| XXX                                  |      | ANNUAL REPORT PURSUANT TO SECTION 13 or      15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     |
|--------------------------------------|--------------------------|-----------------------------------------------------------------------------------------------|
|                                      |                          |                                                                                          |
|                                 |                          | For the fiscal year ended December 31,      2009                                              |  |
|                                 |                     |                                                                                          |   |
|        |                          | 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 |

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

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

----

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

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

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

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

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

| Indicate the number of shares outstanding of      each of the registrant's classes of common stock, as of the latest      practicable date. |
|---------------------------------------------------------------------------------------------------------------------------------------------|
| 3,390,178      as of March 12, 2010                                                                                                         |

|                                                                                                                                                                                    |  | Part of the      Form 10-K into Which      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------------------------------------------|
| Document                                                                                                                                                                           |  | the Document is      Incorporated          |
| Portions of Potomac Bancshares, Inc.’s Proxy Statement for the 2010      Annual Meeting of Shareholders which proxy statement will be filed on or      about March 30, 2010. |  | Part III, Items 10, 11, 12, 13 and      14 |

----

| PART I                 |      |  |
|------------------------|--------------------------|--|
|                   |
| Item    | 1.                       |  | Business | 4 |
| Item                   | 2.                       |  | Properties | 12 |
| 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 | 13 |
| Item                   | 6.                       |  | Selected Financial Data | 15 |
| Item                   | 7.                       |  | Management’s Discussion and Analysis of      Financial Condition and Results of Operations | 16 |
| Item                   | 8.                       |  | Financial Statements and Supplementary Data | 28 |
| Item                   | 9.                       |  | Changes In and Disagreements with      Accountants on Accounting and Financial Disclosure | 62 |
| Item                   | 9A(T).                   |  | Controls and Procedures | 62 |
| Item                   | 9B.                      |  | Other Information | 62 |
|                   |
| PART III               |                          |  |
|                   |
| * Item                 | 10.                      |  | Directors, Executive Officers and      Corporate Governance | 63 |
| * Item                 | 11.                      |  | Executive Compensation | 63 |
| * Item                 | 12.                      |  | Security Ownership of Certain Beneficial      Owners and Management and Related Stockholder Matters | 63 |
| * Item                 | 13.                      |  | Certain Relationships and Related Transactions and Director      Independence | 63 |
| * Item                 | 14.                      |  | Principal Accounting Fees and      Services | 64 |
|                   |
| PART IV                |                          |  |   |
|                   |
| Item                   | 15.                      |  | Exhibits and Financial Statement      Schedules | 64 |

----

- 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, 
- Avoidance 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  | $       | 38 083  |
|---------------------------------------------|---------|---------|
| - Secured by farmland                       |         | 1 419   |
| - Secured by 1-4 family        residential  |         | 102 290 |
| - Secured by multifamily        residential |         | 2 070   |
| - Secured by nonfarm        nonresidential  |         | 71 916  |
|                                        |
|                                             | $  | 215 778 |
|                                        |         |         |

- 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                                                |                | 3,898                    |          |                          |        |  |  |  |
|      Retained      earnings                                 |                | 21,931                   |          |                          |        |  |  |  |
|                                                                                      |                | 29,501                   |          |                          |        |  |  |  |
|      Less cost of      shares acquired for the treasury     |                | 2,866                    |          |                          |        |  |  |  |
| Total tier 1 capital                                                                 | $              | 26,635                   |          | $              | 9,144  |  | $   | 17,491 |
| Tier 2 capital:                                                                      |                |                          |          |                          |        |  |  |  |
|      Allowance for loan losses      (1)                     |                | 2893                     |          |                          |        |  |  |  |
|                                                                                 |
| Total risk-based capital                                                             | $              | 29,528                   |          | $                        | 18,289 |  | $ | 11,239 |
|                                                                                 |
| Risk-weighted assets                                                                 | $    | 228,607                  |          |                          |        |  |  |  |
|                                                                                 |
| Tier 1 capital                                                                       | $              | 26,635                   |          | $                        | 12,181 |  | $ | 14,454 |
|                                                                                 |
| Average total assets                                                                 | $              | 304,527                  |          |                          |        |  |  |  |
|                                                                                 |
| Capital ratios:                                                                      |                |                          |          |                          |        |  |  |  |
|      Tier 1 risk-based      capital ratio                   |                | 11.65%                   |     |                          | 4.00%  |   |  | 7.65% |
|      Total risk-based capital      ratio                    |                | 12.92%                   |     |                          | 8.00%  |   |  | 4.92% |
|      Tier 1 capital to      average total assets (leverage) |           | 8.75%                    |     |                     | 4.00%  |   |   | 4.75% |

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

----

----

----

----

|                                          |                |                          | Price      Range |                          | Cash      Dividends |
|------------------------------------------|----------------|--------------------------|------------------|--------------------------|---------------------|
|                                          |                |      | High             |      | Low                 |      | Paid per      Share |
| 2008       | First Quarter  |                          | $                |   13.75             |                     | $ |   12.00 |  | $ | .1100 |
|                                          | Second Quarter |                          |                  | 14.00                    |                     |  | 12.00 |  |  | .1125 |
|                                          | Third Quarter  |                          |                  | 12.20                    |                     |  | 10.15 |  |  | .1150 |
|                                          | Fourth Quarter |                          |                  | 11.10                    |                     |  | 8.00 |  |  | .1175 |
|                                     |
| 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 |

----

|                                |                          |           |                          |                |                          |                  | (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                  |                      | 62515              |

----

|                                                                                                     |      | 2009                                              |      | 2008   |      | 2007 |      | 2006   |      | 2005      |
|-----------------------------------------------------------------------------------------------------|--------------------------|---------------------------------------------------|--------------------------|--------|--------------------------|------|--------------------------|--------|--------------------------|-----------|
|                                                                                                     |                          | (Dollars in Thousands Except Per Share      Data) |
| Summary of Operations                                                                               |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                                                                                                |
|             Interest income                                           |                          | $                                                 | 14 913                   |        |                          | $    | 17 358                   |        | $                        | 19 691    |  | $ | 19 099 |  | $ | 15 424 |
|        Interest expense                                               |                          |                                                   | 5 121                    |        |                          |      | 6 477                    |        |                          | 8 161     |  |  | 6 932 |  |  | 4135 |
|        Net      interest income                                       |                          |                                                   | 9 792                    |        |                          |      | 10 881                   |        |                          | 11 530    |  |  | 12 167 |  |  | 11 289 |
|        Provision for loan      losses                                 |                          |                                                   | 6 690                    |        |                          |      | 2 934                    |        |                          | 678       |  |  | 331 |  |  | 330 |
|        Net      interest income after provision                       |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                    for loan losses |                          |                                                   | 3 102                    |        |                          |      | 7 947                    |        |                          | 10 852    |  |  | 11 836 |  |  | 10 959 |
|        Noninterest income                                             |                          |                                                   | 4 281                    |        |                          |      | 4 355                    |        |                          | 4 379     |  |  | 3 766 |  |  | 3 185 |
|             Noninterest expense                                       |                          |                                                   | 11 059                   |        |                          |      | 9 587                    |        |                          | 9 703     |  |  | 9 261 |  |  | 8 460 |
|        Income (loss) before income      taxes                         |                          |                                                   | (3 676                   | )      |                          |      | 2 715                    |        |                          | 5 528     |  |  | 6 341 |  |  | 5 684 |
|             Income tax expense (benefit)                              |                          |                                                   | (1 436                   | )      |                          |      | 853                      |        |                          | 1 998     |  |  | 2 306 |  |  | 2 020 |
|                                                                                                |
|        Net      income (loss)                                         |                          | $                                                 | (2 240                   | )      |                          | $    | 1 862                    |        | $                        | 3 530     |  | $ | 4 035 |  | $ | 3 664 |
|                                                                                                |
| Per Share Data **                                                                                   |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                                                                                                |
|        Net      income (loss), basic                                  |                          | $                                                 | (.66                     | )      |                          | $    | .55                      |        | $                        | 1.03      |  | $ | 1.17 |  | $ | 1.06 |
|        Net income (loss),      diluted                                |                          |                                                   | (.66                     | )      |                          |      | .55                      |        |                          | 1.03      |  |  | 1.16 |  |  | 1.05 |
|             Cash dividends declared                                   |                          |                                                   | .27                      |        |                          |      | .46                      |        |                          | .42       |  |  | .38 |  |  | .33 |
|        Book value at period    end                                    |                          |                                                   | 7.54                     |        |                          |      | 8.19                     |        |                          | 8.52      |  |  | 7.78 |  |  | 7.23 |
|             Weighted-average shares outstanding, basic                |                          |                                                   | 3 390 516                |        |                          |      | 3 401 717                |        |                          | 3 423 239 |  |  | 3 454 961 |  |  | 3 460 984 |
|        Weighted-average shares      outstanding, diluted              |                          |                                                   | 3 390 516                |        |                          |      | 3 403 265                |        |                          | 3 430 764 |  |  | 3 467 918 |  |  | 3 477 538 |
|                                                                                                |
| Average Balance Sheet Summary                                                                       |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                                                                                                |
|             Assets                                                    |                          | $                                                 | 304 739                  |        |                          | $    | 303 749                  |        | $                        | 297 716   |  | $ | 289 303 |  | $ | 264 314 |
|        Loans                                                          |                          |                                                   | 239 175                  |        |                          |      | 232 894                  |        |                          | 226 773   |  |  | 220 895 |  |  | 196 478 |
|             Securities                                                |                          |                                                   | 32 841                   |        |                          |      | 34 178                   |        |                          | 42 040    |  |  | 48 891 |  |  | 47 183 |
|        Deposits                                                       |                          |                                                   | 261 233                  |        |                          |      | 259 536                  |        |                          | 252 908   |  |  | 243 833 |  |  | 217 307 |
|             Stockholders’ equity                                |                          |                                                   | 26 266                   |        |                          |      | 30 118                   |        |                          | 28 207    |  |  | 26 632 |  |  | 23 822 |
|                                                                                                |
| Performance Ratios                                                                                  |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                                                                                                |
|             Return (loss) on average assets                           |                          |                                                   | (0.74)%                  |   |                          |      | 0.61%                    |   |                          | 1.19%     |   |  | 1.39% |   |  | 1.39% |
|        Return (loss) on average      equity                           |                          |                                                   | (8.53)%                  |   |                          |      | 6.18%                    |   |                          | 12.51%    |   |  | 15.15% |   |  | 15.38% |
|             Dividend payout ratio                                     |                          |                                                   | (40.91)%                 |   |                          |      | 83.64%                   |   |                          | 40.78%    |   |  | 32.48% |   |  | 31.13% |
|                                                                                                |
| Capital Ratios                                                                                      |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                                                                                                |
|             Leverage ratio                                            |                          |                                                   | 8.75%                    |   |                          |      | 9.85%                    |   |                          | 9.99%     |   |  | 9.34% |   |  | 9.18% |
|        Risk-based capital      ratios                                 |                          |                                                   |                          |        |                          |      |                          |        |                          |           |  |  |  |  |  |  |
|                    Tier 1 capital  |                          |                                                   | 11.65%                   |   |                          |      | 12.37%                   |   |                          | 13.01%    |   |  | 12.71% |   |  | 12.68% |
|                    Total capital   |                          |                                                   | 12.92%                   |   |                          |      | 13.63%                   |   |                          | 14.23%    |   |  | 13.82% |   |  | 13.76% |

| ** |   | All      figures have been restated to reflect a 2% stock dividend declared on      March 14, 2006 and a 100% stock dividend declared on February 8,      2005. |
|----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                          |                          | 2009           |                          | 2008           |                          | 2007           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|----------------|--------------------------|----------------|--------------------------|----------------|
|                                                                                                                                                          |                          | 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                                                                                                        |                          | $              |   238 493           |                |                          | $              | 13 759 |  | 5.77% |  | $ |   232 124 |  |  | $ |   15 151 |  | 6.53% |  | $ |   225 876 |  | $ |   16 971 |  | 7.51% |
|        Tax exempt                                                                                                          |                          |                | 682                      |                |                          |                | 64 |  | 9.38% |  |  | 770 |  |  |  | 73 |  | 9.48% |  |  | 897 |  |  | 76 |  | 8.47% |
|                    Total loans                                                          |                          |                | 239 175                  |                |                          |                | 13 823 |  | 5.78% |  |  | 232 894 |  |  |  | 15 224 |  | 6.54% |  |  | 226 773 |  |  | 17 047 |  | 7.52% |
| Taxable securities                                                                                                                                       |                          |                | 29 084                   |                |                          |                | 933 |  | 3.21% |  |  | 31 286 |  |  |  | 1 415 |  | 4.52% |  |  | 40 112 |  |  | 1 894 |  | 4.72% |
| Nontaxable securities                                                                                                                                    |                          |                | 3 757                    |                |                          |                | 224 |  | 5.96% |  |  | 2 892 |  |  |  | 167 |  | 5.77% |  |  | 1 928 |  |  | 112 |  | 5.81% |
| Federal funds sold                                                                                                                                       |                          |                | 4 049                    |                |                          |                | 7 |  | 0.17% |  |  | 10 712 |  |  |  | 249 |  | 2.32% |  |  | 8 226 |  |  | 435 |  | 5.29% |
| Other earning assets                                                                                                                                     |                          |                | 3 125                    |                |                          |                | 24 |  | 0.77% |  |  | 7 765 |  |  |  | 383 |  | 4.93% |  |  | 4 616 |  |  | 267 |  | 5.78% |
|                    Total earning      assets                                            |                          |                | 279 190                  |                |                          | $              | 15 011 |  | 5.38% |  |  | 285 549 |  |  | $ | 17 438 |  | 6.11% |  |  | 281 655 |  | $ | 19 755 |  | 7.01% |
|                                                                                                                                                     |
| Allowance for loan losses                                                                                                                                |                          |                | (4 776                   | )              |                          |                |  |  |  |  |  | (2 940 | ) |  |  |  |  |  |  |  | (2 433 | ) |  |  |  |  |
| Cash and due from banks                                                                                                                                  |                          |                | 6 850                    |                |                          |                |  |  |  |  |  | 4 396 |  |  |  |  |  |  |  |  | 5 140 |  |  |  |  |  |
| Premises and equipment, net                                                                                                                              |                          |                | 8 650                    |                |                          |                |  |  |  |  |  | 6 934 |  |  |  |  |  |  |  |  | 6 342 |  |  |  |  |  |
| Other assets                                                                                                                                             |                          |                | 14 825                   |                |                          |                |  |  |  |  |  | 9 810 |  |  |  |  |  |  |  |  | 7 012 |  |  |  |  |  |
|                    Total assets                                                         |                          | $              | 304 739                  |                |                          |                |  |  |  |  | $ | 303 749 |  |  |  |  |  |  |  | $ | 297 716 |  |  |  |  |  |
|                                                                                                                                                     |
| LIABILITIES AND                                                                                                                                          |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             STOCKHOLDERS’ EQUITY                                                                                     |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Deposits                                                                                                                                                 |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             Savings and interest-                                                                                          |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    bearing demand deposits                                              |                          | $              | 119 504                  |                |                          | $              | 1 016 |  | 0.85% |   | $ | 120 853 |  |  | $ | 1 615 |  | 1.34% |  | $ | 119 142 |  | $ | 2 713 |  | 2.28% |
|        Time deposits                                                                                                       |                          |                | 115 239                  |                |                          |                | 3 756 |  | 3.26% |  |  | 111 574 |  |  |  | 4 547 |  | 4.08% |  |  | 106 778 |  |  | 4 983 |  | 4.67% |
|                    Total interest-                                                      |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           bearing deposits           |                          |                | 234 743                  |                |                          |                | 4 772 |  | 2.03% |  |  | 232 427 |  |  |  | 6 162 |  | 2.65% |  |  | 225 920 |  |  | 7 696 |  | 3.41% |
|                                                                                                                                                     |
| Securities sold under    agreements                                                                                                                      |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        to      repurchase and federal                                                                                      |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             funds purchased                                                                                                |                          |                | 9 212                    |                |                          |                | 148 |  | 1.61% |  |  | 9 963 |  |  |  | 255 |  | 2.56% |  |  | 10 959 |  |  | 441 |  | 4.02% |
| Advances from FHLB and FRB                                                                                                                               |                          |                | 4 336                    |                |                          |                | 201 |  | 4.64% |  |  | 1 381 |  |  |  | 60 |  | 4.34% |  |  | 416 |  |  | 24 |  | 5.77% |
|                    Total      interest                                                  |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           bearing      liabilities   |                          |                | 248 291                  |                |                          | $              | 5 121 |  | 2.06% |  |  | 243 771 |  |  | $ | 6 477 |  | 2.66% |  |  | 237 295 |  | $ | 8 161 |  | 3.44% |
|                                                                                                                                                     |
| Noninterest-bearing demand                                                                                                                               |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             deposits                                                                                                       |                          |                | 26 490                   |                |                          |                |  |  |  |  |  | 27 109 |  |  |  |  |  |  |  |  | 28 988 |  |  |  |  |  |
| Other liabilities                                                                                                                                        |                          |                | 3 692                    |                |                          |                |  |  |  |  |  | 2 751 |  |  |  |  |  |  |  |  | 3 226 |  |  |  |  |  |
| Stockholders’ equity                                                                                                                               |                          |                | 26 266                   |                |                          |                |  |  |  |  |  | 30 118 |  |  |  |  |  |  |  |  | 28 207 |  |  |  |  |  |
|                    Total liabilities and                                                |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                           stockholders’ equity |                          | $              | 304 739                  |                |                          |                |  |  |  |  | $ | 303 749 |  |  |  |  |  |  |  | $ | 297 716 |  |  |  |  |  |
|                                                                                                                                                     |
| Net interest income                                                                                                                                      |                          |                |                          |                |                          | $              | 9 890 |  |  |  |  |  |  |  | $ | 10 961 |  |  |  |  |  |  | $ | 11 594 |  |  |
|                                                                                                                                                     |
| Net interest spread                                                                                                                                      |                          |                |                          |                |                          |                |  |  | 3.32% |  |  |  |  |  |  |  |  | 3.45% |  |  |  |  |  |  |  | 3.57% |
| Interest expense as a                                                                                                                                    |                          |                |                          |                |                          |                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             percent of average      earning assets                                                                         |                          |                |                          |                |                          |                | 1.83% |  |  |  |  |  |  |  |  | 2.27% |  |  |  |  |  |  |  | 2.90% |
|                                                                                                                                                     |
| Net interest margin                                                                                                                                      |                          |                |                          |                |                          |                |  |  | 3.54% |  |  |  |  |  |  |  |  | 3.84% |  |  |  |  |  |  |  | 4.12% |

----

----

|                                                                     |                          | 2009                    |                          | 2008                    |
|---------------------------------------------------------------------|--------------------------|-------------------------|--------------------------|-------------------------|
|                                                                     |                          | Three      Months Ended |                          | Three      Months Ended |
|                                                                     |      | Dec    31               |      | Sept    30              |      | June    30 |      | Mar    31 |      | Dec    31 |      | Sept    30 |      | June    30 |      | Mar    31 |
| Interest income                                                     |                          | $                       | 3 594                    |                         | $ | 3 704 |  |  | $ | 3 805 |  |  | $ | 3 810 |  |  | $ | 4 171 |  |  | $ | 4 198 |  | $ | 4 318 |  | $ | 4 671 |
| Interest expense                                                    |                          |                         | 1 208                    |                         |  | 1 228 |  |  |  | 1 300 |  |  |  | 1 385 |  |  |  | 1 462 |  |  |  | 1 464 |  |  | 1 644 |  |  | 1 907 |
| Net interest income                                                 |                          |                         | 2 386                    |                         |  | 2 476 |  |  |  | 2 505 |  |  |  | 2 425 |  |  |  | 2 709 |  |  |  | 2 734 |  |  | 2674 |  |  | 2 764 |
| Provision for loan losses                                           |                          |                         | 13                       |                         |  | 3 540 |  |  |  | 1 560 |  |  |  | 1 577 |  |  |  | 1 371 |  |  |  | 1 134 |  |  | 276 |  |  | 153 |
| Net interest income (loss)    after                                 |                          |                         |                          |                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             provision for loan losses |                          |                         | 2 373                    |                         |  | (1 064 | ) |  |  | 945 |  |  |  | 848 |  |  |  | 1 338 |  |  |  | 1 600 |  |  | 2 398 |  |  | 2 611 |
| Noninterest income                                                  |                          |                         | 1 619                    |                         |  | 1 369 |  |  |  | 1 047 |  |  |  | 1 022 |  |  |  | 923 |  |  |  | 1 048 |  |  | 1 334 |  |  | 1 050 |
| Noninterest expense                                                 |                          |                         | 2 973                    |                         |  | 3 102 |  |  |  | 3 134 |  |  |  | 2 626 |  |  |  | 2 614 |  |  |  | 2 453 |  |  | 2 237 |  |  | 2 283 |
| Income (loss) before taxes                                          |                          |                         | 1 019                    |                         |  | (2 797 | ) |  |  | (1 142 | ) |  |  | (756 | ) |  |  | (353 | ) |  |  | 195 |  |  | 1 495 |  |  | 1 378 |
| Income tax expense (benefit)                                        |                          |                         | 614                      |                         |  | (1 204 | ) |  |  | (508 | ) |  |  | (338 | ) |  |  | (129 | ) |  |  | 23 |  |  | 472 |  |  | 487 |
| Net income      (loss)                                              |                          | $                       | 405                      |                         | $ | (1 593 | ) |  | $ | (634 | ) |  | $ | (418 | ) |  | $ | (224 | ) |  | $ | 172 |  | $ | 1 023 |  | $ | 891 |
|                                                                |
| Earnings (loss) per share,    basic                                 |                          |                         |                          |                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        and diluted                    |                          | $                       | .12                      |                         | $ | (.47 | ) |  | $ | (.19 | ) |  | $ | (.12 | ) |  | $ | (.07 | ) |  | $ | .05 |  | $ | .30 |  | $ | .26 |
|                                                                |

----

|                                                                                                                                     |                          | 2009 Compared to 2008 |                          | 2008 Compared to 2007 |
|-------------------------------------------------------------------------------------------------------------------------------------|--------------------------|-----------------------|--------------------------|-----------------------|
|                                                                                                                                     |                          | (in      thousands)   |                          | (in      thousands)   |
|                                                                                                                                     |                          | Change in             |                          |                       |  |  |  |  |  |  |  | Change in |  |  |  |  |  |  |  |  |
|                                                                                                                                     |                          | Income/               |                          | Volume                |  | Rate |  | Income/ |  | Volume |  |  | Rate |
|                                                                                                                                     |      | Expense               |      | Effect                |      | Effect |      | Expense |      | Effect |      | Effect |
| INTEREST INCOME                                                                                                                     |                          |                       |                          |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        Taxable loans                                                                                  |                          | $                     | (1 392                   | )                     |  | $ | 430 |  |  | $ | (1 822 | ) |  | $ | (1 820 | ) |  | $ | 490 |  |  | $ | (2 310 | ) |
|        Tax      exempt loans                                                                          |                          |                       | (9                       | )                     |  |  | (8 | ) |  |  | (1 | ) |  |  | (3 | ) |  |  | (19 | ) |  |  | 16 |  |
|        Taxable securities                                                                             |                          |                       | (482                     | )                     |  |  | (95 | ) |  |  | (387 | ) |  |  | (479 | ) |  |  | (402 | ) |  |  | (77 | ) |
|             Nontaxable securities                                                                     |                          |                       | 57                       |                       |  |  | 52 |  |  |  | 5 |  |  |  | 55 |  |  |  | 56 |  |  |  | (1 | ) |
|        Federal funds sold                                                                             |                          |                       | (242                     | )                     |  |  | (97 | ) |  |  | (145 | ) |  |  | (186 | ) |  |  | 217 |  |   |  | (403 | ) |
|             Other earning assets                                                                      |                          |                       | (359                     | )                     |  |  | (149 | ) |  |  | (210 | ) |  |  | 116 |  |  |  | 148 |   |  |  | (32 | ) |
|                           TOTAL |                          | $                     | (2 427                   | )                     |  | $ | 133 |  |  | $ | (2 560 | ) |  | $ | (2 317 | ) |  | $ | 490 |  |  | $ | (2 807 | ) |
|                                                                                                                                |
| INTEREST EXPENSE                                                                                                                    |                          |                       |                          |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        Savings and      interest-bearing                                                              |                          |                       |                          |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    demand deposits                                 |                          | $                     | (599                     | )                     |  | $ | (18 | ) |  | $ | (581 | ) |  | $ | (1 098 | ) |  | $ | 40 |  |  | $ | (1 138 | ) |
|             Time deposits                                                                             |                          |                       | (791                     | )                     |  |  | 155 |  |  |  | (946 | ) |  |  | (436 | ) |  |  | 241 |  |  |  | (677 | ) |
|        Securities sold under      agreements                                                          |                          |                       |                          |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    to repurchase and federal                       |                          |                       |                          |                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    funds purchased                                 |                          |                       | (107                     | )                     |  |  | (18 | ) |  |  | (89 | ) |  |  | (186 | ) |  |  | (37 | ) |  |  | (149 | ) |
|             Advances from FHLB and FRB                                                                |                          |                       | 141                      |                       |  |  | 137 |  |  |  | 4 |  |  |  | 36 |  |  |  | 40 |  |  |  | (4 | ) |
|                           TOTAL |                          | $                     | (1 356                   | )                     |  | $ | 256 |  |  | $ | (1 612 | ) |  | $ | (1 684 | ) |  | $ | 284 |  |  | $ | (1 968 | ) |
|                                                                                                                                |
| NET INTEREST INCOME                                                                                                                 |                          | $                     | (1 071                   | )                     |   | $ | (123 | ) |  | $ | (948 | ) |  | $ | (633 | ) |  | $ | 206 |  |  | $ | (839 | ) |
|                                                                                                                                |

----

|                                                                                                |                          | 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                                                     |                          | $                    | 36 919 |  |  | $ | 15 315 |  |  | $ | 90 041 |  | $ | 92 436 |   | $ | - - |
|             Securities                                           |                          |                      | - - |  |  |  | 1 005 |  |  |  | 28 416 |  |  | 3 792 |  |  | 1 100 |
|        Federal funds sold                                        |                          |                      | 5 950 |  |  |  | - - |  |  |  | - - |  |  | - - |  |  | - - |
|             Other earning assets                                 |                          |                      | 53 |  |  |  | - - |  |  |  | - - |  |  | - - |  |  | - - |
|                    Total      |                          | $                    | 42 922 |  |  | $ | 16 320 |  |  | $ | 118 457 |  | $ | 96 228 |  | $ | 1 100 |
|                                                                                           |
| Interest-Bearing Liabilities:                                                                  |                          |                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        Time deposits $100,000 and      over                      |                          | $                    | 4 607 |  |  | $ | 9 020 |   |  | $ | 31 090 |  | $ | - - |  | $ | - - |
|             Other time deposits                                  |                          |                      | 9 684 |  |  |  | 29 850 |  |  |  | 30 304 |  |  | - - |  |  | - - |
|        Interest bearing demand      deposits                     |                          |                      | 49 000 |  |  |  | - - |  |  |  | - - |  |  | - - |  |  | 34 516 |
|             Savings accounts                                     |                          |                      | - - |  |  |  | - - |  |  |  | - - |  |  | - - |  |  | 38 443 |
|        Securities sold under      agreements to                  |                          |                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    repurchase |                          |                      | 7 340 |  |  |  | - - |  |  |  | - - |  |  | - - |  |  | - - |
|             Federal Home Loan Bank advances                      |                          |                      | 237 |  |  |  | 727 |  |  |  | 2 892 |  |  | - - |  |  | - - |
|                    Total      |                          | $                    | 70 868 |  |  | $ | 39 597 |  |  | $ | 64 286 |  | $ | - - |  | $ | 72 959 |
|                                                                                           |
| Rate Sensitivity Gap                                                                           |                          | $                    | (27 946 | ) |  | $ | (23 277 | ) |  | $ | 54 171 |  | $ | 96 228 |  |  |  |
|                                                                                           |
| Cumulative      Gap                                                                            |                          | $                    |          (27 946 | ) |  | $ |                  (51 223 | ) |  | $ | 2 948 |  | $ | 99 176 |  |  |  |
|                                                                                           |

----

|                                                                                   |         | 2009 |         |  2008 |         |  2007 |         |  2006 |         |  2005 |
|-----------------------------------------------------------------------------------|--------------------------------------------|------|--------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|------------|
| Commercial, financial and      agricultural                                       |                                            | $    | 9 700                                      |            | $                                          | 9 671      |                                            | $          | 4 987                                      |            | $ | 4 247 |  | $ | 6 046 |
| Mortgage loans on real estate:                                                    |                                            |      |                                            |            |                                            |            |                                            |            |                                            |            |  |  |  |  |  |
|        Construction and land    development    |                                            |      | 38 083                                     |            |                                            | 55 843     |                                            |            | 55 042                                     |            |  | 53 801 |  |  | 41 174 |
|        Secured by farm land                    |                                            |      | 1 419                                      |            |                                            | 1 380      |                                            |            | 1 328                                      |            |  | 1 557 |  |  | 2 381 |
|        Secured by 1-4 family    residential    |                                            |      | 102 290                                    |            |                                            | 101 253    |                                            |            | 98 864                                     |            |  | 103 983 |  |  | 98 408 |
|        Secured by multifamily      residential |                                            |      | 2 070                                      |            |                                            | 1 937      |                                            |            | 1 749                                      |            |  | 3 733 |  |  | 3 486 |
|        Secured by nonfarm      nonresidential  |                                            |      | 71 916                                     |            |                                            | 63 943     |                                            |            | 47 726                                     |            |  | 46 367 |  |  | 43 019 |
| Consumer loans                                                                    |                                            |      | 9 011                                      |            |                                            | 11 970     |                                            |            | 14 718                                     |            |  | 16 089 |  |  | 15 549 |
| All other loans                                                                   |                                            |      | 222                                        |            |                                            | 457        |                                            |            | 193                                        |            |  | 292 |  |  | 372 |
|                                                                                   |                                            | $    | 234 711                                    |            | $                                          | 246 454    |                                            | $          | 224 607                                    |            | $ | 230 069 |  | $ | 210 435 |
|                                                                              |                                            |      |                                            |            |                                            |            |                                            |            |                                            |            |  |  |  |  |  |

|                                                             |        | Commercial,                                |              |                                            |              |
|-------------------------------------------------------------|--------|--------------------------------------------|--------------|--------------------------------------------|--------------|
|                                                             |        | Financial and                              |              | Real Estate-                               |
| At December 31,      2009                                   |   |         | Agricultural |         | Construction |
| Loans maturing within one year                              |        | $                                          | 2 106        |                                            | $            | 19 814 |
| Variable rate loans due after one      year                 |        |                                            | 1 182        |                                            |              | 6 686 |
| Fixed rate loans due after one year      through five years |        |                                            | 6 296        |                                            |              | 7 070 |
| Fixed rate loans due after five      years                  |        |                                            | 116          |                                            |              | 4 513 |
| Total maturities                                            |        | $                                          | 9 700        |                                            | $            | 38083 |
|                                                        |        |                                            |              |                                            |              |  |

----

|                                                                                                            |         | 2009           |         | 2008 |         | 2007  |         | 2006 |         | 2005 |
|------------------------------------------------------------------------------------------------------------|--------------------------------------------|----------------|--------------------------------------------|------|--------------------------------------------|-------|--------------------------------------------|------|--------------------------------------------|------|
|                                                                                                            |                                            | (in thousands) |
| Balance at beginning of period                                                                             |                                            | $              | 4 079                                      |      | $                                          | 2 779 |                                            | $    | 2 423                                      |      | $ | 2 161 |  | $ | 1 966 |
| Charge-offs:                                                                                               |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        Commercial, financial and      agricultural                      |                                            |                | 23                                         |      |                                            | 21    |                                            |      | 14                                         |      |  | - - |  |  | 30 |
|        Real estate –      construction                            |                                            |                | 3 957                                      |      |                                            | 269   |                                            |      | 32                                         |      |  | - - |  |  | - - |
|        Real estate –      mortgage                                |                                            |                | 920                                        |      |                                            | 1 102 |                                            |      | 206                                        |      |  | - - |  |  | - - |
|        Consumer                                                         |                                            |                | 383                                        |      |                                            | 441   |                                            |      | 252                                        |      |  | 207 |  |  | 218 |
|               Total      charge-offs |                                            |                | 5 283                                      |      |                                            | 1 833 |                                            |      | 504                                        |      |  | 207 |  |  | 248 |
| Recoveries:                                                                                                |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        Commercial, financial and      agricultural                      |                                            |                | 5                                          |      |                                            | - -   |                                            |      | 30                                         |      |  | - - |  |  | - - |
|        Real estate –      construction                            |                                            |                | - -                                        |      |                                            | - -   |                                            |      | - -                                        |      |  | - - |  |  | - - |
|        Real estate –      mortgage                                |                                            |                | 2                                          |      |                                            | 17    |                                            |      | - -                                        |      |  | - - |  |  | - - |
|        Consumer                                                         |                                            |                | 225                                        |      |                                            | 182   |                                            |      | 152                                        |      |  | 138 |  |  | 113 |
|               Total      recoveries  |                                            |                | 232                                        |      |                                            | 199   |                                            |      | 182                                        |      |  | 138 |  |  | 113 |
| Net charge-offs                                                                                            |                                            |                | 5 051                                      |      |                                            | 1 634 |                                            |      | 322                                        |      |  | 69 |  |  | 135 |
| Additions charged      to operations                                                                       |                                            |                | 6 690                                      |      |                                            | 2 934 |                                            |      | 678                                        |      |  | 331 |  |  | 330 |
|                                                                                                       |
| Balance at end of period                                                                                   |                                            | $              | 5 718                                      |      | $                                          | 4 079 |                                            | $    | 2 779                                      |      | $ | 2 423 |  | $ | 2 161 |
| Ratio of net charge-offs during the period                                                                 |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        to average loans      outstanding during                         |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        the period                                                       |                                            |                | 2.11%                                      |      |                                            | 0.70% |                                            |      | 0.14%                                      |      |  | 0.03% |  |  | 0.07% |
|                                                                                                  |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |

|                                                                                                    |                                | 2009                   |                                | 2008                             |                                | 2007                   |                                | 2006                                  |                                | 2005                   |
|----------------------------------------------------------------------------------------------------|--------------------------------|------------------------|--------------------------------|----------------------------------|--------------------------------|------------------------|--------------------------------|---------------------------------------|--------------------------------|------------------------|
|                                                                                                    |       | Allowance(inthousands) |       | % Loans inCategory toTotal Loans |       | Allowance(inthousands) |       | % Loans inCategory      toTotal Loans |       | Allowance(inthousands) |       | % Loans inCategory      toTotal Loans |       | Allowance(inthousands) |       | % Loans inCategory      toTotal Loans |       | Allowance(inthousands) |       | % Loans inCategory      toTotal Loans |
| Commercial,                                                                                        |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        financial and                                            |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        agricultural                                             |                                | $                      | 425                            |                                  | 4.13%                          |                        | $                              | 69                                    |                                | 3.92%                  |  | $ | 35 |  | 2.22% |  | $ | 71 |  | 1.85% |  | $ | 94 |  | 2.87% |
| Mortgage loans on                                                                                  |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        real estate:                                             |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        Construction                                             |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               and      land  |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               development    |                                |                        | 2 328                          |                                  | 16.23%                         |                        |                                | 2 182                                 |                                | 26.63%                 |  |  | 1 025 |  | 24.50% |  |  | 820 |  | 23.38% |  |  | 538 |  | 19.57% |
|        Secured by farm                                          |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               land           |                                |                        | 107                            |                                  | .60%                           |                        |                                | 76                                    |                                | .56%                   |  |  | 9 |  | .59% |  |  | 12 |  | .68% |  |  | 17 |  | 1.13% |
|        Secured by 1-4                                           |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               family         |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               residential    |                                |                        | 1 255                          |                                  | 43.58%                         |                        |                                | 845                                   |                                | 39.38%                 |  |  | 924 |  | 44.02% |  |  | 753 |  | 45.20% |  |  | 696 |  | 46.76% |
|        Secured by    multi-                                     |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               family         |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|               residential    |                                |                        | 20                             |                                  | .88%                           |                        |                                | 16                                    |                                | .79%                   |  |  | 13 |  | .78% |  |  | 27 |  | 1.62% |  |  | 25 |  | 1.66% |
|        Secured by    nonfarm                                    |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |
|               nonresidential |                                |                        | 1 275                          |                                  | 30.64%                         |                        |                                | 727                                   |                                | 23.67%                 |  |  | 661 |  | 21.25% |  |  | 478 |  | 20.15% |  |  | 477 |  | 20.44% |
| Consumer loans                                                                                     |                                |                        | 146                            |                                  | 3.84%                          |                        |                                | 90                                    |                                | 4.86%                  |  |  | 111 |  | 6.55% |  |  | 248 |  | 6.99% |  |  | 261 |  | 7.39% |
| All other loans                                                                                    |                                |                        | - -                            |                                  | .10%                           |                        |                                | 4                                     |                                | .19%                   |  |  | 1 |  | .09% |  |  | 1 |  | .13% |  |  | 2 |  | .18% |
| Unallocated                                                                                        |                                |                        | 162                            |                                  | - -                            |                        |                                | 70                                    |                                | - -                    |  |  | -- |  | - - |  |  | 13 |  | - - |  |  | 51 |  | - - |
|                                                                                                    |                                | $                      | 5 718                          |                                  | 100.00%                        |                        | $                              | 4 079                                 |                                | 100.00%                |  | $ | 2 779 |  | 100.00% |  | $ | 2 423 |  | 100.00% |  | $ | 2 161 |  | 100.00% |
|                                                                                          |                                |                        |                                |                                  |                                |                        |                                |                                       |                                |                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

----

|                                                                           |         | 2009           |         | 2008 |         | 2007  |         | 2006 |         | 2005 |
|---------------------------------------------------------------------------|--------------------------------------------|----------------|--------------------------------------------|------|--------------------------------------------|-------|--------------------------------------------|------|--------------------------------------------|------|
|                                                                           |                                            | (in thousands) |
| Nonaccrual loans                                                          |                                            | $              | 3 819                                      |      | $                                          | 2 669 |                                            | $    | 1 584                                      |      | $ | 144 |  | $ | 122 |
| Restructured loans                                                        |                                            |                | - -                                        |      |                                            | - -   |                                            |      | - -                                        |      |  | - - |  |  | - - |
| Foreclosed properties                                                     |                                            |                | 5 632                                      |      |                                            | 1 644 |                                            |      | 430                                        |      |  | - - |  |  | - - |
|        Total nonperforming      assets |                                            | $              | 9 451                                      |      | $                                          | 4 313 |                                            | $    | 2 014                                      |      | $ | 144 |  | $ | 122 |
|                                                                      |
| Loans past due 90 days                                                    |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        accruing    interest            |                                            | $              | - -                                   |      | $                                          | 1 263 |                                            | $    | 21                                         |      | $ | - - |  | $ | 65 |
|                                                                      |
| Allowance for loan losses                                                 |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        to period end    loans          |                                            |                | 2.44%                                      |      |                                            | 1.66% |                                            |      | 1.24%                                      |      |   | 1.05% |  |  | 1.03% |
|                                                                      |
| Nonperforming assets to                                                   |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        period end loans      and       |                                            |                |                                            |      |                                            |       |                                            |      |                                            |      |  |  |  |  |  |
|        foreclosed      properties      |                                            |                | 3.93%                                      |      |                                            | 1.74% |                                            |      | .89%                                       |      |  | .06% |  |  | .06% |

|                                                                                                                                                                        |         | 2009Carrying Value(in thousands) |         | WeightedAverageYield |         | 2008Carrying Value(in thousands) |         | WeightedAverageYield |         | 2007Carrying Value(in thousands) |         | WeightedAverageYield |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|----------------------------------|--------------------------------------------|----------------------|--------------------------------------------|----------------------------------|--------------------------------------------|----------------------|--------------------------------------------|----------------------------------|--------------------------------------------|----------------------|
| Securities available for      sale                                                                                                                                     |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |
|        Obligations of U.S.      Government agencies:                                                                                |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |
|               Maturing      within one year                                                      |                                            | $                                | 1 005                                      |                      | 1.25%                                      |                                  | $                                          | 5 600                |                                            | 5.03%                            |                                            | $                    | 10 501 |  | 4.38% |
|               Maturing      after one year but                                                   |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |
|                      within      five years                   |                                            |                                  | 27 418                                     |                      | 2.69%                                      |                                  |                                            | 18 889               |                                            | 4.13%                            |                                            |                      | 26 200 |  | 5.00% |
|        Municipal      obligations:                                                                                                  |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |
|               Maturing      within one year                                                      |                                            |                                  | - -                                        |                      |                                            |                                  |                                            | 147                  |                                            | 3.04%                            |                                            |                      | - - |  |  |
|               Maturing      after one year but                                                   |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |
|                      within      five years                   |                                            |                                  | 999                                        |                      | 3.73%                                      |                                  |                                            | 879                  |                                            | 3.82%                            |                                            |                      | 1 029 |  | 3.71% |
|               Maturing      after five years                                                     |                                            |                                  | 3 791                                      |                      | 4.14%                                      |                                  |                                            | 1 963                |                                            | 3.86%                            |                                            |                      | 1 842 |  | 3.87% |
|        Equity securities with no      stated maturity                                                                               |                                            |                                  | 1      100                                 |                      | .46%                                       |                                  |                                            | 1      217           |                                            | .12%                             |                                            |                      | 382 |  | .35% |
|                      Total      securities available for sale |                                            | $                                | 34      313                                |                      |                                            |                                  | $                                          | 28      695          |                                            |                                  |                                            | $                    | 39      954 |  |  |
|                                                                                                                                                         |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |                                            |                                  |                                            |                      |  |  |  |

----

|                                                          |                                            | Year Ended December 31               |
|----------------------------------------------------------|--------------------------------------------|--------------------------------------|
|                                                          |                                            | (average      balances in thousands) |
|                                                          |                                            | 2009                                 |  | 2008 |  | 2007 |
|                                                          |                                            | Average                              |  | Average |  | Average |  | Average |  | Average |  | Average |
|                                                          |         | Balance                              |         | Rate |         | Balance |         | Rate |         | Balance |         | Rate |
| Noninterest-bearing demand deposits                      |                                            | $                                    | 26 490 |  |  |  | $ | 27 109 |  |  |  | $ | 28 988 |  |  |
|                                                     |
| Interest-bearing demand    deposits                      |                                            |                                      | 80 842 |  | 0.94% |  |  | 79 591 |  | 1.41% |  |  | 83 916 |  | 2.41% |
| Savings deposits                                         |                                            |                                      | 38 662 |  | 0.65% |  |  | 41 262 |  | 1.20% |  |  | 35 226 |  | 1.96% |
| Time deposits                                            |                                            |                                      | 115 239 |  | 3.26% |  |  | 111 574 |  | 4.08% |  |  | 106 778 |  | 4.67% |
|                                                     |
| Total interest-bearingdeposits                           |                                            |                                      | 234 743 |  | 2.03% |  |  | 232 427 |  | 2.65% |  |  | 225 920 |  | 3.41% |
|                                                     |
|        Total deposits |                                            | $                                    | 261 233 |  |  |  | $ | 259 536 |  |  |  | $ | 254 908 |  |  |
|                                                |                                            |                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Within three months                        |         | $ | 4 607  |
|--------------------------------------------|--------------------------------------------|---|--------|
| Over three through six months              |                                            |   | 1 684  |
| Over six months through twelve      months |                                            |   | 7 336  |
| Over twelve months                         |                                            |   | 31 090 |
|                                       |                                            |   |        |
| Total                                      |                                            | $ | 44717  |
|                                  |                                            |   |        |

----

|                                                                                              |         | 2009           |         | 2008 |         | 2007    |
|----------------------------------------------------------------------------------------------|--------------------------------------------|----------------|--------------------------------------------|------|--------------------------------------------|---------|
|                                                                                              |                                            | (In thousands) |
| Tier 1 capital:                                                                              |                                            |                |                                            |      |                                            |         |  |  |  |
|        Common stock                                       |                                            | $              | 3 672                                      |      | $                                          | 3 672   |  | $ | 3 672 |
|        Surplus                                            |                                            |                | 3 898                                      |      |                                            | 3 851   |  |  | 3 771 |
|        Retained    earnings                               |                                            |                | 21 931                                     |      |                                            | 25 070  |  |  | 24 787 |
|                                                                                         |                                            |                | 29 501                                     |      |                                            | 32 593  |  |  | 32 230 |
|        Less cost of shares      acquired for the treasury |                                            |                | 2 866                                      |      |                                            | 2 837   |  |  | 2 701 |
|                                                                                    |
| Total tier 1 capital                                                                         |                                            | $              | 26 635                                     |      | $                                          | 29 756  |  | $ | 29 529 |
| Tier 2 capital:                                                                              |                                            |                |                                            |      |                                            |         |  |  |  |
|        Allowance for loan losses      (1)                 |                                            |                | 2 893                                      |      |                                            | 3 019   |  |  | 2 779 |
|                                                                                    |
| Total risk-based capital                                                                     |                                            | $              | 29 528                                     |      | $                                          | 32 775  |  | $ | 32 308 |
|                                                                                    |
| Risk-weighted assets                                                                         |                                            | $              | 228 607                                    |      | $                                          | 240 471 |  | $ | 227 013 |
|                                                                                    |
| Capital ratios:                                                                              |                                            |                |                                            |      |                                            |         |  |  |  |
|        Tier 1 risk-based capital      ratio               |                                            |                | 11.65%                                     |      |                                            | 12.37%  |  |  | 13.01% |
|        Total risk-based capital      ratio                |                                            |                | 12.92%                                     |      |                                            | 13.63%  |  |  | 14.23% |
|        Leverage ratio                                     |                                            |                | 8.75%                                      |      |                                            | 9.85%   |  |  | 9.99% |

----

|                                                                                                                       |         | 2009 |         | 2008 |
|-----------------------------------------------------------------------------------------------------------------------|--------------------------------------------|------|--------------------------------------------|------|
| Financial instruments whose      contract                                                                             |                                            |      |                                            |      |  |  |
|        amounts represent credit      risk:                                         |                                            |      |                                            |      |  |  |
|               Commitments      to extend credit |                                            | $    | 29 275                                     |      | $ | 48 726 |
|               Standby      letters of credit    |                                            |      | 1 646                                      |      |  | 2 467 |

|                                                  |                                            | December      31 |
|--------------------------------------------------|--------------------------------------------|------------------|
|                                                  |         | 2009             |         | 2008 |
| Balance outstanding at yearend                   |                                            | $                | 7 340 |  | $ | 8 352 |
| Maximum balance at any month-end during the year |                                            | $                | 11 311 |  | $ | 10 868 |
| Average balance for the year                     |                                            | $                | 9 218 |  | $ | 9 963 |
| Weighted average rate for the year               |                                            |                  | 1.61% |  |  | 2.56% |
| Weighted average rate at year    end             |                                            |                  | 1.61% |  |  | 2.56% |
| Estimated fair value                             |                                            | $                | 7 340 |  | $ | 8 352 |

----

|                                      |                                            | 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           |                                            | $                                          | 3 856 |  | $ | 964 |  | $ | 2 067 |  | $ | 825 |
|                                 |
| Lease Obligations for Real    Estate |                                            | $                                          | 28 |  | $ | 28 |  | $ | - - |  | $ | - - |
|                                 |
| Lease Obligations forEquipment       |                                            | $                                          | 24 |  | $ | 24 |  | $ | - - |  | $ | - - |
|                            |                                            |                                            |  |  |  |  |  |  |  |  |  |  |

----

|            |
|--------------------------------------------------------------|
| Winchester,      VirginiaMarch 30, 2010                      |

----

|                                                                                                                                                                                                     |         | 2009 |         | 2008 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|------|--------------------------------------------|------|
|                      ASSETS                                                                |                                            |      |                                            |      |  |  |  |  |
| Cash and due from banks                                                                                                                                                                             |                                            | $    | 6 620                                      |      |  | $ | 3 754 |  |
| Interest-bearing deposits in other      financial institutions                                                                                                                                      |                                            |      | 53                                         |      |  |  | 1 282 |  |
| Federal funds sold                                                                                                                                                                                  |                                            |      | 5 950                                      |      |  |  | 3 313 |  |
| Securities available for sale, at fair value                                                                                                                                                        |                                            |      | 34 313                                     |      |  |  | 28 695 |  |
| Loans held for sale                                                                                                                                                                                 |                                            |      | 97                                         |      |  |  | 329 |  |
| Loans, net of allowance for loan losses of $5,718                                                                                                                                                   |                                            |      |                                            |      |  |  |  |  |
|        in 2009 and $4,079 in      2008                                                                                                                           |                                            |      | 228 993                                    |      |  |  | 242 375 |  |
| Premises and equipment, net                                                                                                                                                                         |                                            |      | 8 726                                      |      |  |  | 8 015 |  |
| Other real estate owned, net of valuation allowance                                                                                                                                                 |                                            |      |                                            |      |  |  |  |  |
|        of $303 in 2009 and $0 in      2008                                                                                                                       |                                            |      | 5 632                                      |      |  |  | 1 644 |  |
| Accrued interest receivable                                                                                                                                                                         |                                            |      | 952                                        |      |  |  | 1 108 |  |
| Federal Home Loan Bank of Pittsburgh stock                                                                                                                                                          |                                            |      | 805                                        |      |  |  | 725 |  |
| Other assets                                                                                                                                                                                        |                                            |      | 11 048                                     |      |  |  | 9 141 |  |
|                                                                                                                                                                                                |
|                      Total Assets                                                          |                                            | $    | 303 189                                    |      |  | $ | 300 381 |  |
|                                                                                                                                                                                                |
|                      LIABILITIES      AND STOCKHOLDERS’ EQUITY                       |                                            |      |                                            |      |  |  |  |  |
|                                                                                                                                                                                                |
| LIABILITIES                                                                                                                                                                                         |                                            |      |                                            |      |  |  |  |  |
|        Deposits                                                                                                                                                  |                                            |      |                                            |      |  |  |  |  |
|               Noninterest-bearing                                                                                             |                                            | $    | 27 953                                     |      |  | $ | 25 469 |  |
|               Interest-bearing                                                                                                |                                            |      | 236 514                                    |      |  |  | 228 619 |  |
|                      Total Deposits                                                        |                                            | $    | 264 467                                    |      |  | $ | 254 088 |  |
|        Securities sold under      agreements to repurchase                                                                                                       |                                            |      | 7 340                                      |      |  |  | 8 352 |  |
|        Federal Home Loan Bank      advances                                                                                                                      |                                            |      | 3 856                                      |      |  |  | 4 776 |  |
|        Accrued interest      payable                                                                                                                             |                                            |      | 405                                        |      |  |  | 481 |  |
|        Other    liabilities                                                                                                                                      |                                            |      | 1 549                                      |      |  |  | 4 880 |  |
|        Commitments and      contingent liabilities                                                                                                               |                                            |      | - -                                        |      |  |  | - - |  |
|                      Total Liabilities                                                     |                                            | $    | 277 617                                    |      |  | $ | 272 577 |  |
|                                                                                                                                                                                                |
| STOCKHOLDERS’ EQUITY                                                                                                                                                                          |                                            |      |                                            |      |  |  |  |  |
|        Common stock, $1 per      share par value; 5,000,000 shares                                                                                               |                                            |      |                                            |      |  |  |  |  |
|               authorized;      3,671,691 shares issued                                                                        |                                            | $    | 3 672                                      |      |  | $ | 3 672 |  |
|        Surplus                                                                                                                                                   |                                            |      | 3 898                                      |      |  |  | 3 851 |  |
|        Undivided    profits                                                                                                                                      |                                            |      | 21 931                                     |      |  |  | 25 070 |  |
|        Accumulated other      comprehensive (loss), net                                                                                                          |                                            |      | (1 063                                     | )    |  |  | (1 952 | ) |
|                                                                                                                                                                                                |                                            | $    | 28 438                                     |      |  | $ | 30 641 |  |
|                      Less cost of shares acquired for the      treasury, 2009, 281,513 and |                                            |      |                                            |      |  |  |  |  |
|                             2008,      278,086 shares   |                                            |      | 2 866                                      |      |  |  | 2 837 |  |
|                      Total Stockholders’    Equity                                   |                                            | $    | 25 572                                     |      |  | $ | 27 804 |  |
|                                                                                                                                                                                                |
|                      Total Liabilities and Stockholders’      Equity                 |                                            | $    | 303 189                                    |      |  | $ | 300 381 |  |
|                                                                                                                                                                                                |                                            |      |                                            |      |  |  |  |  |

----

|                                                                                                                                                                                              |         | 2009 |         | 2008 |         | 2007 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|------|--------------------------------------------|------|--------------------------------------------|------|
| Interest and Dividend Income:                                                                                                                                                                |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|        Interest and fees on      loans                                                                                                                    |                                            | $    | 13 801                                     |      |                                            | $    | 15 201 |  |  | $ | 17 093 |
|        Interest on securities      available for sale - taxable                                                                                           |                                            |      | 933                                        |      |                                            |      | 1 415 |  |  |  | 1 894 |
|        Interest on securities      available for sale - nontaxable                                                                                        |                                            |      | 148                                        |      |                                            |      | 110 |  |  |  | 74 |
|        Interest on federal funds      sold                                                                                                                |                                            |      | 7                                          |      |                                            |      | 249 |  |  |  | 435 |
|        Other interest and      dividends                                                                                                                  |                                            |      | 24                                         |      |                                            |      | 383 |  |  |  | 195 |
|                      Total      Interest and Dividend Income                        |                                            | $    | 14 913                                     |      |                                            | $    | 17 358 |  |  | $ | 19691 |
|                                                                                                                                                                                         |
| Interest Expense:                                                                                                                                                                            |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|        Interest on      deposits                                                                                                                          |                                            | $    | 4 772                                      |      |                                            | $    | 6 162 |  |  | $ | 7696 |
|        Interest on securities      sold under agreements to repurchase                                                                                    |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|               and      federal funds purchased                                                                         |                                            |      | 148                                        |      |                                            |      | 255 |  |  |  | 441 |
|        Interest on Federal Home      Loan Bank and Federal Reserve                                                                                        |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|               Bank      advances                                                                                       |                                            |      | 201                                        |      |                                            |      | 60 |  |  |  | 24 |
|                      Total      Interest Expense                                    |                                            | $    | 5 121                                      |      |                                            | $    | 6 477 |  |  | $ | 8 161 |
|                                                                                                                                                                                         |
|                      Net      Interest Income                                       |                                            | $    | 9 792                                      |      |                                            | $    | 10 881 |  |  | $ | 11 530 |
|                                                                                                                                                                                         |
| Provision for Loan Losses                                                                                                                                                                    |                                            |      | 6 690                                      |      |                                            |      | 2 934 |  |  |  | 678 |
|                                                                                                                                                                                         |
|                      Net      Interest Income after Provision                       |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|                             for      Loan Losses |                                            | $    | 3 102                                      |      |                                            | $    | 7 947 |  |  | $ | 10852 |
|                                                                                                                                                                                         |
| Noninterest Income:                                                                                                                                                                          |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|        Trust and financial      services                                                                                                                  |                                            | $    | 758                                        |      |                                            | $    | 807 |  |  | $ | 1 085 |
|        Service charges on      deposit accounts                                                                                                           |                                            |      | 2 205                                      |      |                                            |      | 2 340 |  |  |  | 2 102 |
|        Visa/MC Fees                                                                                                                                       |                                            |      | 563                                        |      |                                            |      | 516 |  |  |  | 453 |
|        Cash surrender value of      life insurance                                                                                                        |                                            |      | 238                                        |      |                                            |      | 240 |  |  |  | 189 |
|        Miscellaneous      income                                                                                                                          |                                            |      | 4                                          |      |                                            |      | 246 |  |  |  | 8 |
|        Loss on sale of real      estate                                                                                                                   |                                            |      | - -                                        |      |                                            |      | (185 | ) |  |  | - - |
|        Gain on sale of      securities                                                                                                                    |                                            |      | 42                                         |      |                                            |      | - - |  |  |  | - - |
|        Other operating      income                                                                                                                        |                                            |      | 471                                        |      |                                            |      | 391 |  |  |  | 542 |
|                      Total      Noninterest Income                                  |                                            | $    | 4 281                                      |      |                                            | $    | 4 355 |  |  | $ | 4 379 |
|                                                                                                                                                                                         |
| Noninterest Expenses:                                                                                                                                                                        |                                            |      |                                            |      |                                            |      |  |  |  |  |  |
|        Salaries and employee      benefits                                                                                                                |                                            | $    | 5 351                                      |      |                                            | $    | 5 146 |  |  | $ | 5 252 |
|        Net occupancy expense of      premises                                                                                                             |                                            |      | 570                                        |      |                                            |      | 542 |  |  |  | 563 |
|        Furniture and equipment      expenses                                                                                                              |                                            |      | 948                                        |      |                                            |      | 933 |  |  |  | 925 |
|        Advertising and      marketing                                                                                                                     |                                            |      | 176                                        |      |                                            |      | 266 |  |  |  | 246 |
|        FDIC assessment                                                                                                                                    |                                            |      | 711                                        |      |                                            |      | 84 |  |  |  | 30 |
|        Printing, stationery and      supplies                                                                                                             |                                            |      | 207                                        |      |                                            |      | 181 |  |  |  | 212 |
|        Foreclosed property      expense                                                                                                                   |                                            |      | 759                                        |      |                                            |      | 167 |  |  |  | 46 |
|        ATM and check card      expense                                                                                                                    |                                            |      | 326                                        |      |                                            |      | 313 |  |  |  | 328 |
|        Other operating      expenses                                                                                                                      |                                            |      | 2 011                                      |      |                                            |      | 1 955 |  |  |  | 2 101 |
|                      Total      Noninterest Expenses                                |                                            | $    | 11 059                                     |      |                                            | $    | 9 587 |  |  | $ | 9 703 |
|                      Income      (Loss) Before Income Tax Expense (Benefit)         |                                            | $    | (3 676                                     | )    |                                            | $    | 2 715 |  |  | $ | 5 528 |
| Income Tax Expense (Benefit)                                                                                                                                                                 |                                            |      | (1 436                                     | )    |                                            |      | 853 |  |  |  | 1 998 |
|                                                                                                                                                                                         |
|                      Net      Income (Loss)                                         |                                            | $    | (2 240                                     | )    |                                            | $    | 1 862 |  |  | $ | 3 530 |
|                                                                                                                                                                                         |
| Earnings (Loss)      Per Share, basic and diluted                                                                                                                                            |                                            | $    | (.66                                       | )    |                                            | $    | .55 |  |  | $ | 1.03 |
|                                                                                                                                                                                    |                                            |      |                                            |      |                                            |      |  |  |  |  |  |

----

|                                                                                                                                                                                                        |     |        |                |     |   |         |     |       |          |        |     |                    |               |       |     | Accumulated |     |        |   |   |     |   |  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------|----------------|--------------------|---|---------|--------------------|-------|----------|--------|--------------------|--------------------|---------------|-------|--------------------|-------------|--------------------|--------|---|---|--------------------|---|--|---|
|                                                                                                                                                                                                   |                    |        |                |                    |   |         |                    |       |          |        |               |                    |               |       |                    | Other       |                    |        |   |   |                    |   |  |   |
|                                                                                                                                                                                                        |                    | Common |           |                    |   |    | Undivided          |       | Treasury |        | Comprehensive      |                    | Comprehensive |       |                    |             |                    |
|                                                                                                                                                                                                        |                    | Stock  |                | Surplus            |   | Profits |                    | Stock |          | (Loss) |                    | Income      (Loss) |               | Total |
| Balances, December 31, 2006                                                                                                                                                                            |               | $      | 3 672          |                    | $ | 3 661   |                    | $     | 22 677   |   |                    | $                  | (2 279        | )     |                    | $           | (1 014             | )      |   |   |               |   |  | $ | 26 717 |  |
|                                                                                                                                                                                                   |
|             Comprehensive income                                                                                                                                         |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |        |                    |        |   |   |                    |   |  |   |  |  |
|                    Net income – 2007                                                                                            |                    |        | - -            |                    |   | - -     |                    |       | 3 530    |        |                    |                    | - -           |       |                    |             | - -                |        |   | $ | 3 530              |   |  |   | 3 530 |  |
|                    Other comprehensive    income:                                                                                     |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |
|                           Unrealized holding gains                                                 |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                                  arising during theperiod       |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                                  (net of tax, $159)             |                    |        | - -            |                    |   | - -     |                    |       | - -      |        |                    |                    | - -           |       |                    |             | 306                |        |   |   | 306                |   |  |   | 306 |  |
|                           Change in benefit obligations                                            |                    |   |           |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                                  and plan assets for    pension |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |
|                                  and other postretirement       |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                                  benefits (net of tax,    $97)  |                    |        | - -            |                    |   | - -     |                    |       | - -      |        |                    |                    | - -           |       |                    |             | 194                |        |   |   | 194                |   |  |   | 194 |  |
|                    Total other comprehensive      income                                                                              |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    | 500    |   |   |                    |   |  |
|        Total comprehensive income                                                                                                                                        |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   | $ | 4 030              |   |  |   |  |  |
|        Purchase of treasury shares:                                                                                                                                      |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                    28,083 shares                                                                                                      |                    |        | - -            |                    |   | - -     |                    |       | - -      |        |                    |                    | (422          | )     |                    |             | - -                |        |   |   |                    |   |  |   | (422 | ) |
|        Stock-based compensation                                                                                                                                          |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                    expense                                                                                                            |                    |        | - -            |                    |   | 110     |                    |       | - -      |        |                    |                    | - -           |       |                    |             | - -                |        |   |   |                    |   |  |   | 110 |  |
|        Cash dividends – 2007                                                                                                                                       |                    |        |                |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |        |   |   |                    |   |  |   |  |  |
|                    ($.42 per share)                                                                                                   |                    |        | - -            |                    |   | - -     |                    |       | (1 420   | )      |                    |                    | - -           |       |                    |             | - -                |        |   |   |                    |   |  |   | (1 420 | ) |
| 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 |  |

----

|                                                                                                                                                                  |     |        |       |     |   |         |     |       |          |        |     |                    |               |       |     | Accumulated |     |     |  |   |     |   |  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------|-------|--------------------|---|---------|--------------------|-------|----------|--------|--------------------|--------------------|---------------|-------|--------------------|-------------|--------------------|-----|--|---|--------------------|---|--|---|
|                                                                                                                                                             |                    |        |       |                    |   |         |                    |       |          |        |                    |                    |               |       |                    | Other       |                    |     |  |   |                    |   |  |   |
|                                                                                                                                                                  |                    | Common |       |                    |   |         | Undivided          |       | Treasury |        | Comprehensive      |                    | Comprehensive |       |                    |             |                    |
|                                                                                                                                                                  |                    | Stock  |       | Surplus            |   | Profits |                    | Stock |          | (Loss) |                    | Income      (Loss) |               | Total |
| 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 holdinglosses           |                    |        |       |                    |   |         |                    |       |          |        |                    |                    |               |       |                    |             |                    |     |  |   |                    |   |  |   |  |  |
|              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 |  |
|                                                                                                                                                             |

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|                                                                                                                                                                                                                                                                            | 2009   |       | 2008 |       | 2007 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|------|--------------------------------|------|
| CASH FLOWS FROM OPERATING      ACTIVITIES                                                                                                                                                                                                                                  |   |                           |      |                                |      |   |  |  |   |   |  |
|        Net (loss) income                                                                                                                                                                                                                     | $      | (2 240                         | )    |                                | $    | 1 862 |  |  | $ | 3 530 |  |
|        Adjustments to reconcile net (loss) income to      net cash provided by                                                                                                                                                               |        |                                |      |                                |      |  |  |  |  |  |  |
|                    (used in) operating      activities:                                                                                                                                                   |        |                                |      |                                |      |  |  |  |  |  |  |
|                           Provision for loanlosses                                                                                                                     |        | 6 690                          |      |                                |      | 2 934 |  |  |  | 678 |  |
|                           Depreciation                                                                                                                                 |        | 573                            |      |                                |      | 532 |  |  |  | 568 |  |
|                           Deferred tax (benefit)                                                                                                                       |        | (609                           | )    |                                |      | (474 | ) |  |  | (250 | ) |
|                           (Discount accretion) and premium      amortization on securities, net                                                                        |        | 129                            |      |                                |      | (21 | ) |  |  | (63 | ) |
|                           (Gain) on sale of    securities                                                                                                              |        | (42                            | )    |                                |      | - - |  |  |  | - - |  |
|                           (Gain) loss on sale of other real      estate                                                                                                |        | (473                           | )    |                                |      | 185 |  |  |  | 15 |  |
|                           Loss on disposal of premises and      equipment                                                                                              |        | 4                              |      |                                |      | 5 |  |  |  | 12 |  |
|                           Stock-based compensation      expense                                                                                                        |        | 47                             |      |                                |      | 70 |  |  |  | 110 |  |
|                           Proceeds from sale of    loans                                                                                                               |        | 8 703                          |      |                                |      | 12 153 |  |  |  | 11 002 |  |
|                           Origination of loans for      sale                                                                                                           |        | (8 471                         | )    |                                |      | (4 349 | ) |  |  | (18 730 | ) |
|                           Changes in assets and      liabilities:                                                                                                      |        |                                |      |                                |      |  |  |  |  |  |  |
|                                  Decrease in accrued interest      receivable                                                       |        | 156                            |      |                                |      | 258 |  |  |  | 65 |  |
|                                  (Increase) in other    assets                                                                      |        | (1 717                         | )    |                                |      | (418 | ) |  |  | (2 212 | ) |
|                                  (Decrease) increase in accrued interest      payable                                               |        | (76                            | )    |                                |      | (276 | ) |  |  | 85 |  |
|                                  (Decrease) increase in other      liabilities                                                      |        | (1 901                         | )    |                                |      | 304 |  |  |  | 9 |  |
|                                         Net cash provided by (used in) operating      activities | $      | 773                            |      |                                | $    | 12 765 |  |  | $ | (5 181 | ) |
|                                                                                                                                                                                                                                                             |
| CASH FLOWS FROM INVESTING      ACTIVITIES                                                                                                                                                                                                                                  |        |                                |      |                                |      |  |  |  |  |  |  |
|        Proceeds from maturity of securities available      for sale                                                                                                                                                                          | $      | 5 645                          |      |                                | $    | 5 500 |  |  | $ | 14 470 |  |
|        Proceeds from call of securities available for      sale                                                                                                                                                                              |        | 18 000                         |      |                                |      | 22 000 |  |  |  | 10 035 |  |
|        Proceeds from sale of securities available for      sale                                                                                                                                                                              |        | 3 042                          |      |                                |      | - - |  |  |  | - - |  |
|        Purchases of securities available for      sale                                                                                                                                                                                       |        | (32 594                        | )    |                                |      | (15 267 | ) |  |  | (20 842 | ) |
|        Net (increase) decrease in    loans                                                                                                                                                                                                   |        | (2 425                         | )    |                                |      | (26 719 | ) |  |  | 4 709 |  |
|        Purchases of premises and      equipment                                                                                                                                                                                              |        | (1 288                         | )    |                                |      | (2 315 | ) |  |  | (384 | ) |
|        Proceeds from sale of other real      estate                                                                                                                                                                                          |        | 5 602                          |      |                                |      | 1 815 |  |  |  | 61 |  |
|                                         Net cash (used in) provided by investing      activities | $      | (4 018                         | )    |                                | $    | (14 986 | ) |  | $ | 8 049 |  |
|                                                                                                                                                                                                                                                                  |
| CASH FLOWS FROM FINANCING      ACTIVITIES                                                                                                                                                                                                                                  |        |                                |      |                                |      |  |  |  |  |  |  |
|        Net increase (decrease) in noninterest-bearing      deposits                                                                                                                                                                          | $      | 2 484                          |      |                                | $    | (2 525 | ) |  | $ | (1 879 | ) |
|        Net increase in interest-bearing      deposits                                                                                                                                                                                        |        | 7 895                          |      |                                |      | 3 239 |  |  |  | 3 475 |  |
|        Net (repayment) proceeds of securities sold      under agreements to repurchase                                                                                                                                                       |        | (1 012                         | )    |                                |      | (4 185 | ) |  |  | 2 011 |  |
|        Net (repayment) proceeds of Federal Home Loan      Bank advances                                                                                                                                                                      |        | (920                           | )    |                                |      | 4 564 |  |  |  | (408 | ) |
|        Purchase of treasury shares                                                                                                                                                                                                           |        | (29                            | )    |                                |      | (149 | ) |  |  | (422 | ) |
|        Sale of treasury shares                                                                                                                                                                                                               |        | - -                            |      |                                |      | 23 |  |  |  | - - |  |
|        Cash dividends                                                                                                                                                                                                                        |        | (899                           | )    |                                |      | (1 548 | ) |  |  | (1 420 | ) |
|                                         Net cash provided by (used in) financing      activities | $      | 7 519                          |      |                                | $    | (581 | ) |  | $ | 1 357 |  |
|                                         Increase (decrease) in cash and cash      equivalents    | $      | 4 274                          |      |                                | $    | (2 802 | ) |  | $ | 4 225 |  |
|                                                                                                                                                                                                                                                                  |
| CASH AND CASH EQUIVALENTS                                                                                                                                                                                                                                                  |        |                                |      |                                |      |  |  |  |  |  |  |
|        Beginning                                                                                                                                                                                                                             |        | 8 349                          |      |                                |      | 11 151 |  |  |  | 6 926 |  |
|        Ending                                                                                                                                                                                                                                | $      | 12 623                         |      |                                | $    | 8 349 |  |  | $ | 11 151 |  |
|                                                                                                                                                                                                                                                             |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW      INFORMATION                                                                                                                                                                                                                     |        |                                |      |                                |      |  |  |  |  |  |  |
|        Cash payments for:                                                                                                                                                                                                                    |        |                                |      |                                |      |  |  |  |  |  |  |
|                    Interest                                                                                                                                                                               | $      | 5 197                          |      |                                | $    | 6 753 |  |  | $ | 8 076 |  |
|                    Income taxes                                                                                                                                                                           | $      | 41                             |      |                                | $    | 1 642 |  |  | $ | 2 368 |  |
|                                                                                                                                                                                                                                                                  |
| SUPPLEMENTAL DISCLOSURES OF      NON-CASH                                                                                                                                                                                                                                  |        |                                |      |                                |      |  |  |  |  |  |  |
|        INVESTING AND FINANCING    ACTIVITIES                                                                                                                                                                                                 |        |                                |      |                                |      |  |  |  |  |  |  |
|                    Unrealized (loss) gain on securities      available for sale                                                                                                                           | $      | (83                            | )    |                                | $    | 117 |  |  | $ | 465 |  |
|                    Change in benefit obligations and plan      assets for pension                                                                                                                         |        |                                |      |                                |      |  |  |  |  |  |  |
|                           and other postretirement      benefits                                                                                                       | $      | 1 430                          |      |                                | $    | (2 295 | ) |  | $ | 291 |  |
|                    Loans transferred toOREO                                                                                                                                                               | $      | 8 814                          |      |                                | $    | 3 238 |  |  | $ | 506 |  |
|                    Loans made on sale of other real estate      owned                                                                                                                                     | $      | 1 568                          |      |                                | $    | 775 |  |  | $ | - - |   |
|                                                                                                                                                                                                                                                                  |

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----

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- 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 has been 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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|                                              | 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 |
|                                         |
|                                              | 2008      |
|                                              |           |  |  | Gross |  | Gross |  |  |  |
|                                              | Amortized |  | Unrealized |   | Unrealized |  | Fair |
|                                              | Cost      |  | Gains |  | (Losses) |   | Value |
| Obligations of U.S. Government      agencies | $         | 23 996 |   | $ | 493 |   | $ | - - |  |  | $ | 24 489 |
| State and municipal obligations              |           | 3 132 |  |   | 8 |  |   | (151 | ) |  |  | 2 989 |
| Equity securities                            |      | 1 217 |  |  | - - |  |  | - - |   |  |  | 1 217 |
|                                              | $         | 28 345 |  | $ | 501 |   | $ | (151 | ) |  | $ | 28 695 |
|                                         |

|                                       | Amortized |                                | Fair   |        |
|---------------------------------------|-----------|--------------------------------|--------|--------|
|                                       | Cost      |       | Value  |   |
| Due in one year or less               | $         | 1 000                          |        | $      | 1 005 |   |
| Due after one year through five years |           | 28 139                         |        |   | 28 417 |   |
| Due after five years                  |      | 3 809                          |   |        | 3 791 |  |
| Equity securities                     |      | 1 100                          |        |   | 1 100 |  |
|                                       | $         | 34 048                         |        | $      | 34 313 |  |
|                                  |

----

|                                                               | 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, 2008   |
|                                                               | Less than 12      months |  | More than 12      months |  | Total |
|                                                               |                          |  |  | Gross |  |  |  |  | Gross |  |  |  |  | Gross |
|                                                               |                          |  |  | Unrealized |  |  |  |  | Unrealized |  |  |  |  | Unrealized |
|                                                               | Fair Value               |  | Losses |   | Fair Value |  | Losses |  | Fair      Value |  | Losses |
| State and municipalobligations                                | $                        | 2 077 |  | $ | (151 | ) |  | $ | - - |  | $ | - - |  | $ | 2 077 |  | $ | (151 | ) |
|                                                          |

----

|                                                                                                                     | December      31 |
|---------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                                     | 2009             |       | 2008 |
|                                                                                                                     | (in thousands)   |
| Mortgage loans on real estate:                                                                                      |                  |  |  |  |  |
|        Construction and land      development                                         | $                | 38 083 |  | $ | 65 643 |
|             Secured by farm land                                                      |                  | 1 419 |  |  | 1 380 |
|        Secured by 1-4 family      residential                                         |                  | 102 290 |  |  | 97 064 |
|             Secured by multifamily residential                                        |                  | 2 070 |  |  | 1 937 |
|        Secured by nonfarm      nonresidential                                         |                  | 71 916 |  |  | 58 332 |
| Commercial loans (except those      secured                                                                         |                  |  |  |  |  |
|        by      real estate)                                                           |                  | 9 700 |  |  | 9 671 |
| Consumer loans                                                                                                      |                  | 9 011 |  |  | 11 970 |
| All other loans                                                                                                     |                  | 222 |  |   | 457 |
|        Total loans                                                                    | $                | 234 711 |   | $ | 246 454 |
|                    Less: allowance for loan losses |                  | 5 718 |  |  | 4 079 |
|                                                                                                                     | $                | 228 993 |  | $ | 242 375 |
|                                                                                                                |

|                                                                                  | 2009   |       | 2008   |       | 2007   |
|----------------------------------------------------------------------------------|--------|--------------------------------|--------|--------------------------------|--------|
| Balances at beginning of year                                                    | $      | 4 079                          |        |                                | $      | 2 779 |  |  | $ | 2 423 |  |
|        Provision charged to operating      expense |   | 6 690                          |        |                                |   | 2 934 |  |   |  | 678 |  |
|             Recoveries added to the allowance      |        | 232                            |        |                           |        | 199 |   |  |   | 182 |  |
|        Loan losses charged to the      allowance   |        | (5 283                         | )      |                                |        | (1 833 | ) |  |  | (504 | ) |
| Balances at end of year                                                          | $      | 5 718                          |   |                                | $      | 4 079 |  |  | $ | 2 779 |   |
|                                                                             |

----

|                                                                   | 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   |                                | 2007   |
| Average investment in impaired      loans                         | $      | 16 262                         |        | $                              | 7 770  |   | $ | 1 163 |
| Interest income recognized on impaired loans                      | $      | 1 233                          |   | $                              | 471    |        | $ | 48 |
| Interest income recognized on a cash      basis on impaired loans | $      | 68                             |        | $                              | 4      |        | $ | - - |
|                                                              |

|                               | December      31 |
|-------------------------------|------------------|
|                               | 2009             |       | 2008 |
|                               | (in thousands)   |
| Premises and improvements     | $                | 9 516 |  | $ | 8 676 |
| Furniture and equipment       |                  | 4 630 |   |  | 4 539 |
|                               | $                | 14 146 |   | $ | 13      215 |
| Less accumulated depreciation |                  | 5 420 |  |   | 5 200 |
|                               | $                | 8 726 |  | $ | 8 015 |
|                          |

| 2010   | $      | 53 100  |
|--------|--------|---------|
| 2011   |        | 38 678  |
| 2012   |   | 12 878  |
| 2013   |        | 4 498   |
| 2014   |        | 5 401   |
|        | $      | 114 555 |
|   |

----

| 2010   | $      | 964   |
|--------|--------|-------|
| 2011   |        | 1 010 |
| 2012   |   | 1 057 |
| 2013   |        | 825   |
|        | $      | 3 856 |
|   |

----

|                                                                                |                       |        |                         |                                |        |             |        |                                | Other  |
|--------------------------------------------------------------------------------|-----------------------|--------|-------------------------|--------------------------------|--------|-------------|--------|--------------------------------|--------|
|                                                                                | Pension      Benefits |        | Postretirement Benefits |
|                                                                                | 2009                  |        | 2008                    |                                | 2009   |             | 2008   |
|                                                                                | (in thousands)        |        | (in thousands)          |
| Change in benefit obligation:                                                  |                       |        |                         |       |        |             |        |       |        |  |  |       |  |  |   |
|        Benefit obligation,      beginning        | $                     | 7 401  |                         |                                | $      | 6 374       |        |                                | $      | 547 |  |  | $ | 536 |  |
|        Service cost                              |                       | 266    |                         |                                |        | 344         |        |                                |        | 11 |  |  |  | 12 |  |
|        Interest cost                             |                       | 447    |                         |                                |        | 474         |        |                                |        | 32 |  |  |  | 30 |   |
|        Actuarial (gain) loss                     |                       | 210    |                         |                                |        | 514         |        |                                |        | 1 |  |  |  | (6 | ) |
|        Benefits paid                             |                       | (308   | )                       |                                |        | (305        | )      |                                |        | (23 | ) |  |  | (25 | ) |
|        Curtailment                               |                       | (1 054 | )                       |                                |        | - -         |        |                                |        | - - |  |  |  | - - |  |
|        Benefit obligation, ending                | $                     | 6 962  |                         |                                | $      | 7 401       |        |                                | $      | 568 |  |  | $ | 547 |  |
|                                                                           |
| Change in plan assets:                                                         |                       |        |                         |                                |        |             |        |                                |        |  |  |  |  |  |  |
|        Fair value of plan assets,      beginning | $                     | 4 026  |                         |                                | $      | 5 303       |        |                                | $      | - - |  |  | $ | - - |  |
|        Actual return on plan assets              |                       | 785    |                         |                                |        | (1 457      | )      |                                |        | - - |  |  |  | - - |  |
|        Employer contributions                    |                       | 1 118  |                         |                                |        | 485         |        |                                |        | 23 |  |  |  | 25 |  |
|        Benefits paid                             |                       | (308   | )                       |                                |        | (305        | )      |                                |   | (23 | ) |   |  | (25 | ) |
|        Fair value of plan assets,    ending      | $                     | 5 621  |                         |                                | $      | 4 026       |        |                                | $      | - - |  |  | $ | - - |  |
|                                                                           |
| Funded status at end of year                                                   | $                     | (1 341 | )                       |                                | $      | (3      375 | )      |                                | $      | (568 | ) |  | $ | (547 | ) |
| Unrecognized net (gain)                                                        |                       | - -    |                         |                                |        | - -         |        |                           |        | (52 | ) |  |  | (53 | ) |
| Unrecognized transition asset                                                  |                       | - -    |                         |                                |        | - -         |        |                                |        | 87 |  |  |  | 105 |  |
|                                                                           |
| Accounts recognized on      consolidated                                       |                       |        |                         |                                |        |             |        |                                |        |  |  |  |  |  |  |
|        balance sheet as:                         |                       |        |                         |                                |        |             |        |                                |        |  |  |  |  |  |  |
|        Accrued benefit liabilities               | $                     | (1 341 | )                       |                                | $      | (3 375      | )      |                                | $      | (533 | ) |  | $ | (495 | ) |
|                                                                           |
| Amounts recognized in accumulated      other                                   |                       |        |                         |                                |        |             |        |                                |        |  |  |  |  |  |  |
|        comprehensive loss consist of:            |                       |        |                         |                                |        |             |        |                                |        |  |  |  |  |  |  |
|        Net loss (gain)                           | $                     | 1 841  |                         |                           | $      | 3 255       |   |                                | $      | (52 | ) |  | $ | (53 | ) |
|        Transition liability                      |                  | - -    |                    |                                |   | - -         |        |                                |        | 87 |  |  |  | 104 |  |
|        Deferred tax asset                        |                       | (626   | )                       |                                |        | (1 107      | )      |                                |        | (12 | ) |  |  | (17 | ) |
|                                                                                | $                     | 1 215  |                         |                                | $      | 2 148       |        |                                | $      | 23 |  |  | $ | 34 |   |
|                                                                           |

----

|                                                                                                                                                                                                      |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        | Other  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------------------------------|-------------------------|--------------------------------|--------|--------------------------------|--------|--------------------------------|------|--------------------------------|--------|--------|--------|
|                                                                                                                                                                                                      | Pension      Benefits |                                | Postretirement Benefits |
|                                                                                                                                                                                                      | 2009                  |       | 2008                    |       | 2007   |       | 2009   |       | 2008 |       | 2007   |
|                                                                                                                                                                                                      | (in thousands)        |                                |                         | (in thousands)                 |
| Components of net periodic benefit      cost:                                                                                                                                                        |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|        Service cost                                                                                                                                                    | $                     | 266                            |                         |                                | $      | 301                            |        |                                | $    | 254                            |        |        | $      | 12 |  |  | $ | 12 |  |  | $ | 11 |  |
|             Interest cost                                                                                                                                              |                       | 447                            |                         |                                |        | 410                            |        |                                |      | 362                            |        |        |        | 32 |  |  |  | 30 |  |  |  | 30 |  |
|        Expected return on plan      assets                                                                                                                             |                       | (373                           | )                       |                                |        | (313                           | )      |                                |      | (356                           | )      |        |        | - - |  |  |  | - - |  |  |  | - - |  |
|             Amortization of net obligation                                                                                                                             |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|                    at transition                                                                                                    |                       | - -                            |                         |                                |        | - -                            |        |                                |      | - -                            |        |        |        | 17 |  |  |  | 17 |  |  |  | 17 |   |
|        Recognized actuarial      loss                                                                                                                                  |                       | 159                            |                         |                                |        | 71                             |        |                                |      | 40                             |        |        |        | - - |  |  |  | - - |  |  |   | - - |  |
|        Net periodic benefit cost                                                                                                                                       | $                     | 499                            |                         |                                | $      | 469                            |        |                                | $    | 300                            |        |        | $      | 61 |  |  | $ | 59 |  |  | $ | 58 |  |
|                                                                                                                                                                                                 |
| Other changes in plan assets and      benefit                                                                                                                                                        |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|             obligations recognized in accumulated                                                                                                                      |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|             other comprehensive loss:                                                                                                                                  |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|                    Net loss (gain)                                                                                                  | $                     | (201                           | )                       |                                | $      | 2 319                          |        |                                |      | (274                           | )      |        | $      | 1 |  |  | $ | (6 | ) |  |  | - - |  |
|                    Transition liability                                                                                             |                       | - -                            |                         |                                |        | - -                            |        |                                |      | - -                            |        |        |        | (17 | ) |  |  | (18 | ) |   |  | (17 | ) |
|                    Deferred tax                                                                                                     |                       | 481                            |                         |                                |        | (789                           | )      |                                |      | 91                             |        |        |        | 5 |  |  |  | 9 |  |  |  | 6 |  |
|                    Amortization of net (gain) loss                                                                                  |                       | (159                           | )                       |                                |        | - -                            |        |                                |      | - -                            |        |   |        | - - |  |  |   | - - |   |  |  | - - |  |
|                    Adjustment to (gain) for curtailment                                                                             |                       | (1 054                         | )                       |                                |        | - -                            |        |                                |      | - -                            |        |        |        | - - |  |  |  | - - |  |  |  | - - |  |
|                           Total recognized in                                                    |                       |                                |                         |                                |        |                                |        |                           |      |                                |        |        |        |  |  |   |  |  |  |  |  |  |  |
|                                  accumulated other            |                       |                           |                         |                                |   |                                |        |                                |      |                                |   |        |   |  |   |  |  |  |  |  |  |  |  |
|                                  comprehensive loss           | $                     | (933                           | )                       |                           | $      | 1 530                          |   |                                | $    | (183                           | )      |        | $      | (11 | ) |  | $ | (15 | ) |  | $ | (11 | ) |
|                           Total recognized in net periodic                                       |                       |                                |                    |                                |        |                           |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|                                  benefit cost and accumulated |                       |                                |                         |                                |        |                                |        |                                |      |                                |        |        |        |  |  |  |  |  |  |  |  |  |  |
|                                  other comprehensive loss     | $                     | (434                           | )                       |                                | $      | 1 999                          |        |                                | $    | 117                            |        |        | $      | 50 |  |  | $ | 44 |  |  | $ | 47 |  |
|                                                                                                                                                                                                 |
| 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 |
|--------------------------------------------------------------------------------------------------------------------|-----------------------|--------------------------------|------------------------------------|
|                                                                                                                    | 2009                  |       | 2008                               |       | 2007 |       | 2009 |       | 2008 |       | 2007 |
| Weighted-average assumptions used      to                                                                          |                       |                                |                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             determine net periodic benefit cost:                                     |                       |                                |                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                    Discount rate                  | 6.30                  | %                              |                                    | 6.00 | % |  | 6.00 | % |  | 6.00 | % |  | 6.00 | % |  | 6.00 | % |
|                    Expected return on plan assets | 8.00                  | %                              |                                    | 6.00 | % |  | 7.50 | % |  | - - |  |  | - - |   |  | - - |  |
|                    Rate of compensation increase  | 3.00                  | %                              |                                    | 3.50 | % |  | 4.50 | % |  | 3.00 | % |  | 3.00 | % |   | 3.00 | % |
|                                                                                                               |
| Weighted-average assumptions used      to                                                                          |                       |                                |                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|             determine benefit obligations:                                           |                       |                           |                               |  |  |   |  |  |  |  |  |   |   |  |  |  |  |
|                    Discount rate                  | 6.08                  | %                              |                                    | 6.00 | % |  | 6.00 | % |   | 6.00 | % |  | 6.00 | % |  | 6.00 | % |
|                    Rate of compensation increase  | N/A                   |                                |                                    | 3.50 | % |  | 4.50 | % |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |

|                                                                                           |   |                           | Fair Value      Measurement at December 31, 2009 |
|-------------------------------------------------------------------------------------------|--------|--------------------------------|--------------------------------------------------|
|                                                                                           |        |                                |                                                  | Quoted Prices in |  | Significant |  | Significant |
|                                                                                           |        |                                |                                                  | Active Markets for |  | Observable |  | Unobservable |
|                                                                                           |        |                                |                                                  | Identical |  | Inputs |  | Inputs |
| AssetCategory                                                                             |   | 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 |  |   | - - |   |  | - - |
| Corporate bonds                                                                           |        | 846                            |                                                  |  | 846 |  |  | - - |  |  | - - |
|                                                                                      |
|                    Total | $      |      5 621 |                                                  | $ | 5 621 |  | $ | - - |  | $ | - - |
|                                                                                      |

----

|                                                                                           | Plan Assets      at December 31 |
|-------------------------------------------------------------------------------------------|---------------------------------|
|                                                                                           | 2009                            |       | 2008 |
| Asset Category                                                                            |                                 |  |   |  |  |
|        Equities                                             | 61                              | % |   | 57 | % |
|             Fixed income/cash                               | 39                              | % |  | 43 | % |
|                    Total | 100                             | % |  | 100 | % |
|                                                                                      |

|           |                       |                                |          | Other          |
|-----------|-----------------------|--------------------------------|----------|----------------|
|           |                       |                                |          | Postretirement |
|           | Pension      Benefits |       | Benefits |
|           | (in thousands)        |
| 2010      | $                     | 329                            |          | $              | 27 |
| 2011      |                       | 356                            |          |                | 28 |
| 2012      |                  | 385                            |     |           | 30 |
| 2013      |                       | 402                            |          |                | 31 |
| 2014      |                       | 421                            |          |                | 33 |
| 2015-2019 |                       | 2 401                          |          |                | 176 |

----

|                                                                                                | 1%      Increase |       | 1%      Decrease |
|------------------------------------------------------------------------------------------------|------------------|--------------------------------|------------------|
|                                                                                                | (in thousands)   |
| Effect on the health care component of      the accumulated                                    |                  |                                |                  |  |  |  |
|             postretirement benefit obligation                    | $                | 62                             |             | $ | (59 | ) |
| Effect on total of service and interest cost componentsof                                      |                  |                           |                  |  |  |  |
|        net periodic postretirement      health care benefit cost |                  | 3                              |                  |  | (4 | ) |

|                                                                                                   | 2009           |       | 2008      |       | 2007    |
|---------------------------------------------------------------------------------------------------|----------------|--------------------------------|-----------|--------------------------------|---------|
|                                                                                                   | Average        |                                | Per Share |                                | Average |  | Per Share |  | Average |  | Per Share |
|                                                                                                   | Shares         |       | Amount    |                                | Shares  |       | Amount |  | Shares |       | Amount |
|                                                                                                   | (in thousands) |                                |           |                                |         |  | (in thousands) |  |  |  |  | (in thousands) |  |  |  |
| Basic (loss) earnings                                                                             |                |                                |           |                                |         |  |  |  |  |  |  |  |  |  |  |
|        per      share                                               | 3 391          |                                | $         | (.66                           | )       |  | 3 402 |  | $ | .55 |  | 3 423 |  | $ | 1.03 |
|                                                                                              |
| Effect of dilutive securities:                                                                    |                |                                |      |                                |         |  |  |  |  |  |  |   |  |   |   |
|                    Stock options | - -            |                           |           |                           |         |  | 2 |   |   |   |   | 8 |   |  |  |
|                                                                                              |
| Diluted (loss) earnings                                                                           |                |                                |           |                                |    |  |  |  |  |  |  |  |  |  |  |
|        per share                                                    | 3 391          |                                | $         | (.66                           | )       |  | 3 404 |  | $ | .55 |  | 3 431 |  | $ | 1.03 |
|                                                                                         |

|                                     |         |                                |        |                                |               |                                | Weighted-       |           |        |     |
|-------------------------------------|---------|--------------------------------|--------|--------------------------------|---------------|--------------------------------|-----------------|-----------|--------|-----|
|                                     |         |                                |        | Weighted-                      |               | Average                        |                 | Aggregate |
|                                     |         |                                |        | Average                        |               | Remaining                      |                 | Intrinsic |
|                                     |         |                                |        | Exercise                       |               | Contractual                    |                 | Value     |
|                                     | Shares  |       | Price  |       | Life in Years |       | (in  thousands) |
| Outstanding at beginning of    year | 132 620 |                                |        | $                              | 14.75         |                                |                 |           |        |     |
| Granted                             | - -     |                                |        |                                | - -           |                                |                 |           |        |     |
| Exercised                           | - -     |                                |        |                                | - -           |                                |            |           |        |     |
| Forfeited                           | (6 396  | )                              |   |                           | 14.75         |                           |                 |           |   |     |
| Outstanding at end of year          | 126 224 |                           |        | $                              | 14.75         |                                | 6               |           | $      | - - |
| Exercisable at end of year          | 100 323 |                                |        | $                              | 14.45         |                                | 5               |           | $      | - - |
|                           |

----

|          |       |             | 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 |             | 25 826                   |                    | 4.0                      |  | $ | 11.28 |  | 25 826 |  | $ | 11.28 |
|          | 14.00 |             | 34 124                   |                    | 5.0                      |  |  | 14.00 |  | 29 801 |  |  | 14.00 |
|          | 17.25 |             | 35 867                   |                    | 6.0                      |  |  | 17.25 |  | 26 523 |  |  | 17.25 |
|          | 15.60 |             | 30 407                   |                    | 7.0                      |  |  | 15.60 |  | 18 173 |  |  | 15.60 |
|          |       |             | 126 224                  |                    |                          |  |  |  |  | 100 323 |  |  |  |
|     |

|                                                                                                             |      | 2009 |      | 2008 |
|-------------------------------------------------------------------------------------------------------------|--------------------------|------|--------------------------|------|
| Deferred tax assets:                                                                                        |                          |      |                          |      |  |  |
|        Reserve for loan    losses                                             |                          | $    | 1 504                    |      | $ | 1 229 |
|             Accrued pension expense                                           |                          |      | 456                      |      |  | 1 148 |
|        Accrued postretirement      benefits                                   |                          |      | 238                      |      |  | 229 |
|             Nonaccrual interest                                               |                          |      | 58                       |      |  | 80 |
|        Stock option expense                                                   |                          |      | 35                       |      |  | 35 |
|             Home equity closing costs                                         |                          |      | 44                       |      |  | 64 |
|        Net loan origination      fees                                         |                          |      | 50                       |      |  | 35 |
|             OREO expense                                                      |                          |      | 102                      |      |  | 11 |
|        OREO valuation    allowance                                            |                          |      | 103                      |      |  | - - |
|             OREO built in gain                                                |                          |      | 358                      |      |  | - - |
|                                                                                                        |                          | $    |   2 948             |      | $ |   2  831 |
| Deferred tax liabilities:                                                                                   |                          |      |                          |      |  |  |
|        Depreciation                                                           |                          | $    | 108                      |      | $ | 114 |
|             Securities available for sale                                     |                          |      | 90                       |      |  | 119 |
|                                                                                                             |                          | $    | 198                      |      | $ | 233 |
|                                                                                                        |
|                    Net deferred tax assets |                          | $    | 2 750                    |      | $ | 2 598 |
|                                                                                                        |

----

|                               |      | 2009           |      | 2008 |      | 2007 |
|-------------------------------|--------------------------|----------------|--------------------------|------|--------------------------|------|
|                               |                          | (in thousands) |
| Current tax (benefit) expense |                          | $              | (827                     | )    |                          | $    | 1 327 |  |  | $ | 2 248 |  |
| Deferred tax (benefit)        |                          |                | (609                     | )    |                          |      | (474 | ) |  |  | (250 | ) |
|                               |                          | $              | (1 436                   | )    |                          | $    | 853 |  |  | $ | 1 998 |  |
|                          |

|                                                                              |      | 2009 |      | 2008 |      | 2007 |
|------------------------------------------------------------------------------|--------------------------|------|--------------------------|------|--------------------------|------|
| Computed “expected” tax (benefit)      expense                   |                          | $    | (1 250                   | )    |                          | $    | 923 |  |  | $ | 1 880 |  |
| Increase (decrease) in income taxes resulting from:                          |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|        Tax      exempt income                  |                          |      | (146                     | )    |                          |      | (217 | ) |  |  | (107 | ) |
|        State income tax (benefit)      expense |                          |      | (163                     | )    |                          |      | 123 |  |  |  | 191 |  |
|             Other                              |                          |      | 123                      |      |                          |      | 24 |  |  |  | 34 |  |
|                                                                              |                          | $    | (1 436                   | )    |                          | $    | 853 |  |  | $ | 1 998 |  |
|                                                                         |

|                                      |                          | Payments      (in thousands) Due By Period |
|--------------------------------------|--------------------------|--------------------------------------------|
|                                      |                          |                                            |  |  |  |  |  | Over |  | Over |
|                                      |                          |                                            |  |  | Less |  | 1 Year |  | 3 Years |
|                                      |                          |                                            |  |  | than |  | through |  | through |
|                                      |      | Total                                      |      | 1    Year |      | 3    Years |      | 5    Years |
| Lease Obligations for Real    Estate |                          | $                                          | 28 |  | $ | 28 |  | $ | - - |  | $ | - - |
|                                 |
| Lease Obligations forEquipment       |                          | $                                          | 24 |  | $ | 24 |  | $ | - - |  | $ | - - |
|                                 |

----

|                                                                                                                  |      | 2009 |      | 2008 |
|------------------------------------------------------------------------------------------------------------------|--------------------------|------|--------------------------|------|
| Financial instruments whose      contract                                                                        |                          |      |                          |      |  |  |
|             amounts represent credit risk:                                         |                          |      |                          |      |  |  |
|                    Commitments to extend credit |                          | $    |   29 275            |      | $ |   48 726 |
|                    Standby letters of credit    |                          |      | 1 646                    |      |  | 2467 |

----

----

|                                                |                          |             |                          | Fair Value Measurements at December      31 |
|------------------------------------------------|--------------------------|------------------|--------------------------|---------------------------------------------|
|                                                |                          |                  |                          |                                             | Quoted Prices |  |  |  |  |  |  |
|                                                |                          |                  |                          |                                             | in Active |  | Significant |  |  |  |
|                                                |                          |                  |                          |                                             | Markets for |  | Other |  | Significant |
|                                                |                          |                  |                          |                                             | Identical |  | Observable |  | Unobservable |
|                                                |                          | Balance as of    |                          | Assets                                      |  | Inputs |  | Inputs |
| Description                                    |      | December      31 |      | (Level      1)                              |      | (Level      2) |      | (Level      3) |
| Available for sale securities                  |                          |                  |                          |                                             |  |  |  |  |  |  |  |  |
|        2009      |                          | $                | 34 313                   |                                        | $ | - - |  | $ | 34 313 |  | $ | - - |
|             2008 |                          |                  | 28 695                   |                                             |  | - - |  |  | 28 695 |  |  | - - |

----

|                                                                                          |        |                          |                  |                          | Carrying      Value at December 31 |
|------------------------------------------------------------------------------------------|--------|--------------------------|------------------|--------------------------|------------------------------------|
|                                                                                          |        |                          |                  |                          | Quoted Prices                      |  |  |  |  |  |
|                                                                                          |        |                          |                  |                          | in Active                          |  | Significant |  |  |  |
|                                                                                          |        |                          |                  |                          | Markets for                        |  | Other |  | Significant |
|                                                                                          |        |                          |                  |                          | Identical                          |  | Observable |  | Unobservable |
|                                                                                          |        | Balance as of            |                  | Assets                   |                                    | Input |  | Input |
| Description                                                                              |   |      | December      31 |      | (Level      1)                     |      | (Level      2) |      | (Level      3) |
| Assets                                                                                   |        |                          |                  |                          |                                    |  |  |  |  |  |  |  |
|             Impaired Loans                                 |        |                          |                  |                          |                                    |  |  |  |  |  |  |  |
|                    2009 |        | $                        | 11 186           |                          | $                                  | - - |  | $ | 3 311 |  | $ | 7 875 |
|                    2008 |        |                          | 2 943            |                          |                                    | - - |  |  | 2 943 |  |  | - - |
|             OREO                                           |        |                          |                  |                          |                                    |  |  |  |  |  |  |  |
|                    2009 |        | $                        | 5 632            |                          | $                                  | - - |  | $ | 5 632 |  | $ | - - |
|                    2008 |        |                          | 1 644            |                          |                                    | - - |  |  | 1 644 |  |  | - - |

----

|                                                                                                              |                          | 2009           |                          | 2008           |
|--------------------------------------------------------------------------------------------------------------|--------------------------|----------------|--------------------------|----------------|
|                                                                                                              |                          | Carrying       |                          | Fair           |  | Carrying |  | Fair |
|                                                                                                              |      | Amount         |      | Value          |      | Amount |      | Value |
|                                                                                                              |                          | (in thousands) |                          | (in thousands) |
| Financial assets:                                                                                            |                          |                |                          |                |  |  |  |  |  |  |  |  |
|        Cash                                                                    |                          | $              | 6 673                    |                | $ | 6 673 |  | $ | 5 036 |  | $ | 5 036 |
|             Federal funds sold                                                 |                          |                | 5 950                    |                |  | 5 950 |  |  | 3 313 |  |  | 3 313 |
|        Securities available for      sale                                      |                          |                | 34 313                   |                |  | 34 313 |  |  | 28 695 |  |  | 28 695 |
|             Loans, net                                                         |                          |                | 228 993                  |                |  | 236 838 |  |  | 242 375 |  |  | 244 138 |
|        Loans held for sale                                                     |                          |                | 97                       |                |  | 97 |  |  | 329 |  |  | 329 |
|             Accrued interest receivable                                        |                          |                | 952                      |                |  | 952 |  |  | 1 108 |  |  | 1 108 |
|                                                                                                         |
| Financial liabilities:                                                                                       |                          |                |                          |                |  |  |  |  |  |  |  |  |
|        Deposits                                                                |                          |                | 264 467                  |                |  | 260 915 |  |  | 254 088 |  |  | 252 521 |
|             Securities sold under                                              |                          |                |                          |                |  |  |  |  |  |  |  |  |
|                    agreements to repurchase |                          |                | 7 340                    |                |  | 7 340 |  |  | 8 352 |  |  | 8 352 |
|        FHLB advances                                                           |                          |                | 3 856                    |                |  | 4 012 |  |  | 4 776 |  |  | 5 034 |
|             Accrued interest payable                                           |                          |                | 405                      |                |  | 405 |  |  | 481 |  |  | 481 |

----

|                                                                                                                                                    |                          |                |                          |             |                          |                       | Minimum                  |        |                          |        |                          |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|----------------|--------------------------|-------------|--------------------------|-----------------------|--------------------------|--------|--------------------------|--------|--------------------------|-------|
|                                                                                                                                                    |                          |                |                          |             |                          |                       | Capital                  |        | Minimum To Be            |
|                                                                                                                                                    |                          | Actual         |                          | Requirement |                          | Well      Capitalized |
|                                                                                                                                                    |      | Amount         |      | Ratio       |      | Amount                |      | Ratio  |      | Amount |      | Ratio |
|                                                                                                                                                    |                          | (in thousands) |
| 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% |
|                                                                                                                                               |
| As of December 31, 2008:                                                                                                                           |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|        Total capital (to      risk-weighted                                                                          |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                    assets):                                                       |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                           Consolidated         |                          | $              | 32 775                   |             | 13.63%                   |                       | $                        | 19 238 |                          | 8.0%   |                          |       | N/A |  | N/A |
|                           Bank of Charles Town |                          | $              | 31 423                   |             | 13.14%                   |                       | $                        | 19 133 |                          | 8.0%   |                          | $     | 23 917 |  | 10.0% |
|             Tier 1 capital (to risk-weighted                                                                         |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                    assets):                                                       |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                           Consolidated         |                          | $              | 29 756                   |             | 12.37%                   |                       | $                        | 9 619  |                          | 4.0%   |                          |       | N/A |  | N/A |
|                           Bank of Charles Town |                          | $              | 28 420                   |             | 11.88%                   |                       | $                        | 9 567  |                          | 4.0%   |                          | $     | 14 350 |  | 6.0% |
|        Tier 1 capital (to      average                                                                               |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                    assets):                                                       |                          |                |                          |             |                          |                       |                          |        |                          |        |                          |       |  |  |  |
|                           Consolidated         |                          | $              | 29 756                   |             | 9.85%                    |                       | $                        | 12 081 |                          | 4.0%   |                          |       | N/A |  | N/A |
|                           Bank of Charles Town |                          | $              | 28 420                   |             | 9.45%                    |                       | $                        | 12 030 |                          | 4.0%   |                          | $     | 15 038 |  | 5.0% |

----

|                                                                                                                                      |      | 2009 |      | 2008 |
|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------|------|--------------------------|------|
| ASSETS                                                                                                                               |                          |      |                          |      |  |  |  |  |
|        Cash                                                                                            |                          | $    | 1                        |      |  | $ | 48 |  |
|             Investment in subsidiary                                                                   |                          |      | 24 352                   |      |  |  | 26 468 |  |
|        Other assets                                                                                    |                          |      | 1 220                    |      |  |  | 1 288 |  |
|                                                                                                                                 |
|                    Total Assets                                     |                          | $    | 25 573                   |      |  | $ | 27 804 |  |
|                                                                                                                                 |
| LIABILITIES AND STOCKHOLDERS’      EQUITY                                                                                      |                          |      |                          |      |  |  |  |  |
|                                                                                                                                 |
| LIABILITIES                                                                                                                          |                          |      |                          |      |  |  |  |  |
|        Other liabilities                                                                               |                          | $    | 1                        |      |  | $ | - - |  |
|                    Total Liabilities                                |                          | $    | 1                        |      |  | $ | - - |  |
|                                                                                                                                 |
| STOCKHOLDERS’ EQUITY                                                                                                           |                          |      |                          |      |  |  |  |  |
|        Common stock                                                                                    |                          | $    | 3 672                    |      |  | $ | 3 672 |  |
|             Surplus                                                                                    |                          |      | 3 898                    |      |  |  | 3 851 |  |
|        Undivided profits                                                                               |                          |      | 21 931                   |      |  |  | 25 070 |  |
|             Accumulated other comprehensive (loss), net                                                |                          |      | (1 063                   | )    |  |  | (1 952 | ) |
|                                                                                                                                 |                          | $    | 28 438                   |      |  | $ | 30 641 |  |
|                    Less cost of shares acquired for the treasury    |                          |      | 2 866                    |      |  |  | 2 837 |  |
|                    Total Stockholders’ Equity                 |                          | $    | 25 572                   |      |  | $ | 27 804 |  |
|                                                                                                                                 |
|                    Total Liabilities and Stockholders’ Equity |                          | $    | 25 573                   |      |  | $ | 27 804 |  |
|                                                                                                                                 |

----

|                                                                                                                                                                     |      | 2009 |      | 2008 |      | 2007 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|------|--------------------------|------|--------------------------|------|
| Income                                                                                                                                                              |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|        Dividends from      subsidiary                                                                                                 |                          | $    | 977                      |      |                          | $    | 2 582 |  |  | $ | 1 942 |  |
|             Interest income                                                                                                           |                          |      | 1                        |      |                          |      | 3 |  |  |  | 1 |  |
|                    Total Income                                                                    |                          | $    | 978                      |      |                          | $    | 2 585 |  |  | $ | 1 943 |  |
|                                                                                                                                                                |
| Expenses                                                                                                                                                            |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|        Stock-based compensation      expense                                                                                          |                          | $    | 47                       |      |                          | $    | 70 |  |  | $ | 110 |  |
|             Transfer agent expense                                                                                                    |                          |      | 15                       |      |                          |      | 11 |  |  |  | 9 |  |
|        Legal fees                                                                                                                     |                          |      | 11                       |      |                          |      | 9 |  |  |  | 20 |  |
|             Other professional fees                                                                                                   |                          |      | 63                       |      |                          |      | 43 |  |  |  | 57 |  |
|        Printing, stationery and      supplies                                                                                         |                          |      | 16                       |      |                          |      | 14 |  |  |  | 16 |  |
|             Other operating expenses                                                                                                  |                          |      | 145                      |      |                          |      | 24 |  |  |  | 20 |  |
|                    Total Expenses                                                                  |                          | $    | 297                      |      |                          | $    | 171 |  |  | $ | 232 |  |
|                                                                                                                                                                |
|                    Income before Income Tax (Benefit) and                                          |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|                           Equity in Undistributed (Loss) Income |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|                           of Subsidiary                         |                          | $    | 681                      |      |                          | $    | 2 414 |  |  | $ | 1 711 |  |
|                                                                                                                                                                |
| Income Tax (Benefit)                                                                                                                                                |                          |      | (84                      | )    |                          |      | (32 | ) |  |  | (56 | ) |
|                                                                                                                                                                |
|                    Income before Equity in Undistributed (Loss)                                    |                          |      |                          |      |                          |      |  |  |  |  |  |  |
|                           Income of Subsidiary                  |                          | $    | 765                      |      |                          | $    | 2 446 |  |  | $ | 1 767 |  |
|                                                                                                                                                                |
| Equity in Undistributed (Loss) Income of      Subsidiary                                                                                                            |                          |      | (3 005                   | )    |                          |      | (584 | ) |  |  | 1 763 |  |
|                                                                                                                                                                |
|                    Net (Loss) Income                                                               |                          | $    | (2 240                   | )    |                          | $    | 1 862 |  |  | $ | 3 530 |  |
|                                                                                                                                                                |

----

|                                                                                                                                                                        | 2009    |        |      | 2008 |         |      | 2007 |  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|--------------------------|------|---------|--------------------------|------|--|
| CASH FLOWS FROM OPERATING      ACTIVITIES                                                                                                                              |         |        |                          |      |         |                          |      |  |  |  |  |
|      Net (loss)      income                                                                                                                   | $       | (2 240 | )                        |      | $       | 1 862                    |      |  | $ | 3 530 |  |
|      Adjustments to reconcile net      (loss) income to net cash                                                                              |         |        |                          |      |         |                          |      |  |  |  |  |
|           provided      by operating activities:                                                                     |         |        |                          |      |         |                          |      |  |  |  |  |
|                Equity      in undistributed loss (income) of                                |         |        |                          |      |         |                          |      |  |  |  |  |
|                     subsidiary                                     |         | 3 005  |                          |      |         | 584                      |      |  |  | (1 763 | ) |
|                Stock-based      compensation expense                                        |         | 47     |                          |      |         | 70                       |      |  |  | 110 |  |
|                Decrease      (increase) in other assets                                     |         | 68     |                          |      |         | (830                     | )    |  |  | (24 | ) |
|                Increase      in other liabilities                                           |         | 1      |                          |      |         | - -                      |      |  |  | - - |  |
|                                                                                                                                                                   |         |
|                     Net      cash provided by operating activities | $       | 881    |                          |      | $       | 1 686                    |      |  | $ | 1 853 |  |
|                                                                                                                                                                   |         |
| CASH FLOWS FROM FINANCING      ACTIVITIES                                                                                                                              |         |        |                          |      |         |                          |      |  |  |  |  |
|      Cash      dividends                                                                                                                      | $       | (899   | )                        |      | $       | (1 548                   | )    |  | $ | (1 420 | ) |
|      Purchase of treasury      shares                                                                                                         |         | (29    | )                        |      |         | (149                     | )    |  |  | (422 | ) |
|      Sale of treasury      shares                                                                                                             |         | - -    |                          |      |         | 23                       |      |  |  | - - |  |
|                                                                                                                                                                   |         |
|                     Net      cash (used in) financing activities   | $       | (928   | )                        |      | $       | (1 674                   | )    |  | $ | (1 842 | ) |
|                                                                                                                                                                   |         |
|                     (Decrease)      increase in cash and cash      |         |        |                          |      |         |                          |      |  |  |  |  |
|                          equivalents      | $       | (47    | )                        |      | $       | 12                       |      |  | $ | 11 |  |
|                                                                                                                                                                   |         |
| CASH AND CASH EQUIVALENTS                                                                                                                                              |         |        |                          |      |         |                          |      |  |  |  |  |
|      Beginning                                                                                                                                |    | 48     |                          |      |         | 36                       |      |  |  | 25 |   |
|      Ending                                                                                                                                   | $  | 1      |                          |      | $  | 48                       |      |  | $  | 36 |  |
|                                                                                                                                                                   |         |        |                          |      |         |                          |      |  |  |  |  |

----

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| Name                    |  | Position    Since                                         |  | Age |  | Principal      Occupation                                                                                                                          |
|-------------------------|--|-----------------------------------------------------------|--|-----|--|----------------------------------------------------------------------------------------------------------------------------------------------------|
| Robert F. Baronner, Jr. |  | President & CEO2001                                   |  | 51  |  | Employed by bank as of 1/1/01 as      President and CEO.                                                                                           |
|                    |
| David W. Irvin          |  | Executive Vice    President2004                           |  | 46  |  | Employed at bank from 2001 to present as      Commercial Loan Division Manager.                                                                    |
|                    |
| Gayle Marshall Johnson  |  | Sr. Vice President & Chief Financial      Officer1994 |  | 60  |  | 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         |
| Plancategory              |      | warrants and      rights |      | warrants and      rights |      | reflected in column      (a)) |
| 2003 Stock Incentive Plan |                          |                          |                          |                          |                          |                               |
| amended by shareholders   |                     |                          |                          |                          |                          |                               |
| April 24, 2007            |                          | 126,224                  |                          | $14.75                   |                          | 305,336                       |
|                      |                          |                          |                          |                          |                          |                          |

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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. Seebelow.                                                                                                                                                                                                   |

----

| By       | /s/ Robert F.      Baronner, Jr.                 |   | March 30, 2010 |
|----------|--------------------------------------------------|--------|----------------|
|          | Robert F. Baronner, Jr.                          |        |           |
|          | President & Chief Executive Officer          |        |           |
|          |                                             |
|          |                                             |
| By  | /s/ Gayle Marshall      Johnson                  |        | March 30, 2010 |
|          | Gayle Marshall Johnson                           |        |           |
|          | Sr. Vice President & Chief Financial Officer |        |           |

| Signature & Title |                                   | Date   |
|-----------------------|-----------------------------------|--------|
|                       |                              |
| By               | /s/ Dr. Keith      Berkeley       |   | March 30, 2010 |
|                       | Dr. Keith Berkeley, Director      |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ J. Scott      Boyd            |        | March 30, 2010 |
|                       | J. Scott Boyd, Director           |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ John P. Burns,      Jr.       |        | March 30, 2010 |
|                       | John P. Burns, Jr., Director      |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ Guy Gareth      Chicchirichi  |        | March 30, 2010 |
|                       | Guy Gareth Chicchirichi, Director |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ Margaret      Cogswell        |        | March 30, 2010 |
|                       | Margaret Cogswell, Director       |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ Mary Clare      Eros          |        | March 30, 2010 |
|                       | Mary Clare Eros, Director         |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ William R.      Harner        |        | March 30, 2010 |
|                       | William R. Harner, Director       |        |   |
|                       |                              |
|                       |                              |
| By               | /s/ Barbara H.      Pichot        |        | March 30, 2010 |
|                       | Barbara H. Pichot, Director       |        |   |

----

| By       | /s/ John C. Skinner,      Jr.  |   | March 30, 2010 |
|----------|--------------------------------|--------|----------------|
|          | John C. Skinner, Jr., Director |        |           |
|          |                           |
|          |                           |
| By  | /s/ C. Larry      Togans       |        | March 30, 2010 |
|          | C. Larry Togans, Director      |        |           |

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