----

| Virginia                                                   |       | 16-1694602          |
|------------------------------------------------------------|------------|---------------------|
| (State or other jurisdiction of                            |       | (I.R.S. Employer    |
| incorporation or organization)                             |       | Identification No.) |
|                                                       |       |                |
| 15521 Midlothian Turnpike, Midlothian, Virginia            | 23113      |
| Address of principal executive offices)                    | (Zip code) |
|                                                       |       |
| 804-897-3900                                               |
| (Registrant’s telephone number, including area code) |

----

| Part I – Financial Information |
|--------------------------------------|
|                                 |
|                                 | Item 1. Financial Statements |   |
|                                 |   |   |
|                                 | Consolidated Balance Sheets |   |
|                                 | March 31, 2010 (unaudited) and December 31, 2009 | 3 |
|                                 |   |
|                                 | Consolidated Statements of Income |   |
|                                 | For the Three Months Ended |   |
|                                 | March 31, 2010 and 2009 (unaudited) | 4 |
|                                 |   |
|                                 | Consolidated Statements of Stockholders’ Equity |   |
|                                 | For the Three Months Ended |   |
|                                 | March 31, 2010 and 2009 (unaudited) | 5 |
|                                 |   |
|                                 | Consolidated Statements of Cash Flows |   |
|                                 | For the Three Months Ended |   |
|                                 | March 31, 2010 and 2009 (unaudited) | 6 |
|                                 |   |
|                                 | Notes to Condensed Consolidated Financial Statements (unaudited) | 7 |
|                                 |   |
|                                 | Item 2.  Management’s Discussion and Analysis of Financial             Condition and Results of Operations | 17 |
|                                 |   |
|                                 | Item 3.  Quantitative and Qualitative Disclosures About Market Risk | 33 |
|                                 |   |
|                                 | Item 4T.  Controls and Procedures | 33 |
|                                 |   |
| Part II – Other Information    |
|                                 |   |   |
|                                 | Item 1.  Legal Proceedings | 34 |
|                                 |   |
|                                 | Item 1A.  Risk Factors | 34 |
|                                 |   |
|                                 | Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
|                                 |   |
|                                 | Item 3.  Defaults Upon Senior Securities | 34 |
|                                 |   |
|                                 | Item 4.  (Removed and Reserved) | 34 |
|                                 |   |
|                                 | Item 5.  Other Information | 34 |
|                                 |   |
|                                 | Item 6.  Exhibits | 34 |
|                                 |   |   |
|                                 | Signatures | 35 |

----

| Village Bank and Trust Financial Corp. and Subsidiary                          |
|--------------------------------------------------------------------------------|
| Consolidated Balance Sheets                                                    |
| March 31, 2010 (Unaudited) and December 31, 2009                               |
|                                                                           |   |   |   |   |
|                                                                           |   | March 31, |   | December 31, |
|                                                                           |   | 2010 |   | 2009 |
|                                                                           |   | (Unaudited) |   |   |
| Assets                                                                         |   |   |   |   |
| Cash and due from banks                                                        | $ |  12,479,089 | $ |  13,884,581 |
| Federal funds sold                                                             |   |  34,520,104 |   |  6,777,239 |
| Investment securities available for sale                                       |   |  41,367,828 |   |  54,857,211 |
| Loans held for sale                                                            |   |  10,525,439 |   |  7,506,252 |
| Loans                                                                          |   |   |   |   |
| Outstandings                                                                   |   |  463,717,444 |   |  467,359,664 |
| Allowance for loan losses                                                      |   |  (9,090,947) |   |  (10,521,931) |
| Deferred costs                                                                 |   |  387,441 |   |  208,883 |
|                                                                           |   |  455,013,938 |   |  457,046,616 |
| Premises and equipment, net                                                    |   |  27,685,122 |   |  27,799,084 |
| Accrued interest receivable                                                    |   |  2,932,596 |   |  3,366,718 |
| Bank owned life insurance                                                      |   |  5,488,252 |   |  5,431,002 |
| Other real estate owned                                                        |   |  10,714,591 |   |  11,278,532 |
| Other assets                                                                   |   |  14,696,314 |   |  15,015,708 |
|                                                                           |   |   |   |   |
|                                                                           | $ |  615,423,273 | $ |  602,962,943 |
|                                                                           |   |   |   |   |
| Liabilities and Stockholders' Equity                                           |   |   |   |   |
| Liabilities                                                                    |   |   |   |   |
| Deposits                                                                       | $ |  510,977,282 | $ |  498,285,124 |
| Trust preferred securities                                                     |   |  8,764,000 |   |  8,764,000 |
| Federal home loan bank advances                                                |   |  29,000,000 |   |  29,000,000 |
| Other borrowings                                                               |   |  14,470,730 |   |  14,829,521 |
| Accrued interest payable                                                       |   |  483,568 |   |  501,069 |
| Other liabilities                                                              |   |  2,366,675 |   |  2,641,410 |
| Total liabilities                                                              |   |  566,062,255 |   |  554,021,124 |
|                                                                           |   |   |   |   |
| Stockholders' equity                                                           |   |   |   |   |
| Preferred stock, $4 par value, $1,000 liquidation preference,                  |   |  58,952 |   |  58,952 |
|    1,000,000 shares authorized, 14,738 shares issued and outstanding |   |   |   |   |

| Common stock, $4 par value - 10,000,000 shares authorized;            |                                                     |  16,922,512  |   |  16,922,512  |
|-----------------------------------------------------------------------|----------------------------------------------------------|-------------------|--------|-------------------|
|   4,230,628 shares issued and outstanding at March 31, 2010 |                                                     |              |   |              |
|   and December 31, 2009                                     |                                                     |              |   |              |
| Additional paid-in capital                                            |                                                     |  40,598,815  |   |  40,568,771  |
| Retained earnings                                                     |                                                     |  (8,377,580) |   |  (8,647,731) |
| Warrant Surplus                                                       |                                                     |  732,479     |   |  732,479     |
| Discount on preferred stock                                           |                                                     |  (600,971)   |   |  (636,959)   |
| Accumulated other comprehensive income (loss)                         |                                                     |  26,811      |   |  (56,205)    |
| Total stockholders' equity                                            |                                                     |  49,361,018  |   |  48,941,819  |
|                                                                  |                                                     |              |   |              |
|                                                                  |           $ |  615,423,273 | $      |  602,962,943 |
|                                                                  |                                                     |              |   |              |
| See accompanying notes to consolidated financial statements.          |                                                     |              |   |              |

----

| Village Bank and Trust Financial Corp. and Subsidiary        |
|--------------------------------------------------------------|
| Consolidated Income Statements                               |
| Three Months Ended March 31, 2010 and 2009                   |
| (Unaudited)                                                  |
|                                                         |   |   |   |   |
|                                                         |   | Three Months Ended March 31, |
|                                                         |   |                 2010 |   |                    2009 |
| Interest income                                              |   |   |   |   |
| Loans                                                        | $ |  7,089,244 | $ |  8,009,697 |
| Investment securities                                        |   |  357,120 |   |  336,458 |
| Federal funds sold                                           |   |  14,232 |   |  7,273 |
| Total interest income                                        |   |  7,460,596 |   |  8,353,428 |
|                                                         |   |   |   |   |
| Interest expense                                             |   |   |   |   |
| Deposits                                                     |   |  2,510,967 |   |  4,003,456 |
| Borrowed funds                                               |   |  533,820 |   |  443,306 |
| Total interest expense                                       |   |  3,044,787 |   |  4,446,762 |
|                                                         |   |   |   |   |
| Net interest income                                          |   |  4,415,809 |   |  3,906,666 |
| Provision for loan losses                                    |   |  500,000 |   |  1,100,000 |
| Net interest income after provision                          |   |   |   |   |
| for loan losses                                              |   |  3,915,809 |   |  2,806,666 |
|                                                         |   |   |   |   |
| Noninterest income                                           |   |   |   |   |
| Service charges and fees                                     |   |  407,689 |   |  373,119 |
| Gain on sale of loans                                        |   |  1,171,954 |   |  943,116 |
| Gain on sale of assets                                       |   |  242,936 |   |  - |
| Rental income                                                |   |  103,671 |   |  41,671 |
| Other                                                        |   |  227,720 |   |  98,480 |
| Total noninterest income                                     |   |  2,153,970 |   |  1,456,386 |
|                                                         |   |   |   |   |
| Noninterest expense                                          |   |   |   |   |
| Salaries and benefits                                        |   |  2,767,389 |   |  2,464,614 |
| Occupancy                                                    |   |  509,918 |   |  444,044 |
| Equipment                                                    |   |  217,724 |   |  255,618 |
| Supplies                                                     |   |  134,362 |   |  125,825 |
| Professional and outside services                            |   |  522,809 |   |  435,641 |
| Advertising and marketing                                    |   |  89,626 |   |  71,495 |
| Expenses related to foreclosed real estate                   |   |  209,828 |   |  39,923 |
| FDIC insurance premium                                       |   |  292,168 |   |  95,387 |
| Other operating expense                                      |   |  586,805 |   |  444,352 |
| Total noninterest expense                                    |   |  5,330,629 |   |  4,376,899 |
|                                                         |   |   |   |   |
| Net income (loss) before income taxes                        |   |  739,150 |   |  (113,847) |
| Income tax expense (benefit)                                 |   |  251,311 |   |  (38,709) |
|                                                         |   |   |   |   |
| Net income (loss)                                            |   |  487,839 |   |  (75,138) |
|                                                         |   |   |   |   |
| Preferred stock dividends                                    |   |  181,700 |   |  - |
|                                                         |   |   |   |   |
| Net income loss available to common stockholders             | $ |  306,139 | $ |  (75,138) |
|                                                         |   |   |   |   |
| Earnings (loss) per share, basic                             | $ |  0.07 | $ |  (0.02) |
| Earnings (loss) per share, diluted                           | $ |  0.07 | $ |  (0.02) |
|                                                         |   |   |   |   |
| See accompanying notes to consolidated financial statements. |   |   |   |   |

----

| Village Bank and Trust Financial Corp. and Subsidiary                    |
|--------------------------------------------------------------------------|
| Consolidated Statements of Stockholders' Equity                          |
| Three Months Ended March 31, 2010 and 2009                               |
| (Unaudited)                                                              |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |
|                                                                     |   |   |   |   |   | Additional |   | Retained |   |   |   | Discount on |   | Other |   |   |
|                                                                     |   | Prefered |   | Common |   | Paid-in |   | Earnings |   |   |   | Preferred |   | Comprehensive |   |   |
|                                                                     |   | Stock |   | Stock |   | Capital |   | (Deficit) |   | Warrant |   |  Stock |   | Income (loss) |   | Total |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2009                                               |   $ |  58,952 |   $ |  16,922,512 |   $ |  40,568,771 |   $ |  (8,647,731) |   $ |  732,479 |   $ |  (636,959) |   $ |  (56,205) |   $ |  $8,941,819 |
| Amortization of preferred stock                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         discount                 |   |  - |   |  - |   |  - |   |  (35,988) |   |  - |   |  35,988 |   |  - |   |  - |
| Preferred stock dividend                                                 |   |  - |   |  - |   |  - |   |  (181,700) |   |  - |   |  - |   |  - |   |  (181,700) |
| Stock based compensation                                                 |   |  - |   |  - |   |  30,044 |   |   |   |  - |   |  - |   |  - |   |  30,044 |
| Minimum pension adjustment                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        (net of income taxes of 2,188) |   |  - |   |  - |   |  - |   |   |   |  - |   |  - |   |  2,145 |   |  2,145 |
| Net income                                                               |   |  - |   |  - |   |  - |   |  487,839 |   |  - |   |  - |   |  - |   |  487,839 |
| Change in unrealized gain                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (loss) on securities                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale (net of                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income  taxes of $24,496)                                      |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  80,871 |   |  80,871 |
| Total comprehensive                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income (loss)                                                            |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  570,855 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31, 2010                                                  |   $ |  58,952 |   $ |  16,922,512 |   $ |  40,598,815 |   $ |  (8,377,580) |   $ |  732,479 |   $ |  (600,971) |   $ |  26,811 |   $ |  49,361,018 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                               |   $ |  - |   $ |  16,917,488 |   $ |  25,737,048 |   $ |  3,453,788 |   $ |  - |   $ |  - |   $ |  54,250 |   $ |  46,162,574 |
| Issuance of common stock                                                 |   |  - |   |  4,872 |   |  (4,872) |   |  - |   |  - |   |  - |   |  - |   |  - |
| Stock based compensation                                                 |   |  - |   |  - |   |  45,461 |   |  - |   |  - |   |  - |   |  - |   |  45,461 |
| Minimum pension adjustment                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        (net of income taxes of $729)  |   |   |   |   |   |   |   |   |   |   |   |   |   |  2,145 |   |  2,145 |
| Net loss                                                                 |   |  - |   |  - |   |  - |   |  (75,138) |   |  - |   |  - |   |  - |   |  (75,138) |
| Change in unrealized gain                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (loss) on securities                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale (net of income                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  taxes of $54,089)                                                  |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  (159,086) |   |  (159,086) |
| Total comprehensive                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income (loss)                                                            |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  (232,079) |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, March 31, 2009                                                  |   $ |              - |  $ |  16,922,360 |   $ |  25,777,637 |   $ |  3,378,650 |   $ |              - |   $ |  - |   $ |  (102,691) |   $ |  45,975,956 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.             |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Village Bank and Trust Financial Corp. and Subsidiary                   |
|-------------------------------------------------------------------------|
| Consolidated Statements of Cash Flows                                   |
| Three Months Ended March 31, 2010 and 2009                              |
|                                                                    |   |   |   |   |
|                                                                    |   | 2010 |   | 2009 |
| Cash Flows from Operating Activities                                    |   |   |   |   |
| Net income (loss)                                                       | $ |  487,839 | $ |  (75,138) |
| Adjustments to reconcile net income to net                              |   |   |   |   |
| cash provided by (used in) operating activities:                        |   |   |   |   |
| Depreciation and amortization                                           |   |  315,000 |   |  310,004 |
| Provision for loan losses                                               |   |  500,000 |   |  1,100,000 |
| Write-down of other real estate owned                                   |   |  43,000 |   |  - |
| Gain on securities                                                      |   |  (108,213) |   |  (8,061) |
| Gain on loans sold                                                      |   |  (1,171,954) |   |  (943,116) |
| Gain on sale of premises and equipment                                  |   |  (242,936) |   |  (645) |
| Gain on sale of other real estate owned                                 |   |  (68,475) |   | - |
| Stock compensation expense                                              |   |  30,044 |   |  45,461 |
| Proceeds from sale of mortgage loans                                    |   |  49,053,958 |   |  45,065,904 |
| Origination of mortgage loans for sale                                  |   |  (50,901,191) |   |  (49,328,920) |
| Amortization of premiums and accrection of discounts on securities, net |   |  209,813 |   |  7,692 |
| Decrease in interest receivable                                         |   |  834,122 |   |  233,682 |
| Increase in bank owned life insurance                                   |   |  (57,250) |   |  (59,545) |
| (Increase) decrease  in other assets                          |   |  279,878 |   |  (1,341,837) |
| Increase (decrease) in interest payable                                 |   |  (17,501) |   |  (89,204) |
| Increase (decrease) in other liabilities                                |   |  (274,734) |   |  175,954 |
| Net cash used in operating activities                                   |   |  (1,088,600) |   |  (4,907,769) |
|                                                                    |   |   |   |   |
| Cash Flows from Investing Activities                                    |   |   |   |   |
| Purchases of available for sale securities                              |   |  (2,950,740) |   |  (6,230,297) |
| Maturities and calls of available for sale securities                   |   |  16,162,000 |   |  4,473,630 |
| Proceeds from the sale of calls of available for sale securities        |   |  299,054 |   |  - |
| Proceeds from sale of other real estate owned                           |   |  1,568,051 |   |  - |
| Net increase in loans                                                   |   |  154,043 |   |  (2,363,098) |
| Purchases of premises and equipment                                     |   |  (335,423) |   |  (120,736) |
| Proceeds from sale of premises and equipment                            |   |  377,321 |   |  9,626 |
| Acquisition net of cash required                                        |   |  - |   |  - |
| Net cash used in investing activities                                   |   |  15,274,306 |   |  (4,230,875) |
|                                                                    |   |   |   |   |
| Cash Flows from Financing Activities                                    |   |   |   |   |
| Net increase (decrease)  in deposits                          |   |  12,692,158 |   |  16,207,140 |
| Net increase (decrease) in other borrowings                             |   |  (358,791) |   |  (8,872,798) |
| Dividends on preferred stock                                            |   |  (181,700) |   |  - |
| Net cash provided by financing activities                               |   |  12,151,667 |   |  7,334,342 |
|                                                                    |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents                    |   |  26,337,373 |   |  (1,804,302) |
| Cash and cash equivalents, beginning of period                          |   |  20,661,820 |   |  26,600,829 |
|                                                                    |   |   |   |   |
| Cash and cash equivalents, end of period                                | $ |  46,999,193 | $ |  24,796,527 |
|                                                                    |   |   |   |   |
| Supplemental Schedule of Non Cash Activities                            |   |   |   |   |
| Real estate owned assets acquired in settlement of loans                | $ |  978,635 | $ |  306,124 |
|                                                                    |   |   |   |   |
| See accompanying notes to consolidated financial statements.            |   |   |   |   |

----

----

|                                                |   | Three Months Ended March 31, |
|-----------------------------------------------------|--------|------------------------------|
|                                                |   | 2010                         |   | 2009 |
|                                                |   |                         |   |   |
| Numerator                                           |   |                         |   |   |
| Net income (loss) - basic and diluted               | $      |  487,839                | $ |  (75,138) |
| Preferred stock dividend                            |   |  181,700                |   |  - |
|                                                |   |                         |   |   |
| Net income (loss) applicable to common stockholders | $      |  306,139                | $ |  (75,138) |
|                                                |   |                         |   |   |
| Denominator                                         |   |                         |   |   |
| Weighted average shares outstanding - basic         |   |  4,230,628              |   |  4,229,981 |
| Dilutive effect of common stock options and         |   |                         |   |   |
| restricted stock awards                             |   |  -                      |   |  - |
|                                                |   |                         |   |   |
| Weighted average shares outstanding - diluted       |   |  4,230,628              |   |  4,229,981 |
|                                                |   |                         |   |   |
| Earnings (loss) per share - basic and diluted       |   |                         |   |   |
| Earnings (loss) per share - basic                   | $      |  0.07                   | $ |  (0.02) |
| Effect of dilutive common stock options             |   |  -                      |   |  - |
|                                                |   |                         |   |   |
| Earnings (loss) per share - diluted                 | $      |  0.07                   | $ |  (0.02) |

----

|                        |   |         |   |         |   | Unrealized |   | Estimated    |   |    |
|-----------------------------|--------|--------------|--------|--------------|--------|------------|--------|--------------|--------|---------|
|                        |   | Par          |   | Amortized    |   | Gain       |   | Fair         |   | Average |
|                        |   | Value        |   | Cost         |   | (Loss)     |   | Value        |   | Yield   |
| March 31, 2010              |   |         |   |         |   |       |   |         |   |    |
| US Government Agencies      |   |         |   |         |   |       |   |         |   |    |
| Within one year             | $      |  12,750 | $      |  12,834 | $      |  20   | $      |  12,854 |   | 2.14%   |
| One to five years           |   |  16,463 |   |  17,087 |   |  61   |   |  17,148 |   | 3.34%   |
| Five to ten years           |   |  2,352  |   |  2,331  |   |  28   |   |  2,359  |   | 1.72%   |
| More than ten years         |   |  1,000  |   |  981    |   |  43   |   |  1,024  |   | 2.80%   |
| Total                       |   |  32,565 |   |  33,233 |   |  152  |   |  33,385 |   | 2.75%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Mortgage-backed securities  |   |         |   |         |   |       |   |         |   |    |
| One to five years           |   |  3,464  |   |  3,580  |   |  74   |   |  3,654  |   | 3.54%   |
| Five to ten years           |   |  220    |   |  229    |   |  (8)  |   | 221          |   | 1.39%   |
| More than ten years         |   |  27     |   |  28     |   |  -    |   |  28     |   | 3.04%   |
| Total                       |   |  3,711  |   |  3,837  |   |  66   |   |  3,903  |   | 3.41%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Municipals                  |   |         |   |         |   |       |   |         |   |    |
| More than ten years         |   |  2,000  |   |  2,105  |   |  5    |   |  2,110  |   | 5.19%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Other investments           |   |         |   |         |   |       |   |         |   |    |
| More than five years        |   |  2,000  |   |  1,974  |   |  (4)  |   |  1,970  |   | 5.65%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Total investment securities | $      |  40,276 | $      |  41,149 | $      |  219  | $      |  41,368 |   | 3.07%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| December 31, 2009           |   |         |   |         |   |       | $      |  -      |   |    |
| US Government Agencies      |   |         |   |         |   |       |   |         |   |    |
| One to five years           | $      |  9,000  | $      |  9,315  | $      |  (66) | $      |  9,249  |   | 2.32%   |
| Five to ten years           |   |  3,000  |   |  3,029  |   |  32   |   |  3,061  |   | 4.50%   |
| More than ten years         |   |  34,250 |   |  35,284 |   |  75   |   |  35,359 |   | 5.73%   |
| Total                       |   |  46,250 |   |  47,628 |   |  41   |   |  47,669 |   | 5.70%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Mortgage-backed securities  |   |         |   |         |   |       |   |         |   |    |
| One to five years           |   |  389    |   |  435    |   |  (37) | $      |  398    |   | 4.40%   |
| Five to ten years           |   |  471    |   |  471    |   |  29   |   |  500    |   | 5.24%   |
| More than ten years         |   |  3,141  |   |  3,227  |   |  53   |   |  3,280  |   | 5.42%   |
|                        |   |  4,001  |   |  4,133  |   |  45   |   |  4,178  |   | 5.39%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Municipals                  |   |         |   |         |   |       |   |         |   |    |
| More than ten years         |   |  1,000  |   |  1,026  |   |  1    |   |  1,027  |   | 5.28%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Other investments           |   |         |   |         |   |       |   |         |   |    |
| More than five years        |   |  2,000  |   |  1,973  |   |  10   |   |  1,983  |   | 5.65%   |
|                        |   |         |   |         |   |       |   |         |   |    |
| Total investment securities | $      |  53,251 | $      |  54,760 |   |  $97  | $      |  54,857 |   | 4.72%   |

----

|                       |   | Securities in a Loss   |   | Securities in a Loss   |   |    |   |       |
|----------------------------|--------|------------------------|--------|------------------------|--------|---------|--------|------------|
|                       |   | Position for Less Than |   | Position for More Than |   |    |   |       |
|                       |   | 12 Months              |   | 12 Months              |   | Total   |
|                       |   | Fair                   |   | Unrealized             |   | Fair    |   | Unrealized |   | Fair |   | Unrealized |
|                       |   | Value                  |   | Losses                 |   | Value   |   | Losses     |   | Value |   | Losses |
|                       |   | (in thousands)         |
| March 31, 2010             |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| Investment securities      |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| available for sale         |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| US Government Agencies     | $      |  10,080           | $      |  (43)             | $      |  - | $      |  -    | $ |  10,080 | $ |  (43) |
| Mortgage-backed securities |   |  599              |   |  (42)             |   |  - |   |  -    |   |  599 |   |  (42) |
| Municipals                 |   |  518              |   |  (4)              |   |  - |   |  -    |   |  518 |   |  (4) |
| Other investments          |   |  1,970            |   |  (3)              |   |  - |   |  -    |   |  1,970 |   |  (3) |
|                       |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| Total                      | $      |  13,167           | $      |  (92)             | $      |  - | $      |  -    | $ |  13,167 | $ |  (92) |
|                       |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| December 31, 2009          |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| Investment securities      |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| available for sale         |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| US Government Agencies     | $      |  19,542           | $      |  (264)            | $      |  - | $      |  -    | $ |  19,542 | $ |  (264) |
|                       |   |                   |   |                   |   |    |   |       |   |   |   |   |   |
| Total                      | $      |  19,542           | $      |  (264)            | $      |  - | $      |  -    | $ |  19,542 | $ |  (264) |

|                               |   | March 31, 2010    |   | December 31, 2009 |
|------------------------------------|--------|-------------------|--------|-------------------|
|                               |   |   Amount     |   | %                 |   | Amount |   | % |
|                               |   |              |   |              |   |   |   |   |
| Noninterest bearing demand         | $      |  40,329,929  |   | 7.89%             | $ |  38,520,878 |   | 7.73% |
| NOW                                |   |  37,105,791  |   | 7.26%             |   |  36,441,259 |   | 7.31% |
| Money market                       |   |  105,829,790 |   | 20.71%            |   |  115,166,477 |   | 23.11% |
| Savings                            |   |  9,985,487   |   | 1.95%             |   |  8,901,299 |   | 1.79% |
| Time deposits of $100,000 and over |   |  126,119,292 |   | 24.68%            |   |  119,352,471 |   | 23.95% |
| Other time deposits                |   |  191,606,993 |   | 37.51%            |   |  179,902,740 |   | 36.11% |
|                               |   |              |   |              |   |   |   |   |
| Total                              | $      |  510,977,282 |   | 100.00%           | $ |  498,285,124 |   | 100.00% |

----

|                 |   | Three Months Ended March 31, |
|----------------------|--------|------------------------------|
|                 |   | 2010                         |   | 2009 |
|                 |   |                         |   | Weighted |   |   |   |   |   |   |   | Weighted |   |   |   |   |
|                 |   |                         |   | Average |   |   |   |   |   |   |   | Average |   |   |   |   |
|                 |   |                         |   | Exercise |   | Fair Value |   | Intrinsic |   |   |   | Exercise |   | Fair Value |   | Intrinsic |
|                 |   | Options                      |   | Price |   | Per Share |   | Value |   | Options |   | Price |   | Per Share |   | Value |
|                 |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options outstanding, |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| beginning of period  |   |  336,005                |   $ |  9.58 |   $ |  4.75 |   |   |   |  333,955 |   $ |  9.63 |   $ |  4.77 |   |   |
| Granted              |   |  -                      |   |  - |   |  - |   |   |   |  - |   |  - |   |  - |   |   |
| Forfeited            |   |  -                      |   |  - |   |  - |   |   |   |  - |   |  - |   |  - |   |   |
| Exercised            |   |  -                      |   |  - |   |  - |   |   |   |  - |   |  - |   |  - |   |   |
| Options outstanding, |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end of period        |   |  336,005                |   $ |  9.58 |   $ |  4.75 |   $ |  - |   |  333,955 |   $ |  9.63 |   $ |  4.77 |   $ |        - |
| Options exercisable, |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end of period        |   |  300,650                |   |   |   |   |   |   |   |  298,600 |   |   |   |   |   |   |

----

----

|                           |   | Fair Value Measurement at March 31, 2010 Using |
|--------------------------------|--------|------------------------------------------------|
|                           |   |                                           |   | Quoted Prices |   |   |   |   |
|                           |   |                                           |   | in Active |   |   |   |   |
|                           |   |                                           |   | Markets for |   | Other |   | Significant |
|                           |   |                                           |   | Identical |   | Observable |   | Unobservable |
|                           |   | Carrying                                       |   | Assets |   | Inputs |   | Inputs |
|                           |   | Value                                          |   | (Level 1) |   | (Level 2) |   | (Level 3) |
|                           |   | (in thousands)                                 |
| Financial Assets-Recurring     |   |                                           |   |   |   |   |   |   |
| US Government Agencies         | $      |  33,385                                   | $ |  - | $ |  33,385 | $ |  - |
| MBS                            |   |  3,903                                    |   |  - |   |  3,903 |   |  - |
| Municipals                     |   |  2,110                                    |   |  - |   |  2,110 |   |  - |
| Other available for sale (1)   |   |  1,970                                    |   |  - |   |  1,970 |   |  - |
|                           |   |                                           |   |   |   |   |   |   |
| Financial Assets-Non-Recurring |   |                                           |   |   |   |   |   |   |
| Impaired loans                 | $      | 33,255                                         | $ |  - | $ |  - | $ |  33,255 |
| Real estate owned              |   |  10,715                                   |   |  - |   |  - |   |  10,715 |
|                           |   |                                           |   |   |   |   |   |   |
| (1) Excludes restricted stock. |   |                                           |   |   |   |   |   |   |

----

|                           |   | Fair Value Measurement at December 31, 2009 Using |
|--------------------------------|--------|---------------------------------------------------|
|                           |   |                                              |   | Quoted Prices |   |   |   |   |
|                           |   |                                              |   | in Active |   |   |   |   |
|                           |   |                                              |   | Markets for |   | Other |   | Significant |
|                           |   |                                              |   | Identical |   | Observable |   | Unobservable |
|                           |   | Carrying                                          |   | Assets |   | Inputs |   | Inputs |
|                           |   | Value                                             |   | (Level 1) |   | (Level 2) |   | (Level 3) |
|                           |   | (in thousands)                                    |
| Financial Assets-Recurring     |   |                                              |   |   |   |   |   |   |
| US Government Agencies         | $      |  47,669                                      | $ |  - |   $ |          47,669 |   $ |                    - |
| MBS                            |   |  4,178                                       |   |  - |   |  4,178 |   |  - |
| Municipals                     |   |  1,027                                       |   |  - |   |  1,027 |   |  - |
| Other available for sale (1)   |   |  1,983                                       |   |  - |   |  1,983 |   |  - |
|                           |   |                                              |   |   |   |   |   |   |
| Financial Assets-Non-Recurring |   |                                              |   |   |   |   |   |   |
| Impaired loans                 | $      |  25,913                                      | $ |  - |   $ |                   - |   $ |           25,913 |
| Real estate owned              |   |  11,279                                      |   |  - |   |  - |   |  11,279 |
|                           |   |                                              |   |   |   |   |   |   |
| (1) Excludes restricted stock. |   |                                              |   |   |   |   |   |   |

----

|                                     |             | March 31.         |             | December 31,      |
|------------------------------------------|------------------|-------------------|------------------|-------------------|
|                                     |             | 2010              |             | 2009              |
|                                     |             | Carrying          |             | Estimated         |   | Carrying |   | Estimated |
|                                     |             | Value             |             | Fair Value        |   | Value |   | Fair Value |
|                                     |             |              |             |              |   |   |   |   |
| Financial assets                         |             |              |             |              |   |   |   |   |
| Cash and cash equivalents                | $                |  46,999,193  | $                |  $46,999,193 | $ |  $20,661,820 | $ |  $20,661,820 |
| Investment securities available for sale |  41,367,828 |              |  41,367,828 |              |  54,857,211 |   |  54,857,211 |
| Loans held for sale                      |             |  10,525,439  |             |  10,525,439  |   |  7,506,252 |   |  7,506,252 |
| Loans                                    |             |  455,013,938 |             |  455,913,883 |   |  457,046,616 |   |  466,271,730 |
| Accrued interest receivable              |             |  2,932,596   |             |  2,932,596   |   |  3,366,718 |   |  3,366,718 |
|                                     |             |              |             |              |   |   |   |   |
| Financial liabilities                    |             |              |             |              |   |   |   |   |
| Deposits                                 |             |  510,977,282 |             |  508,592,924 |   |  498,285,124 |   |  500,979,984 |
| FHLB borrowings                          |             |  29,000,000  |             |  29,045,019  |   |  29,000,000 |   |  29,011,904 |
| Trust preferred securities               |             |  8,764,000   |             |  10,215,897  |   |  8,764,000 |   |  8,764,000 |
| Other borrowings                         |             |  14,470,730  |             |  15,348,992  |   |  14,829,521 |   |  14,829,521 |
| Accrued interest payable                 |             |  483,568     |             |  483,568     |   |  501,069 |   |  501,069 |
|                                     |             |              |             |              |   |   |   |   |
| Off-balance-sheet instruments            |             |              |             |              |   |   |   |   |
| Undisbursed credit lines                 |             |              |             |  53,834,188  |   |   |   |  49,621,000 |
| Commitments to extend or originate       |             |              |             |              |   |   |   |   |
| credit                                   |             |              |             |  24,599,943  |   |   |   |  19,078,000 |
| Standby letters of credit                |             |              |             |  3,906,054   |   |   |   |  4,177,000 |

----

----

----

----

----

|               |   |   |   | Adjusted      |
|--------------------|--------|--------|--------|---------------|
|               |   |   |   | for Interest  |
|               |   |   |   | On Non-       |
| Quarter Ended      |   | Actual |   | Accrual Loans |
|               |   |   |   |          |
| March 31, 2009     |   | 3.04%  |   | 3.17%         |
| June 30, 2009      |   | 3.17%  |   | 3.27%         |
| September 30, 2009 |   | 3.17%  |   | 3.32%         |
| December 31, 2009  |   | 3.22%  |   | 3.27%         |
| March 31, 2010     |   | 3.26%  |   | 3.52%         |

----

| Average Balance Sheets |
|------------------------|
| (In thousands)         |

|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
|---------------------------------------------|----------|-----------------------------------|----------|-----------------------------------|--------|------------|----------|---------------|----------|-------------|--------|------------|
|                                        |     | Three Months Ended March 31, 2010 |     | Three Months Ended March 31, 2009 |
|                                        |     |                              |     | Interest                          |   | Annualized |     |          |     | Interest    |   | Annualized |
|                                        |     | Average                           |     | Income/                           |   | Yield      |     | Average       |     | Income/     |   | Yield      |
|                                        |     | Balance                           |     | Expense                           |   | Rate       |     | Balance       |     | Expense     |   | Rate       |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Loans net of deferred fees                  |   $ |     469,676   |   $ |  7,000                       |   | 6.04%      |   $ |  474,419 |   $ |  7,928 |   | 6.78%      |
| Investment securities                       |     |  46,280                      |     |  357                         |   | 3.13%      |     |  25,740  |     |  337   |   | 5.31%      |
| Loans held for sale                         |     |  7,208                       |     |  89                          |   | 5.01%      |     |  6,461   |     |  81    |   | 5.08%      |
| Federal funds and other                     |     |  26,226                      |     |  14                          |   | 0.22%      |     |  15,188  |     |  7     |   | 0.19%      |
| Total interest earning assets               |     |  549,390                     |     |  7,460                       |   | 5.51%      |     |  521,808 |     |  8,353 |   | 6.49%      |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Allowance for loan losses and deferred fees |     |  (10,582)                    |     |                              |   |       |     |  (6,221) |     |        |   |       |
| Cash and due from banks                     |     |  12,031                      |     |                              |   |       |     |  12,300  |     |        |   |       |
| Premises and equipment, net                 |     |  27,774                      |     |                              |   |       |     |  28,121  |     |        |   |       |
| Other assets                                |     |  34,324                      |     |                              |   |       |     |  24,953  |     |        |   |       |
| Total assets                                |   $ |    612,937         |     |                              |   |       |   $ |  580,961 |     |        |   |       |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Interest bearing deposits                   |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Interest checking                           |   $ |    37,222          |   $ |  135                         |   | 1.47%      |   $ |  19,122  |   $ |  67    |   | 1.42%      |
| Money market                                |     |  111,145                     |     |  370                         |   | 1.35%      |     |  30,420  |     |  132   |   | 1.76%      |
| Savings                                     |     |  9,391                       |     |  26                          |   | 1.12%      |     |  6,107   |     |  18    |   | 1.20%      |
| Certificates                                |     |  309,218                     |     |  1,980                       |   | 2.60%      |     |  388,877 |     |  3,786 |   | 3.95%      |
| Total deposits                              |     |  466,976                     |     |  2,511                       |   | 2.18%      |     |  444,526 |     |  4,003 |   | 3.65%      |
| Borrowings                                  |     |  55,234                      |     |  534                         |   | 3.92%      |     |  51,609  |     |  443   |   | 3.48%      |
| Total interest bearing liabilities          |     |  522,210                     |     |  3,045                       |   | 2.36%      |     |  496,135 |     |  4,446 |   | 3.63%      |
| Noninterest bearing deposits                |     |  38,001                      |     |                              |   |       |     |  36,013  |     |        |   |       |
| Other liabilities                           |     |  3,430                       |     |                              |   |       |     |  2,746   |     |        |   |       |
| Total liabilities                           |     |  563,641                     |     |                              |   |       |     |  534,894 |     |        |   |       |
| Equity capital                              |     |  49,297                      |     |                              |   |       |     |  46,067  |     |        |   |       |
| Total liabilities and capital               |   $ |  612,938                     |     |                              |   |       |   $ |  580,961 |     |        |   |       |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Net interest income before                  |     |                              |     |                              |   |       |     |          |     |        |   |       |
|   provision for loan losses       |     |                              |   $ |  4,415                       |   |       |     |          |   $ |  3,907 |   |       |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Interest spread - average yield on interest |     |                              |     |                              |   |       |     |          |     |        |   |       |
| earning assets, less average rate on        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| interest bearing liabilities                |     |                              |     |                              |   | 3.15%      |     |          |     |        |   | 2.86%      |
|                                        |     |                              |     |                              |   |       |     |          |     |        |   |       |
| Annualized net interest margin (net         |     |                              |     |                              |   |       |     |          |     |        |   |       |
| interest income expressed as                |     |                              |     |                              |   |       |     |          |     |        |   |       |
| percentage of average earning assets)       |     |                              |     |                              |   | 3.26%      |     |          |     |        |   | 3.04%      |

----

|                       |   | March 31,    |   | December 31, |   | September 30, |   | June 30,     |   | March 31,    |
|----------------------------|--------|--------------|--------|--------------|--------|---------------|--------|--------------|--------|--------------|
|                       |   | 2010         |   | 2009         |   | 2009          |   | 2009         |   | 2009         |
|                       |   |         |   |         |   |          |   |         |   |         |
| Nonaccrual loans           |   |         |   |         |   |          |   |         |   |         |
| Number                     |   |  130    |   |  123    |   |  117     |   |  96     |   |  49     |
| Amount                     | $      |  33,255 | $      |  25,913 | $      |  21,916  | $      |  18,795 | $      |  13,369 |
| Other real estate owned    |   |  10,715 |   |  11,279 |   |  11,249  |   |  4,626  |   |  3,967  |
|                       |   |         |   |         |   |          |   |         |   |         |
| Nonperforming assets       | $      |  43,970 | $      |  37,192 | $      |  33,165  | $      |  23,421 | $      | 17,336       |
|                       |   |         |   |         |   |          |   |         |   |         |
| Percentage of total assets | 7.14%  |         | 6.17%  |         | 5.35%  |          | 3.94%  |         | 2.99%  |

|                                 |   | March 31,     |   | December 31,  |   | September 30, |   | June 30,     |   | March 31,    |
|--------------------------------------|--------|---------------|--------|---------------|--------|---------------|--------|--------------|--------|--------------|
|                                 |   | 2010          |   | 2009          |   | 2009          |   | 2009         |   | 2009         |
|                                 |   |          |   |          |   |          |   |         |   |         |
| Loans 90 days past due and           |   |          |   |          |   |          |   |         |   |         |
| still accruing                       | $      |  2,535   | $      |  4,787   | $      |  1,661   | $      |  1,670  | $      |  1,435  |
|                                 |   |          |   |          |   |          |   |         |   |         |
| Nonaccrual loans                     |   |  33,255  |   |  25,913  |   |  21,916  |   |  18,795 |   |  13,369 |
|                                 |   |          |   |          |   |          |   |         |   |         |
| Other real estate owned              |   |  10,715  |   |  11,279  |   |  11,249  |   |  4,626  |   |  3,967  |
|                                 |   |          |   |          |   |          |   |         |   |         |
| Allowance for loan losses            |   |          |   |          |   |          |   |         |   |         |
| Beginning balance                    | $      |  10,522  | $      |  9,527   | $      |  9,618   | $      |  6,849  | $      |  6,059  |
| Provision for loan losses            |   |  500     |   |  3,020   |   |  6,000   |   |  3,100  |   |  1,100  |
| Charge-offs                          |   |  (2,114) |   |  (2,026) |   |  (6,091) |   |  (336)  |   |  (314)  |
| Recoveries                           |   |  183     |   |  1       |   |  -       |   |  5      |   |  4      |
| Ending balance                       | $      |  9,091   | $      |  10,522  | $      |  9,527   | $      |  9,618  | $      |  6,849  |
|                                 |   |          |   |          |   |          |   |         |   |         |
| Ratios                               |   |          |   |          |   |          |   |         |   |         |
| Allowance for loan losses to         |   |          |   |          |   |          |   |         |   |         |
| Loans, net of unearned income        |   | 1.96%         |   | 2.25%         |   | 2.02%         |   | 2.01%        |   | 1.45%        |
| Nonaccrual loans                     |   | 27.34%        |   | 40.61%        |   | 43.47%        |   | 51.17%       |   | 51.23%       |
| Nonperforming assets to total assets |   | 7.14%         |   | 6.17%         |   | 5.35%         |   | 3.94%        |   | 2.99%        |

----

----

| Loan Portfolio, Net |
|---------------------|
| (In thousands)      |

|                                       |   |           |   |              |   |           |   |   |
|--------------------------------------------|--------|----------------|--------|-------------------|--------|----------------|--------|--------|
|                                       |   | March 31, 2010 |   | December 31, 2009 |
|                                       |   | Amount         |   | %                 |   | Amount         |   | %      |
|                                       |   |           |   |              |   |           |   |   |
| Commercial                                 | $      |  35,510   |   | 7.7%              | $      |  39,576   |   | 8.5%   |
| Real estate - residential                  |   |  96,238   |   | 20.8%             |   |  93,657   |   | 20.0%  |
| Real estate - commercial                   |   |  246,779  |   | 53.2%             |   |  240,830  |   | 51.5%  |
| Real estate - construction                 |   |  74,110   |   | 16.0%             |   |  81,688   |   | 17.5%  |
| Consumer                                   |   |  11,081   |   | 2.4%              |   |  11,609   |   | 2.5%   |
|                                       |   |           |   |              |   |           |   |   |
| Total loans                                |   |  463,718  |   | 100.0%            |   |  467,360  |   | 100.0% |
| Deferred loan costs, net                   |   |  387      |   |              |   |  209      |   |   |
| Less:  Allowance for loan losses |   |  (9,091)  |   |              |   |  (10,522) |   |   |
|                                       |   |           |   |              |   |           |   |   |
| Total loans, net                           | $      |  455,014  |   |              | $      |  457,047  |   |   |

----

| Analysis of Allowance for Loan Losses |
|---------------------------------------|
| (In thousands)                        |

|                                             |   | Three Months Ended |
|--------------------------------------------------|--------|--------------------|
|                                             |   | March 31,          |
|                                             |   | 2010               |   | 2009 |
|                                             |   |               |   |   |
| Beginning balance                                | $      |  10,522       | $ |  6,059 |
| Provision for loan losses                        |   |  500          |   |  1,100 |
| Charge-offs                                      |   |               |   |   |
| Commercial and industrial                        | $      |  $(4)         | $ |  - |
| Real estate - residential                        |   |  (115)        |   |  - |
| Real estate - commercial                         |   |  (1,034)      |   |  - |
| Real estate - construction                       |   |  (957)        |   |  (187) |
| Consumer                                         |   |  (4)          |   |  (127) |
|                                             |   |  (2,114)      |   |  (314) |
| Recoveries                                       |   |               |   |   |
| Commercial and industrial                        |   |  -            |   |  - |
| Real estate - residential                        |   |  -            |   |  - |
| Real estate - commercial                         |   |  -            |   |  - |
| Real estate - construction                       |   |  101          |   |  3 |
| Consumer                                         |   |  82           |   |  1 |
|                                             |   |  183          |   |  4 |
| Net charge-offs                                  |   |  (1,931)      |   |  (310) |
|                                             |   |               |   |   |
| Ending balance                                   | $      |  9,091        | $ |  6,849 |
|                                             |   |               |   |   |
| Loans outstanding at end of period (1)           | $      |  464,105      | $ |  472,775 |
| Ratio of allowance for loan losses as            |   |               |   |   |
| a percent of loans outstanding at                |   |               |   |   |
| end of year                                      |   | 1.96%              |   | 1.45% |
|                                             |   |               |   |   |
| Average loans outstanding for the period (1)     | $      |  469,676      | $ |  474,420 |
| Ratio of net charge-offs to average loans        |   |               |   |   |
| outstanding for the period                       |   | 0.45%              |   | 0.07% |
|                                             |   |               |   |   |
| (1)  Loans are net of unearned income. |   |               |   |   |

----

----

| Analysis of Capital                                |
|----------------------------------------------------|
| (In thousands)                                     |
|                                               |   |   |   |   |
|                                               |   | March 31, |   | December 31, |
|                                               |   | 2010 |   | 2009 |
|                                               |   |   |   |   |
| Tier 1 capital                                     |   |   |   |   |
| Preferred stock                                    | $ |  59 | $ |  59 |
| Common stock                                       |   |  16,922 |   |  16,922 |
| Additional paid-in capital                         |   |  40,599 |   |  40,569 |
| Retained earnings (deficit)                        |   |  (8,378) |   |  (8,648) |
| Warrant Surplus                                    |   |  732 |   |  732 |
| Discount on preferred stock                        |   |  (601) |   |  (636) |
| Qualifying trust preferred securities              |   |  8,764 |   |  8,764 |
| Total Tier 1 capital                               |   |  58,097 |   |  57,762 |
|                                               |   |   |   |   |
| Tier 2 capital                                     |   |   |   |   |
| Allowance for loan losses includible in Tier 2 (1) |   |  6,290 |   |  6,310 |
| Total Tier 2 capital                               |   |  6,290 |   |  6,310 |
|                                               |   |   |   |   |
| Total risk-based capital                           |   |  64,387 |   |  64,072 |
|                                               |   |   |   |   |
| Risk-weighted assets                               | $ |  500,477 | $ |  500,602 |
|                                               |   |   |   |   |
| Capital ratios                                     |   |   |   |   |
| Tier 1 capital to risk-weighted assets             |   | 11.6% |   | 11.5% |
| Total capital to risk-weighted assets              |   | 12.9% |   | 12.8% |
| Leverage ratio (Tier 1 capital to                  |   |   |   |   |
| average assets)                                    |   | 9.5% |   | 9.4% |
| Equity to total assets                             |   | 9.5% |   | 8.1% |
|                                               |   |   |   |   |
| (1) Amount is limited to 1.25 percent of the       |   |   |   |   |
| Company's gross risk weighted assets               |   |   |   |   |

----

----

| Village Bank and Trust Financial Corp.                                                                                 |
|------------------------------------------------------------------------------------------------------------------------|
| Interest Rate Sensitivity GAP Analysis                                                                                 |
| March 31, 2010                                                                                                         |
| (In thousands)                                                                                                         |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   | Within 3 |   | 3 to 6 |   | 6 to 12 |   | 13 to 36 |   | More than |   |   |
|                                                                                                                   |   | Months |   | Months |   | Months |   | Months |   | 36 Months |   | Total |
| Interest Rate Sensitive Assets                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed rate                                                                                                             |   $ |     24,447 |   $ |    15,295 |   $ |    18,340 |   $ |    33,651 |   $ |    149,073 |   $ |    240,806 |
| Variable rate                                                                                                          |   |  139,532 |   |  5,141 |   |  7,372 |   |  17,745 |   |  53,122 |   |  222,912 |
| Investment securities                                                                                                  |   |  - |   |  - |   |  - |   |  2,347 |   |  39,021 |   |  41,368 |
| Loans held for sale                                                                                                    |   |  10,525 |   |  - |   |  - |   |  - |   |  - |   |  10,525 |
| Federal funds sold                                                                                                     |   |  34,520 |   |  - |   |  - |   |  - |   |  - |   |  34,520 |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total rate sensitive assets                                                                                            |   |  209,024 |   |  20,436 |   |  25,712 |   |  53,743 |   |  241,216 |   |  550,131 |
| Cumulative rate sensitive assets                                                                                       |   |  209,024 |   |  229,460 |   |  255,172 |   |  308,915 |   |  550,131 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Sensitive Liabilities                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking (2)                                                                                                  |   |  - |   |  - |   |  - |   |  37,105 |   |  - |   |  37,105 |
| Money market accounts                                                                                                  |   |  105,830 |   |  - |   |  - |   |  - |   |  - |   |  105,830 |
| Savings (2)                                                                                                            |   |  - |   |  - |   |  - |   |  9,985 |   |  - |   |  9,985 |
| Certificates of deposit                                                                                                |   |  41,416 |   |  41,720 |   |  102,459 |   |  116,643 |   |  15,488 |   |  317,726 |
| FHLB advances                                                                                                          |   |  15,000 |   |   |   |  - |   |  10,000 |   |  4,000 |   |  29,000 |
| Trust Preferred Securities                                                                                             |   |  - |   |  - |   |  - |   |   |   |  8,764 |   |  8,764 |
| Federal funds purchased                                                                                                |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |
| Other borrowings                                                                                                       |   |  4,611 |   |  41 |   |  88 |   |  537 |   |  9,194 |   |  14,471 |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total rate sensitive liabilities                                                                                       |   |  166,857 |   |  41,761 |   |  102,547 |   |  174,270 |   |  37,446 |   |  522,881 |
| Cumulative rate sensitive liabilities                                                                                  |   |  166,857 |   |  208,618 |   |  311,165 |   |  485,435 |   |  522,881 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitivity gap for period                                                                                        |   $ |  42,167 |   $ |  (21,325) |   $ |  (76,835) |   $ |  (120,527) |   $ |  203,770 |   |  $27,250 |
| Cumulative rate sensitivity gap                                                                                        |   $ |  42,167 |   $ |  20,842 |   $ |  (55,993) |   $ |  (176,520) |   $ |  27,250 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of cumulative gap to total assets                                                                                |   | 6.9% |   | 3.4% |   | (9.1)% |   | (28.7)% |   | 4.4% |   |   |
| Ratio of cumulative rate sensitive                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| assets to cumulative rate sensitive                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                                                                                            |   | 125.3% |   | 110.0% |   | 82.0% |   | 63.6% |   | 105.2% |   |   |
| Ratio of cumulative gap to cumulative                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| rate sensitive assets                                                                                                  |   | 20.2% |   | 9.1% |   | (21.9)% |   | (57.1)% |   | 5.0% |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Includes nonaccrual loans of approximately $33,251,000, which are spread throughout the categories.                |   |   |   |   |   |   |
| (2) Management believes that interest checking and savings accounts are generally not sensitive to changes in interest |   |   |   |   |
| rates and therefore has placed such deposits in the "13 to 36 months" category.                                        |   |   |   |   |   |   |   |   |

----

----

----

----

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|   | 31.1 | Certification of Chief Executive Officer |
|--------|------|------------------------------------------|

|   | 31.2 | Certification of Chief Financial Officer |
|--------|------|------------------------------------------|

|   | 32.1 | Statement of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 |
|--------|------|-----------------------------------------------------------------------------------------------------|

----

----

|   | Exhibit |
|--------|---------|

| Number | Document |
|--------|----------|

|     32.1 | Statement of Chief Executive Officer and Chief Financial Officer |
|-------------------------|------------------------------------------------------------------|

|   | Pursuant to 18 U.S.C. Section 1350 |
|--------|------------------------------------|

----