  |   |              |   | 27,454 |   |   |   | 17,177 |   |   |   | 31,511 |   |
| Wholesale market deposits                     |   |           | 52,947  |   |              |   | 66,941 |   |   |   | 57,388 |   |   |   | 66,831 |   |
| Holding company unsecured line of credit      |   |           | 1,000   |   |              |   | – |   |   |   | 1,000 |   |   |   | – |   |
|                                          |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                        |   | $              | 214,115 |   |              | $      | 159,716 |   |   | $ | 211,101 |   |   | $ | 155,776 |   |
|                                          |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Funding as a percent of total assets          |   |           | 35.7    | %      |              |   | 26.6 | % |   |   | 34.0 | % |   |   | 25.1 | % |

----

Index

----

Index

|   | · | Be considered “well capitalized” at all times. |
|--------|--------|------------------------------------------------------------|

|   | · | Maintain nonperforming assets as a percentage of tangible equity plus the allowance for loan losses to less than 25%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Maintain loan loss reserves no less than 60% of nonperforming loans. |
|--------|--------|----------------------------------------------------------------------|

|   | · | Maintain total risk based capital ratio of at least 12% |
|--------|--------|---------------------------------------------------------|

----

Index

----

Index

|                                                                  |   | March 31, |    |    | December 31, |   |
|-----------------------------------------------------------------------|--------|-----------|---------|---------|--------------|--------|
| (dollars in thousands)                                                |   | 2011      |    |    | 2010         |   |   | 2010 |   |
|                                                                  |   |      |    |    |         |   |   |   |   |
| Stockholders’ equity                                            |   | $         | 47,916  |    |         | $      | 43,282 |   |   | $ | 46,690 |   |
| Junior subordinated debentures, net                                   |   |      | 7,500   |    |         |   | 7,500 |   |   |   | 7,500 |   |
| Disallowed mortgage servicing right assets                            |   |      | (127    | )       |         |   | (114 | ) |   |   | (110 | ) |
| Accumulated other comprehensive (income) loss                         |   |      | (2,442  | )       |         |   | (1,898 | ) |   |   | (2,528 | ) |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Tier 1 regulatory capital                                             |   |      | 52,847  |    |         |   | 48,770 |   |   |   | 51,552 |   |
| Qualifying unrealized gain on equity securities available for sale    |   |      | – |    |         |   | – |   |   |   | – |   |
| Senior subordinated notes                                             |   |      | 7,000   |    |         |   | 7,000 |   |   |   | 7,000 |   |
| Allowance for loan losses                                             |   |      | 5,611   |    |         |   | 6,097 |   |   |   | 5,654 |   |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Total regulatory capital                                              |   | $         | 65,458  |    |         | $      | 61,867 |   |   | $ | 64,206 |   |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Total quarterly average assets                                        |   | $         | 617,818 |    |         | $      | 601,065 |   |   | $ | 610,577 |   |
| Disallowed mortgage servicing right assets                            |   |      | (115    | )       |         |   | (114 | ) |   |   | (108 | ) |
| Accumulated other comprehensive (income) loss                         |   |      | (2,186  | )       |         |   | (1,898 | ) |   |   | (2,596 | ) |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Quarterly average tangible assets (as defined by current regulations) |   | $         | 615,598 |    |         | $      | 599,053 |   |   | $ | 607,954 |   |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Risk-weighted assets (as defined by current regulations)              |   | $         | 447,124 |    |         | $      | 486,206 |   |   | $ | 449,987 |   |
|                                                                  |   |      |    |    |         |   |   |   |   |   |   |   |
| Tier 1 capital to average tangible assets (leverage ratio)            |   |      | 8.58    | %  |         |   | 8.10 | %  |   |   | 8.48 | %  |
| Tier 1 capital to risk-weighted assets                                |   |      | 11.82   | %  |         |   | 10.03 | %  |   |   | 11.46 | %  |
| Total capital to risk-weighted assets                                 |   |      | 14.64   | %  |         |   | 12.72 | %  |   |   | 14.27 | %  |

----

Index

| Tier 1 capital to average tangible assets (leverage ratio) | 9.47%  | 9.10%  |   | 9.37%  |   |
|------------------------------------------------------------|--------|--------|--------|--------|--------|
| Tier 1 capital to risk-weighted assets                     | 13.05% | 11.32% |   | 12.64% |   |
| Total capital to risk-weighted assets                      | 14.30% | 12.57% |   | 13.90% |   |

|                                                                |   | As of Quarter End |    |
|---------------------------------------------------------------------|--------|-------------------|---------|
|                                                                |   | March 31,         |    |   | Dec. 31, |   |   | Sept. 30, |   |   | June 30, |   |   | March 31, |   |
| (dollars in thousands)                                              |   | 2011              |    |   | 2010 |   |   | 2010 |   |   | 2010 |   |   | 2010 |   |
|                                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming assets                                          |   | $                 | 15,359  |   |   | $ | 16,389 |   |   | $ | 15,141 |   |   | $ | 15,837 |   |   | $ | 16,178 |   |
|                                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total stockholders’ equity                                    |   | $                 | 47,916  |   |   | $ | 46,690 |   |   | $ | 46,044 |   |   | $ | 44,046 |   |   | $ | 43,282 |   |
| Less:  Mortgage servicing rights, net (intangible assets) |   |              | (1,268  | ) |   |   | (1,100 | ) |   |   | (1,042 | ) |   |   | (1,163 | ) |   |   | (1,143 | ) |
| Less:  Preferred stock capital elements                   |   |              | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Add:  Allowance for loan losses                           |   |              | 7,377   |   |   |   | 7,960 |   |   |   | 8,001 |   |   |   | 7,665 |   |   |   | 7,649 |   |
|                                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total tangible common stockholders’ equity and reserves       |   | $                 | 54,025  |   |   | $ | 53,550 |   |   | $ | 53,003 |   |   | $ | 50,548 |   |   | $ | 49,788 |   |
|                                                                |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming assets as a percentage of total                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| tangible common stockholders’ equity and reserves             |   |              | 28.43   | %  |   |   | 30.61 | %  |   |   | 28.57 | %  |   |   | 31.33 | %  |   |   | 32.49 | %  |

----

Index

|         |   |      |    |   |   |   | Weighted    |   |   | Avg. Monthly |   |   | PSB Credit  |   | Agency       |   | Mortgage             |   |
|--------------|--------|-----------|---------|--------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------|--------|--------------|--------|----------------------|--------|
| Agency       |   | Principal |    |   | Loan   |   | Average     |   |   | Payment      |   |   | Enhancement |   | Funded First |   | Servicing Right, net |   |
| Program      |   | Serviced  |    |   | Count  |   | Coupon Rate |   |   | Seasoning    |   |   | Guarantee   |   | Loss Account |   | $                    |   | % |   |
|         |   |      |    |   |   |   |        |   |   |         |   |   |        |   |         |   |                 |   |   |   |
| FHLB MPF 100 |   | $         | 22,941  |   |   |   | 401         |   |   |         | 5.38   | %      |        |   | 95           |   |                 | $      | 94 |   |   | $ | 353 |   |   | $ | 68 |   |   |   | 0.30 | % |
| FHLB MPF 125 |   |      | 40,297  |   |   |   | 407         |   |   |         | 5.75   | %      |        |   | 57           |   |                 |   | 1,851 |   |   |   | 1,606 |   |   |   | 182 |   |   |   | 0.45 | % |
| FHLB XTRA    |   |      | 185,482 |   |   |   | 1,358       |   |   |         | 4.63   | %      |        |   | 14           |   |                 |   | n/a |   |   |   | n/a |   |   |   | 956 |   |   |   | 0.52 | % |
| FNMA         |   |      | 12,514  |   |   |   | 92          |   |   |         | 4.38   | %      |        |   | 13           |   |                 |   | n/a |   |   |   | n/a |   |   |   | 62 |   |   |   | 0.50 | % |
|         |   |      |    |   |   |   |        |   |   |         |   |   |        |   |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totals       |   | $         | 261,234 |   |   |   | 2,258       |   |   |         | 4.86   | %      |        |   | 28           |   |                 | $      | 1,945 |   |   | $ | 1,959 |   |   | $ | 1,268 |   |   |   | 0.49 | % |

|         |   |      |    |   |   |   | Weighted    |   |   | Avg. Monthly |   |   | PSB Credit  |   | Agency       |   | Mortgage             |   |
|--------------|--------|-----------|---------|--------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------|--------|--------------|--------|----------------------|--------|
|         |   | Principal |    |   | Loan   |   | Average     |   |   | Payment      |   |   | Enhancement |   | Funded First |   | Servicing Right, net |   |
| ($000s)      |   | Serviced  |    |   | Count  |   | Coupon Rate |   |   | Seasoning    |   |   | Guarantee   |   | Loss Account |   | $                    |   | % |   |
|         |   |      |    |   |   |   |        |   |   |         |   |   |        |   |         |   |                 |   |   |   |
| FHLB MPF 100 |   | $         | 25,245  |   |   |   | 426         |   |   |         | 5.38   | %      |        |   | 92           |   |                 | $      | 94 |   |   | $ | 353 |   |   | $ | 70 |   |   |   | 0.28 | % |
| FHLB MPF 125 |   |      | 44,964  |   |   |   | 448         |   |   |         | 5.75   | %      |        |   | 54           |   |                 |   | 1,851 |   |   |   | 1,651 |   |   |   | 146 |   |   |   | 0.32 | % |
| FHLB XTRA    |   |      | 178,183 |   |   |   | 1,291       |   |   |         | 4.63   | %      |        |   | 12           |   |                 |   | n/a |   |   |   | n/a |   |   |   | 832 |   |   |   | 0.47 | % |
| FNMA         |   |      | 11,705  |   |   |   | 84          |   |   |         | 4.44   | %      |        |   | 12           |   |                 |   | n/a |   |   |   | n/a |   |   |   | 52 |   |   |   | 0.44 | % |
|         |   |      |    |   |   |   |        |   |   |         |   |   |        |   |         |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Totals       |   | $         | 260,097 |   |   |   | 2,249       |   |   |         | 4.89   | %      |        |   | 27           |   |                 | $      | 1,945 |   |   | $ | 2,004 |   |   | $ | 1,100 |   |   |   | 0.42 | % |

a

----

Index

A

r

m

| Exhibit |                                                                 |
|---------|----------------------------------------------------------------------|
| Number  | Description                                                          |
|    |                                                                 |
| 31.1    | Certification of CEO under Section 302 of Sarbanes-Oxley Act of 2002 |
| 31.2    | Certification of CFO under Section 302 of Sarbanes-Oxley Act of 2002 |
| 32.1    | Certifications under Section 906 of Sarbanes-Oxley Act of 2002       |

|         | PSB HOLDINGS, INC.                  |
|--------------|-------------------------------------|
|         |                                |
|         |                                |
| May 16, 2011 | SCOTT M. CATTANACH                  |
|         | Scott M. Cattanach                  |
|         | Treasurer                           |
|         |                                |
|         | (On behalf of the Registrant and as |
|         | Principal Financial Officer)        |

----

Index

31.1 

31.2

32.1