| XXX          |       | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                                |
|--------------|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                           |                                                                                                                                                                |
|         |                           | For the fiscal year ended December 31, 2010                                                                                                                         |
|    |                           |                                                                                                                                                                |
|         |                           | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                                            |
|         |                           |                                                                                                                                                                |
|         |                           | For the transition period from       __________       to       __________ |

| West Virginia                            |       | 55-0732247          |
|------------------------------------------|--------------------------------|---------------------|
| (State or Other Jurisdiction of          |                           | (I.R.S. Employer    |
| Incorporation or Organization)           |                           | Identification No.) |
|                                     |                           |                |
| 111 East Washington Street               |                           |                |
| PO Box 906, Charles Town WV              |                           | 25414-0906          |
| (Address of Principal Executive Offices) |                           | (Zip Code)          |

| Registrant's telephone number, including area code          |       | 304-725-8431 |
|-------------------------------------------------------------|--------------------------------|--------------|
|                                                        |                           |         |
| Securities registered pursuant to Section 12(b) of the Act: |                           |         |

|                |              | Name of Each Exchange |
|---------------------|--------------------------------------------------------------------------|-----------------------|
| Title of Each Class |                                                                     | on Which Registered   |
|                |                                                                     |             |
| NONE                |                                                                     |                  |
|           |                                                                     |                  |

|   | Yes   |       |             | No   | XX |
|--------|------------|--------------------------------|--------------------------------------------------------------------|----------------|----|

----

|   | Yes   |       |             | No   | XX |
|--------|------------|--------------------------------|--------------------------------------------------------------------|----------------|----|

|   | Yes   | XX |             | No   |       |
|--------|------------|----|--------------------------------------------------------------------|----------------|--------------------------------|

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

|   |       |       |             |       | XX |
|--------|--------------------------------|--------------------------------|--------------------------------------------------------------------|--------------------------------|----|

| Large Accelerated Filer |       |       |       | Accelerated Filer |        |       |       | Non-Accelerated Filer |       |       |       | Smaller Reporting Company |       | XX |       |
|-------------------------|---------------------------|--------------------------------|--------------------------------|-------------------|--------------------------------------|--------------------------------|--------------------------------|-----------------------|--------------------------------|--------------------------------|--------------------------------|---------------------------|--------------------------------|----|--------------------------------|

|   | Yes   |       |             | No   | XX |
|--------|------------|--------------------------------|--------------------------------------------------------------------|----------------|----|

|                                                                                                                                                                    |       | Part of the Form 10-K into Which      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|---------------------------------------|
| Document                                                                                                                                                                |                           | the Document is Incorporated          |
|                                                                                                                                                                    |                           |                                  |
| Portions of Potomac Bancshares, Inc.’s Proxy Statement for the 2011 Annual Meeting of Shareholders which proxy statement will be filed on or about April 8, 2011. |                           | Part III, Items 10, 11, 12, 13 and 14 |

----

| PART I   |      |   |   |                                                                                           |
|----------|--------------------------|--------|--------|------------------------------------------------------------------------------------------------|
|     |                     |   |   |                                                                                           |
| Item     |                     | 1.     |   | Business                                                                                       |       | 4 |
| Item     |                     | 2.     |   | Properties                                                                                     |   | 11 |
| Item     |                     | 3.     |   | Legal Proceedings                                                                              |   | 12 |
| Item     |                     | 4.     |   | (Removed and Reserved)                                                                         |   | 12 |
|     |                     |   |   |                                                                                           |
| PART II  |                     |   |   |                                                                                           |
|     |                     |   |   |                                                                                           |
| Item     |                     | 5.     |   | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases  |   |   |
|     |                     |   |   |        of Equity Securities                                      |   | 12 |
| Item     |                     | 6.     |   | Selected Financial Data                                                                        |   | 15 |
| Item     |                     | 7.     |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations    |   | 16 |
| Item     |                     | 7A.    |   | Quantitative and Qualitative Disclosures About Market Risk                                     |   | 28 |
| Item     |                     | 8.     |   | Financial Statements and Supplementary Data                                                    |   | 30 |
| Item     |                     | 9.     |   | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure           |   | 70 |
| Item     |                     | 9A.    |   | Controls and Procedures                                                                        |   | 70 |
| Item     |                     | 9B.    |   | Other Information                                                                              |   | 70 |
|     |                     |   |   |                                                                                           |
| PART III |                     |   |   |                                                                                           |
|     |                     |   |   |                                                                                           |
| * Item   |                     | 10.    |   | Directors, Executive Officers and Corporate Governance                                         |   | 71 |
| * Item   |                     | 11.    |   | Executive Compensation                                                                         |   | 71 |
| * Item   |                     | 12.    |   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |   | 71 |
| * Item   |                     | 13.    |   | Certain Relationships and Related Transactions and Director Independence                       |   | 71 |
| * Item   |                     | 14.    |   | Principal Accounting Fees and Services                                                         |   | 71 |
|     |                     |   |   |                                                                                           |
| PART IV  |                     |   |   |                                                                                           |
|     |                     |   |   |                                                                                           |
| Item     |                     | 15.    |   | Exhibits and Financial Statement Schedules                                                     |   | 72 |

----

- Harpers Ferry, West Virginia, 
- Kearneysville, West Virginia, 
- Martinsburg, West Virginia and 
- Hedgesville, West Virginia. 

- Commercial credit lines, equipment loans, and construction financing, 
- Real estate loans, secondary market and adjustable rate mortgages, 
- Retail loan products including home equity lines of credit, 
- Checking and savings accounts for businesses and individuals and 
- Certificates of deposit and individual retirement accounts. 

- Sound credit analysis, 
- Proper documentation according to the bank's loan policy standards,  
- Management of loan concentrations to a single industry or with a single class of collateral, 
- Diligent maintenance of past due and nonaccrual loans and 
- A risk grading system that assists us in managing deteriorating credits on a proactive basis. 

----

- The purchase of raw land and land development, 
- Commercial, multi-family and other non-residential construction, 
- Purchase of improved property, 
- Purchase of owner occupied one to four family residential property, 
- Lines of credit and 
- Home equity loans. 

| - Construction and land development  |       | $      | 24 174  |
|--------------------------------------|--------------------------------|--------|---------|
| - Secured by farmland                |                           |   | 792     |
| - Secured by 1-4 family residential  |                           |   | 97 537  |
| - Secured by multifamily residential |                           |   | 1 976   |
| - Secured by nonfarm nonresidential  |                           |   | 79 615  |
|                                 |                           |   |    |
|                                 |                           | $      | 204 094 |
|                                 |                           |   |    |

- Grant loans on a sound and collectible basis,  
- Invest the bank’s funds profitably for the benefit of shareholders and the protection of depositors and 
- Serve the legitimate credit needs of the community in which the bank is located. 

----

- Present a valid identification, 
- Have a social security number, 
- Must be a U.S. citizen or possess evidence of legal alien status, and  
- Must be at least 18 years of age or share an account with a person at least 18 years of age. 

----

----

----

|                                                                                                                    |       | Actual         |       | Required |       | Excess |
|-------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|----------|--------------------------------|--------|
|                                                                                                                    |                           | (in thousands) |
| Tier 1 capital:                                                                                                         |                           |           |                           |     |                           |   |   |   |   |
|        Common stock                                                                       |                           | $              | 3 672                          |     |                           |   |   |   |   |
|        Surplus                                                                            |                           |           | 3 932                          |     |                           |   |   |   |   |
|        Retained earnings                                                                  |                           |           | 23 725                         |     |                           |   |   |   |   |
|                                                                                                                    |                           |           | 31 329                         |     |                           |   |   |   |   |
|        Less:                                                                              |                           |           |                           |     |                           |   |   |   |   |
|               Cost of shares acquired for the treasury |                           |           | 2 866                          |     |                           |   |   |   |   |
|               Disallowed deferred tax asset            |                           |           | 398                            |     |                           |   |   |   |   |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Total tier 1 capital                                                                                                    |                           | $              | 28 065                         |     | $                              | 8 653  |   | $ | 19 412 |
| Tier 2 capital:                                                                                                         |                           |           |                           |     |                           |   |   |   |   |
|        Allowance for loan losses (1)                                                      |                           |           | 2 733                          |     |                           |   |   |   |   |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Total risk-based capital                                                                                                |                           | $              | 30 798                         |     | $                              | 17 306 |   | $ | 13 492 |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Risk-weighted assets                                                                                                    |                           | $              | 216 322                        |     |                           |   |   |   |   |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Tier 1 capital                                                                                                          |                           | $              | 28 065                         |     | $                              | 11 992 |   | $ | 16 073 |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Average total assets (2)                                                                                                |                           | $              | 299 802                        |     |                           |   |   |   |   |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| Capital ratios:                                                                                                         |                           |           |                           |     |                           |   |   |   |   |
|        Tier 1 risk-based capital ratio                                                    |                           |           | 12.97%                         |     |                           | 4.00%  |   |   | 8.97% |
|        Total risk-based capital ratio                                                     |                           |           | 14.24%                         |     |                           | 8.00%  |   |   | 6.24% |
|        Tier 1 capital to average total assets (leverage)                                  |                           |           | 9.36%                          |     |                           | 4.00%  |   |   | 5.36% |
|                                                                                                                    |                           |           |                           |     |                           |   |   |   |   |
| (1) Limited to 1.25% of gross risk-weighted assets.(2) Net of disallowed deferred tax asset.                            |

----

----

- Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which will have rulemaking authority for a wide range of consumer protection laws that would apply to all banks and have broad powers to supervise and enforce consumer protection laws;  
- After a three-year phase-in period which begins January 1, 2013, removes trust preferred securities as a permitted component of a holding company’s tier 1 capital;  
- Requires financial holding companies to be well-capitalized and well-managed as of July 21, 2011. Bank holding companies and banks must also be both well-capitalized and well-managed in order to acquire banks located outside their domiciled state;  
- Provides for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the deposit insurance fund from 1.15% to 1.35% and changes in the basis for determining FDIC premiums from deposits to assets;  
- Provides for new disclosure and other requirements relating to executive compensation and corporate governance. These disclosures and requirements apply to all public companies, not just financial institutions;  
- Permanently increases the limit for federal deposit insurance, increases the cash limit of Securities Investor Protection Corporation protection from $100,000 to $250,000 and provides unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions;  
- Repeals the federal prohibitions on the payment of interest on demand deposits; and  
- Amends the Electronic Fund Transfer Act (EFTA) to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. 

----

| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
|---------------|---------------------------------------------------------------------------------------------------------------------|

|   |       |           |                           | Price Range |                           | Cash Dividends |
|--------|--------------------------------|----------------|--------------------------------|-------------|--------------------------------|----------------|
|   |                           |           |       | High        |       | Low            |       | Paid per Share |
| 2009   |                           | First Quarter  |                           | $           | 10.10                          |           | $ | 7.50 |   | $ | .1175 |
|   |                           | Second Quarter |                           |        | 9.50                           |           |   | 6.60 |   |   | .1175 |
|   |                           | Third Quarter  |                           |        | 8.00                           |           |   | 5.35 |   |   | .0300 |
|   |                           | Fourth Quarter |                           |        | 6.34                           |           |   | 5.75 |   |   | .0000 |
|   |                           |           |                           |        |                           |           |   |   |   |   |   |
| 2010   |                           | First Quarter  |                           | $           | 6.10                           |           | $ | 4.63 |   | $ | .0000 |
|   |                           | Second Quarter |                           |        | 6.34                           |           |   | 4.50 |   |   | .0000 |
|   |                           | Third Quarter  |                           |        | 5.84                           |           |   | 4.30 |   |   | .0000 |
|   |                           | Fourth Quarter |                           |        | 5.25                           |           |   | 4.30 |   |   | .0000 |

----

----

|                           |                           |      |                           |        |                           | (c) Total Number |                           |               |
|--------------------------------|--------------------------------|-----------|--------------------------------|-------------|--------------------------------|------------------|--------------------------------|--------------------|
|                           |                           |      |                           |        |                           | of Shares        |                           |               |
|                           |                           | (a) Total |                           |        |                           | Purchased as     |                           | (d) Maximum Number |
|                           |                           | Number of |                           | (b) Average |                           | Part of Publicly |                           | of Shares that May |
|                           |                           | Shares    |                           | Price Paid  |                           | Announced        |                           | Yet be Purchased   |
| Period                         |       | Purchased |       | Per Share   |       | Programs         |       | Under the Program  |
| October 1 through October 31   |                           | NONE      |                           | $           |  - -                      |             | 283 553                        |               | 62 515 |
|                           |                           |      |                           |        |                           |             |                           |               |
| November 1 through November 30 |                           | NONE      |                           |        | - -                            |             | 283 553                        |               | 62 515 |
|                           |                           |      |                           |        |                           |             |                           |               |
| December 1 through December 31 |                           | NONE      |                           |        | - -                            |             | 283 553                        |               | 62 515 |

|                                                   |                           | Equity Compensation Plan Information |
|--------------------------------------------------------|--------------------------------|--------------------------------------|
|                                                   |                           | Number of                            |   |   |   |   |   |
|                                                   |                           | Securities to be                     |   |   |   |   | Number of Securities |
|                                                   |                           | Issued Upon                          |   | Weighted Average |   | Remaining Available for |
|                                                   |                           | Exercise of                          |   | Exercise Price of |   | Future Issuance Under |
|                                                   |                           | Outstanding                          |   | Outstanding |   | Equity Compensation |
| Plan Category                                          |       | Options                              |       | Options |       | Plan |
| Equity compensation plans approved by Stockholders     |                           | 120,974                              |   | $ | 14.76 |   | 310,586 |
| Equity compensation plans not approved by Stockholders |                           | -                                    |   | $ | - |   | - |
|                                                   |                           | 120,974                              |   | $ | 14.76 |   | 310,586 |

----

|                                                                                           |                           | 2010                                         |      | 2009                           |   |      | 2008   |                           | 2007   |      | 2006                           |
|------------------------------------------------------------------------------------------------|--------------------------------|----------------------------------------------|-----------|--------------------------------|--------|-----------|--------|--------------------------------|--------|-----------|--------------------------------|
|                                                                                           |                           | (Dollars in Thousands Except Per Share Data) |
| Summary of Operations                                                                          |       |                                         |      |       |   |      |   |       |   |      |       |   |   |       |   |   |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Interest income                                           |                           | $                                            | 13 904    |                           | $      | 14 913    |   |                           | $      | 17 358    |                           | $ | 19 691 |   | $ | 19 099 |
|        Interest expense                                          |                           |                                         | 4 143     |                           |   | 5 121     |   |                           |   | 6 477     |                           |   | 8 161 |   |   | 6 932 |
|        Net interest income                                       |                           |                                         | 9 761     |                           |   | 9 792     |   |                           |   | 10 881    |                           |   | 11 530 |   |   | 12 167 |
|        Provision for loan losses                                 |                           |                                         | 1 599     |                           |   | 6 690     |   |                           |   | 2 934     |                           |   | 678 |   |   | 331 |
|        Net interest income after provision                       |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|               for loan losses |                           |                                         | 8 162     |                           |   | 3 102     |   |                           |   | 7 947     |                           |   | 10 852 |   |   | 11 836 |
|        Noninterest income                                        |                           |                                         | 4 076     |                           |   | 4 281     |   |                           |   | 4 355     |                           |   | 4 379 |   |   | 3 766 |
|        Noninterest expense                                       |                           |                                         | 9 764     |                           |   | 11 059    |   |                           |   | 9 587     |                           |   | 9 703 |   |   | 9 261 |
|        Income (loss) before income taxes                         |                           |                                         | 2 474     |                           |   | (3 676    | )      |                           |   | 2 715     |                           |   | 5 528 |   |   | 6 341 |
|        Income tax expense (benefit)                              |                           |                                         | 680       |                           |   | (1 436    | )      |                           |   | 853       |                           |   | 1 998 |   |   | 2 306 |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Net income (loss)                                         |                           | $                                            | 1 794     |                           | $      | (2 240    | )      |                           | $      | 1 862     |                           | $ | 3 530 |   | $ | 4 035 |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
| Per Share Data                                                                                 |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Net income (loss), basic                                  |                           | $                                            | .53       |                           | $      | (.66      | )      |                           | $      | .55       |                           | $ | 1.03 |   | $ | 1.17 |
|        Net income (loss), diluted                                |                           |                                         | .53       |                           |   | (.66      | )      |                           |   | .55       |                           |   | 1.03 |   |   | 1.16 |
|        Cash dividends declared                                   |                           |                                         | .00       |                           |   | .27       |   |                           |   | .46       |                           |   | .42 |   |   | .38 |
|        Book value at period end                                  |                           |                                         | 7.90      |                           |   | 7.54      |   |                           |   | 8.19      |                           |   | 8.52 |   |   | 7.78 |
|        Weighted-average shares outstanding, basic                |                           |                                         | 3 390 178 |                           |   | 3 390 516 |   |                           |   | 3 401 717 |                           |   | 3 423 239 |   |   | 3 454 961 |
|        Weighted-average shares outstanding, diluted              |                           |                                         | 3 390 178 |                           |   | 3 390 516 |   |                           |   | 3 403 265 |                           |   | 3 430 764 |   |   | 3 467 918 |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
| Average Balance Sheet Summary                                                                  |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Assets                                                    |                           | $                                            | 303 998   |                           | $      | 304 739   |   |                           | $      | 303 749   |                           | $ | 297 716 |   | $ | 289 303 |
|        Loans                                                     |                           |                                         | 227 113   |                           |   | 239 175   |   |                           |   | 232 894   |                           |   | 226 773 |   |   | 220 895 |
|        Securities                                                |                           |                                         | 39 388    |                           |   | 32 841    |   |                           |   | 34 178    |                           |   | 42 040 |   |   | 48 891 |
|        Deposits                                                  |                           |                                         | 263 534   |                           |   | 261 233   |   |                           |   | 259 536   |                           |   | 252 908 |   |   | 243 833 |
|        Stockholders’ equity                                |                           |                                         | 26 780    |                           |   | 26 266    |   |                           |   | 30 118    |                           |   | 28 207 |   |   | 26 632 |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
| Performance Ratios                                                                             |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Return (loss) on average assets                           |                           |                                         | 0.59%     |                           |   | (0.74)%   |   |                           |   | 0.61%     |                           |   | 1.19% |   |   | 1.39% |
|        Return (loss) on average equity                           |                           |                                         | 6.70%     |                           |   | (8.53)%   |   |                           |   | 6.18%     |                           |   | 12.51% |   |   | 15.15% |
|        Dividend payout ratio                                     |                           |                                         | 0.00%     |                           |   | (40.91)%  |   |                           |   | 83.64%    |                           |   | 40.78% |   |   | 32.48% |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
| Capital Ratios                                                                                 |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|                                                                                           |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|        Leverage ratio                                            |                           |                                         | 9.36%     |                           |   | 8.75%     |   |                           |   | 9.85%     |                           |   | 9.99% |   |   | 9.34% |
|        Risk-based capital ratios                                 |                           |                                         |      |                           |   |      |   |                           |   |      |                           |   |   |   |   |   |
|               Tier 1 capital  |                           |                                         | 12.97%    |                           |   | 11.65%    |   |                           |   | 12.37%    |                           |   | 13.01% |   |   | 12.71% |
|               Total capital   |                           |                                         | 14.24%    |                           |   | 12.92%    |   |                           |   | 13.63%    |                           |   | 14.23% |   |   | 13.82% |

----

|                                                                                                                                                |                           | 2010           |                           | 2009           |                           | 2008           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|----------------|--------------------------------|----------------|
|                                                                                                                                                |                           | Average        |                           | Income/        |                           | Average        |   | Average |   | Income/ |   | Average |   | Average |   |   | Income/ |   | Average |
|                                                                                                                                                |       | Balances       |       | Expense        |       | Yield/Rate     |       | Balances |       | Expense |       | Yield/Rate |       | Balances |   |       | Expense |       | Yield/Rate |
|                                                                                                                                                |                           | (in thousands) |                           | (in thousands) |                           | (in thousands) |
| ASSETS                                                                                                                                              |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                                                                                               |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Taxable                                                                                                        |                           | $              | 226 169                        |           | $                              | 12 875         |   | 5.69% |   | $ | 238 493 |   | $ | 13 759 |   | 5.77% |   | $ | 232 124 |   |   | $ | 15 151 |   | 6.53% |
|        Tax exempt                                                                                                     |                           |           | 944                            |           |                           | 73             |   | 7.73% |   |   | 682 |   |   | 64 |   | 9.38% |   |   | 770 |   |   |   | 73 |   | 9.48% |
|               Total loans                                                          |                           |           | 227 113                        |           |                           | 12 948         |   | 5.70% |   |   | 239 175 |   |   | 13 823 |   | 5.78% |   |   | 232 894 |   |   |   | 15 224 |   | 6.54% |
| Taxable securities                                                                                                                                  |                           |           | 34 372                         |           |                           | 755            |   | 2.20% |   |   | 29 084 |   |   | 933 |   | 3.21% |   |   | 31 286 |   |   |   | 1 415 |   | 4.52% |
| Nontaxable securities                                                                                                                               |                           |           | 5 016                          |           |                           | 306            |   | 6.10% |   |   | 3 757 |   |   | 224 |   | 5.96% |   |   | 2 892 |   |   |   | 167 |   | 5.77% |
| Federal funds sold                                                                                                                                  |                           |           | 3 291                          |           |                           | 3              |   | 0.09% |   |   | 4 049 |   |   | 7 |   | 0.17% |   |   | 10 712 |   |   |   | 249 |   | 2.32% |
| Other earning assets                                                                                                                                |                           |           | 7 935                          |           |                           | 21             |   | 0.26% |   |   | 3 125 |   |   | 24 |   | 0.77% |   |   | 7 765 |   |   |   | 383 |   | 4.93% |
|               Total earning assets                                                 |                           |           | 277 727                        |           | $                              | 14 033         |   | 5.05% |   |   | 279 190 |   | $ | 15 011 |   | 5.38% |   |   | 285 549 |   |   | $ | 17 438 |   | 6.11% |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                                                                                           |                           |           | (5 335                         | )              |                           |           |   |   |   |   | (4 776 | ) |   |   |   |   |   |   | (2 940 | ) |   |   |   |   |   |
| Cash and due from banks                                                                                                                             |                           |           | 4 655                          |           |                           |           |   |   |   |   | 6 850 |   |   |   |   |   |   |   | 4 396 |   |   |   |   |   |   |
| Premises and equipment, net                                                                                                                         |                           |           | 8 510                          |           |                           |           |   |   |   |   | 8 650 |   |   |   |   |   |   |   | 6 934 |   |   |   |   |   |   |
| Other assets                                                                                                                                        |                           |           | 18 441                         |           |                           |           |   |   |   |   | 14 825 |   |   |   |   |   |   |   | 9 810 |   |   |   |   |   |   |
|               Total assets                                                         |                           | $              | 303 998                        |           |                           |           |   |   |   | $ | 304 739 |   |   |   |   |   |   | $ | 303 749 |   |   |   |   |   |   |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND                                                                                                                                     |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        STOCKHOLDERS’ EQUITY                                                                                     |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                                            |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Savings and interest-                                                                                          |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               bearing demand deposits                                              |                           | $              | 126 035                        |           | $                              | 838            |   | 0.66% |   | $ | 119 504 |   | $ | 1 016 |   | 0.85% |   | $ | 120 853 |   |   | $ | 1 615 |   | 1.34% |
|        Time deposits                                                                                                  |                           |           | 109 902                        |           |                           | 3 134          |   | 2.85% |   |   | 115 239 |   |   | 3 756 |   | 3.26% |   |   | 111 574 |   |   |   | 4 547 |   | 4.08% |
|               Total interest-                                                      |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      bearing deposits           |                           |           | 235 937                        |           |                           | 3 972          |   | 1.68% |   |   | 234 743 |   |   | 4 772 |   | 2.03% |   |   | 232 427 |   |   |   | 6 162 |   | 2.65% |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities sold under agreements                                                                                                                    |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        to repurchase and federal                                                                                      |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        funds purchased                                                                                                |                           |           | 8 372                          |           |                           | 84             |   | 1.00% |   |   | 9 212 |   |   | 148 |   | 1.61% |   |   | 9 963 |   |   |   | 255 |   | 2.56% |
| Advances from FHLB and FRB                                                                                                                          |                           |           | 3 333                          |           |                           | 87             |   | 2.61% |   |   | 4 336 |   |   | 201 |   | 4.64% |   |   | 1 381 |   |   |   | 60 |   | 4.34% |
|               Total interest                                                       |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      bearing liabilities        |                           |           | 247 642                        |           | $                              | 4 143          |   | 1.67% |   |   | 248 291 |   | $ | 5 121 |   | 2.06% |   |   | 243 771 |   |   | $ | 6 477 |   | 2.66% |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing demand                                                                                                                          |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        deposits                                                                                                       |                           |           | 27 597                         |           |                           |           |   |   |   |   | 26 490 |   |   |   |   |   |   |   | 27 109 |   |   |   |   |   |   |
| Other liabilities                                                                                                                                   |                           |           | 1 979                          |           |                           |           |   |   |   |   | 3 692 |   |   |   |   |   |   |   | 2 751 |   |   |   |   |   |   |
| Stockholders’ equity                                                                                                                          |                           |           | 26 780                         |           |                           |           |   |   |   |   | 26 266 |   |   |   |   |   |   |   | 30 118 |   |   |   |   |   |   |
|               Total liabilities and                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                      stockholders’ equity |                           | $              | 303 998                        |           |                           |           |   |   |   | $ | 304 739 |   |   |   |   |   |   | $ | 303 749 |   |   |   |   |   |   |
|                                                                                                                                                |                           |           |                           |           |                           |           |
| Net interest income                                                                                                                                 |                           |           |                           |           | $                              | 9 890          |   |   |   |   |   |   | $ | 9 890 |   |   |   |   |   |   |   | $ | 10 961 |   |   |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest spread                                                                                                                                 |                           |           |                           |           |                           |           |   | 3.38% |   |   |   |   |   |   |   | 3.32% |   |   |   |   |   |   |   |   | 3.45% |
| Interest expense as a                                                                                                                               |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        percent of average earning assets                                                                              |                           |           |                           |           |                           | 1.49%          |   |   |   |   |   |   |   | 1.83% |   |   |   |   |   |   |   |   | 2.27% |
|                                                                                                                                                |                           |           |                           |           |                           |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin                                                                                                                                 |                           |           |                           |           |                           |           |   | 3.56% |   |   |   |   |   |   |   | 3.54% |   |   |   |   |   |   |   |   | 3.84% |

----

- Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which will have rulemaking authority for a wide range of consumer protection laws that would apply to all banks and have broad powers to supervise and enforce consumer protection laws;  
- After a three-year phase-in period which begins January 1, 2013, removes trust preferred securities as a permitted component of a holding company’s tier 1 capital;  
- Requires financial holding companies to be well-capitalized and well-managed as of July 21, 2011. Bank holding companies and banks must also be both well-capitalized and well-managed in order to acquire banks located outside their domiciled state;  
- Provides for an increase in the FDIC assessment for depository institutions with assets of $10 billion or more, increases in the minimum reserve ratio for the deposit insurance fund from 1.15% to 1.35% and changes in the basis for determining FDIC premiums from deposits to assets;  
- Provides for new disclosure and other requirements relating to executive compensation and corporate governance. These disclosures and requirements apply to all public companies, not just financial institutions; 

----

- Permanently increases the $250 thousand limit for federal deposit insurance and increases the cash limit of Securities Investor Protection Corporation protection from $100 thousand to $250 thousand and provides unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions;  
- Repeals the federal prohibitions on the payment of interest on demand deposits; and  
- Amends the Electronic Fund Transfer Act (EFTA) to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer. 

----

|                                                           |                           | 2010               |                           | 2009               |
|----------------------------------------------------------------|--------------------------------|--------------------|--------------------------------|--------------------|
|                                                           |                           | Three Months Ended |                           | Three Months Ended |
|                                                           |       | Dec 31             |       | Sept 30            |       | June 30 |       | Mar 31 |       | Dec 31 |       | Sept 30 |       | June 30 |       | Mar 31 |
| Interest income                                                |                           | $                  | 3 380                          |               | $ | 3 459 |   | $ | 3 539 |   | $ | 3 526 |   | $ | 3 594 |   | $ | 3 704 |   |   | $ | 3 805 |   |   | $ | 3 810 |   |
| Interest expense                                               |                           |               | 948                            |               |   | 993 |   |   | 1 058 |   |   | 1 144 |   |   | 1 208 |   |   | 1 228 |   |   |   | 1 300 |   |   |   | 1 385 |   |
| Net interest income                                            |                           |               | 2 432                          |               |   | 2 466 |   |   | 2 481 |   |   | 2 382 |   |   | 2 386 |   |   | 2 476 |   |   |   | 2 505 |   |   |   | 2 425 |   |
| Provision for loan losses                                      |                           |               | 615                            |               |   | 213 |   |   | 461 |   |   | 310 |   |   | 13 |   |   | 3 540 |   |   |   | 1 560 |   |   |   | 1 577 |   |
| Net interest income (loss) after                               |                           |               |                           |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        provision for loan losses |                           |               | 1 817                          |               |   | 2 253 |   |   | 2 020 |   |   | 2 072 |   |   | 2 373 |   |   | (1 064 | ) |   |   | 945 |   |   |   | 848 |   |
| Noninterest income                                             |                           |               | 884                            |               |   | 1 047 |   |   | 1 093 |   |   | 1 052 |   |   | 1 619 |   |   | 1 369 |   |   |   | 1 047 |   |   |   | 1 022 |   |
| Noninterest expense                                            |                           |               | 2 263                          |               |   | 2 531 |   |   | 2 461 |   |   | 2 509 |   |   | 2 973 |   |   | 3 102 |   |   |   | 3 134 |   |   |   | 2 626 |   |
| Income (loss) before taxes                                     |                           |               | 438                            |               |   | 769 |   |   | 652 |   |   | 615 |   |   | 1 019 |   |   | (2 797 | ) |   |   | (1 142 | ) |   |   | (756 | ) |
| Income tax expense (benefit)                                   |                           |               | 32                             |               |   | 241 |   |   | 214 |   |   | 193 |   |   | 614 |   |   | (1 204 | ) |   |   | (508 | ) |   |   | (338 | ) |
| Net income (loss)                                              |                           | $                  | 406                            |               | $ | 528 |   | $ | 438 |   | $ | 422 |   | $ | 405 |   | $ | (1 593 | ) |   | $ | (634 | ) |   | $ | (418 | ) |
| Earnings (loss) per share, basic                               |                           |               |                           |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        and diluted               |                           | $                  | .12                            |               | $ | .16 |   | $ | .13 |   | $ | .12 |   | $ | .12 |   | $ | (.47 | ) |   | $ | (.19 | ) |   | $ | (.12 | ) |
|                                                           |                           |               |                           |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                     |                           | 2010 Compared to 2009                       |                           | 2009 Compared to 2008 |
|----------------------------------------------------------------------------------------------------------|--------------------------------|---------------------------------------------|--------------------------------|-----------------------|
|                                                                                                     |                           | (in thousands)                              |                           | (in thousands)        |
|                                                                                                     |                           | Change in                                   |                           |                  |   |   |   |   |   |   |   | Change in |   |   |   |   |   |   |   |   |
|                                                                                                     |                           | Income/                                     |                           | Volume                |   | Rate |   | Income/ |   | Volume |   | Rate |
|                                                                                                     |       | Expense                                     |       | Effect                |       | Effect |       | Expense |       | Effect |       | Effect |
| INTEREST INCOME                                                                                          |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Taxable loans                                                       |                           | $        | (884                           | )                     |   | $    | (697 | ) |   | $ | (187 | ) |   | $      | (1 392 | ) |   | $    | 430 |   |   | $ | (1 822 | ) |
|        Tax exempt loans                                                    |                           |                                        | 9                              |                  |   |   | 16 |   |   |   | (7 | ) |   |   | (9 | ) |   |   | (8 | ) |   |   | (1 | ) |
|        Taxable securities                                                  |                           |                                        | (178                           | )                     |   |   | 244 |   |   |   | (422 | ) |   |   | (482 | ) |   |   | (95 | ) |   |   | (387 | ) |
|        Nontaxable securities                                               |                           |                                        | 82                             |                  |   |   | 77 |   |   |   | 5 |   |   |   | 57 |   |   |   | 52 |   |   |   | 5 |   |
|        Federal funds sold                                                  |                           |                                        | (4                             | )                     |   |   | (1 | ) |   |   | (3 | ) |   |   | (242 | ) |   |   | (97 | ) |   |   | (145 | ) |
|        Other earning assets                                                |                           |                                        | (3                             | )                     |   |   | (5 | ) |   |   | 2 |   |   |   | (359 | ) |   |   | (149 | ) |   |   | (210 | ) |
|               TOTAL                     |                           | $                                           | (978                           | )                     |   | $ | (366 | ) |   | $ | (612 | ) |   | $ | (2 427 | ) |   | $ | 133 |   |   | $ | (2 560 | ) |
|                                                                                                     |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                                                                         |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Savings and interest-bearing                                        |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               demand deposits           |                           | $                                           | (178                           | )                     |   | $ | 58 |   |   | $ | (236 | ) |   | $ | (599 | ) |   | $ | (18 | ) |   | $ | (581 | ) |
|        Time deposits                                                       |                           |                                        | (622                           | )                     |   |   | (168 | ) |   |   | (454 | ) |   |   | (791 | ) |   |   | 155 |   |   |   | (946 | ) |
|        Securities sold under agreements                                    |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               to repurchase and federal |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               funds purchased           |                           |                                        | (64                            | )                     |   |   | (13 | ) |   |   | (51 | ) |   |   | (107 | ) |   |   | (18 | ) |   |   | (89 | ) |
|        Advances from FHLB and FRB                                          |                           |                                        | (114                           | )                     |   |   | (40 | ) |   |   | (74 | ) |   |   | 141 |   |   |   | 137 |   |   |   | 4 |   |
|               TOTAL                |                           | $                                           | (978                           | )                     |   | $ | (163 | ) |   | $ | (815 | ) |   | $ | (1 356 | ) |   | $ | 256 |   |   | $ | (1 612 | ) |
|                                                                                                     |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INTEREST INCOME                                                                                      |                           | $                                           | - -                            |                  |   | $ | (203 | ) |   | $ | 203 |   |   | $ | (1 071 | ) |   | $ | (123 | ) |   | $ | (948 | ) |
|                                                                                                     |                           |                                        |                           |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                      |                           | Mature or Reprice                                             |
|-------------------------------------------------------------------------------------------|--------------------------------|---------------------------------------------------------------|
|                                                                                      |                           |                                                          |   |   |   | After Three |   |   |   |   |   |   |   |   |   |
|                                                                                      |                           |                                                          |   |   |   | Months |   | After One Year |   |   |   |   |   |   |
|                                                                                      |                           | Within                                                        |   | But Within |   | But Within |   | After |   |   |   |
|                                                                                      |       | Three Months                                                  |       | Twelve Months |       | Five Years |       | Five Years |       | Nonsensitive |
| Interest Earning Assets:                                                                  |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Loans                                                |                           | $           | 27 792 |   |   | $              | 29 367 |   |   | $ | 78 111 |   | $ | 83 980 |   | $ | - - |
|        Securities                                           |                           |                                                          | 2 012 |   |   |   | 3 191 |   |   |   | 32 372 |   |   | 4 237 |   |   | 878 |
|        Federal funds sold                                   |                           |                                                          | 2 725 |   |   |   | - - |   |   |   | - - |   |   | - - |   |   | - - |
|        Other earning assets                                 |                           |                                                          | 6 511 |   |   |   | - - |   |   |   | - - |   |   | - - |   |   | - - |
|               Total      |                           | $                                                             | 39 040 |   |   | $ | 32 558 |   |   | $ | 110 483 |   | $ | 88 217 |   | $ | 878 |
|                                                                                      |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-Bearing Liabilities:                                                             |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Time deposits $100,000 and over                      |                           | $                                                             | 1 901 |   |   | $ | 24 707 |   |   | $ | 18 439 |   | $ | - - |   | $ | - - |
|        Other time deposits                                  |                           |                                                          | 9 723 |   |   |   | 24 810 |   |   |   | 23 730 |   |   | - - |   |   | - - |
|        Interest bearing demand deposits                     |                           |                                                          | 51 309 |   |   |   | - - |   |   |   | - - |   |   | - - |   |   | 34 611 |
|        Savings accounts                                     |                           |                                                          | - - |   |   |   | - - |   |   |   | - - |   |   | - - |   |   | 41 497 |
|        Securities sold under agreements to                  |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               repurchase |                           |                                                          | 7 382 |   |   |   | - - |   |   |   | - - |   |   | - - |   |   | - - |
|        Federal Home Loan Bank advances                      |                           |                                                          | 297 |   |   |   | 898 |   |   |   | 1 522 |   |   | - - |   |   | - - |
|               Total      |                           | $                                                             | 70 612 |   |   | $ | 50 415 |   |   | $ | 43 691 |   | $ | - - |   | $ | 76 108 |
|                                                                                      |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate Sensitivity Gap                                                                      |                           | $                                                             | (31 562 | ) |   | $ | (17 857 | ) |   | $ | 66 792 |   | $ | 88 217 |   |   |   |
|                                                                                      |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative Gap                                                                            |                           | $                                                             | (31 562 | ) |   | $ | (49 419 | ) |   | $ | 17 373 |   | $ | 105 590 |   |   |   |
|                                                                                      |                           |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                    |       | 2010   |       | 2009   |       | 2008    |       | 2007   |       | 2006   |
|-------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|---------|--------------------------------|--------|--------------------------------|--------|
| Commercial, financial and agricultural                                  |                           | $      | 7 920                          |   | $                              | 9 700   |                           | $      | 9 671                          |   | $ | 4 987 |   | $ | 4 247 |
| Mortgage loans on real estate:                                          |                           |   |                           |   |                           |    |                           |   |                           |   |   |   |   |   |   |
|        Construction and land development  |                           |   | 24 174                         |   |                           | 38 083  |                           |   | 55 843                         |   |   | 55 042 |   |   | 53 801 |
|        Secured by farm land               |                           |   | 792                            |   |                           | 1 419   |                           |   | 1 380                          |   |   | 1 328 |   |   | 1 557 |
|        Secured by 1-4 family residential  |                           |   | 97 537                         |   |                           | 102 290 |                           |   | 101 253                        |   |   | 98 864 |   |   | 103 983 |
|        Secured by multifamily residential |                           |   | 1 976                          |   |                           | 2 070   |                           |   | 1 937                          |   |   | 1 749 |   |   | 3 733 |
|        Secured by nonfarm nonresidential  |                           |   | 79 615                         |   |                           | 71 916  |                           |   | 63 943                         |   |   | 47 726 |   |   | 46 367 |
| Consumer loans                                                          |                           |   | 6 800                          |   |                           | 9 011   |                           |   | 11 970                         |   |   | 14 718 |   |   | 16 089 |
| All other loans                                                         |                           |   | 436                            |   |                           | 222     |                           |   | 457                            |   |   | 193 |   |   | 292 |
|                                                                    |                           | $      | 219 250                        |   | $                              | 234 711 |                           | $      | 246 454                        |   | $ | 224 607 |   | $ | 230 069 |
|                                                                    |                           |   |                           |   |                           |    |                           |   |                           |   |   |   |   |   |   |

|                                                      |   | Commercial,                    |         |                           |         |
|-----------------------------------------------------------|--------|--------------------------------|--------------|--------------------------------|--------------|
|                                                      |   | Financial and                  |         | Real Estate-                   |
| At December 31, 2010                                      |   |       | Agricultural |       | Construction |
| Loans maturing within one year                            |   | $                              | 3 894        |                           | $            | 11 639 |
| Variable rate loans due after one year through five years |   |                           | 242          |                           |         | - - |
| Variable rate loans due after five years                  |   |                           | 597          |                           |         | 1 230 |
| Fixed rate loans due after one year through five years    |   |                           | 2 507        |                           |         | 7 010 |
| Fixed rate loans due after five years                     |   |                           | 680          |                           |         | 4 295 |
| Total maturities                                          |   | $                              | 7 920        |                           | $            | 24 174 |
|                                                      |   |                           |         |                           |         |   |

----

|                                                                                             |       | 2010           |       | 2009   |       | 2008   |       | 2007   |       | 2006   |
|--------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                                                                             |                           | (in thousands) |
| Balance at beginning of period                                                                   |                           | $              | 5 718                          |   | $                              | 4 079  |                           | $      | 2 779                          |   | $ | 2 423 |   | $ | 2 161 |
| Charge-offs:                                                                                     |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        Commercial, financial and agricultural                      |                           |           | 313                            |   |                           | 23     |                           |   | 21                             |   |   | 14 |   |   | - - |
|        Real estate – construction                            |                           |           | 775                            |   |                           | 3 957  |                           |   | 269                            |   |   | 32 |   |   | - - |
|        Real estate – mortgage                                |                           |           | 1 245                          |   |                           | 920    |                           |   | 1 102                          |   |   | 206 |   |   | - - |
|        Consumer                                                    |                           |           | 293                            |   |                           | 383    |                           |   | 441                            |   |   | 252 |   |   | 207 |
|               Total charge-offs |                           |           | 2 626                          |   |                           | 5 283  |                           |   | 1 833                          |   |   | 504 |   |   | 207 |
| Recoveries:                                                                                      |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        Commercial, financial and agricultural                      |                           |           | 25                             |   |                           | 5      |                           |   | - -                            |   |   | 30 |   |   | - - |
|        Real estate – construction                            |                           |           | - -                            |   |                           | - -    |                           |   | - -                            |   |   | - - |   |   | - - |
|        Real estate – mortgage                                |                           |           | 95                             |   |                           | 2      |                           |   | 17                             |   |   | - - |   |   | - - |
|        Consumer                                                    |                           |           | 201                            |   |                           | 225    |                           |   | 182                            |   |   | 152 |   |   | 138 |
|               Total recoveries  |                           |           | 321                            |   |                           | 232    |                           |   | 199                            |   |   | 182 |   |   | 138 |
| Net charge-offs                                                                                  |                           |           | 2 305                          |   |                           | 5 051  |                           |   | 1 634                          |   |   | 322 |   |   | 69 |
| Additions charged to operations                                                                  |                           |           | 1 599                          |   |                           | 6 690  |                           |   | 2 934                          |   |   | 678 |   |   | 331 |
|                                                                                             |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
| Balance at end of period                                                                         |                           | $              | 5 012                          |   | $                              | 5 718  |                           | $      | 4 079                          |   | $ | 2 779 |   | $ | 2 423 |
| Ratio of net charge-offs during the period                                                       |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        to average loans outstanding during                         |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        the period                                                  |                           | 1.01%          |                           | 2.11%  |                           | 0.70%  |                           | 0.14%  |                           | 0.03%  |
|                                                                                             |                           |           |                           |   |                           |   |                           |   |                           |   |

|                                                                                          |               | 2010       |               | 2009        |               | 2008       |               | 2007        |               | 2006       |
|-----------------------------------------------------------------------------------------------|--------------------|------------|--------------------|-------------|--------------------|------------|--------------------|-------------|--------------------|------------|
|                                                                                          |               | Allowance  |               | % Loans in  |               | Allowance  |               | % Loans in  |               | Allowance  |   | % Loans in |   | Allowance |   | % Loans in |   | Allowance |   | % Loans in |
|                                                                                          |               | (in        |               | Category to |               | (in        |               | Category to |               | (in        |   | Category to |   | (in |   | Category to |   | (in |   | Category to |
|                                                                                          |     | thousands) |     | Total Loans |     | thousands) |     | Total Loans |     | thousands) |     | Total Loans |     | thousands) |     | Total Loans |     | thousands) |     | Total Loans |
| Commercial,                                                                                   |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        financial and                                            |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        agricultural                                             |               | $          | 239                |        | 3.61%              |       | $                  | 425         |               | 4.13%      |   | $ | 69 |   | 3.92% |   | $ | 35 |   | 2.22% |   | $ | 71 |   | 1.85% |
| Mortgage loans on                                                                             |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        real estate:                                             |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Construction                                             |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               and land       |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               development    |               |       | 2 022              |        | 11.03%             |       |               | 2 328       |               | 16.23%     |   |   | 2 182 |   | 26.63% |   |   | 1 025 |   | 24.50% |   |   | 820 |   | 23.38% |
|        Secured by farm                                          |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               land           |               |       | 166                |        | .36%               |       |               | 107         |               | .60%       |   |   | 76 |   | .56% |   |   | 9 |   | .59% |   |   | 12 |   | .68% |
|        Secured by 1-4                                           |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               family         |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               residential    |               |       | 1 666              |        | 44.49%             |       |               | 1 255       |               | 43.58%     |   |   | 845 |   | 39.38% |   |   | 924 |   | 44.02% |   |   | 753 |   | 45.20% |
|        Secured by multi-                                        |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               family         |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               residential    |               |       | 25                 |        | .90%               |       |               | 20          |               | .88%       |   |   | 16 |   | .79% |   |   | 13 |   | .78% |   |   | 27 |   | 1.62% |
|        Secured by nonfarm                                       |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |
|               nonresidential |               |       | 859                |        | 36.31%             |       |               | 1 275       |               | 30.64%     |   |   | 727 |   | 23.67% |   |   | 661 |   | 21.25% |   |   | 478 |   | 20.15% |
| Consumer loans                                                                                |               |       | 20                 |        | 3.10%              |       |               | 146         |               | 3.84%      |   |   | 90 |   | 4.86% |   |   | 111 |   | 6.55% |   |   | 248 |   | 6.99% |
| All other loans                                                                               |               |       | 1                  |        | .20%               |       |               | - -         |               | .10%       |   |   | 4 |   | .19% |   |   | 1 |   | .09% |   |   | 1 |   | .13% |
| Unallocated                                                                                   |               |       | 14                 |        | - -                |       |               | 162         |               | - -        |   |   | 70 |   | - - |   |   | - - |   | - - |   |   | 13 |   | - - |
|                                                                                          |               | $          | 5 012              |        | 100.00%            |       | $                  | 5 718       |               | 100.00%    |   | $ | 4 079 |   | 100.00% |   | $ | 2 779 |   | 100.00% |   | $ | 2 423 |   | 100.00% |
|                                                                                          |               |       |               |        |               |       |               |        |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                            |       | 2010           |       | 2009   |       | 2008   |       | 2007   |       | 2006   |
|-----------------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                                            |                           | (in thousands) |
| Nonaccrual loans                                                |                           | $              | 2 233                          |   | $                              | 3 819  |                           | $      | 2 669                          |   | $ | 1 584 |   | $ | 144 |
| Restructured loans                                              |                           |           | - -                            |   |                           | - -    |                           |   | - -                            |   |   | - - |   |   | - - |
| Foreclosed properties                                           |                           |           | 6 563                          |   |                           | 5 632  |                           |   | 1 644                          |   |   | 430 |   |   | - - |
|        Total nonperforming assets |                           | $              | 8 796                          |   | $                              | 9 451  |                           | $      | 4 313                          |   | $ | 2 014 |   | $ | 144 |
|                                                            |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
| Loans past due 90 days                                          |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        accruing interest          |                           | $              | - -                            |   | $                              | - -    |                           | $      | 1 263                          |   | $ | 21 |   | $ | - - |
|                                                            |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
| Allowance for loan losses                                       |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        to period end loans        |                           | 2.29%          |                           | 2.44%  |                           | 1.66%  |                           | 1.24%  |                           | 1.05%  |
|                                                            |                           |           |                           |   |                           |   |                           |   |                           |   |
| Nonperforming assets to                                         |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        period end loans and       |                           |           |                           |   |                           |   |                           |   |                           |   |   |   |   |   |   |
|        foreclosed properties      |                           | 3.90%          |                           | 3.93%  |                           | 1.74%  |                           | .89%   |                           | .06%   |

|                                                                                                                                                         |                     | 2010           |               | Weighted |               | 2009           |               | Weighted |               | 2008           |               | Weighted |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|----------------|--------------------|----------|--------------------|----------------|--------------------|----------|--------------------|----------------|--------------------|----------|
|                                                                                                                                                         |                     | Carrying Value |               | Average  |               | Carrying Value |               | Average  |               | Carrying Value |               | Average  |
|                                                                                                                                                         |      | (in thousands) |     | Yield    |     | (in thousands) |     | Yield    |     | (in thousands) |     | Yield    |
| Securities available for sale                                                                                                                                |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |
|        Obligations of U.S. Government agencies:                                                                                |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |
|               Maturing within one year                                                      |                     | $              | 4 587              |     | 3.01%              |           | $                  | 1 005    |               | 1.25%          |               | $        | 5 600 |   | 5.03% |
|               Maturing after one year but                                                   |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |
|                      within five years                   |                     |           | 31 701             |     | 1.65%              |           |               | 27 418   |               | 2.69%          |               |     | 18 889 |   | 4.13% |
|        Municipal obligations:                                                                                                  |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |
|               Maturing within one year                                                      |                     |           | 616                |     | 3.98%              |           |               | - -      |               |           |               |     | 147 |   | 3.04% |
|               Maturing after one year but                                                   |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |
|                      within five years                   |                     |           | 671                |     | 3.36%              |           |               | 999      |               | 3.73%          |               |     | 879 |   | 3.82% |
|               Maturing after five years                                                     |                     |           | 4 237              |     | 4.02%              |           |               | 3 791    |               | 4.14%          |               |     | 1 963 |   | 3.86% |
|        Equity securities with no stated maturity                                                                               |                     |           | 878                |     | .02%               |           |               | 1 100    |               | .46%           |               |     | 1 217 |   | .12% |
|                      Total securities available for sale |                     | $              | 42 690             |     |               |           | $                  | 34 313   |               |           |               | $        | 28 695 |   |   |
|                                                                                                                                                         |                     |           |               |     |               |           |               |     |               |           |               |     |   |   |   |

----

|                                                |                           | Year Ended December 31          |
|-----------------------------------------------------|--------------------------------|---------------------------------|
|                                                |                           | (average balances in thousands) |
|                                                |                           | 2010                            |   | 2009 |   | 2008 |
|                                                |                           | Average                         |   | Average |   | Average |   | Average |   | Average |   | Average |
|                                                |       | Balance                         |       | Rate |       | Balance |       | Rate |       | Balance |       | Rate |
| Noninterest-bearing demand deposits                 |                           | $                               | 27 597 |   |   |   | $ | 26 490 |   |   |   | $ | 27 109 |   |   |
|                                                |                           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand deposits                    |                           |                            | 85 654 |   | 0.73% |   |   | 80 842 |   | 0.94% |   |   | 79 591 |   | 1.41% |
| Savings deposits                                    |                           |                            | 40 381 |   | 0.53% |   |   | 38 662 |   | 0.65% |   |   | 41 262 |   | 1.20% |
| Time deposits                                       |                           |                            | 109 902 |   | 2.85% |   |   | 115 239 |   | 3.26% |   |   | 111 574 |   | 4.08% |
|                                                |                           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing deposits                     |                           |                            | 235 937 |   | 1.68% |   |   | 234 743 |   | 2.03% |   |   | 232 427 |   | 2.65% |
|                                                |                           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Total deposits |                           | $                               | 263 534 |   |   |   | $ | 261 233 |   |   |   | $ | 259 536 |   |   |
|                                                |

| Within three months                   |       | $      | 1 901  |
|---------------------------------------|--------------------------------|--------|--------|
| Over three through six months         |                           |   | 11 247 |
| Over six months through twelve months |                           |   | 13 460 |
| Over twelve months                    |                           |   | 18 439 |
|                                  |                           |   |   |
| Total                                 |                           | $      | 45 047 |
|                                  |

----

|                                                                                                                    |       | 2010           |       | 2009   |       | 2008    |
|-------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------|--------------------------------|---------|
|                                                                                                                    |                           | (In thousands) |
| Tier 1 capital:                                                                                                         |                           |           |                           |   |                           |    |   |   |   |
|        Common stock                                                                       |                           | $              | 3 672                          |   | $                              | 3 672   |   | $ | 3 672 |
|        Surplus                                                                            |                           |           | 3 932                          |   |                           | 3 898   |   |   | 3 851 |
|        Retained earnings                                                                  |                           |           | 23 725                         |   |                           | 21 931  |   |   | 25 070 |
|                                                                                                                    |                           |           | 31 329                         |   |                           | 29 501  |   |   | 32 593 |
|                                                                                                                    |                           |           |                           |   |                           |    |   |   |   |
|        Less:                                                                              |                           |           |                           |   |                           |    |   |   |   |
|               Cost of shares acquired for the treasury |                           |           | 2 866                          |   |                           | 2 866   |   |   | 2 837 |
|               Disallowed deferred tax asset            |                           |           | 398                            |   |                           | - -     |   |   | - - |
|                                                                                                                    |                           |           |                           |   |                           |    |   |   |   |
| Total tier 1 capital                                                                                                    |                           | $              | 28 065                         |   | $                              | 26 635  |   | $ | 29 756 |
| Tier 2 capital:                                                                                                         |                           |           |                           |   |                           |    |   |   |   |
|        Allowance for loan losses (1)                                                      |                           |           | 2 733                          |   |                           | 2 893   |   |   | 3 019 |
|                                                                                                                    |                           |           |                           |   |                           |    |   |   |   |
| Total risk-based capital                                                                                                |                           | $              | 30 798                         |   | $                              | 29 528  |   | $ | 32 775 |
|                                                                                                                    |                           |           |                           |   |                           |    |   |   |   |
| Risk-weighted assets                                                                                                    |                           | $              | 216 322                        |   | $                              | 228 607 |   | $ | 240 471 |
|                                                                                                                    |                           |           |                           |   |                           |    |   |   |   |
| Capital ratios:                                                                                                         |                           |           |                           |   |                           |    |   |   |   |
|        Tier 1 risk-based capital ratio                                                    |                           |           | 12.97%                         |   |                           | 11.65%  |   |   | 12.37% |
|        Total risk-based capital ratio                                                     |                           |           | 14.24%                         |   |                           | 12.92%  |   |   | 13.63% |
|        Leverage ratio                                                                     |                           |           | 9.36%                          |   |                           | 8.75%   |   |   | 9.85% |

| (1)       | Limited to 1.25% of gross risk-weighted assets. |
|-----------------------------------------|-------------------------------------------------|

----

|                                                                                                        |       | 2010   |       | 2009   |
|-------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|
| Financial instruments whose contract                                                                        |                           |   |                           |   |   |   |
|        amounts represent credit risk:                                         |                           |   |                           |   |   |   |
|               Commitments to extend credit |                           | $      | 28 050                         |   | $ | 29 275 |
|               Standby letters of credit    |                           |   | 2 225                          |   |   | 1 646 |

----

|                                             |                           | December 31 |
|--------------------------------------------------|--------------------------------|-------------|
|                                             |       | 2010        |       | 2009 |
| Balance outstanding at year end                  |                           | $           | 7 382 |   | $ | 7 340 |
| Maximum balance at any month-end during the year |                           | $           | 10 023 |   | $ | 11 311 |
| Average balance for the year                     |                           | $           | 8 372 |   | $ | 9 218 |
| Weighted average rate for the year               |                           |        | 1.00% |   |   | 1.61% |
| Weighted average rate at year end                |                           |        | 1.00% |   |   | 1.61% |
| Estimated fair value                             |                           | $           | 7 382 |   | $ | 7 340 |

|                              |                           | Payments (in thousands) Due By Period |
|-----------------------------------|--------------------------------|---------------------------------------|
|                              |                           |                                  |   |   |   |   |   | Over |   | Over |
|                              |                           |                                  |   |   | Less |   | 1 Year |   | 3 Years |
|                              |                           |                                  |   |   | than |   | through |   | through |
|                              |       | Total                                 |       | 1 Year |       | 3 Years |       | 5 Years |
| Long-Term Debt Obligations        |                           | $                                     | 2 717 |   | $ | 1 195 |   | $ | 1 522 |   | $ | - - |
|                              |                           |                                  |   |   |   |   |   |   |   |   |   |   |
| Lease Obligations for Real Estate |                           | $                                     | 110 |   | $ | 39 |   | $ | 71 |   | $ | - - |
|                              |                           |                                  |   |   |   |   |   |   |   |   |   |   |
| Lease Obligations for Equipment   |                           | $                                     | 127 |   | $ | 29 |   | $ | 59 |   | $ | 39 |
|                              |

----

| One Year Simulation        |
|----------------------------|
|                       |
|                       |   | % Change in |
| Change in Yield Curve      |      | Net Income |
| +                          | 200 basis points |   |        | + | 8.0% |        |
|    +   | 100 basis points |   |   | +   | 4.4% |   |
|                       | Most likely |   |   |   | 0 |   |
| -                          | 100 basis points |   |   | - | 1.5% |   |
| -                          | 200 basis points |   |   | - | 3.5% |   |

| Two Year Simulation        |
|----------------------------|
|                       |
|                       |   | % Change in |
| Change in Yield Curve      |      | Net Income |
|    +   | 200 basis points |   |        | +   | 11.0% |        |
| +                          | 100 basis points |   |   | + | 6.1% |   |
|                       | Most likely |   |   |   | 0 |   |
| -                          | 100 basis points |   |   | - | 4.0% |   |
| -                          | 200 basis points |   |   | - | 8.3% |   |

|                  |                     |                   | Change in Economic Value of Equity |
|-----------------------|--------------------------|------------------------|------------------------------------|
| Change in Yield Curve |      | (dollars in thousands) |
|    +   | 200 basis points         |                   |                               | $ |   | - 2,630 |   |
| +                     | 100 basis points         |                   |                               |   |   | - 1,112 |   |
|                  | Most likely              |                   |                               |   |   | 0 |   |
| -                     | 100 basis points         |                   |                               |   | + | 1,343 |   |
| -                     | 200 basis points         |                   |                               |   | + | 2,711 |   |

----

----

|                                                                                                                                                                                   |       | 2010   |       | 2009   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|
|                      ASSETS                                                        |                           |   |                           |   |   |   |   |   |
| Cash and due from banks                                                                                                                                                                |                           | $      | 2 185                          |   |   | $ | 2 493 |   |
| Interest-bearing deposits in other financial institutions                                                                                                                              |                           |   | 7 995                          |   |   |   | 4 180 |   |
| Federal funds sold                                                                                                                                                                     |                           |   | 2 725                          |   |   |   | 5 950 |   |
| Securities available for sale, at fair value                                                                                                                                           |                           |   | 42 690                         |   |   |   | 34 313 |   |
| Loans held for sale                                                                                                                                                                    |                           |   | 76                             |   |   |   | 97 |   |
| Loans, net of allowance for loan losses of $5,012                                                                                                                                      |                           |   |                           |   |   |   |   |   |
|        in 2010 and $5,718 in 2009                                                                                                                        |                           |   | 214 238                        |   |   |   | 228 993 |   |
| Premises and equipment, net                                                                                                                                                            |                           |   | 8 270                          |   |   |   | 8 726 |   |
| Other real estate owned, net of valuation allowance                                                                                                                                    |                           |   |                           |   |   |   |   |   |
|        of $95 in 2010 and $303 in 2009                                                                                                                   |                           |   | 6 563                          |   |   |   | 5 632 |   |
| Accrued interest receivable                                                                                                                                                            |                           |   | 960                            |   |   |   | 952 |   |
| Federal Home Loan Bank of Pittsburgh stock                                                                                                                                             |                           |   | 765                            |   |   |   | 805 |   |
| Other assets                                                                                                                                                                           |                           |   | 11 142                         |   |   |   | 12 137 |   |
|                                                                                                                                                                                   |                           |   |                           |   |   |   |   |   |
|                      Total Assets                                                  |                           | $      |   297 609                 |   |   | $ |   304 278 |   |
|                                                                                                                                                                                   |                           |   |                           |   |   |   |   |   |
|                      LIABILITIES AND STOCKHOLDERS’ EQUITY                    |                           |   |                           |   |   |   |   |   |
|                                                                                                                                                                                   |                           |   |                           |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                            |                           |   |                           |   |   |   |   |   |
|        Deposits                                                                                                                                          |                           |   |                           |   |   |   |   |   |
|               Noninterest-bearing                                                                                     |                           | $      | 26 695                         |   |   | $ | 27 953 |   |
|               Interest-bearing                                                                                        |                           |   | 230 727                        |   |   |   | 236 514 |   |
|                      Total Deposits                                                |                           | $      | 257 422                        |   |   | $ | 264 467 |   |
|        Securities sold under agreements to repurchase                                                                                                    |                           |   | 7 382                          |   |   |   | 7 340 |   |
|        Federal Home Loan Bank advances                                                                                                                   |                           |   | 2 717                          |   |   |   | 3 856 |   |
|        Accrued interest payable                                                                                                                          |                           |   | 361                            |   |   |   | 405 |   |
|        Other liabilities                                                                                                                                 |                           |   | 2 951                          |   |   |   | 2 638 |   |
|        Commitments and contingent liabilities                                                                                                            |                           |   | - -                            |   |   |   | - - |   |
|                      Total Liabilities                                             |                           | $      | 270 833                        |   |   | $ | 278 706 |   |
|                                                                                                                                                                                   |                           |   |                           |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                                                                             |                           |   |                           |   |   |   |   |   |
|        Common stock, $1 per share par value; 5,000,000 shares                                                                                            |                           |   |                           |   |   |   |   |   |
|               authorized; 3,671,691 shares issued                                                                     |                           | $      | 3 672                          |   |   | $ | 3 672 |   |
|        Surplus                                                                                                                                           |                           |   | 3 932                          |   |   |   | 3 898 |   |
|        Undivided profits                                                                                                                                 |                           |   | 23 725                         |   |   |   | 21 931 |   |
|        Accumulated other comprehensive (loss), net                                                                                                       |                           |   | (1 687                         | )      |   |   | (1 063 | ) |
|                                                                                                                                                                                   |                           | $      | 29 642                         |   |   | $ | 28 438 |   |
|                      Less cost of shares acquired for the treasury, 281,513 shares |                           |   | 2 866                          |   |   |   | 2 866 |   |
|                      Total Stockholders’ Equity                              |                           | $      | 26 776                         |   |   | $ | 25 572 |   |
|                                                                                                                                                                                   |                           |   |                           |   |   |   |   |   |
|                      Total Liabilities and Stockholders’ Equity              |                           | $      | 297 609                        |   |   | $ | 304 278 |   |
|                                                                                                                                                                                   |

----

|                                                                                                                                                                               |       | 2010   |       | 2009   |       | 2008         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------------|
| Interest and Dividend Income:                                                                                                                                                      |                           |   |                           |   |                           |         |   |   |   |   |   |
|        Interest and fees on loans                                                                                                                    |                           | $      | 12 923                         |   | $                              | 13 801       |   |   | $ | 15 201 |   |
|        Interest on securities available for sale - taxable                                                                                           |                           |   | 755                            |   |                           | 933          |   |   |   | 1 415 |   |
|        Interest on securities available for sale - nontaxable                                                                                        |                           |   | 202                            |   |                           | 148          |   |   |   | 110 |   |
|        Interest on federal funds sold                                                                                                                |                           |   | 3                              |   |                           | 7            |   |   |   | 249 |   |
|        Other interest and dividends                                                                                                                  |                           |   | 21                             |   |                           | 24           |   |   |   | 383 |   |
|                      Total Interest and Dividend Income                        |                           | $      | 13 904                         |   | $                              | 14 913       |   |   | $ | 17 358 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
| Interest Expense:                                                                                                                                                                  |                           |   |                           |   |                           |         |   |   |   |   |   |
|        Interest on deposits                                                                                                                          |                           | $      | 3 972                          |   | $                              | 4 772        |   |   | $ | 6 162 |   |
|        Interest on securities sold under agreements to repurchase                                                                                    |                           |   |                           |   |                           |         |   |   |   |   |   |
|               and federal funds purchased                                                                         |                           |   | 84                             |   |                           | 148          |   |   |   | 255 |   |
|        Interest on Federal Home Loan Bank and Federal Reserve                                                                                        |                           |   |                           |   |                           |         |   |   |   |   |   |
|               Bank advances                                                                                       |                           |   | 87                             |   |                           | 201          |   |   |   | 60 |   |
|                      Total Interest Expense                                    |                           | $      | 4 143                          |   | $                              | 5 121        |   |   | $ | 6 477 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
|                      Net Interest Income                                       |                           | $      | 9 761                          |   | $                              | 9 792        |   |   | $ | 10 881 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
| Provision for Loan Losses                                                                                                                                                          |                           |   | 1 599                          |   |                           | 6 690        |   |   |   | 2 934 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
|                      Net Interest Income after Provision                       |                           |   |                           |   |                           |         |   |   |   |   |   |
|                             for Loan Losses |                           | $      | 8 162                          |   | $                              | 3 102        |   |   | $ | 7 947 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
| Noninterest Income:                                                                                                                                                                |                           |   |                           |   |                           |         |   |   |   |   |   |
|        Trust and financial services                                                                                                                  |                           | $      | 842                            |   | $                              | 758          |   |   | $ | 807 |   |
|        Service charges on deposit accounts                                                                                                           |                           |   | 1 854                          |   |                           | 2 205        |   |   |   | 2 340 |   |
|        Visa/MC Fees                                                                                                                                  |                           |   | 676                            |   |                           | 563          |   |   |   | 516 |   |
|        Cash surrender value of life insurance                                                                                                        |                           |   | 235                            |   |                           | 238          |   |   |   | 240 |   |
|        Miscellaneous income                                                                                                                          |                           |   | 38                             |   |                           | 4            |   |   |   | 246 |   |
|        (Loss) on sale of real estate                                                                                                                 |                           |   | - -                            |   |                           | - -          |   |   |   | (185 | ) |
|        Gain on sale of securities                                                                                                                    |                           |   | - -                            |   |                           | 42           |   |   |   | - - |   |
|        Other operating income                                                                                                                        |                           |   | 431                            |   |                           | 471          |   |   |   | 391 |   |
|                      Total Noninterest Income                                  |                           | $      |   4 076                   |   | $                              |   4 281 |   |   | $ |   4 355 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
| Noninterest Expenses:                                                                                                                                                              |                           |   |                           |   |                           |         |   |   |   |   |   |
|        Salaries and employee benefits                                                                                                                |                           | $      | 4 731                          |   | $                              | 5 351        |   |   | $ | 5 146 |   |
|        Net occupancy expense of premises                                                                                                             |                           |   | 648                            |   |                           | 570          |   |   |   | 542 |   |
|        Furniture and equipment expenses                                                                                                              |                           |   | 783                            |   |                           | 948          |   |   |   | 933 |   |
|        Advertising and marketing                                                                                                                     |                           |   | 137                            |   |                           | 176          |   |   |   | 266 |   |
|        FDIC assessment                                                                                                                               |                           |   | 563                            |   |                           | 711          |   |   |   | 84 |   |
|        Printing, stationery and supplies                                                                                                             |                           |   | 182                            |   |                           | 207          |   |   |   | 181 |   |
|        Communications                                                                                                                                |                           |   | 183                            |   |                           | 184          |   |   |   | 167 |   |
|        Foreclosed property expense                                                                                                                   |                           |   | 379                            |   |                           | 759          |   |   |   | 167 |   |
|        ATM and check card expense                                                                                                                    |                           |   | 291                            |   |                           | 326          |   |   |   | 313 |   |
|        Other operating expenses                                                                                                                      |                           |   | 1 867                          |   |                           | 1 827        |   |   |   | 1 788 |   |
|                      Total Noninterest Expenses                                |                           | $      | 9 764                          |   | $                              | 11 059       |   |   | $ | 9 587 |   |
|                      Income (Loss) Before Income Tax Expense (Benefit)         |                           | $      | 2 474                          |   | $                              | (3 676       | ) |   | $ | 2 715 |   |
| Income Tax Expense (Benefit)                                                                                                                                                       |                           |   | 680                            |   |                           | (1 436       | ) |   |   | 853 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
|                      Net Income (Loss)                                         |                           | $      | 1 794                          |   | $                              | (2 240       | ) |   | $ | 1 862 |   |
|                                                                                                                                                                               |                           |   |                           |   |                           |         |   |   |   |   |   |
| Earnings (Loss) Per Share, basic and diluted                                                                                                                                       |                           | $      | .53                            |   | $                              | (.66         | ) |   | $ | .55 |   |
|                                                                                                                                                                               |

----

|                                                                                                                                                                                           |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   | Accumulated |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------|--------------|---------|--------------|---------|--------------|--------|--------------|--------|----------------------|---------------|----------------------|--------|--------|-------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                           |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   | Other       |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |         | Common |         |    |         |    | Undivided    |   | Treasury     |   |   Comprehensive |          |   Comprehensive |   |   |        |   |
|                                                                                                                                                                                           |    | Stock  |    | Surplus |    | Profits |    | Stock  |    | (Loss) |            | Income (Loss) |            | Total  |
| Balances, December 31, 2007                                                                                                                                                                    |         | $      | 3 672        |    | $            | 3 771   |         | $      | 24 787       |   |                 | $             | (2 701               | )      |   | $           | (514   | )      |   |   |   |   |   | $      | 29 015 |   |
|                                                                                                                                                                                           |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|        Comprehensive income                                                                                                                                      |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               Net income – 2008                                                                                         |         |   | - -          |    |         | - -     |         |   | 1 862        |   |                 |          | - -                  |   |   |        | - -    |   |   | $      | 1 862  |   |   |   | 1 862 |   |
|               Other comprehensive (loss):                                                                                     |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                      Unrealized holding gains                                              |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             arising during the period   |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             (net of tax, $40)           |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | - -                  |   |   |        | 77     |   |   |   | 77     |   |   |   | 77 |   |
|                      Change in benefit obligations                                         |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and plan assets for pension |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and other postretirement    |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             benefits (net of tax, $780) |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | - -                  |   |   |        | (1 515 | )      |   |   | (1 515 | )      |   |   | (1 515 | ) |
|               Total other comprehensive (loss)                                                                                |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   | (1 438 | )      |   |   |   |   |
|        Total comprehensive income                                                                                                                                |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   | $      | 424    |   |   |   |   |   |
|        Purchase of treasury shares:                                                                                                                              |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               13,935 shares                                                                                                   |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | (149                 | )      |   |        | - -    |   |   |   |   |   |   |   | (149 | ) |
|        Sale of treasury shares:                                                                                                                                  |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               2,040 shares                                                                                                    |         |   | - -          |    |         | 10      |         |   | - -          |   |                 |          | 13                   |   |   |        | - -    |   |   |   |   |   |   |   | 23 |   |
|        Stock-based compensation                                                                                                                                  |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               expense                                                                                                         |         |   | - -          |    |         | 70      |         |   | - -          |   |                 |          | - -                  |   |   |        | - -    |   |   |   |   |   |   |   | 70 |   |
|        Reduction due to change in                                                                                                                                |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               pension measurement date                                                                                        |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               (net of tax, $16)                                                                                               |         |   | - -          |    |         | - -     |         |   | (31          | )      |                 |          | - -                  |   |   |        | - -    |   |   |   |   |   |   |   | (31 | ) |
|        Cash dividends – 2008                                                                                                                               |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               ($.42 per share)                                                                                                |         |   | - -          |    |         | - -     |         |   | (1 548       | )      |                 |          | - -                  |   |   |        | - -    |   |   |   |   |   |   |   | (1 548 | ) |
| Balances, December 31, 2008                                                                                                                                                                    |         | $      | 3 672        |    | $            | 3 851   |         | $      | 25 070       |   |                 | $             | (2 837               | )      |   | $           | (1 952 | )      |   |   |   |   |   | $      | 27 804 |   |
|                                                                                                                                                             |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|        Comprehensive (loss)                                                                                                                                      |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               Net (loss) – 2009                                                                                         |         |   | - -          |    |         | - -     |         |   | (2 240       | )      |                 |          | - -                  |   |   |        | - -    |   |   | $      | (2 240 | )      |   |   | (2 240 | ) |
|               Other comprehensive income:                                                                                     |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                      Unrealized holding losses                                             |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             arising during the period   |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             (net of tax, $14)           |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | - -                  |   |   |        | (27    | )      |   |   | (27    | )      |   |   | (27 | ) |
|                      Reclassification for (gains)                                          |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             included in net income      |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             (net of tax, $14)           |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | - -                  |   |   |        | (28    | )      |   |   | (28    | )      |   |   | (28 | ) |
|                      Change in benefit obligations                                         |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and plan assets for pension |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and other postretirement    |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|                             benefits (net of tax, $486) |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | - -                  |   |   |        | 944    |   |   |   | 944    |   |   |   | 944 |   |
|               Total other comprehensive income                                                                                |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   | 889    |   |   |   |   |   |
|        Total comprehensive (loss)                                                                                                                                |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   | $      | (1 351 | )      |   |   |   |   |
|        Purchase of treasury shares:                                                                                                                              |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               3,427 shares                                                                                                    |         |   | - -          |    |         | - -     |         |   | - -          |   |                 |          | (29                  | )      |   |        | - -    |   |   |   |   |   |   |   | (29 | ) |
|        Stock-based compensation                                                                                                                                  |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               expense                                                                                                         |         |   | - -          |    |         | 47      |         |   | - -          |   |                 |          | - -                  |   |   |        | - -    |   |   |   |   |   |   |   | 47 |   |
|        Cash dividends – 2009                                                                                                                               |         |   |         |    |         |    |         |   |         |   |                 |          |                 |   |   |        |   |   |   |   |   |   |   |   |   |   |
|               ($.27 per share)                                                                                                |         |   | - -          |    |         | - -     |         |   | (899         | )      |                 |          | - -                  |   |   |        | - -    |   |   |   |   |   |   |   | (899 | ) |
| Balances, December 31, 2009                                                                                                                                                                    |         | $      | 3 672        |    | $            | 3 898   |         | $      | 21 931       |   |                 | $             | (2 866               | )      |   | $           | (1 063 | )      |   |   |   |   |   | $      | 25 572 |   |
|                                                                                                                                                                                           |

----

|                                                                                                                                                                                           |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   | Accumulated |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|---------------|--------------|---------|--------------|---------|--------------|--------|--------------|--------|----------------------|--------|----------------------|--------|-------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                           |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   | Other       |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                           |         |   Common |         |    |         |    | Undivided    |   | Treasury     |   |   Comprehensive |   |   Comprehensive |   |        |   |   |
|                                                                                                                                                                                           |    | Stock         |    | Surplus |    | Profits |    | Stock  |    | (Loss) |            | Income |            | Total  |
| Balances, December 31, 2009                                                                                                                                                                    |         | $             | 3 672        |    | $            | 3 898   |         | $      | 21 931       |   | $                    | (2 866 | )                    |   | $           | (1 063 | )      |   |   |   |   |   | $      | 25 572 |   |
|                                                                                                                                                                                           |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|        Comprehensive income                                                                                                                                      |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|               Net income – 2010                                                                                         |         |          | - -          |    |         | - -     |         |   | 1 794        |   |                 | - -    |                 |   |        | - -    |   |   | $      | 1 794  |   |   |   | 1 794 |   |
|               Other comprehensive (loss):                                                                                     |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                      Unrealized holding losses                                             |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                             arising during the period   |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                             (net of tax, $143)          |         |          | - -          |    |         | - -     |         |   | - -          |   |                 | - -    |                 |   |        | (276   | )      |   |   | (276   | )      |   |   | (276 | ) |
|                      Change in benefit obligations                                         |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and plan assets for pension |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                             and other postretirement    |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|                             benefits (net of tax, $178) |         |          | - -          |    |         | - -     |         |   | - -          |   |                 | - -    |                 |   |        | (348   | )      |   |   | (348   | )      |   |   | (348 | ) |
|               Total other comprehensive (loss)                                                                                |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   | (624   | )      |   |   |   |   |
|        Total comprehensive income                                                                                                                                |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   | $      | 1 170  |   |   |   |   |   |
|        Stock-based compensation                                                                                                                                  |         |          |         |    |         |    |         |   |         |   |                 |   |                 |   |        |   |   |   |   |   |   |   |   |   |   |
|               expense                                                                                                         |         |          | - -          |    |         | 34      |         |   | - -          |   |                 | - -    |                 |   |        | - -    |   |   |   |   |   |   |   | 34 |   |
| Balances, December 31, 2010                                                                                                                                                                    |         | $             | 3 672        |    | $            | 3 932   |         | $      | 23 725       |   | $                    | (2 866 | )                    |   | $           | (1 687 | )      |   |   |   |   |   | $      | 26 776 |   |
|                                                                                                                                                                                           |

----

|                                                                                                                                                                                                                                                             |       | 2010   |       | 2009   |       | 2008   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Net income (loss)                                                                                                                                                                                                           |                           | $      | 1 794                          |   |                           | $      | (2 240 | ) |   | $ | 1 862 |   |
|        Adjustments to reconcile net income (loss) to net cash provided by                                                                                                                                                          |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               operating activities:                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                      Provision for loan losses                                                                                                               |                           |   | 1 599                          |   |                           |   | 6 690 |   |   |   | 2 934 |   |
|                      Depreciation                                                                                                                            |                           |   | 550                            |   |                           |   | 573 |   |   |   | 532 |   |
|                      Deferred tax expense (benefit)                                                                                                          |                           |   | 494                            |   |                           |   | (609 | ) |   |   | (474 | ) |
|                      (Discount accretion) and premium amortization on securities, net                                                                        |                           |   | 214                            |   |                           |   | 129 |   |   |   | (21 | ) |
|                      (Gain) on sale of securities                                                                                                            |                           |   | - -                            |   |                           |   | (42 | ) |   |   | - - |   |
|                      (Gain) loss on sale of other real estate                                                                                                |                           |   | - -                            |   |                           |   | - - |   |   |   | 185 |   |
|                      Loss on disposal of premises and equipment                                                                                              |                           |   | 5                              |   |                           |   | 4 |   |   |   | 5 |   |
|                      Stock-based compensation expense                                                                                                        |                           |   | 34                             |   |                           |   | 47 |   |   |   | 70 |   |
|                      Proceeds from sale of loans                                                                                                             |                           |   | 3 845                          |   |                           |   | 8 703 |   |   |   | 12 153 |   |
|                      Origination of loans for sale                                                                                                           |                           |   | (3 824                         | )      |                           |   | (8 471 | ) |   |   | (4 349 | ) |
|                      Changes in assets and liabilities:                                                                                                      |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                             (Increase) decrease in accrued interest receivable                                            |                           |   | (8                             | )      |                           |   | 156 |   |   |   | 258 |   |
|                             Decrease (increase) in other assets                                                           |                           |   | 325                            |   |                           |   | (2 190 | ) |   |   | (418 | ) |
|                             (Decrease) in accrued interest payable                                                        |                           |   | (44                            | )      |                           |   | (76 | ) |   |   | (276 | ) |
|                             Increase (decrease) in other liabilities                                                      |                           |   | 118                            |   |                           |   | (1 901 | ) |   |   | 304 |   |
|                                    Net cash provided by operating activities           |                           | $      | 5 102                          |   |                           | $      | 773 |   |   | $ | 12 765 |   |
|                                                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Proceeds from maturity of securities available for sale                                                                                                                                                                     |                           | $      | 1 000                          |   |                           | $      | 5 645 |   |   | $ | 5 500 |   |
|        Proceeds from call of securities available for sale                                                                                                                                                                         |                           |   | 28 545                         |   |                           |   | 18 000 |   |   |   | 22 000 |   |
|        Proceeds from sale of securities available for sale                                                                                                                                                                         |                           |   | - -                            |   |                           |   | 3 042 |   |   |   | - - |   |
|        Purchases of securities available for sale                                                                                                                                                                                  |                           |   | (38 555                        | )      |                           |   | (32 594 | ) |   |   | (15 267 | ) |
|        Net decrease (increase) in loans                                                                                                                                                                                            |                           |   | 9 582                          |   |                           |   | (2 425 | ) |   |   | (26 719 | ) |
|        Purchases of premises and equipment                                                                                                                                                                                         |                           |   | (99                            | )      |                           |   | (1 288 | ) |   |   | (2 315 | ) |
|        Proceeds from sale of other real estate                                                                                                                                                                                     |                           |   | 2 849                          |   |                           |   | 5 602 |   |   |   | 1 815 |   |
|                                    Net cash provided by (used in) investing activities |                           | $      | 3 322                          |   |                           | $      | (4 018 | ) |   | $ | (14 986 | ) |
|                                                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Net (decrease) increase in noninterest-bearing deposits                                                                                                                                                                     |                           | $      | (1 258                         | )      |                           | $      | 2 484 |   |   | $ | (2 525 | ) |
|        Net (decrease) increase in interest-bearing deposits                                                                                                                                                                        |                           |   | (5 787                         | )      |                           |   | 7 895 |   |   |   | 3 239 |   |
|        Net proceeds (repayment) of securities sold under agreements to repurchase                                                                                                                                                  |                           |   | 42                             |   |                           |   | (1 012 | ) |   |   | (4 185 | ) |
|        Net (repayment) proceeds of Federal Home Loan Bank advances                                                                                                                                                                 |                           |   | (1 139                         | )      |                           |   | (920 | ) |   |   | 4 564 |   |
|        Purchase of treasury shares                                                                                                                                                                                                 |                           |   | - -                            |   |                           |   | (29 | ) |   |   | (149 | ) |
|        Sale of treasury shares                                                                                                                                                                                                     |                           |   | - -                            |   |                           |   | - - |   |   |   | 23 |   |
|        Cash dividends                                                                                                                                                                                                              |                           |   | - -                            |   |                           |   | (899 | ) |   |   | (1 548 | ) |
|                                    Net cash (used in) provided by financing activities |                           | $      | (8 142                         | )      |                           | $      | 7 519 |   |   | $ | (581 | ) |
|                                    Increase (decrease) in cash and cash equivalents    |                           | $      | 282                            |   |                           | $      | 4 274 |   |   | $ | (2 802 | ) |
|                                                                                                                                                                                                                                                        |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                        |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Beginning                                                                                                                                                                                                                   |                           |   | 12 623                         |   |                           |   | 8 349 |   |   |   | 11 151 |   |
|        Ending                                                                                                                                                                                                                      |                           | $      | 12 905                         |   |                           | $      | 12 623 |   |   | $ | 8 349 |   |
|                                                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Cash payments for:                                                                                                                                                                                                          |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               Interest                                                                                                                                                                          |                           | $      | 4 187                          |   |                           | $      | 5 197 |   |   | $ | 6 753 |   |
|               Income taxes                                                                                                                                                                      |                           | $      | 720                            |   |                           | $      | 41 |   |   | $ | 1 642 |   |
|                                                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF NON-CASH                                                                                                                                                                                                                             |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        INVESTING AND FINANCING ACTIVITIES                                                                                                                                                                                          |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               Unrealized (loss) gain on securities available for sale                                                                                                                           |                           | $      | (419                           | )      |                           | $      | (83 | ) |   | $ | 117 |   |
|               Change in benefit obligations and plan assets for pension                                                                                                                         |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                      and other postretirement benefits                                                                                                       |                           | $      | (526                           | )      |                           | $      | 1 430 |   |   | $ | (2 295 | ) |
|               Loans transferred to OREO                                                                                                                                                         |                           | $      | 3 574                          |   |                           | $      | 8 814 |   |   | $ | 3 238 |   |
|               Loans made on sale of other real estate owned                                                                                                                                     |                           | $      | 695                            |   |                           | $      | 1 568 |   |   | $ | 775 |   |
|                                                                                                                                                                                                                                                             |

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----

----

- Loans secured by farmland and commercial real estate and commercial loans not secured by real estate carry risks associated with the successful operation of a business or farm and the repayment of these loans may depend on the profitability and cash flows of the business or farm. Additional risk relates to the value of collateral other than real estate where depreciation occurs and the appraisal is less precise.  
- Real estate secured construction loans carry risks that a project will not be completed as scheduled and budgeted and that the value of the collateral may, at any point, be less than the principal amount of the loan. Additional risks may occur if the general contractor, who may not be a loan customer, is unable to finish the project as planned due to financial pressures unrelated to the project.  
- Consumer loans carry risks associated with the continued credit-worthiness of the borrower and the value of the collateral, such as automobiles which may depreciate more rapidly than other assets. In addition, these loans may be unsecured. Consumer loans are more likely than real estate loans to be immediately affected in an adverse manner by job loss, divorce, illness or personal bankruptcy. 
- Residential real estate loans carry risks associated the continued credit-worthiness of the borrower and changes in the value of the collateral. 
- All other loans include loans for purchasing or carrying securities and, loans to insurance, investment and finance companies. Risks for these loans may be the successful operation of a business and risks associated with the value of collateral other than real estate which may depreciate over time, may depend on interest rates or may fluctuate in active trading markets. 

- Loans classified as substandard, doubtful or loss by bank examiners, external auditors, loan officer or loan review officer based upon financial trends of the business.  
- Loans on nonaccrual status. 
- Loans more than 60 days delinquent.  
- Loans renewed or extended more than three times with little or no principal curtailment.  
- Loans judgmentally selected by executive management or the Board of Directors due to unexpected changes or events which could have a potentially adverse effect on the borrower’s ability to repay. 

----

- Financial Statement Analysis – As customer financial statements are received, they should be immediately analyzed to see if there are any significant changes in the financial position or operating results.  
- Delayed Financial Statements – If we are having problems getting financial statements from a customer, a problem may be developing.  
- Delinquent Principal or Interest – Delinquencies are often the first indication of a problem. We carefully review each loan as soon as it becomes past due.  
- Marital Difficulties – Marital difficulties often cause business financial stress and are a major cause of problem loans.  
- Lack of Cooperation – It is in the borrower’s best interest to cooperate with the bank. We suspect a problem if the customer becomes uncooperative.  
- Other Red Flags – The following are additional red flags which could mean a problem loan situation is developing: illness or death of a principal or key employee, overdrafts, unexpected renewals or unanticipated new borrowing, a too high or too low inventory level in comparison to industry standards, irresponsible behavior on the part of a borrower, trade payables begin to increase abnormally and cancellation of insurance. 

- Pass – Pass rated loans are to persons or business entities with an acceptable financial condition, appropriate collateral margins, appropriate cash flow to service the existing loan, and an appropriate leverage ratio. Borrower has paid all obligations as agreed and it is expected that this type of payment history will continue. Acceptable personal guarantors support the loan as needed.  
- Special Mention – Special Mention loans often have borrowers with an unstable financial condition and position. Industry conditions may be troubled or in the process of rapid change. Current repayment sources are adequate but are threatened by potential weakness, which if not corrected could result in loss of principal and income to the bank. Borrowers are experiencing adverse operating trends with high financial leverage. Included may be borrowers who have filed bankruptcy and are successfully operating under a plan of reorganization that is providing the bank with adequate repayment of debt.  
- Substandard – Substandard loans are situations where the bank is inadequately protected by the current net worth and paying capacity of the customer. Characteristics include high debt to net worth, negative cash flow, and negative debt service capacity. Collateral securing the debt may have questionable value. Loans may be placed on nonaccrual with all payments applied to the principal until such a time as borrower’s financial condition improves. Some loss of principal or income is likely.  
- Doubtful – Doubtful loans are considered partially or totally uncollectable. Customers who have filed for bankruptcy and are in the status of initial filing up to the acceptance of the reorganization plan are considered doubtful. This classification does not mean that the loan has absolutely no recovery or salvage value. When a loan is in this category, it will also be on nonaccrual status. 
- Loss – Loans in this category are considered uncollectable and have very limited recovery value. Credits in this category will be on nonaccrual status. 

----

----

- The noncontributory, defined benefit pension plan covering employees meeting certain age and service requirements was frozen at October 31, 2009, the end of the plan year. No more participants may enter the plan, and there will be no further increase in benefits due to increases in salaries and years of service.  
- A postretirement life insurance plan covers current and future retirees with 25 years of service over the age of 60.  
- A postretirement life insurance plan covers certain current retirees who met certain requirements. This plan is not available for future retirees.  
- A health care plan covers current retirees who met certain eligibility requirements. This plan is not available for future retirees.  
- A 401(k) retirement savings plan is available to all employees meeting certain age and service requirements. The employer match for this plan was increased with the freezing of the defined benefit plan as described above. Under this plan, the employer may make a discretionary matching contribution each plan year and may also make other discretionary contributions to the plan. 

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|                                    | 2010      |
|-----------------------------------------|-----------|
|                                    |      |   |   | Gross |   | Gross |   |   |   |
|                                    | Amortized |   | Unrealized |   | Unrealized |   | Fair |
|                                    | Cost      |       | Gains |       | (Losses) |       | Value |
| Obligations of U.S. Government agencies | $         | 36 207 |   | $ | 241 |   | $ | (160 | ) |   | $ | 36 288 |
| State and municipal obligations         |      | 5 537 |   |   | 71 |   |   | (84 | ) |   |   | 5 524 |
| Equity securities                       |      | 1 100 |   |   | - - |   |   | (222 | ) |   |   | 878 |
|                                    | $         | 42 844 |   | $ | 312 |   | $ |         (466 | ) |   | $ | 42 690 |
|                                    |
|                                    | 2009      |
|                                    |      |   |   | Gross |   | Gross |   |   |   |
|                                    | Amortized |   | Unrealized |   | Unrealized |   | Fair |
|                                    | Cost      |   | Gains |   | (Losses) |   | Value |
| Obligations of U.S. Government agencies | $         | 28 159 |   | $ | 279 |   | $ | (15 | ) |   | $ | 28 423 |
| State and municipal obligations         |      | 4 789 |   |   | 56 |   |   | (55 | ) |   |   | 4 790 |
| Equity securities                       |      | 1 100 |   |   | - - |   |   | - - |   |   |   | 1 100 |
|                                    | $         | 34 048 |   | $ | 335 |   | $ | (70 | ) |   | $ | 34 313 |
|                                    |      |   |   |   |   |   |   |   |   |   |   |   |

----

|                                  | Amortized |       | Fair   |
|---------------------------------------|-----------|--------------------------------|--------|
|                                  | Cost      |                           | Value  |
| Due in one year or less               | $         | 5 153                          |   | $ | 5 203 |
| Due after one year through five years |      | 32 323                         |   |   | 32 372 |
| Due after five years                  |      | 4 268                          |   |   | 4 237 |
| Equity securities                     |      | 1 100                          |   |   | 878 |
|                                  | $         | 42 844                         |   | $ | 42 690 |
|                                  |      |                           |   |   |   |

|                                                     | December 31, 2010   |
|----------------------------------------------------------|---------------------|
|                                                     | Less than 12 months |   | More than 12 months |   | Total |
|                                                     |                |   |      | Gross |   |   |   |   | Gross |   |   |   |      | Gross |
|                                                     |                |   |   | Unrealized |      |   |   |   | Unrealized |      |   |   |   | Unrealized |
|                                                     | Fair Value          |   | Losses |   | Fair Value |   | Losses |   | Fair Value |   | Losses |
| Obligations of U.S.                                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Government agencies | $                   | 9 899 |   | $ | (147 | ) |   | $ | 1 108 |   | $ | (13 | ) |   | $ | 11 007 |   | $ | (160 | ) |
| State and municipal obligations                          |                | 1 912 |   |   | (84 | ) |   |   | - - |   |   | - - |   |   |   | 1 912 |   |   | (84 | ) |
| Equity securities                                        |                | 878 |   |   | (222 | ) |   |   | - - |   |   | - - |   |   |   | 878 |   |   | (222 | ) |
|                                                     | $                   |     12 689 |   | $ | (453 | ) |   | $ |    1 108 |   | $ |              (13 | ) |   | $ |    13 797 |   | $ | (466 | ) |
|                                                     |
|                                                     | December 31, 2009   |
|                                                     | Less than 12 months |   | More than 12 months |   |   | Total |
|                                                     |                |   |   | Gross |   |   |   |   |   | Gross |   |   |   |   |   | Gross |
|                                                     |                |   |   | Unrealized |   |   |   |   |   | Unrealized |   |   |   |   |   | Unrealized |
|                                                     | Fair Value          |   | Losses |   |   | Fair Value |   | Losses |   |   | Fair Value |   | Losses |
| Obligations of U.S.                                      |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Government agencies | $                   | 4 987 |   | $ | (15 | ) |   | $ | - - |   | $ | - - |   |   | $ | 4 987 |   | $ | (15 | ) |
| State and municipal obligations                          |                | 2 746 |   |   | (55 | ) |   |   | - - |   |   | - - |   |   |   | 2 746 |   |   | (55 | ) |
|                                                     | $                   | 7 733 |   | $ |              (70 | ) |   | $ | - - |   | $ | - - |   |   | $ | 7 733 |   | $ |              (70 | ) |
|                                                     |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                           | December 31    |
|----------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                           | 2010           |   | 2009 |
|                                                                                                           | (in thousands) |
| Commercial – non real estate                                                                             |           |   |       |   |   |
|        Commercial and industrial                                                 | $              | 7 920 |   | $ | 9 700 |
| Commercial real estate                                                                                         |           |   |   |   |   |
|        Owner occupied                                                            |           | 67 517 |   |   | 59 280 |
|        Non-owner occupied                                                        |           | 12 098 |   |   | 12 636 |
| Construction                                                                                                   |           |   |   |   |   |
|        Residential                                                               |           | 5 922 |   |   | 14 625 |
|        Commercial                                                                |           | 18 252 |   |   | 23 458 |
| Real Estate                                                                                                    |           |   |   |   |   |
|        Farmland                                                                  |           | 792 |   |   | 1 419 |
| Residential                                                                                                    |           |   |   |   |   |
|        Revolving open end                                                        |           | 5 975 |   |   | 5 389 |
|        1 to 4 family – first liens                                         |           | 82 691 |   |   | 85 909 |
|        1 to 4 family – junior liens                                        |           | 8 871 |   |   | 10 992 |
|        5 or more family                                                          |           | 1 976 |   |   | 2 070 |
| Consumer loans                                                                                                 |           |   |   |   |   |
|        Titled vehicles                                                           |           | 4 349 |   |   | 5 750 |
|        Deposit accounts                                                          |           | 785 |   |   | 649 |
|        All other consumer loans                                                  |           | 1 666 |   |   | 2 612 |
| All other loans                                                                                                |           | 436 |   |   | 222 |
|        Total loans                                                               | $              | 219 250 |   | $ | 234 711 |
|               Less: allowance for loan losses |           | 5 012 |   |   | 5 718 |
|                                                                                                           | $              | 214 238 |   | $ | 228 993 |
|                                                                                                           |

----

|                                                                        | 2010   |       | 2009   |       | 2008   |
|-----------------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| Balances at beginning of year                                               | $      | 5 718                          |   |                           | $      | 4 079 |   |   | $ | 2 779 |   |
|        Provision charged to operating expense |   | 1 599                          |   |                           |   | 6 690 |   |   |   | 2 934 |   |
|        Recoveries added to the allowance      |   | 321                            |   |                           |   | 232 |   |   |   | 199 |   |
|        Loan losses charged to the allowance   |   | (2 626                         | )      |                           |   | (5 283 | ) |   |   | (1 833 | ) |
| Balances at end of year                                                     | $      | 5 012                          |   |                           | $      | 5 718 |   |   | $ | 4 079 |   |
|                                                                        |

|                                                |         |     |         |       |         |        |         | Commercial   |         |     |         |        |         |   |         |        |         |   | All    |   |   |   |   |   |   |
|-----------------------------------------------------|--------------|----------|--------------|------------|--------------|-------------|--------------|--------------|--------------|----------|--------------|-------------|--------------|--------|--------------|-------------|--------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                |    | Farmland |    | Commercial |    | Real Estate |    | Construction |    | Consumer |    | Residential |    | Other  |    | Unallocated |    | Total  |
| Ending balance                                      |         | $        | 166          |       | $            | 239         |         | $            | 859          |     | $            | 2 022       |         | $      | 20           |        | $            | 1 691  |   | $      | 1      |   | $      | 14     |   | $ | 5 012 |
|                                                |
| Individually evaluated                              |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
|        for impairment |         | $        | 161          |       | $            | 217         |         | $            | 528          |     | $            | 1 812       |         | $      | - -          |        | $            | 429    |   | $      | - -    |   | $      | - -    |   | $ | 3 147 |
| Collectively evaluated                              |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
|        for impairment |         |     | 5            |       |         | 22          |         |         | 331          |     |         | 210         |         |   | 20           |        |         | 1 262  |   |   | 1      |   |   | 14     |   |   | 1 865 |
|                                                |
| Financing receivables:                              |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                      |         | $        | 792          |       | $            | 7 920       |         | $            | 79 615       |     | $            | 24 174      |         | $      | 6 800        |        | $            | 99 513 |   | $      | 436    |   | $      | - -    |   | $ | 219 250 |
|                                                |
| Ending balance:                                     |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated                              |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
|        for impairment |         | $        | 539          |       | $            | 367         |         | $            | 9 398        |     | $            | 11 484      |         | $      | - -          |        | $            | 2 874  |   | $      | - -    |   | $      | - -    |   | $ | 24 662 |
| Collectively evaluated                              |         |     |         |       |         |        |         |         |         |     |         |        |         |   |         |        |         |   |   |   |   |   |   |   |   |   |   |
|        for impairment |         |     | 253          |       |         | 7 553       |         |         | 70 217       |     |         | 12 690      |         |   | 6 800        |        |         | 96 639 |   | 436    |   |   | - -    |   |   | 194 588 |

|                                                                 |   |   |                     | Special |                     | Sub-     |                     |     |                     |   |   |   |
|----------------------------------------------------------------------|--------|--------|--------------------------|---------|--------------------------|----------|--------------------------|----------|--------------------------|--------|--------|--------|
| Internal Risk Rating Grades                                          |   | Pass   |      | Mention |      | Standard |      | Doubtful |      | Loss   |
| Commercial – non real estate                                   |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Commercial and industrial       | $      | 7 371  |                     | $       | 180                      |     | $                        | 95       |                     | $      | 106    |   | $ | 166 |
| Commercial real estate                                               |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Owner occupied                  |   | 53 078 |                     |    | 5 041                    |     |                     | 3 829    |                     |   | 5 375  |   |   | 194 |
|        Non-owner occupied              |   | 11 470 |                     |    | 628                      |     |                     | - -      |                     |   | - -    |   |   | - - |
| Construction                                                         |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Residential                     |   | 282    |                     |    | 489                      |     |                     | 4 005    |                     |   | 1 095  |   |   | 51 |
|        Commercial                      |   | 10 348 |                     |    | 2 789                    |     |                     | 3 575    |                     |   | 1 363  |   |   | - - |
| Real estate                                                          |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Farmland                        |   | 253    |                     |    | - -                      |     |                     | - -      |                     |   | 539    |   |   | - - |
| Consumer                                                             |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Titled vehicles                 |   | N/A    |                     |    | N/A                      |     |                     | N/A      |                     |   | N/A    |   |   | N/A |
|        Deposit accounts                |   | N/A    |                     |    | N/A                      |     |                     | N/A      |                     |   | N/A    |   |   | N/A |
|        All other                       |   | N/A    |                     |    | N/A                      |     |                     | N/A      |                     |   | N/A    |   |   | N/A |
| Residential                                                          |   |   |                     |    |                     |     |                     |     |                     |   |   |   |   |   |
|        Revolving open end              |   | N/A    |                     |    | N/A                      |     |                     | N/A      |                     |   | N/A    |   |   | N/A |
|        1-4 family – first liens  |   | N/A    |                     |    | 3 234                    |     |                     | 956      |                     |   | 1 434  |   |   | 242 |
|        1-4 family – junior liens |   | N/A    |                     |    | 187                      |     |                     | 42       |                     |   | 175    |   |   | 25 |
|        5 or more family                |   | N/A    |                     |    | 308                      |     |                     | - -      |                     |   | - -    |   |   | - - |
|                                                                 |
| Totals                                                               | $      | 82 802 |                     | $       | 12 856                   |     | $                        | 12 502   |                     | $      | 10 087 |   | $ | 678 |
|                                                                 |

----

| Non Risk Rated Loans                                                      |       | Performing |       | Nonperforming |
|---------------------------------------------------------------------------|--------------------------------|------------|--------------------------------|---------------|
| Consumer – non real estate                                          |                           |       |                           |          |   |   |
|        Titled vehicles                 |                           | $          | 4 341                          |          | $ | 8 |
|        Deposit accounts                |                           |       | 785                            |          |   | - - |
|        All other                       |                           |       | 1 661                          |          |   | 7 |
| Residential                                                               |                           |       |                           |          |   |   |
|        Revolving open end              |                           |       | 5 962                          |          |   | 13 |
|        1-4 family – first liens  |                           |       | 75 901                         |          |   | 1 101 |
|        1-4 Family – junior liens |                           |       | 8 442                          |          |   | - - |
|        5 or more family                |                           |       | 1 668                          |          |   | - - |
| All other                                                                 |                           |       | 436                            |          |   | - - |
| Totals                                                                    |                           | $          | 99 196                         |          | $ | 1 129 |
|                                                                      |                           |       |                           |          |   |   |

| With no related allowance:                                                   |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|------------------------------------------------------------------------------|--------------------------------|-----------|--------------------------------|-------------------|--------|-----------|--------------------------------|------------|--------------------------------|------------|---------|--------|----------|--------|--------|
|                                                                         |                           |      |                           |              |   |      |                           |       |                           |       | Average |   | Interest |
|                                                                         |                           | Unpaid    |                           | Recorded          |   | Related   |                           | Recorded   |                           | Income     |
|                                                                         |       | Principal |       |   Investment |   | Allowance |       | Investment |       | Recognized |
| Commercial – non real estate                                           |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Commercial and industrial          |                           | $         | 117                            |              | $      | 95        |       | $          | N/A                            |       | $       | 53     |     | $      | - -    |
| Commercial real estate                                                       |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Owner occupied                     |                           |      | 4 206                          |              |   | 4 256     |                           |       | N/A                            |       |    | 3 591  |     |   | 158    |
|        Non-owner occupied                 |                           |      | 75                             |              |   | - -       |                           |       | N/A                            |       |    | 15     |     |   | - -    |
| Construction                                                                 |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Residential                        |                           |      | 1 188                          |              |   | 1 183     |                           |       | N/A                            |       |    | 1 769  |     |   | 52     |
|        Commercial                         |                           |      | 2 641                          |              |   | 2 631     |                           |       | N/A                            |       |    | 3 655  |     |   | 112    |
| Real estate                                                                  |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Farmland                           |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
| Residential                                                                  |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Revolving open end                 |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
|        1 to 4 family –first liens   |                           |      | 1 259                          |              |   | 1 242     |                           |       | N/A                            |       |    | 1 351  |     |   | 15     |
|        1 to 4 family – junior liens |                           |      | 175                            |              |   | 175       |                           |       | N/A                            |       |    | 142    |     |   | 3      |
|        5 or more family                   |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
| Consumer                                                                     |                           |      |                           |              |   |      |                           |       |                           |       |    |   |     |   |   |
|        Titled vehicles                    |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
|        Deposit accounts                   |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
|        All other consumer                 |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |
| All other                                                                    |                           |      | - -                            |              |   | - -       |                           |       | N/A                            |       |    | - -    |     |   | - -    |

----

| With an allowance recorded:                                                  |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|------------------------------------------------------------------------------|--------------------------------|-----------|--------------------------------|------------|--------|-----------|--------------------------------|------------|--------------------------------|------------|---------|--------|----------|--------|--------|
|                                                                         |                           |      |                           |       |   |      |                           |       |                           |       | Average |   | Interest |
|                                                                         |                           | Unpaid    |                           | Recorded   |   | Related   |                           | Recorded   |                           | Income     |
|                                                                         |       | Principal |       | Investment |   | Allowance |       | Investment |       | Recognized |
| Commercial – non real estate                                           |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Commercial and industrial          |                           | $         | 274                            |       | $      | 272       |       | $          | 217                            |       | $       | 355    |     | $      | 6      |
| Commercial real estate                                                       |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Owner occupied                     |                           |      | 5 201                          |       |   | 5 142     |                           |       | 528                            |       |    | 4 972  |     |   | 272    |
|        Non-owner occupied                 |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
| Construction                                                                 |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Residential                        |                           |      | 2 786                          |       |   | 2 767     |                           |       | 600                            |       |    | 3 910  |     |   | 175    |
|        Commercial                         |                           |      | 4 924                          |       |   | 4 903     |                           |       | 1 212                          |       |    | 3 242  |     |   | 216    |
| Real estate                                                                  |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Farmland                           |                           |      | 549                            |       |   | 539       |                           |       | 161                            |       |    | 547    |     |   | - -    |
| Residential                                                                  |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Revolving open end                 |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
|        1 to 4 family – first liens  |                           |      | 1 412                          |       |   | 1 390     |                           |       | 362                            |       |    | 1 186  |     |   | 56     |
|        1 to 4 family – junior liens |                           |      | 71                             |       |   | 67        |                           |       | 67                             |       |    | 220    |     |   | - -    |
|        5 or more family                   |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
| Consumer                                                                     |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
|        Titled vehicles                    |                           |      | - -                            |       |   | - -       |                           |       | --                             |       |    | - -    |     |   | - -    |
|        Deposit accounts                   |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
|        All other consumer                 |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | 4      |     |   | - -    |
| All other                                                                    |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
|                                                                         |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
| Totals:                                                                      |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |
| Commercial – non real estate                                           |                           | $         | 391                            |       | $      | 367       |                           | $          | 217                            |       | $       | 408    |     | $      | 6      |
| Commercial real estate                                                       |                           |      | 9 482                          |       |   | 9 398     |                           |       | 528                            |       |    | 8 578  |     |   | 430    |
| Construction                                                                 |                           |      | 11 539                         |       |   | 11 484    |                           |       | 1 812                          |       |    | 12 576 |     |   | 555    |
| Real estate –farmland                                                  |                           |      | 549                            |       |   | 539       |                           |       | 161                            |       |    | 547    |     |   | - -    |
| Residential                                                                  |                           |      | 2 917                          |       |   | 2 874     |                           |       | 429                            |       |    | 2 899  |     |   | 74     |
| Consumer                                                                     |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | 4      |     |   | - -    |
| All other                                                                    |                           |      | - -                            |       |   | - -       |                           |       | - -                            |       |    | - -    |     |   | - -    |
|                                                                         |                           | $         | 24 878                         |       | $      | 24 662    |                           | $          | 3 147                          |       | $       | 25 012 |     | $      | 1 065  |
|                                                                         |                           |      |                           |       |   |      |                           |       |                           |       |    |   |     |   |   |

|                           |                                                           |       | 2009   |   | 2008                           |
|--------------------------------|----------------------------------------------------------------|--------------------------------|--------|--------|--------------------------------|
|       | Impaired loans without a valuation allowance                   |                           | $      | 12 397 |       | $ | 7 469 |
|                           | Impaired loans with a valuation allowance                      |                           |   | 14 985 |                           |   | 4 245 |
|                           |        Total impaired loans |                           | $      | 27 382 |                           | $ | 11 714 |
|                           |                                                           |                           |   |   |                           |   |   |
|                           | Valuation allowance related to impaired loans                  |                           | $      | 3 799  |                           | $ | 1 302 |
|                           |                                                           |                           |   |   |                           |   |   |
|                           | Total nonaccrual loans                                         |                           | $      | 3 819  |                           | $ | 2 669 |
|                           |                                                           |                           |   |   |                           |   |   |
|                           | Total loans past due ninety days or more and still accruing    |                           | $      | - -    |                           | $ | 1 263 |
|                           |                                                           |                           |   |   |                           |
|                           |                                                           |                           | 2009   |   | 2008                           |
|                           | Average investment in impaired loans                           |                           | $      | 16 262 |                           | $ | 7 770 |
|                           | Interest income recognized on impaired loans                   |                           | $      | 1 233  |                           | $ | 471 |
|                           | Interest income recognized on a cash basis on impaired loans   |                           | $      | 68     |                           | $ | 4 |
|                           |                                                           |                           |   |   |                           |   |   |

----

|       |                                                                         |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   | 90 Days |   |   |   |
|--------------------------------|------------------------------------------------------------------------------|----------|--------|--------------------------------|--------------------------------|----------|--------------------------------|----------|--------------------------------|---------|--------------------------------|--------|--------|--------------------------------|--------------------------------|---------|----------|---------|--------|---------|--------|--------|--------|
|                           |                                                                         | 30-59    |   | 60-89                          |                           | 90 Days  |                           |     |                           |    |                           |   |   |                           |                           |    | Past Due |    |   |    |
|                           |                                                                         | Days     |   | Days                           |                           | or More  |                           | Total    |                           |    |                           |   | Total  |       | Still                          |    | Non-     |
|                           |                                                                         | Past Due |   | Past Due                       |       | Past Due |       | Past Due |       | Current |       | Loans  |   | Accruing                       |       | Accrual |
|                           |
|                           | Commercial – non real estate                                           |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Commercial and industrial          | $        | 80     |       | $                              | 92       |                           | $        | 2                              |    | $                              | 174    |   | $                              | 7 746                          |    | $        | 7 920   |   | $       | - -    |   | $      | 97 |
|                           | Commercial real estate                                                       |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Owner occupied                     |     | 612    |                           |                           | - -      |                           |     | - -                            |    |                           | 612    |   |                           | 66 905                         |    |     | 67 517  |   |    | - -    |   |   | - - |
|                           |        Non owner occupied                 |     | 194    |                           |                           | - -      |                           |     | - -                            |    |                           | 194    |   |                           | 11 904                         |    |     | 12 098  |   |    | - -    |   |   | - - |
|                           | Construction                                                                 |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Residential                        |     | 238    |                           |                           | - -      |                           |     | - -                            |    |                           | 238    |   |                           | 5 684                          |    |     | 5 922   |   |    | - -    |   |   | - - |
|                           |        Commercial                         |     | 115    |                           |                           | - -      |                           |     | 285                            |    |                           | 400    |   |                           | 17 852                         |    |     | 18 252  |   |    | - -    |   |   | 405 |
|                           | Real estate                                                                  |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Farmland                           |     | - -    |                           |                           | - -      |                           |     | 539                            |    |                           | 539    |   |                           | 253                            |    |     | 792     |   |    | - -    |   |   | 539 |
|                           | Residential                                                                  |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Revolving open end                 |     | - -    |                           |                           | - -      |                           |     | - -                            |    |                           | - -    |   |                           | 5 975                          |    |     | 5 975   |   |    | - -    |   |   | 38 |
|                           |        1 to 4 family – first liens  |     | 2 269  |                           |                           | 416      |                           |     | 881                            |    |                           | 3 566  |   |                           | 79 125                         |    |     | 82 691  |   |    | - -    |   |   | 1 099 |
|                           |        1 to 4 family – junior liens |     | 135    |                           |                           | 19       |                           |     | - -                            |    |                           | 154    |   |                           | 8 717                          |    |     | 8 871   |   |    | - -    |   |   | 42 |
|                           |        5 or more family                   |     | - -    |                           |                           | - -      |                           |     | - -                            |    |                           | - -    |   |                           | 1 976                          |    |     | 1 976   |   |    | - -    |   |   | - - |
|                           | Consumer                                                                     |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |
|                           |        Titled vehicles                    |     | 37     |                           |                           | 2        |                           |     | - -                            |    |                           | 39     |   |                           | 4 310                          |    |     | 4 349   |   |    | - -    |   |   | 8 |
|                           |        Deposit accounts                   |     | 11     |                           |                           | - -      |                           |     | - -                            |    |                           | 11     |   |                           | 774                            |    |     | 785     |   |    | - -    |   |   | - - |
|                           |        All other consumer                 |     | 3      |                           |                           | - -      |                           |     | 5                              |    |                           | 8      |   |                           | 1 658                          |    |     | 1 666   |   |    | - -    |   |   | 5 |
|                           | All other                                                                    |     | - -    |                           |                           | - -      |                           |     | - -                            |    |                           | - -    |   |                           | 436                            |    |     | 436     |   |    | - -    |   |   | - - |
|                           | Totals                                                                       | $        | 3 694  |                           | $                              | 529      |                           | $        | 1 712                          |    | $                              | 5 935  |   | $                              | 213 315                        |    | $        | 219 250 |   | $       | - -    |   | $      | 2 233 |
|                           | Percentage to Total Loans                                                    |     | 1.69%  |                           |                           | 0.24%    |                           |     | 0.78%                          |    |                           | 2.71%  |   |                           | 97.29%                         |    |     |    |   |    | - -%   |   |   | 1.02% |
|                           |                                                                         |     |   |                           |                           |     |                           |     |                           |    |                           |   |   |                           |                           |    |     |    |   |    |   |   |   |   |

- 30 to 59 days past due (principal or interest) still accruing interest 
- 60 to 89 days past due (principal or interest) still accruing interest 
- 90 days or more past due (principal or interest) still accruing interest 
- Nonaccrual status. 

|                          |                           | December 31    |
|-------------------------------|--------------------------------|----------------|
|                          |                           | 2010           |   | 2009 |
|                          |                           | (in thousands) |
| Premises and improvements     |       | $              | 9 438 |       | $ | 9 516 |
| Furniture and equipment       |                           |           | 4 377 |   |   | 4 630 |
|                          |                           | $              | 13 815 |   | $ | 14 146 |
| Less accumulated depreciation |                           |           | 5 545 |   |   | 5 420 |
|                          |                           | $              | 8 270 |   | $ | 8 726 |
|                          |                           |           |   |   |   |   |

----

| 2011   |       | $      | 61 141  |
|--------|--------------------------------|--------|---------|
| 2012   |                           |   | 18 608  |
| 2013   |                           |   | 7 227   |
| 2014   |                           |   | 5 796   |
| 2015   |                           |   | 10 538  |
|   |                           | $      | 103 310 |
|   |                           |   |    |

| 2011   |       | $      | 1 195  |
|--------|--------------------------------|--------|--------|
| 2012   |                           |   | 1 215  |
| 2013   |                           |   | 307    |
|   |                           | $      | 2 717  |
|   |                           |   |   |

----

|       |                                                                           |                           |             |   |                    |                           |   |   |   |                           | Other  |
|--------------------------------|--------------------------------------------------------------------------------|--------------------------------|------------------|--------|-------------------------|--------------------------------|--------|--------|--------|--------------------------------|--------|
|                           |                                                                           |                           | Pension Benefits |   | Postretirement Benefits |
|                           |                                                                           |                           | 2010             |   | 2009                    |                           | 2010   |   | 2009   |
|                           |                                                                           |                           | (in thousands)   |   | (in thousands)          |
|                           | Change in benefit obligation:                                                  |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        Benefit obligation, beginning        |       | $                | 6 962  |                    |       | $      | 7 401  |   |       | $      | 568 |   |       | $ | 547 |   |
|                           |        Service cost                         |                           |             | - -    |                    |                           |   | 266    |   |                           |   | 12 |   |   |   | 11 |   |
|                           |        Interest cost                        |                           |             | 413    |                    |                           |   | 447    |   |                           |   | 34 |   |   |   | 32 |   |
|                           |        Change in assumptions                |                           |             | - -    |                    |                           |   | - -    |   |                           |   | 27 |   |   |   | - - |   |
|                           |        Actuarial loss                       |                           |             | 592    |                    |                           |   | 210    |   |                           |   | 4 |   |   |   | 1 |   |
|                           |        Benefits paid                        |                           |             | (311   | )                       |                           |   | (308   | )      |                           |   | (20 | ) |   |   | (23 | ) |
|                           |        Curtailment                          |                           |             | - -    |                    |                           |   | (1 054 | )      |                           |   | - - |   |   |   | - - |   |
|                           |        Benefit obligation, ending           |                           | $                | 7 656  |                    |                           | $      | 6 962  |   |                           | $      | 625 |   |   | $ | 568 |   |
|                           |                                                                           |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           | Change in plan assets:                                                         |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        Fair value of plan assets, beginning |                           | $                | 5 621  |                    |                           | $      | 4 026  |   |                           | $      | - - |   |   | $ | - - |   |
|                           |        Actual return on plan assets         |                           |             | 443    |                    |                           |   | 785    |   |                           |   | - - |   |   |   | - - |   |
|                           |        Employer contributions               |                           |             | 345    |                    |                           |   | 1 118  |   |                           |   | 20 |   |   |   | 23 |   |
|                           |        Benefits paid                        |                           |             | (311   | )                       |                           |   | (308   | )      |                           |   | (20 | ) |   |   | (23 | ) |
|                           |        Fair value of plan assets, ending    |                           | $                | 6 098  |                    |                           | $      | 5 621  |   |                           | $      | - - |   |   | $ | - - |   |
|                           |                                                                 |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           | Funded status at end of year                                                   |                           | $                | (1 558 | )                       |                           | $      | (1 341 | )      |                           | $      | (625 | ) |   | $ | (568 | ) |
|                           | Unrecognized net (gain)                                                        |                           |             | - -    |                    |                           |   | - -    |   |                           |   | (21 | ) |   |   | (52 | ) |
|                           | Unrecognized transition asset                                                  |                           |             | - -    |                    |                           |   | - -    |   |                           |   | 70 |   |   |   | 87 |   |
|                           |                                                                           |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           | Accounts recognized on consolidated                                            |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        balance sheet as:                    |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        Accrued benefit liabilities          |                           | $                | (1 558 | )                       |                           | $      | (1 341 | )      |                           | $      | (576 | ) |   | $ | (533 | ) |
|                           |                                                                           |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           | Amounts recognized in accumulated other                                        |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        comprehensive loss consist of:       |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |
|                           |        Net loss (gain)                      |                           | $                | 2 354  |                    |                           | $      | 1 841  |   |                           | $      | (21 | ) |   | $ | (52 | ) |
|                           |        Transition liability                 |                           |             | - -    |                    |                           |   | - -    |   |                           |   | 70 |   |   |   | 87 |   |
|                           |        Deferred tax asset                   |                           |             | (800   | )                       |                           |   | (626   | )      |                           |   | (17 | ) |   |   | (12 | ) |
|                           |                                                                           |                           | $                | 1 554  |                    |                           | $      | 1 215  |   |                           | $      | 32 |   |   | $ | 23 |   |
|                           |                                                                           |                           |             |   |                    |                           |   |   |   |                           |   |   |   |   |   |   |   |

----

|       |                                                                                                                                                                                                 |               |             |   |                    |               |   |               |   |   |   |               |   |   | Other  |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------|--------|-------------------------|--------------------|--------|--------------------|--------|--------|--------|--------------------|--------|--------|--------|
|                           |                                                                                                                                                                                                 |               | Pension Benefits |   | Postretirement Benefits |
|                           |                                                                                                                                                                                                 |     | 2010             |   | 2009                    |     | 2008   |     | 2010   |   | 2009   |     | 2008   |
|                           |                                                                                                                                                                                                 |               | (in thousands)   |   | (in thousands)          |
|                           | Components of net periodic benefit cost:                                                                                                                                                             |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        Service cost                                                                                                                                               |               | $                | - -    |                    |     | $      | 266                |   |   | $      | 301                |   |   | $      | 12 |   |     | $ | 12 |   |   | $ | 12 |   |
|                           |        Interest cost                                                                                                                                              |               |             | 413    |                    |               |   | 447                |   |   |   | 410                |   |   |   | 34 |   |   |   | 32 |   |   |   | 30 |   |
|                           |        Expected return on plan assets                                                                                                                             |               |             | (460   | )                       |               |   | (373               | )      |   |   | (313               | )      |   |   | - - |   |   |   | - - |   |   |   | - - |   |
|                           |        Amortization of net obligation                                                                                                                             |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |               at transition                                                                                                    |               |             | - -    |                    |               |   | - -                |   |   |   | - -                |   |   |   | 17 |   |   |   | 17 |   |   |   | 17 |   |
|                           |        Recognized actuarial loss                                                                                                                                  |               |             | 96     |                    |               |   | 159                |   |   |   | 71                 |   |   |   | - - |   |   |   | - - |   |   |   | - - |   |
|                           |        Net periodic benefit cost                                                                                                                                  |               | $                | 49     |                    |               | $      | 499                |   |   | $      | 469                |   |   | $      | 63 |   |   | $ | 61 |   |   | $ | 59 |   |
|                           |                                                                                                                                                                                                 |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           | Other changes in plan assets and benefit                                                                                                                                                             |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        obligations recognized in accumulated                                                                                                                      |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        other comprehensive loss:                                                                                                                                  |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |               Net loss (gain)                                                                                                  |               | $                | 609    |                    |               | $      | (201               | )      |   | $      | 2 319              |   |   | $      | 31 |   |   | $ | 1 |   |   | $ | (6 | ) |
|                           |        Transition liability                                                                                                                                       |               |             | - -    |                    |               |   | - -                |   |   |   | - -                |   |   |   | (18 | ) |   |   | (17 | ) |   |   | (18 | ) |
|                           |               Deferred tax                                                                                                     |               |             | (174   | )                       |               |   | 481                |   |   |   | (789               | )      |   |   | (4 | ) |   |   | 5 |   |   |   | 9 |   |
|                           |               Amortization of net (gain)                                                                                       |               |             | (96    | )                       |               |   | (159               | )      |   |   | - -                |   |   |   | - - |   |   |   | - - |   |   |   | - - |   |
|                           |               Adjustment to (gain) for curtailment                                                                             |               |             | - -    |                    |               |   | (1 054             | )      |   |   | - -                |   |   |   | - - |   |   |   | - - |   |   |   | - - |   |
|                           |                      Total recognized in                                                    |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |                             accumulated other            |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |                             comprehensive loss           |               | $                | 339    |                    |               | $      | (933               | )      |   | $      | 1 530              |   |   | $      | 9 |   |   | $ | (11 | ) |   | $ | (15 | ) |
|                           |                      Total recognized in net periodic                                       |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |                             benefit cost and accumulated |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |                             other comprehensive loss     |               | $                | 388    |                    |               | $      | (434               | )      |   | $      | 1 999              |   |   | $      | 71 |   |   | $ | 50 |   |   | $ | 44 |   |
|                           |                                                                                                                                                                                            |               |             |   |                    |               |   |               |   |   |   |               |   |   |
|                           | Adjustment (in thousands) to retained earnings due to change in measurement                                                                                                                          |               |             |   |                    |               |   |               |   |   |   |               |   |   |
|                           |        date for the year ended December 31, 2008:                                                                                                                 |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |
|                           |        Service cost                                                                                                                                               |               |             |   |                    |               |   |               |   |   |   |               |   |   | $      | 42 |   |   |   |   |   |   |   |   |   |
|                           |        Interest cost                                                                                                                                              |               |             |   |                    |               |   |               |   |   |   |               |   |   |   | 64 |   |   |   |   |   |   |   |   |   |
|                           |        Expected return on plan assets                                                                                                                             |               |             |   |                    |               |   |               |   |   |   |               |   |   |   | (66 | ) |   |   |   |   |   |   |   |   |
|                           |        Deferred tax benefit                                                                                                                                       |               |             |   |                    |               |   |               |   |   |   |               |   |   |   | (16 | ) |   |   |   |   |   |   |   |   |
|                           |        Amortization of loss                                                                                                                                       |               |             |   |                    |               |   |               |   |   |   |               |   |   |   | 7 |   |   |   |   |   |   |   |   |   |
|                           |                                                                                                                                                                                                 |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        Net period benefit cost                                                                                                                                    |               |             |   |                    |               |   |               |   |   |   |               |   |   | $      | 31 |   |   |   |   |   |   |   |   |   |
|                           |                                                                                                                                                                                                 |               |             |   |                    |               |   |               |   |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|       |                                                                                                               | Pension Benefits |                           | Other Postretirement Benefits |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|------------------|--------------------------------|-------------------------------|
|                           |                                                                                                               | 2010             |                           | 2009                          |   | 2008 |       | 2010 |       | 2009 |       | 2008 |
|                           | Weighted-average assumptions used to                                                                               |             |                           |                          |   |   |   |   |   |   |   |   |
|                           |        determine net periodic benefit cost:                                     |             |                           |                          |   |   |   |   |   |   |   |   |
|                           |               Discount rate                  | 6.08%            |       | 6.30%                         |       | 6.00% |   | 6.00% |   | 6.00% |   | 6.00% |
|                           |               Expected return on plan assets | 8.00%            |                           | 8.00%                         |   | 6.00% |   | - - |   | - - |   | - - |
|                           |               Rate of compensation increase  | N/A              |                           | 3.00%                         |   | 3.50% |   | 3.00% |   | 3.00% |   | 3.00% |
|                           |                                                                                                               |             |                           |                          |   |   |   |   |   |   |   |   |
|                           | Weighted-average assumptions used to                                                                               |             |                           |                          |   |   |   |   |   |   |   |   |
|                           |        determine benefit obligations:                                           |             |                           |                          |   |   |   |   |   |   |   |   |
|                           |               Discount rate                  | 5.37%            |                           | 6.08%                         |   | 6.00% |   | 5.70% |   | 6.00% |   | 6.00% |
|                           |               Rate of compensation increase  | N/A              |                           | N/A                           |   | 3.50% |   | 3.00% |   | 3.00% |   | 3.00% |

|       |                                                                                      |                           |   |                           |             | Fair Value Measurement at December 31, 2010 |
|--------------------------------|-------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|------------------|---------------------------------------------|
|                           |                                                                                      |                           |   |                           |             | Quoted Prices in                            |   | Significant |   | Significant |
|                           |                                                                                      |                           |   |                           |             | Active Markets for                          |   | Observable |   | Unobservable |
|                           |                                                                                      |                           |   |                           |             | Identical                                   |   | Inputs |   | Inputs |
|                           | Asset Category                                                                            |       | Total  |       | Assets (Level 1) |                                        | (Level 2) |   | (Level 3) |
|                           | Cash                                                                                      |                           | $      | 615                            |             | $                                           | 615 |       | $ | - - |       | $ | - - |
|                           | Equity securities                                                                         |                           |   |                           |             |                                        |   |   |   |   |   |   |   |
|                           |        U.S. companies                                  |                           |   | 2 502                          |             |                                        | 2 502 |   |   | - - |   |   | - - |
|                           |        International companies                         |                           |   | 646                            |             |                                        | 646 |   |   | - - |   |   | - - |
|                           | U. S. Treasury securities                                                                 |                           |   | 718                            |             |                                        | 718 |   |   | - - |   |   | - - |
|                           | U. S. Corporate bonds                                                                     |                           |   | 1 531                          |             |                                        | 1 531 |   |   | - - |   |   | - - |
|                           | International Corporate bonds                                                             |                           |   | 86                             |             |                                        | 86 |   |   | - - |   |   | - - |
|                           |               Total |                           | $      | 6 098                          |             | $                                           | 6 098 |   | $ | - - |   | $ | - - |
|                           |                                                                                      |                           |   |                           |             |                                        |   |   |   |   |   |   |   |

----

|                                                         |                                                                                      |                           |   |   |                           | Fair Value Measurement at December 31, 2009 |
|--------------------------------------------------------------|-------------------------------------------------------------------------------------------|--------------------------------|--------|--------|--------------------------------|---------------------------------------------|
|                                                         |                                                                                      |                           |   |   |                           | Quoted Prices in                            |   | Significant |   | Significant |
|                                                         |                                                                                      |                           |   |   |                           | Active Markets for                          |   | Observable |   | Unobservable |
|            |                                                                                      |                           |   |   |                           | Identical                                   |   | Inputs |   | Inputs |
|                                                         | Asset Category                                                                            |                           | Total  |   | Assets (Level 1)               |                                        | (Level 2) |   | (Level 3) |
|                                                         | Cash                                                                                      |       | $      | 194    |       | $                                           | 194 |       | $ | - - |       | $ | - - |
|                                                         | Equity securities                                                                         |                           |   |   |                           |                                        |   |   |   |   |   |   |   |
|                                                         |        U.S. companies                                  |                           |   | 2 749  |                           |                                        | 2 749 |   |   | - - |   |   | - - |
|                                                         |        International companies                         |                           |   | 657    |                           |                                        | 657 |   |   | - - |   |   | - - |
|                                                         | U. S. Treasury securities                                                                 |                           |   | 1 175  |                           |                                        | 1 175 |   |   | - - |   |   | - - |
|                                                         | U. S. Corporate bonds                                                                     |                           |   | 846    |                           |                                        | 846 |   |   | - - |   |   | - - |
|                                                         |               Total |                           | $      | 5 621  |                           | $                                           | 5 621 |   | $ | - - |   | $ | - - |
|                                                         |                                                                                      |                           |   |   |                           |                                        |   |   |   |   |   |   |   |

|                                                                                      |                           | Plan Assets at December 31 |
|-------------------------------------------------------------------------------------------|--------------------------------|----------------------------|
|                                                                                      |       | 2010                       |       | 2009 |
| Asset Category                                                                            |                           |                       |   |   |   |   |   |   |   |   |
|        Equities                                        |                           |                       | 52 | % |   |   |   | 61 | % |   |
|        Fixed income/cash                               |                           |                       | 48 | % |   |   |   | 39 | % |   |
|               Total |                           |                       | 100 | % |   |   |   | 100 | % |   |
|                                                                                      |                           |                       |   |   |   |   |   |   |   |   |

|       |                           |                           |     |                           |   |   | Other                          |
|------------|--------------------------------|--------------------------------|----------|--------------------------------|--------|--------|--------------------------------|
|       |                           |                           |     |                           |   |   | Postretirement                 |
|       | Pension Benefits               |       | Benefits |
| 2011       |       | $                              | 356      |       |   |   |       | $ | 24 |       |   |
| 2012       |                           |                           | 375      |                           |   |   |                           |   | 25 |   |   |
| 2013       |                           |                           | 393      |                           |   |   |                           |   | 27 |   |   |
| 2014       |                           |                           | 414      |                           |   |   |                           |   | 31 |   |   |
| 2015       |                           |                           | 453      |                           |   |   |                           |   | 34 |   |   |
| Thereafter |                           |                           | 2 461    |                           |   |   |                           |   | 144 |   |   |

----

|                                                                                           |       | 1% Increase    |   | 1% Decrease |
|------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------|-------------|
|                                                                                           |                           | (in thousands) |
| Effect on the health care component of the accumulated                                         |                           |           |   |        |   |   |   |   |   |   |   |
|        postretirement benefit obligation                    |                           |           | $      | 68          |   |       |   | $ | (61 | ) |   |
| Effect on total of service and interest cost components of                                     |                           |           |   |        |   |   |   |   |   |   |   |
|        net periodic postretirement health care benefit cost |                           |           |   | 4           |   |   |   |   | (3 | ) |   |

|       |                                                    |                           | 2010           |                           | 2009   |      | 2008   |
|--------------------------------|---------------------------------------------------------|--------------------------------|----------------|--------------------------------|--------|-----------|--------|
|                           |                                                    |                           | Average        |                           |   | Per Share |   | Average |   | Per Share |   | Average |   | Per Share |
|                           |                                                    |                           | Shares         |       | Amount |      | Shares |       | Amount |       | Shares |       | Amount |
|                           |                                                    |       | (in thousands) |                           |   |      |   |   |       | (in thousands) |   |   |   |   |   |   |   | (in thousands) |   |   |   |   |   |
|                           | Basic earnings (loss)                                   |                           |           |                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        per share     |                           |           | 3 390                          |   |      |   | $ | .53 |   |   |   | 3 391 |   |   |   | $ | (.66 | ) |   |   |   | 3 402 |   |   |   | $ | .55 |   |
|                           | Effect of dilutive securities:                          |                           |           |                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        Stock options |                           |           | - -                            |   |      |   |   |   |   |   |   | - - |   |   |   |   |   |   |   |   |   | 2 |   |   |   |   |   |   |
|                           |                                                    |                           |           |                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           | Diluted earnings (loss)                                 |                           |           |                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |        per share     |                           |           | 3 390                          |   |      |   | $ | .53 |   |   |   | 3 391 |   |   |   | $ | (.66 | ) |   |   |   | 3 404 |   |   |   | $ | .55 |   |
|                           |                                          |                           |           |                           |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                             |                           |         |    |   |                           |                           |      |           |        |   |      | Weighted- |                           |   |   |   |   |
|----------------------------------|--------------------------------|--------------|---------|--------|--------------------------------|--------------------------------|-----------|----------------|-------------|--------|-----------|-----------|--------------------------------|--------|--------|--------|--------|
|                             |                           |         |    |   |                           |                           | Weighted- |           | Average     |   | Aggregate |
|                             |                           |         |    |   |                           |                           | Average   |           | Remaining   |   | Intrinsic |
|                             |                           |         |    |   |                           |                           | Exercise  |           | Contractual |   | Value     |
|                             |       | Shares       |    | Price  |       | Life in Years                  |      | (in thousands) |
| Outstanding at beginning of year |                           |    | 126 224 |   |                      |       |      | $              | 14.75       |   |      |      |                           |   |   |   |   |
| Granted                          |                           |         | - -     |   |                           |                           |      |           | - -         |   |      |      |                           |   |   |   |   |
| Exercised                        |                           |         | - -     |   |                           |                           |      |           | - -         |   |      |      |                           |   |   |   |   |
| Forfeited                        |                           |         | (5 250  | )      |                           |                           |      |           | 14.49       |   |      |      |                           |   |   |   |   |
| Outstanding at end of year       |                           |         | 120 974 |   |                           |                           |      | $              | 14.76       |   |      | 5         |                           |   | $      | - -    |   |
| Exercisable at end of year       |                           |         | 108 149 |   |                           |                           |      | $              | 14.59       |   |      | 4         |       |   | $      | - -    |   |
|                             |                           |         |    |   |                           |                           |      |           |        |   |      |      |                           |   |   |   |   |

|       |     |                           |        |                                 |            | Options Outstanding |     | Options Exercisable            |        |
|--------------------------------|----------|--------------------------------|-------------|--------------------------------------|-----------------|---------------------|----------|--------------------------------|-------------|
|                           |     |                           |        |                                 |            |                |     |                           |        | Weighted |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |     |                           |        |                                 |            |                |     |                           |        | Average |   | Weighted |   |   |   |   |   | Weighted |
|                           |     |                           |        |                                 |            |                |     |                           |        | Remaining |   | Average |   |   |   |   |   | Average |
|                           | Exercise |                           | Number      |                                 | Contractual     |                | Exercise |                           | Number      |   | Exercise |
|                           | Price    |       | Outstanding |        | Life (in years) |                | Price    |       | Exercisable |   | Price |
|                           |     | $                              | 11.28       |                                 |            |                | 24 468   |                           |        | 3.0 |       |   | $ | 11.28 |   |   |   | 24 468 |   |       |   | $ | 11.28 |   |
|                           |     |                           | 14.00       |                                 |            |                | 32 735   |                           |        | 4.0 |   |   |   | 14.00 |   |   |   | 32 735 |   |   |   |   | 14.00 |   |
|                           |     |                           | 17.25       |                                 |            |                | 34 477   |                           |        | 5.0 |   |   |   | 17.25 |   |   |   | 29 808 |   |   |   |   | 17.25 |   |
|                           |     |                           | 15.60       |                                 |            |                | 29 294   |                           |        | 6.0 |   |   |   | 15.60 |   |   |   | 21 138 |   |   |   |   | 15.60 |   |
|                           |     |                           |        |                                 |            |                | 120 974  |                           |        |   |   |   |   |   |   |   |   | 108 149 |   |   |   |   |   |   |
|                           |     |                           |        |                                 |            |                |     |                           |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                        |                           | 2010   |   | 2009   |
|-------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------|--------|
| Deferred tax assets:                                                                                        |                           |   |   |   |   |   |   |   |   |   |
|        Reserve for loan losses                                           |                           |   | $      | 1 245  |   |   |   | $ | 1 504 |   |
|        Accrued pension expense                                           |                           |   |   | 530    |   |   |   |   | 456 |   |
|        Accrued postretirement benefits                                   |                           |   |   | 255    |   |   |   |   | 238 |   |
|        Nonaccrual interest                                               |                           |   |   | 36     |   |   |   |   | 58 |   |
|        Stock option expense                                              |                           |   |   | 35     |   |   |   |   | 35 |   |
|        Home equity closing costs                                         |                           |   |   | 23     |   |   |   |   | 44 |   |
|        Net loan origination fees                                         |                           |   |   | 69     |   |   |   |   | 50 |   |
|        Securities available for sale                                     |                           |   |   | 52     |   |   |   |   | - - |   |
|        OREO expense                                                      |                           |   |   | 138    |   |   |   |   | 102 |   |
|        OREO valuation allowance                                          |                           |   |   | 32     |   |   |   |   | 103 |   |
|        OREO built in gain                                                |                           |   |   | 250    |   |   |   |   | 358 |   |
|                                                                                                        |                           |   | $      | 2 665  |   |   |   | $ | 2 948 |   |
| Deferred tax liabilities:                                                                                   |                           |   |   |   |   |   |   |   |   |   |
|        Depreciation                                                      |                           |   | $      | 89     |   |   |   | $ | 108 |   |
|        Securities available for sale                                     |                           |   |   | - -    |   |   |   |   | 90 |   |
|                                                                                                        |                           |   | $      | 89     |   |   |   | $ | 198 |   |
|                                                                                                        |                           |   |   |   |   |   |   |   |   |   |
|               Net deferred tax assets |       |   | $      | 2 576  |   |       |   | $ | 2 750 |   |
|                                                                                                        |                           |   |   |   |   |   |   |   |   |   |

|        |                           |                           | 2010   |       | 2009   |       | 2008   |
|--------------------------------------|--------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                 | Current tax expense (benefit)  |       | $      | 186                            |   | $                              | (827   | ) |   | $ | 1 327 |   |
|                                 | Deferred tax expense (benefit) |                           |   | 494                            |   |                           | (609   | ) |   |   | (474 | ) |
|                                 |                           |                           | $      | 680                            |   | $                              | (1 436 | ) |   | $ | 853 |   |
|                                 |                           |                           |   |                           |   |                           |   |   |   |   |   |   |

|       |                                                                         |       | 2010   |       | 2009   |       | 2008   |
|--------------------------------|------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                           | Computed “expected” tax (benefit) expense                        |                           | $      | 841                            |   |                           | $      | (1 250 | ) |   | $ | 923 |   |
|                           | Increase (decrease) in income taxes resulting from:                          |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                           |        Tax exempt income                  |                           |   | (165                           | )      |                           |   | (146 | ) |   |   | (217 | ) |
|                           |        State income tax (benefit) expense |                           |   | - -                            |   |                           |   | (163 | ) |   |   | 123 |   |
|                           |        Other                              |                           |   | 4                              |   |                           |   | 123 |   |   |   | 24 |   |
|                           |                                                                         |                           | $      | 680                            |   |                           | $      | (1 436 | ) |   | $ | 853 |   |
|                           |                                                                         |                           |   |                           |   |                           |   |   |   |   |   |   |   |

----

|       |   |                           | Lease       |                           | Lease       |
|------------|--------|--------------------------------|-------------|--------------------------------|-------------|
|       |   |                           | Obligations |                           | Obligations |
|       |   |                           | for         |                           | for         |
|       |   |                           | Real Estate |       | Equipment   |
| 2011       |   |       | $           | 39                             |        | $ | 29 |
| 2012       |   |                           |        | 40                             |        |   | 29 |
| 2013       |   |                           |        | 31                             |        |   | 29 |
| 2014       |   |                           |        | -                              |        |   | 30 |
| 2015       |   |                           |        | -                              |        |   | 10 |
| Thereafter |   |                           |        | -                              |        |   | - - |
|       |   |                           | $           | 110                            |        | $ | 127 |
|       |   |                           |        |                           |        |   |   |

----

|                                                                                                        |       | 2010   |       | 2009   |
|-------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|
| Financial instruments whose contract                                                                        |                           |   |                           |   |   |   |
|        amounts represent credit risk:                                         |                           |   |                           |   |   |   |
|               Commitments to extend credit |                           | $      | 28 050                         |   | $ | 29 275 |
|               Standby letters of credit    |                           |   | 2 225                          |   |   | 1 646 |

----

----

|                                                                                                    |                           | 2010           |                           | 2009           |
|---------------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|----------------|
|                                                                                                    |                           | Carrying       |                           | Fair           |   | Carrying |   | Fair |
|                                                                                                    |       | Amount         |       | Value          |       | Amount |       | Value |
|                                                                                                    |                           | (in thousands) |                           | (in thousands) |
| Financial assets:                                                                                       |                           |           |                           |           |   |   |   |   |   |   |   |   |
|        Cash                                                               |                           | $              | 10 180                         |           | $ | 10 180 |   | $ | 6 673 |   | $ | 6 673 |
|        Federal funds sold                                                 |                           |           | 2 725                          |           |   | 2 725 |   |   | 5 950 |   |   | 5 950 |
|        Securities available for sale                                      |                           |           | 42 690                         |           |   | 42 690 |   |   | 34 313 |   |   | 34 313 |
|        Loans, net                                                         |                           |           | 214 238                        |           |   | 212 200 |   |   | 228 993 |   |   | 236 838 |
|        Loans held for sale                                                |                           |           | 76                             |           |   | 76 |   |   | 97 |   |   | 97 |
|        FHLB stock                                                         |                           |           | 765                            |           |   | 765 |   |   | 805 |   |   | 805 |
|        BOLI                                                               |                           |           | 6 397                          |           |   | 6 397 |   |   | 6 162 |   |   | 6 162 |
|        Accrued interest receivable                                        |                           |           | 960                            |           |   | 960 |   |   | 952 |   |   | 952 |
|                                                                                                    |                           |           |                           |           |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                                                  |                           |           |                           |           |   |   |   |   |   |   |   |   |
|        Deposits                                                           |                           |           | 257 422                        |           |   | 258 240 |   |   | 264 467 |   |   | 260 915 |
|        Securities sold under                                              |                           |           |                           |           |   |   |   |   |   |   |   |   |
|               agreements to repurchase |                           |           | 7 382                          |           |   | 7 382 |   |   | 7 340 |   |   | 7 340 |
|        FHLB advances                                                      |                           |           | 2 717                          |           |   | 2 734 |   |   | 3 856 |   |   | 4 012 |
|        Accrued interest payable                                           |                           |           | 361                            |           |   | 361 |   |   | 405 |   |   | 405 |

----

|                                                                   |   |                           |   |                           | Fair Value Measurements at December 31, 2010 Using |
|------------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|----------------------------------------------------|
|                                                                   |   |                           |   |                           | Quoted Prices                                      |   |   |   |   |   |   |
|                                                                   |   |                           |   |                           | in Active                                          |   | Significant |   |   |   |
|                                                                   |   |                           |   |                           | Markets for                                        |   | Other |   | Significant |
|                                                                   |   | Balance as of                  |   | Identical                      |                                               | Observable |   | Unobservable |
|                                                                   |   | December 31                    |   | Assets                         |                                               | Inputs |   | Inputs |
| Description                                                            |   |       | 2010   |       | (Level 1)                                          |       | (Level 2) |       | (Level 3) |
| Available for sale debt securities                                     |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
|        U.S. Government agency securities |   | $                              | 36 288 |                           | $                                                  | - - |   | $ | 36 288 |   | $ | - - |
|        State and municipal securities    |   |                           | 5 524  |                           |                                               | - - |   |   | 5 524 |   |   | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Total available for sale debt securities                               |   | $                              | 41 812 |                           | $                                                  | - - |   | $ | 41 812 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Available for sale equity securities                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
|        Financial services industry       |   | $                              | 878    |                           | $                                                  | - - |   | $ | 878 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Total available for sale securities                                    |   | $                              | 42 690 |                           | $                                                  | - - |   | $ | 42 690 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |

|                                                                   |   |                           |   |                           | Fair Value Measurements at December 31, 2009 Using |
|------------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|----------------------------------------------------|
|                                                                   |   |                           |   |                           | Quoted Prices                                      |   |   |   |   |   |   |
|                                                                   |   |                           |   |                           | in Active                                          |   | Significant |   |   |   |
|                                                                   |   |                           |   |                           | Markets for                                        |   | Other |   | Significant |
|                                                                   |   | Balance as of                  |   | Identical                      |                                               | Observable |   | Unobservable |
|                                                                   |   | December 31                    |   | Assets                         |                                               | Inputs |   | Inputs |
| Description                                                            |   |       | 2009   |       | (Level 1)                                          |       | (Level 2) |       | (Level 3) |
| Available for sale securities                                          |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
|        U.S. Government agency securities |   | $                              | 28 423 |                           | $                                                  | - - |   | $ | 28 423 |   | $ | - - |
|        State and municipal securities    |   |                           | 4 790  |                           |                                               | - - |   |   | 4 790 |   |   | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Total available for sale debt securities                               |   | $                              | 33 213 |                           | $                                                  | - - |   | $ | 33 213 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Available for sale equity securities                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
|        Financial services industry       |   | $                              | 1 100  |                           | $                                                  | - - |   | $ | 1 100 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |
| Total available for sale securities                                    |   | $                              | 34 313 |                           | $                                                  | - - |   | $ | 34 313 |   | $ | - - |
|                                                                   |   |                           |   |                           |                                               |   |   |   |   |   |   |   |

----

|                                                |   |                           |              |                           | Carrying Value at December 31, 2010 |
|-----------------------------------------------------|--------|--------------------------------|-------------------|--------------------------------|-------------------------------------|
|                                                |   |                           |              |                           | Quoted Prices                       |   |   |   |   |   |   |
|                                                |   |                           |              |                           | in Active                           |   | Significant |   |   |   |
|                                                |   |                           |              |                           | Markets for                         |   | Other |   | Significant |
|                                                |   |                           |              |                           | Identical                           |   | Observable |   | Unobservable |
|                                                |   | Balance as of                  |              | Assets                         |                                | Input |   | Input |
| Description                                         |   |       | December 31, 2010 |       | (Level 1)                           |       | (Level 2) |       | (Level 3) |
| Assets                                              |   |                           |              |                           |                                |   |   |   |   |   |   |   |
|        Impaired Loans |   | $                              | 11 933            |                           | $                                   | - - |   | $ | 10 593 |   | $ | 1 340 |
|        OREO           |   |                           | 6 563             |                           |                                | - - |   |   | 6 563 |   |   | - - |
|                                                |
|                                                |   |                           |              |                           | Carrying Value at December 31, 2009 |
|                                                |   |                           |              |                           | Quoted Prices                       |   |   |   |   |   |   |
|                                                |   |                           |              |                           | in Active                           |   | Significant |   |   |   |
|                                                |   |                           |              |                           | Markets for                         |   | Other |   | Significant |
|                                                |   |                           |              |                           | Identical                           |   | Observable |   | Unobservable |
|                                                |   | Balance as of                  |              | Assets                         |                                | Input |   | Input |
| Description                                         |   |                           | December 31, 2009 |                           | (Level 1)                           |   | (Level 2) |   | (Level 3) |
| Assets                                              |   |                           |              |                           |                                |   |   |   |   |   |   |   |
|        Impaired Loans |   | $                              | 11 186            |                           | $                                   | - - |   | $ | 3 311 |   | $ | 7 875 |
|        OREO           |   |                           | 5 632             |                           |                                | - - |   |   | 5 632 |   |   | - - |

----

|                                                                                                |                           |           |                           |        |                           |             | Minimum                        |   |                           |   |                           |   |
|-----------------------------------------------------------------------------------------------------|--------------------------------|----------------|--------------------------------|-------------|--------------------------------|------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
|                                                                                                |                           |           |                           |        |                           |             | Capital                        |   | Minimum To Be                  |
|                                                                                                |                           | Actual         |                           | Requirement |                           | Well Capitalized |
|                                                                                                |       | Amount         |       | Ratio       |       | Amount           |       | Ratio  |       | Amount |       | Ratio  |
|                                                                                                |                           | (in thousands) |
| As of December 31, 2010:                                                                            |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|        Total capital (to risk-weighted assets):                       |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 30 798                         |        | 14.24%                         |             | $                              | 17 306 |                           | 8.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 29 584                         |        | 13.74%                         |             | $                              | 17 223 |                           | 8.0%   |                           | $      | 21 529 |   | 10.0% |
|        Tier 1 capital (to risk-weighted assets):                      |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 28 065                         |        | 12.97%                         |             | $                              | 8 653  |                           | 4.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 26 864                         |        | 12.48%                         |             | $                              | 8 612  |                           | 4.0%   |                           | $      | 12 917 |   | 6.0% |
|        Tier 1 capital (to average assets):                            |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 28 065                         |        | 9.36%                          |             | $                              | 11 992 |                           | 4.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 26 864                         |        | 8.99%                          |             | $                              | 11 947 |                           | 4.0%   |                           | $      | 14 934 |   | 5.0% |
|                                                                                                |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
| As of December 31, 2009:                                                                            |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|        Total capital (to risk-weighted assets):                       |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 29 528                         |        | 12.92%                         |             | $                              | 18 289 |                           | 8.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 28 293                         |        | 12.44%                         |             | $                              | 18 190 |                           | 8.0%   |                           | $      | 22 737 |   | 10.0% |
|        Tier 1 capital (to risk-weighted assets):                      |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 26 635                         |        | 11.65%                         |             | $                              | 9 144  |                           | 4.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 25 415                         |        | 11.18%                         |             | $                              | 9 095  |                           | 4.0%   |                           | $      | 13 642 |   | 6.0% |
|        Tier 1 capital (to average assets):                            |                           |           |                           |        |                           |             |                           |   |                           |   |                           |   |   |   |   |
|               Consolidated         |                           | $              | 26 635                         |        | 8.75%                          |             | $                              | 12 181 |                           | 4.0%   |                           |   | N/A |   | N/A |
|               Bank of Charles Town |                           | $              | 25 415                         |        | 8.38%                          |             | $                              | 12 133 |                           | 4.0%   |                           | $      | 15 166 |   | 5.0% |

----

|                                                                                                                            |       | 2010   |       | 2009   |
|---------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|
| ASSETS                                                                                                                          |                           |   |                           |   |   |   |   |   |
|        Cash                                                                                       |                           | $      | 70                             |   |   | $ | 1 |   |
|        Investment in subsidiary                                                                   |                           |   | 25 685                         |   |   |   | 24 352 |   |
|        Equity securities available for sale, at fair value                                        |                           |   | 858                            |   |   |   | 1 100 |   |
|        Other assets                                                                               |                           |   | 163                            |   |   |   | 120 |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |
|               Total Assets                                     |                           | $      | 26 776                         |   |   | $ | 25 573 |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                      |                           |   |                           |   |   |   |   |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |
| LIABILITIES                                                                                                                     |                           |   |                           |   |   |   |   |   |
|        Other liabilities                                                                          |                           | $      | - -                            |   |   | $ | 1 |   |
|               Total Liabilities                                |                           | $      | - -                            |   |   | $ | 1 |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                      |                           |   |                           |   |   |   |   |   |
|        Common stock                                                                               |                           | $      | 3 672                          |   |   | $ | 3 672 |   |
|        Surplus                                                                                    |                           |   | 3 932                          |   |   |   | 3 898 |   |
|        Undivided profits                                                                          |                           |   | 23 725                         |   |   |   | 21 931 |   |
|        Accumulated other comprehensive (loss), net                                                |                           |   | (1 687                         | )      |   |   | (1 063 | ) |
|                                                                                                                            |                           | $      | 29 642                         |   |   | $ | 28 438 |   |
|               Less cost of shares acquired for the treasury    |                           |   | 2 866                          |   |   |   | 2 866 |   |
|               Total Stockholders’ Equity                 |                           | $      | 26 776                         |   |   | $ | 25 572 |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |
|               Total Liabilities and Stockholders’ Equity |                           | $      | 26 776                         |   |   | $ | 25 573 |   |
|                                                                                                                            |                           |   |                           |   |   |   |   |   |

----

|                                                                                                                                                           |       | 2010   |       | 2009   |       | 2008   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| Income                                                                                                                                                         |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Dividends from subsidiary                                                                                                 |                           | $      | 80                             |   |                           | $      | 977 |   |   | $ | 2 582 |   |
|        Interest income                                                                                                           |                           |   | - -                            |   |                           |   | 1 |   |   |   | 3 |   |
|               Total Income                                                                    |                           | $      | 80                             |   |                           | $      | 978 |   |   | $ | 2 585 |   |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| Expenses                                                                                                                                                       |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Stock-based compensation expense                                                                                          |                           | $      | 34                             |   |                           | $      | 47 |   |   | $ | 70 |   |
|        Public relations & new business development                                                                           |                           |   | 3                              |   |                           |   | 4 |   |   |   | 7 |   |
|        Transfer agent expense                                                                                                    |                           |   | 15                             |   |                           |   | 15 |   |   |   | 11 |   |
|        Computer services                                                                                                         |                           |   | 4                              |   |                           |   | 3 |   |   |   | 2 |   |
|        Director and committee fees                                                                                               |                           |   | 9                              |   |                           |   | 8 |   |   |   | 9 |   |
|        Legal fees                                                                                                                |                           |   | 17                             |   |                           |   | 11 |   |   |   | 9 |   |
|        Other professional fees                                                                                                   |                           |   | 16                             |   |                           |   | 63 |   |   |   | 43 |   |
|        Postage                                                                                                                   |                           |   | 4                              |   |                           |   | 4 |   |   |   | 4 |   |
|        Proxy solicitation                                                                                                        |                           |   | 9                              |   |                           |   | 8 |   |   |   | 1 |   |
|        Printing, stationery and supplies                                                                                         |                           |   | 15                             |   |                           |   | 16 |   |   |   | 14 |   |
|        Other taxes                                                                                                               |                           |   | 1                              |   |                           |   | 1 |   |   |   | 1 |   |
|        Other operating expenses                                                                                                  |                           |   | - -                            |   |                           |   | 117 |   |   |   | - - |   |
|               Total Expenses                                                                  |                           | $      | 127                            |   |                           | $      | 297 |   |   | $ | 171 |   |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               (Loss) Income before Income Tax (Benefit) and                                   |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                      Equity in Undistributed Income (Loss) |                           | $      | (47                            | )      |                           | $      | 681 |   |   | $ | 2 414 |   |
|                      of Subsidiary                         |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| Income Tax (Benefit)                                                                                                                                           |                           |   | (31                            | )      |                           |   | (84 | ) |   |   | (32 | ) |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               (Loss) Income before Equity in Undistributed                                    |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                      Income(Loss) of Subsidiary            |                           | $      | (16                            | )      |                           | $      | 765 |   |   | $ | 2 446 |   |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| Equity in Undistributed Income (Loss) of Subsidiary                                                                                                            |                           |   | 1 810                          |   |                           |   | (3 005 | ) |   |   | (584 | ) |
|               Net Income (Loss)                                                               |                           | $      | 1 794                          |   |                           | $      | (2 240 | ) |   | $ | 1 862 |   |
|                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |

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|                                                                                                                                                                                                                |       | 2010   |       | 2009   |       | 2008   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Net income (loss)                                                                                                                                                              |                           | $      | 1 794                          |   |                           | $      | (2 240 | ) |   | $ | 1 862 |   |
|        Adjustments to reconcile net income (loss) to net cash                                                                                                                         |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|               provided by operating activities:                                                                                                    |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                      Equity in undistributed (income) loss of subsidiary                                        |                           |   | (1 810                         | )      |                           |   | 3 005 |   |   |   | 584 |   |
|                      Stock-based compensation expense                                                           |                           |   | 34                             |   |                           |   | 47 |   |   |   | 70 |   |
|                      Decrease (increase) in other assets                                                        |                           |   | 52                             |   |                           |   | 68 |   |   |   | (830 | ) |
|                      (Decrease) increase in other liabilities                                                   |                           |   | (1                             | )      |                           |   | 1 |   |   |   | - - |   |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                             Net cash provided by operating activities        |                           | $      | 69                             |   |                           | $      | 881 |   |   | $ | 1 686 |   |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Cash dividends                                                                                                                                                                 |                           | $      | - -                            |   |                           | $      | (899 | ) |   | $ | (1 548 | ) |
|        Purchase of treasury shares                                                                                                                                                    |                           |   | - -                            |   |                           |   | (29 | ) |   |   | (149 | ) |
|        Sale of treasury shares                                                                                                                                                        |                           |   | - -                            |   |                           |   | - - |   |   |   | 23 |   |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                             Net cash (used in) financing activities          |                           | $      | - -                            |   |                           | $      | (928 | ) |   | $ | (1 674 | ) |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|                             Increase (decrease) in cash and cash equivalents |                           | $      | 69                             |   |                           |   | (47 | ) |   | $ | 12 |   |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                                                                                                                                                           |                           |   |                           |   |                           |   |   |   |   |   |   |   |
|        Beginning                                                                                                                                                                      |                           |   | 1                              |   |                           |   | 48 |   |   |   | 36 |   |
|        Ending                                                                                                                                                                         |                           | $      | 70                             |   |                           | $      | 1 |   |   | $ | 48 |   |
|                                                                                                                                                                                                                |                           |   |                           |   |                           |   |   |   |   |   |   |   |

----

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| Name                    |       | Position Since                                       |       | Age    |       | Principal Occupation                                                                                                                     |
|-------------------------|--------------------------------|------------------------------------------------------|--------------------------------|--------|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|
| Robert F. Baronner, Jr. |                           | President & CEO2001                              |                           | 52     |                           | Employed by bank as of 1/1/01 as President and CEO.                                                                                      |
|                    |                           |                                                 |                           |   |                           |                                                                                                                                     |
| Gayle Marshall Johnson  |                           | Sr. Vice President & Chief Financial Officer1994 |                           | 61     |                           | Employed with the bank 1977-1985 and 1988-present; Vice President and Chief Financial Officer since 1990. Sr. Vice President since 2005. |

|                      |                           |                 |                           |                 |                           | Number of securities      |
|---------------------------|--------------------------------|----------------------|--------------------------------|----------------------|--------------------------------|---------------------------|
|                      |                           | Number of securities |                           |                 |                           | remaining available for   |
|                      |                           | to be issued         |                           | Weighted-average     |                           | future issuance under     |
|                      |                           | upon exercise of     |                           | exercise price of    |                           | equity compensation plans |
|                      |                           | outstanding options, |                           | outstanding options, |                           | (excluding securities     |
| Plan category             |       | warrants and rights  |       | warrants and rights  |       | reflected in column (a))  |
| 2003 Stock Incentive Plan |                           |                 |                           |                 |                           |                      |
| amended by shareholders   |                           |                 |                           |                 |                           |                      |
| April 24, 2007            |                           | 120,974              |                           | $14.76               |                           | 310,586                   |
|                      |                           |                 |                           |                 |                           |                      |

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|       | (a)  | (1) Financial Statements. Reference is made to Part II, Item 8 of this Annual Report on Form 10-K.                                                                                                    |
|--------------------------------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |      |
|                           |      | (2) Financial Statement Schedules. These schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. |
|                           |      |
|                           |      | (3) Exhibits. See below.                                                                                                                                                                              |

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| POTOMAC BANCSHARES, INC. |               |   |
|--------------------------|--------------------------------------------------|--------|
|                     |                                             |   |
| By                  | /s/ Robert F. Baronner, Jr.                      |   | March 31, 2011 |
|                     | Robert F. Baronner, Jr.                          |   |   |
|                     | President & Chief Executive Officer          |   |   |
|                     |                                             |   |
| By                       | /s/ Gayle Marshall Johnson                       |   | March 31, 2011 |
|                     | Gayle Marshall Johnson                           |   |   |
|                     | Sr. Vice President & Chief Financial Officer |   |   |

| Signature & Title |                              | Date   |
|-----------------------|-----------------------------------|--------|
|                  |                              |
| By               | /s/ Dr. Keith Berkeley            |   | March 31, 2011 |
|                  | Dr. Keith Berkeley, Director      |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ J. Scott Boyd                 |   | March 31, 2011 |
|                  | J. Scott Boyd, Director           |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ John P. Burns, Jr.            |   | March 31, 2011 |
|                  | John P. Burns, Jr., Director      |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ Guy Gareth Chicchirichi       |   | March 31, 2011 |
|                  | Guy Gareth Chicchirichi, Director |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ Margaret Cogswell             |   | March 31, 2011 |
|                  | Margaret Cogswell, Director       |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ Mary Clare Eros               |   | March 31, 2011 |
|                  | Mary Clare Eros, Director         |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ William R. Harner             |   | March 31, 2011 |
|                  | William R. Harner, Director       |   |   |
|                  |                              |
|                  |                              |
| By                    | /s/ Stanley L. Merson             |   | March 31, 2011 |
|                  | Stanley L. Merson, Director       |   |   |
|                  |                              |   |   |
|                  |                              |   |   |
| By                    | /s/ Barbara H. Pichot             |   | March 31, 2011 |
|                  | Barbara H. Pichot, Director       |   |   |
|                  |                              |   |   |
|                  |                              |   |   |
| By                    | /s/ John C. Skinner, Jr.          |   | March 31, 2011 |
|                  | John C. Skinner, Jr., Director    |   |   |
|                  |                              |
|                  |                              |
| By               | /s/ C. Larry Togans               |   | March 31, 2011 |
|                  | C. Larry Togans, Director         |   |   |

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