| 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                                                                                                                                                                 |   |
|                              | September 30, 2010 (unaudited) and December 31, 2009                                                                                                                                   | 3      |
|                              |                                                                                                                                                                                        |   |
|                              | Consolidated Statements of Income                                                                                                                                                           |   |
|                              | For the Three and Nine Months Ended                                                                                                                                                    |   |
|                              | September 30, 2010 and 2009 (unaudited)                                                                                                                                                     | 4      |
|                              |                                                                                                                                                                                        |   |
|                              | Consolidated Statements of Stockholders’ Equity                                                                                                                                       |   |
|                              | For the Nine Months Ended                                                                                                                                                              |   |
|                              | September 30, 2010 and 2009 (unaudited)                                                                                                                                                     | 5      |
|                              |                                                                                                                                                                                        |   |
|                              | Consolidated Statements of Cash Flows                                                                                                                                                       |   |
|                              | For the Nine Months Ended                                                                                                                                                              |   |
|                              | September 30, 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 | 18     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                                                                                               | 37     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 4T.  Controls and Procedures                                                                                                                                                 | 37     |
|                              |                                                                                                                                                                                        |   |
| Part II – Other Information |                                                                                                                                                                                        |
|                              |                                                                                                                                                                                        |   |
|                              | Item 1.  Legal Proceedings                                                                                                                                                        | 38     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 1A.  Risk Factors                                                                                                                                                            | 38     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                              | 39     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 3.  Defaults Upon Senior Securities                                                                                                                                          | 39     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 4.  (Removed and Reserved)                                                                                                                                                   | 39     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 5.  Other Information                                                                                                                                                        | 39     |
|                              |                                                                                                                                                                                        |   |
|                              | Item 6.  Exhibits                                                                                                                                                                 | 39     |
|                              |
| Signatures                        | 40                                                                                                                                                                                          |

----

| Village Bank and Trust Financial Corp. and Subsidiary                                         |
|-----------------------------------------------------------------------------------------------|
| Consolidated Balance Sheets                                                                   |
| September 30, 2010 (Unaudited) and December 31, 2009                                          |
|                                                                                          |   |   |   |   |
|                                                                                          |   | September 30, |   | December 31, |
|                                                                                          |   | 2010 |   | 2009* |
| Assets                                                                                        |   |   |   |   |
| Cash and due from banks                                                                       |   |  $         12,260,846 |   |  $       13,884,581 |
| Federal funds sold                                                                            |   |  6,652,465 |   |  6,777,239 |
| Investment securities available for sale                                                      |   |  28,311,767 |   |  54,857,211 |
| Loans held for sale                                                                           |   |  26,521,812 |   |  7,506,252 |
| Loans                                                                                         |   |   |   |   |
| Outstandings                                                                                  |   |  458,126,244 |   |  467,359,664 |
| Allowance for loan losses                                                                     |   |  (9,819,404) |   |  (10,521,931) |
| Deferred costs                                                                                |   |  503,957 |   |  208,883 |
|                                                                                          |   |  448,810,797 |   |  457,046,616 |
| Premises and equipment, net                                                                   |   |  27,552,281 |   |  27,799,084 |
| Accrued interest receivable                                                                   |   |  2,591,301 |   |  3,366,718 |
| Bank owned life insurance                                                                     |   |  5,823,314 |   |  5,431,002 |
| Other real estate owned                                                                       |   |  12,940,887 |   |  11,278,532 |
| Other assets                                                                                  |   |  12,413,607 |   |  14,046,120 |
|                                                                                          |   |   |   |   |
|                                                                                          |   |  $        583,879,077 |   |  $     601,993,355 |
|                                                                                          |   |   |   |   |
| Liabilities and Stockholders' Equity                                                          |   |   |   |   |
| Liabilities                                                                                   |   |   |   |   |
| Deposits                                                                                      |   |  $        490,053,073 |   |  $     498,285,124 |
| Trust preferred securities                                                                    |   |  8,764,000 |   |  8,764,000 |
| Federal Home Loan Bank advances                                                               |   |  28,750,000 |   |  29,000,000 |
| Other borrowings                                                                              |   |  4,784,451 |   |  14,829,521 |
| Accrued interest payable                                                                      |   |  431,844 |   |  501,069 |
| Other liabilities                                                                             |   |  2,140,100 |   |  2,765,550 |
| Total liabilities                                                                             |   |  534,923,468 |   |  554,145,264 |
|                                                                                          |   |   |   |   |
| 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;                                     |   |  16,953,664 |   |  16,922,512 |
| 4,238,416 shares issued and outstanding at September 30, 2010                                 |   |   |   |   |
| and 4,230,628 at December 31, 2009                                                            |   |   |   |   |
| Additional paid-in capital                                                                    |   |  40,610,691 |   |  40,568,771 |
| Retained earnings deficit                                                                     |   |  (9,119,127) |   |  (9,741,459) |
| Warrant surplus                                                                               |   |  732,479 |   |  732,479 |
| Discount on preferred stock                                                                   |   |  (528,720) |   |  (636,959) |
| Accumulated other comprehensive income (loss)                                                 |   |  247,670 |   |  (56,205) |
| Total stockholders' equity                                                                    |   |  48,955,609 |   |  47,848,091 |
|                                                                                          |   |   |   |   |
|                                                                                          |   |  $        583,879,077 |   |  $     601,993,355 |
|                                                                                          |   |   |   |   |
| * Certain December 31, 2009 amounts have been revised.  See Note 2 to the condensed |   |   |
| consolidated financial statements.                                                            |   |   |   |   |
|                                                                                          |   |   |   |   |
| See accompanying notes to consolidated financial statements.                                  |   |   |   |   |

----

| Village Bank and Trust Financial Corp. and Subsidiary           |
|-----------------------------------------------------------------|
| Consolidated Statements of Income                               |
| For the Three and Nine Months Ended September 30, 2010 and 2009 |
| (Unaudited)                                                     |
|                                                            |   |   |   |   |   |   |   |
|                                                            |   | Three Months Ended |   | Nine Months Ended |
|                                                            |   | September 30, |   | September 30, |
|                                                            |   | 2010 |   | 2009 |   | 2010 |   | 2009 |
| Interest income                                                 |   |   |   |   |   |   |   |   |
| Loans                                                           |   |  $       7,409,474 |   |  $     7,954,250 |   |  $     21,713,276 |   |  $       24,100,108 |
| Investment securities                                           |   |  237,059 |   |  373,158 |   |  879,976 |   |  996,135 |
| Federal funds sold                                              |   |  13,747 |   |  6,798 |   |  43,983 |   |  19,207 |
| Total interest income                                           |   |  7,660,280 |   |  8,334,206 |   |  22,637,235 |   |  25,115,450 |
|                                                            |   |   |   |   |   |   |   |   |
| Interest expense                                                |   |   |   |   |   |   |   |   |
| Deposits                                                        |   |  2,168,903 |   |  3,474,837 |   |  6,958,389 |   |  11,302,645 |
| Borrowed funds                                                  |   |  450,301 |   |  534,507 |   |  1,520,365 |   |  1,413,381 |
| Total interest expense                                          |   |  2,619,204 |   |  4,009,344 |   |  8,478,754 |   |  12,716,026 |
|                                                            |   |   |   |   |   |   |   |   |
| Net interest income                                             |   |  5,041,076 |   |  4,324,862 |   |  14,158,481 |   |  12,399,424 |
| Provision for loan losses                                       |   |  1,410,000 |   |  6,000,000 |   |  3,150,000 |   |  10,200,000 |
| Net interest income (loss) after provision                      |   |   |   |   |   |   |   |   |
| for loan losses                                                 |   |  3,631,076 |   |  (1,675,138) |   |  11,008,481 |   |  2,199,424 |
|                                                            |   |   |   |   |   |   |   |   |
| Noninterest income                                              |   |   |   |   |   |   |   |   |
| Service charges and fees                                        |   |  484,981 |   |  404,723 |   |  1,375,554 |   |  1,230,478 |
| Gain on sale of loans                                           |   |  1,922,868 |   |  1,842,129 |   |  4,761,092 |   |  4,295,216 |
| Gain (loss) on sale of assets                                   |   |  - |   |  (5,764) |   |  840,941 |   |  (43,637) |
| Rental income                                                   |   |  118,515 |   |  54,834 |   |  387,457 |   |  128,141 |
| Other                                                           |   |  136,111 |   |  98,020 |   |  494,196 |   |  267,161 |
| Total noninterest income                                        |   |  2,662,475 |   |  2,393,942 |   |  7,859,240 |   |  5,877,359 |
|                                                            |   |   |   |   |   |   |   |   |
| Noninterest expense                                             |   |   |   |   |   |   |   |   |
| Salaries and benefits                                           |   |  3,180,292 |   |  2,718,326 |   |  8,934,796 |   |  7,741,216 |
| Occupancy                                                       |   |  492,012 |   |  466,187 |   |  1,529,597 |   |  1,318,975 |
| Equipment                                                       |   |  192,505 |   |  210,882 |   |  631,619 |   |  668,806 |
| Supplies                                                        |   |  111,941 |   |  126,407 |   |  363,127 |   |  377,005 |
| Professional and outside services                               |   |  460,308 |   |  402,952 |   |  1,476,927 |   |  1,294,701 |
| Advertising and marketing                                       |   |  109,584 |   |  75,191 |   |  335,244 |   |  233,361 |
| Other real estate owned expenses                                |   |  327,261 |   |  111,543 |   |  1,008,597 |   |  1,057,059 |
| Other operating expenses                                        |   |  913,419 |   |  805,143 |   |  2,645,798 |   |  2,397,223 |
| Total noninterest expense                                       |   |  5,787,322 |   |  4,916,631 |   |  16,925,705 |   |  15,088,346 |
|                                                            |   |   |   |   |   |   |   |   |
| Net income (loss) before income taxes                           |   |  506,229 |   |  (4,197,827) |   |  1,942,016 |   |  (7,011,563) |
| Income tax expense (benefit)                                    |   |  172,117 |   |  (1,427,260) |   |  660,285 |   |  (2,383,932) |
|                                                            |   |   |   |   |   |   |   |   |
| Net income (loss)                                               |   |  334,112 |   |  (2,770,567) |   |  1,281,731 |   |  (4,627,631) |
|                                                            |   |   |   |   |   |   |   |   |
| Preferred stock dividends and amortization of discount          |   |  221,910 |   |  221,544 |   |  659,399 |   |  368,516 |
|                                                            |   |   |   |   |   |   |   |   |
| Net income (loss) available to common shareholders              |   |  $           112,202 |   |  $    (2,992,111) |   |  $          622,332 |   |  $       (4,996,147) |
|                                                            |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |
| Earnings (loss) per share, basic                                |   |  $                 0.03 |   |  $             (0.71) |   |  $                0.15 |   |  $                (1.18) |
| Earnings (loss) per share, diluted                              |   |  $                 0.03 |   |  $             (0.71) |   |  $                0.15 |   |  $                (1.18) |
|                                                            |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements     |   |   |   |   |   |   |   |

----

| Village Bank and Trust Financial Corp. and Subsidiary                                                                            |
|----------------------------------------------------------------------------------------------------------------------------------|
| Consolidated Statements of Stockholders' Equity                                                                                  |
| For the Nine Months Ended September 30, 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 |   |  $   (9,741,459) |   |  $    732,479 |   |  $     (636,959) |   |  $       (56,205) |   |  $  47,848,091 |
| Amortization of preferred stock                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         discount                                                                         |   |  - |   |  - |   |  - |   |  (108,239) |   |  - |   |  108,239 |   |  - |   |  - |
| Preferred stock dividend                                                                                                         |   |  - |   |  - |   |  - |   |  (551,160) |   |  - |   |  - |   |  - |   |  (551,160) |
| Issuance of common stock                                                                                                         |   |  - |   |  31,152 |   |  (31,152) |   |  - |   |  - |   |  - |   |  - |   |  - |
| Stock based compensation                                                                                                         |   |  - |   |  - |   |  73,072 |   |  - |   |  - |   |  - |   |  - |   |  73,072 |
| Minimum pension adjustment                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        (net of income taxes of 2,188)                                                         |   |  - |   |  - |   |  - |   |  - |   |   |   |   |   |  6,435 |   |  6,435 |
| Net income                                                                                                                       |   |  - |   |  - |   |  - |   |  1,281,731 |   |  - |   |  - |   |  - |   |  1,281,731 |
| Change in unrealized gain                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (loss) on securities                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale (net of                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income  taxes of $101,130)                                                                                             |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  297,440 |   |  297,440 |
| Total comprehensive income                                                                                                       |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  1,585,606 |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, September 30, 2010                                                                                                      |   |  $        58,952 |   |  $   16,953,664 |   |  $    40,610,691 |   |  $   (9,119,127) |   |  $   732,479 |   |  $     (528,720) |   |  $       247,670 |   | $  48,955,609 |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2008                                                                                                       |   |  $                  - |   |  $  16,917,488 |   |  $    25,737,048 |   |  $     3,453,788 |   |  $               - |   |  $                  - |   |  $         54,250 |   |  $  46,162,574 |
| Issuance of preferred stock                                                                                                      |   |  58,952 |   |  - |   |  14,679,048 |   |  - |   |  732,479 |   |  (732,479) |   |  - |   |  14,738,000 |
| Amortization of preferred stock                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         discount                                                                         |   |  - |   |  - |   |  - |   |  (59,624) |   |  - |   |  59,624 |   |  - |   |  - |
| Preferred stock dividend                                                                                                         |   |  - |   |  - |   |  - |   |  (308,892) |   |  - |   |   |   |  - |   |  (308,892) |
| Issuance of common stock                                                                                                         |   |  - |   |  5,024 |   |  (5,024) |   |  - |   |  - |   |   |   |  - |   |  - |
| Stock based compensation                                                                                                         |   |  - |   |  - |   |  123,129 |   |  - |   |  - |   |   |   |  - |   |  123,129 |
| Minimum pension adjustment                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        (net of income taxes of $2,188)                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |  6,435 |   |  6,435 |
| Net loss                                                                                                                         |   |  - |   |  - |   |  - |   |  (4,627,631) |   |  - |   |  - |   |  - |   |  (4,627,631) |
| Change in unrealized gain                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (loss) on securities                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| available for sale (net of income                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  taxes of $91,256)                                                                                                          |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  268,401 |   |  268,401 |
| Total comprehensive loss                                                                                                         |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |   |  (4,352,795) |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, September 30, 2009                                                                                                      |   |  $         58,952 |   |  $   16,922,512 |   |  $    40,534,201 |   |  $   (1,542,359) |   |  $   732,479 |   |  $    (672,855) |   |  $        329,086 |   |  $   56,362,016 |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| * Certain December 31, 2009 amounts have been revised.  See Note 2 to the condensed consolidated financial statements. |   |   |   |   |   |   |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Village Bank and Trust Financial Corp. and Subsidiary                            |
|----------------------------------------------------------------------------------|
| Consolidated Statements of Cash Flows                                            |
| Nine Months Ended September 30, 2010 and 2009                                    |
| (Unaudited)                                                                      |
|                                                                             | 2010 |   |   | 2009 |
| Cash Flows from Operating Activities                                             |   |   |   |   |   |
| Net income (loss)                                                                | $ |  1,281,731 |   | $ |  (4,627,631) |
| Adjustments to reconcile net income to net                                       |   |   |   |   |   |
| cash provided by (used in) operating activities:                                 |   |   |   |   |   |
| Depreciation and amortization                                                    |   |  976,201 |   |   |  907,351 |
| Provision for loan losses                                                        |   |  3,150,000 |   |   |  10,200,000 |
| Write-down of other real estate owned                                            |   |  184,000 |   |   |  - |
| Gain on securities                                                               |   |  (597,375) |   |   |  (8,061) |
| Gain on loans sold                                                               |   |  (4,761,092) |   |   |  (4,295,216) |
| Gain on sale of premises and equipment                                           |   |  (242,936) |   |   |  37,589 |
| Gain on sale of other real estate owned                                          |   |  (17,546) |   |   |  (29,340) |
| Stock compensation expense                                                       |   |  73,072 |   |   |  123,129 |
| Proceeds from sale of mortgage loans                                             |   |  192,149,659 |   |   |  190,689,712 |
| Origination of mortgage loans for sale                                           |   |  (206,404,127) |   |   |  (189,155,344) |
| Amortization of premiums and accrection of discounts on securities, net          |   |  367,149 |   |   |  148,794 |
| (Increase) decrease in interest receivable                                       |   |  775,417 |   |   |  (57,626) |
| Increase in bank owned life insurance                                            |   |  (392,312) |   |   |  (4,075,234) |
| (Increase) decrease  in other assets                                   |   |  1,485,722 |   |   |  (9,772,443) |
| Decrease in interest payable                                                     |   |  (69,225) |   |   |  (393,934) |
| Decrease in other liabilities                                                    |   |  (625,450) |   |   |  (305,806) |
| Net cash used in operating activities                                            |   |  (12,667,112) |   |   |  (10,614,060) |
|                                                                             |   |   |   |   |   |
| Cash Flows from Investing Activities                                             |   |   |   |   |   |
| Purchases of available for sale securities                                       |   |  (15,138,493) |   |   |  (33,331,406) |
| Proceeds from sales and calls of available for sale securities                   |   |  40,670,661 |   |   |  11,850,002 |
| Proceeds from maturities and principal payments of available for sale securities |   |  1,694,167 |   |   |  - |
| Proceeds from sale of other real estate owned                                    |   |  4,032,682 |   |   |  1,271,482 |
| Net increase in loans                                                            |   |  (775,672) |   |   |  (8,901,961) |
| Purchases of premises and equipment                                              |   |  (863,782) |   |   |  (1,232,306) |
| Proceeds from sale of premises and equipment                                     |   |  377,321 |   |   |  681,741 |
| Net cash provided by (used in) investing activities                              |   |  29,996,884 |   |   |  (29,662,448) |
|                                                                             |   |   |   |   |   |
| Cash Flows from Financing Activities                                             |   |   |   |   |   |
| Issuance of preferred stock                                                      |   |  - |   |   |  14,738,000 |
| Net increase (decrease) in deposits                                              |   |  (8,232,051) |   |   |  41,586,630 |
| Net increase (decrease) in federal home loan bank advances                       |   |  (250,000) |   |   |  4,000,000 |
| Net decrease in other borrowings                                                 |   |  (10,045,070) |   |   |  (7,488,317) |
| Dividends on preferred stock                                                     |   |  (551,160) |   |   |  (308,892) |
| Net cash provided by (used in) financing activities                              |   |  (19,078,281) |   |   |  52,527,421 |
|                                                                             |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                             |   |  (1,748,509) |   |   |  12,250,913 |
| Cash and cash equivalents, beginning of period                                   |   |  20,661,820 |   |   |  26,600,829 |
|                                                                             |   |   |   |   |   |
| Cash and cash equivalents, end of period                                         | $ |  18,913,311 |   | $ |  38,851,742 |
|                                                                             |   |   |   |   |   |
| Supplemental Schedule of Non Cash Activities                                     |   |   |   |   |   |
| Real estate owned assets acquired in settlement of loans                         | $ |  5,861,491 |   | $ |  8,941,954 |
|                                                                             |   |   |   |   |   |
| See accompanying notes to consolidated financial statements.                     |   |   |   |   |   |

----

----

|                      |   | December 31, 2009                               |
|---------------------------|--------|-------------------------------------------------|
|                      |   | As Reported                                     |   | Adjustment |   | As Revised |
|                      |   |                                            |   |   |   |   |
| Other assets              |   |  $     15,015,708 |   |  $     (969,588) |   |  $    14,046,120 |
| Other liabilities         |   |  2,641,410                                 |   |  124,140 |   |  2,765,550 |
| Retained earnings deficit |   |  (8,647,731)                               |   |  (1,093,728) |   |  (9,741,459) |

|                                                        |            | Three Months Ended September 30,                                                                                                           |            | Nine Months Ended September 30,                                                                                                  |
|-------------------------------------------------------------|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------|-----------------|----------------------------------------------------------------------------------------------------------------------------------|
|                                                        |            | 2010                                                                                                                                       |            | 2009                                                                                                                             |   | 2010 |   | 2009 |
| Numerator                                                   |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Net income (loss) - basic and diluted                       |            |  $                334,112                                  |            |  $          (2,770,567)                                                        |   |  $          1,281,731 |   |  $                (4,627,631) |
| Less:                                                       |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Preferred stock dividend                                    |            |  (185,739)                                                                                                                            |            |  (185,739)                                                                                                                  |   |  (551,160) |   |  (308,892) |
| Amortization of discount                                    |            |  (36,171)                                                                                                                             |            |  (35,805)                                                                                                                   |   |  (108,239) |   |  (59,624) |
| Net income (loss) available to common                       |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| shareholders                                                |            |  $                112,202                                       |            |  $           (2,992,111)                                                  |   |  $             622,332 |   |  $               (4,996,147) |
|                                                        |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Denominator                                                 |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Weighted average shares outstanding - basic                 |            |  4,238,416                                                                                                                            |            |  4,230,875                                                                                                                  |   |  4,237,505 |   |  4,230,516 |
| Dilutive effect of common stock options and                 |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
|       restricted stock awards |            |  -                                                                                                                                    |            |  -                                                                                                                          |   |  - |   |  - |
|                                                        |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Weighted average shares outstanding - diluted               |  4,238,416 |                                                                                                                                       |  4,230,875 |                                                                                                                             |  4,237,505 |   |  4,230,516 |
|                                                        |            |                                                                                                                                       |            |                                                                                                                             |   |   |   |   |
| Earnings (loss) per share - basic and diluted               |            |                                                                                                                                       |            |                                                                                                                             |   |   |
| Earnings (loss) per share - basic                           |            |  $                      0.03 |            |  $                    (0.71) |   |  $                   0.15 |   |  $                       (1.18) |
| Effect of dilutive common stock options                     |            |  -                                                                                                                                    |            |  -                                                                                                                          |   |  - |   |  - |

----

| Investment Securities Available-for-Sale |
|------------------------------------------|
| (Dollars in thousands)                   |
|                                     |   |   |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   | Unrealized |   | Estimated |   |   |
|                                     |   | Par |   | Amortized |   | Gain |   | Fair |   | Average |
|                                     |   | Value |   | Cost |   | (Loss) |   | Value |   | Yield |
| September 30, 2010                       |   |   |   |   |   |   |   |   |   |   |
| US Government Agencies                   |   |   |   |   |   |   |   |   |   |   |
| Within one year                          |   |  $                   2,000 |   |  $                 2,007 |   |  $                       8 |   |  $                2,015 |   | 2.33% |
| One to five years                        |   |  5,000 |   |  5,245 |   |  155 |   |  5,400 |   | 2.10% |
| Five to ten years                        |   |  1,440 |   |  1,440 |   |  (1) |   |  1,439 |   | 0.70% |
| Total                                    |   |  8,440 |   |  8,692 |   |  162 |   |  8,854 |   | 1.92% |
|                                     |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities               |   |   |   |   |   |   |   |   |   |   |
| Within one year                          |   |  151 |   |  165 |   |  (10) |   |  155 |   | 6.52% |
| One to five years                        |   |  6,301 |   |  6,366 |   |  185 |   |  6,551 |   | 3.33% |
| Five to ten years                        |   |  4,993 |   |  5,155 |   |  27 |   |  5,182 |   | 3.00% |
| More than ten years                      |   |  232 |   |  241 |   |  (4) |   |  237 |   | 1.93% |
| Total                                    |   |  11,677 |   |  11,927 |   |  198 |   |  12,125 |   | 3.20% |
|                                     |   |   |   |   |   |   |   |   |   |   |
| Municipals                               |   |   |   |   |   |   |   |   |   |   |
| Five to ten years                        |   |  5,000 |   |  5,168 |   |  117 |   |  5,285 |   | 5.15% |
|                                     |   |   |   |   |   |   |   |   |   |   |
| Other investments                        |   |   |   |   |   |   |   |   |   |   |
| More than five years                     |   |  2,000 |   |  1,975 |   |  73 |   |  2,048 |   | 5.65% |
|                                     |   |   |   |   |   |   |   |   |   |   |
| Total investment securities              |   |  $                27,117 |   |  $               27,762 |   |  $                 550 |   |  $               28,312 |   | 3.34% |
|                                     |   |   |   |   |   |   |   |   |   |   |
| 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 Value                                                                                                      |   | Unrealized                                                                                                                              |   | Fair |   | Unrealized |
| September 30, 2010                 |   | Value                                                                                                   |   | Losses                                                                                     |   | (Loss)                                                                                                          |   | Losses                                                                                                                                  |   | Value |   | Losses |
|                               |   | (In thousands)                                                                                          |
| Investment Securities              |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| available for sale                 |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| US Government Agencies             |   |  $                1,439 |   |  $              (16)      |   |  $                  - |   |  $                      - |   |  $               1,439 |   |  $                (16) |
| Mortgage-backed securities         |   |  483                                                                                               |   |  (2)                                                                                  |   |  -                                                                                                         |   |  -                                                                                                                                 |   |  483 |   |  (2) |
|                               |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| Total                              |   |  $                1,922 |   |  $              (18) |   |  $                  - |   |  $                      - |   |  $              1,922 |   |  $                (18) |
|                               |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
|                               |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| December 31, 2009                  |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| Investment securities              |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
|   available for sale     |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
|   US Government Agencies |   |  $              19,542       |   |  $            (264)            |   |  $                  - |   |  $                      - |   |  $            19,542 |   |  $             (264) |
|                               |   |                                                                                                    |   |                                                                                       |   |                                                                                                            |   |                                                                                                                                    |   |   |   |   |
| Total                              |   |  $              19,542            |   |  $            (264)            |   |  $                  - |   |  $                      - |   |  $            19,542 |   |  $             (264) |

|                               |   | September 30, 2010                        |   | December 31, 2009 |
|------------------------------------|--------|-------------------------------------------|--------|-------------------|
|                               |   | Amount                                    |   | %                 |   | Amount |   | % |
|                               |   |                                      |   |              |   |   |   |   |
| Noninterest bearing demand         |   |  $    40,790,586 |   | 8.32%             |   |  $    38,520,878 |   | 7.73% |
| Now                                |   |  32,013,417                          |   | 6.53%             |   |  36,441,259 |   | 7.31% |
| Money market                       |   |  92,663,141                          |   | 18.91%            |   |  115,166,477 |   | 23.11% |
| Savings                            |   |  10,463,651                          |   | 2.14%             |   |  8,901,299 |   | 1.79% |
| Time deposits of $100,000 and over |   |  129,121,578                         |   | 26.35%            |   |  119,352,471 |   | 23.95% |
| Other time deposits                |   |  185,000,700                         |   | 37.75%            |   |  179,902,740 |   | 36.10% |
|                               |   |                                      |   |              |   |   |   |   |
| Total                              |   |  $  490,053,073            |   | 100.00%           |   |  $   498,285,124 |   | 100.00% |

----

|                 |   | Nine Months Ended September 30, |
|----------------------|--------|---------------------------------|
|                 |   | 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              |   |  -                         |   |  - |   |  - |   |   |   |  3,000 |   |  4.45 |   |  2.86 |   |   |
| Forfeited            |   |  (25,800)                  |   |  10.77 |   |  5.02 |   |   |   |  (700) |   |  10.42 |   |  6.12 |   |   |
| Exercised            |   |  -                         |   |  - |   |  - |   |   |   |  - |   |  - |   |  - |   |   |
| Options outstanding, |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end of period        |   |  310,205                   |   |  $             9.48 |   |  $            4.73 |   |  $              - |   |  336,255 |   |  $              9.63 |   |  $             4.75 |   |  $                 - |
| Options exercisable, |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end of period        |   |  291,350                   |   |   |   |   |   |   |   |  300,900 |   |   |   |   |   |   |

----

| ·   | Level 1 Inputs— Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 2 Inputs — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 Inputs - Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                            |   | Fair Value Measurement at September 30, 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          |   |  $                  8,854 |   |  $                           - |   |  $                  8,854 |   |  $                          - |
| MBS                             |   |  12,125                                                                                                        |   |  - |   |  12,125 |   |  - |
| Municipals                      |   |  5,285                                                                                                         |   |  - |   |  5,285 |   |  - |
| Other available for sale (1)    |   |  2,048                                                                                                         |   |  - |   |  2,048 |   |  - |
|                            |   |                                                                                                                |   |   |   |   |   |   |
| Financial Assets-Non-Recurring  |   |                                                                                                                |   |   |   |   |   |   |
| Impaired loans                  |   |  $                23,943            |   |  $                           - |   |  $                         - |   |  $                23,943 |
| Real estate owned               |   |  12,941                                                                                                        |   |  - |   |  - |   |  12,941 |
| Residential loans held for sale |   |  26,522                                                                                                        |   |  - |   |  26,522 |   |  - |
|                            |   |                                                                                                                |   |   |   |   |   |   |
| (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 |
| Residential loans held for sale |   |  7,506                                                                                  |   |  - |   |  7,506 |   |  - |
|                            |   |                                                                                         |   |   |   |   |   |   |
| (1) Excludes restricted stock.  |   |                                                                                         |   |   |   |   |   |   |

----

|                                     |             | September 30,                                                            |             | December 31,                                                                                     |
|------------------------------------------|------------------|--------------------------------------------------------------------------|------------------|--------------------------------------------------------------------------------------------------|
|                                     |             | 2010                                                                     |             | 2009                                                                                             |
|                                     |             | Carrying                                                                 |             | Estimated                                                                                        |   | Carrying |   | Estimated |
|                                     |             | Value                                                                    |             | Fair Value                                                                                       |   | Value |   | Fair Value |
|                                     |             |                                                                     |             |                                                                                             |   |   |   |   |
| Financial assets                         |             |                                                                     |             |                                                                                             |   |   |   |   |
| Cash and cash equivalents                |             |  $          18,913,311 |             |  $              18,913,311 |   |  $             20,661,820 |   |  $            20,661,820 |
| Investment securities available for sale |  28,311,767 |                                                                     |  28,311,767 |                                                                                             |  54,857,211 |   |  54,857,211 |
| Loans held for sale                      |             |  26,521,812                                                         |             |  26,521,812                                                                                 |   |  7,506,252 |   |  7,506,252 |
| Loans                                    |             |  448,810,797                                                        |             |  448,629,947                                                                                |   |  457,046,616 |   |  466,271,730 |
| Accrued interest receivable              |             |  2,591,301                                                          |             |  2,591,301                                                                                  |   |  3,366,718 |   |  3,366,718 |
|                                     |             |                                                                     |             |                                                                                             |   |   |   |   |
| Financial liabilities                    |             |                                                                     |             |                                                                                             |   |   |   |   |
| Deposits                                 |             |  490,053,073                                                        |             |  492,103,799                                                                                |   |  498,285,124 |   |  500,979,984 |
| FHLB borrowings                          |             |  28,750,000                                                         |             |  29,050,023                                                                                 |   |  29,000,000 |   |  29,011,904 |
| Trust preferred securities               |             |  8,764,000                                                          |             |  8,764,000                                                                                  |   |  8,764,000 |   |  8,764,000 |
| Other borrowings                         |             |  4,784,451                                                          |             |  4,784,451                                                                                  |   |  14,829,521 |   |  14,783,055 |
| Accrued interest payable                 |             |  431,844                                                            |             |  431,844                                                                                    |   |  501,069 |   |  501,069 |
|                                     |             |                                                                     |             |                                                                                             |   |   |   |   |
| Off-balance-sheet instruments            |             |                                                                     |             |                                                                                             |   |   |   |   |
| Undisbursed credit lines                 |             |                                                                     |             |  49,200,742                                                                                 |   |   |   |  49,621,000 |
| Commitments to extend or originate       |             |                                                                     |             |                                                                                             |   |   |   |   |
| credit                                   |             |                                                                     |             |  25,182,542                                                                                 |   |   |   |  19,078,000 |
| Standby letters of credit                |             |                                                                     |             |  3,428,258                                                                                  |   |   |   |  4,177,000 |

----

----

----

----

----

|                                  |   |                                                                                                                 |   | Nine Months                                                                                    |
|---------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|
|                                  |   |                                                                                                                 |   | Ended Sept 30,                                                                                 |
|                                  |   | Third Quarter                                                                                                        |   | 2010                                                                                           |
|                                  |   | 2010                                                                                                                 |   | Compared to                                                                                    |
|                                  |   | Compared to                                                                                                          |   | Nine Months                                                                                    |
|                                  |   | Third Quarter                                                                                                        |   | Ended Sept 30,                                                                                 |
|                                  |   | 2009                                                                                                                 |   | 2009                                                                                           |
|                                  |   |                                                                                                                 |   |                                                                                           |
| Increase in net interest income       |   |  $                 716,000 |   |  $             1,759,000 |
| Decrease in provision for loan losses |   |  4,590,000                                                                                                      |   |  7,050,000                                                                                |
| Increase in gain on sale of loans     |   |  81,000                                                                                                         |   |  466,000                                                                                  |
| Gain on sale of securities            |   |  -                                                                                                              |   |  489,000                                                                                  |
| Gain on sale of land                  |   |  -                                                                                                              |   |  243,000                                                                                  |
| Increase in rental income             |   |  64,000                                                                                                         |   |  259,000                                                                                  |
| Increase in noninterest expenses      |   |  (871,000)                                                                                                      |   |  (1,837,000)                                                                              |

----

| Quarter Ended      |   | Actual |
|--------------------|--------|--------|
|               |   |   |
| June 30, 2009      |   | 3.17%  |
| September 30, 2009 |   | 3.17%  |
| December 31, 2009  |   | 3.22%  |
| March 31, 2010     |   | 3.26%  |
| June 30, 2010      |   | 3.46%  |
| September 30, 2010 |   | 3.74%  |

----

----

| Average Balance Sheets                      |
|---------------------------------------------|
| (in thousands)                              |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | Three Months Ended September 30, 2010 |   | Three Months Ended September 30, 2009 |
|                                        |   |   |   | Interest |   | Annualized |   |   |   | Interest |   | Annualized |
|                                        |   | Average |   | Income/ |   | Yield |   | Average |   | Income/ |   | Yield |
|                                        |   | Balance |   | Expense |   | Rate |   | Balance |   | Expense |   | Rate |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of deferred fees                  |   |  $    461,442 |   |  $       7,190 |   | 6.18% |   |  $    483,613 |   |  $     7,777 |   | 6.38% |
| Investment securities                       |   |  29,844 |   |  237 |   | 3.15% |   |  31,563 |   |  373 |   | 4.69% |
| Loans held for sale                         |   |  18,752 |   |  219 |   | 4.63% |   |  12,993 |   |  177 |   | 5.40% |
| Federal funds and other                     |   |  24,297 |   |  14 |   | 0.23% |   |  18,240 |   |  7 |   | 0.15% |
| Total interest earning assets               |   |  534,335 |   |  7,660 |   | 5.69% |   |  546,409 |   |  8,334 |   | 6.05% |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses and deferred fees |   |  (9,384) |   |   |   |   |   |  (9,697) |   |   |   |   |
| Cash and due from banks                     |   |  14,751 |   |   |   |   |   |  18,066 |   |   |   |   |
| Premises and equipment, net                 |   |  27,665 |   |   |   |   |   |  27,722 |   |   |   |   |
| Other assets                                |   |  34,235 |   |   |   |   |   |  27,103 |   |   |   |   |
| Total assets                                |   |  $    601,602 |   |   |   |   |   |  $    609,603 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing deposits                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                           |   |  $      32,704 |   |  $58 |   | 0.70% |   |  $29,465 |   |  $      137 |   | 1.84% |
| Money market                                |   |  97,384 |   |  236 |   | 0.96% |   |  96,455 |   |  468 |   | 1.92% |
| Savings                                     |   |  10,323 |   |  18 |   | 0.69% |   |  6,916 |   |  21 |   | 1.20% |
| Certificates                                |   |  312,707 |   |  1,857 |   | 2.36% |   |  321,579 |   |  2,849 |   | 3.51% |
| Total                                       |   |  453,118 |   |  2,169 |   | 1.90% |   |  454,415 |   |  3,475 |   | 3.03% |
| Borrowings                                  |   |  51,412 |   |  450 |   | 3.47% |   |  51,382 |   |  534 |   | 4.12% |
| Total interest bearing liabilities          |   |  504,530 |   |  2,619 |   | 2.06% |   |  505,797 |   |  4,009 |   | 3.14% |
| Noninterest bearing deposits                |   |  44,189 |   |   |   |   |   |  41,913 |   |   |   |   |
| Other liabilities                           |   |  2,910 |   |   |   |   |   |  2,631 |   |   |   |   |
| Total liabilities                           |   |  551,629 |   |   |   |   |   |  550,341 |   |   |   |   |
| Equity capital                              |   |  49,973 |   |   |   |   |   |  59,262 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and capital               |   |  $    601,602 |   |   |   |   |   |  $    609,603 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income before provision        |   |   |   |   |   |   |   |   |   |  $   4,325 |   |   |
| for loan losses                             |   |   |   |  $     5,041 |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest spread - average yield on interest |   |   |   |   |   |   |   |   |   |   |   |   |
| earning assets, less average rate on        |   |   |   |   |   |   |   |   |   |   |   |   |
| interest bearing liabilities                |   |   |   |   |   | 3.63% |   |   |   |   |   | 2.91% |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Annualized net interest margin (net         |   |   |   |   |   |   |   |   |   |   |   |   |
| interest income expressed as                |   |   |   |   |   |   |   |   |   |   |   |   |
| percentage of average earning assets)       |   |   |   |   |   | 3.74% |   |   |   |   |   | 3.17% |

----

| Average Balance Sheets                      |
|---------------------------------------------|
| (In thousands)                              |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   | Nine Months Ended September 30, 2010 |   | Nine Months Ended September 30, 2009 |
|                                        |   |   |   | Interest |   | Annualized |   |   |   | Interest |   | Annualized |
|                                        |   | Average |   | Income/ |   | Yield |   | Average |   | Income/ |   | Yield |
|                                        |   | Balance |   | Expense |   | Rate |   | Balance |   | Expense |   | Rate |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans net of deferred fees                  |   |  $    465,087 |   |  $   21,225 |   | 6.10% |   |  $    478,606 |   |  $      23,682 |   | 6.62% |
| Investment securities                       |   |  39,099 |   |  $880 |   | 3.01% |   |  $      26,867 |   |  $996 |   | 4.96% |
| Loans held for sale                         |   |  13,491 |   |  488 |   | 4.84% |   |  10,775 |   |  418 |   | 5.19% |
| Federal funds and other                     |   |  25,882 |   |  44 |   | 0.23% |   |  15,704 |   |  19 |   | 0.16% |
| Total interest earning assets               |   |  543,559 |   |  22,637 |   | 5.57% |   |  531,952 |   |  25,115 |   | 6.31% |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses and deferred fees |   |  (9,665) |   |   |   |   |   |  (7,679) |   |   |   |   |
| Cash and due from banks                     |   |  12,565 |   |   |   |   |   |  14,372 |   |   |   |   |
| Premises and equipment, net                 |   |  27,718 |   |   |   |   |   |  27,898 |   |   |   |   |
| Other assets                                |   |  33,952 |   |   |   |   |   |  25,855 |   |   |   |   |
| Total assets                                |   |  $   608,129 |   |   |   |   |   |  $    592,398 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing deposits                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking                           |   |  $     35,512 |   |  $       274 |   | 1.03% |   |  $     23,562 |   |  $         282 |   | 1.60% |
| Money market                                |   |  104,034 |   |  863 |   | 1.11% |   |  54,419 |   |  759 |   | 1.86% |
| Savings                                     |   |  10,018 |   |  62 |   | 0.83% |   |  6,730 |   |  60 |   | 1.19% |
| Certificates                                |   |  312,244 |   |  5,759 |   | 2.47% |   |  361,144 |   |  10,202 |   | 3.78% |
| Total                                       |   |  461,808 |   |  6,958 |   | 2.01% |   |  445,855 |   |  11,303 |   | 3.39% |
| Borrowings                                  |   |  52,247 |   |  1,520 |   | 3.89% |   |  50,716 |   |  1,413 |   | 3.73% |
| Total interest bearing liabilities          |   |  514,055 |   |  8,478 |   | 2.21% |   |  496,571 |   |  12,716 |   | 3.42% |
| Noninterest bearing deposits                |   |  41,332 |   |   |   |   |   |  39,563 |   |   |   |   |
| Other liabilities                           |   |  2,760 |   |   |   |   |   |  2,108 |   |   |   |   |
| Total liabilities                           |   |  558,147 |   |   |   |   |   |  538,242 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity capital                              |   |  49,982 |   |   |   |   |   |  54,156 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and capital               |   |  $    608,129 |   |   |   |   |   |  $    592,398 |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income before provision        |   |   |   |   |   |   |   |   |   |  $   12,399 |   |   |
| for loan losses                             |   |   |   |  $   14,159 |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest spread - average yield on interest |   |   |   |   |   |   |   |   |   |   |   |   |
| earning assets, less average rate on        |   |   |   |   |   |   |   |   |   |   |   |   |
| interest bearing liabilities                |   |   |   |   |   | 3.36% |   |   |   |   |   | 2.89% |
|                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Annualized net interest margin (net         |   |   |   |   |   |   |   |   |   |   |   |   |
| interest income expressed as                |   |   |   |   |   |   |   |   |   |   |   |   |
| percentage of average earning assets)       |   |   |   |   |   | 3.48% |   |   |   |   |   | 3.12% |

----

|                       |   | Sept. 30,                                                                                                            |   | June 30,                                                                                                       |   | March 31,                                                                                                            |   | Dec. 31,                                                                                                 |   | Sept. 30,                                                                                    |
|----------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|
|                       |   | 2010                                                                                                                 |   | 2010                                                                                                           |   | 2010                                                                                                                 |   | 2009                                                                                                     |   | 2009                                                                                         |
|                       |   |                                                                                                                 |   |                                                                                                           |   |                                                                                                                 |   |                                                                                                     |   |                                                                                         |
| Nonaccrual loans           |   |                                                                                                                 |   |                                                                                                           |   |                                                                                                                 |   |                                                                                                     |   |                                                                                         |
| Number                     |   |  117                                                                                                            |   |  132                                                                                                      |   |  130                                                                                                            |   |  123                                                                                                |   |  117                                                                                    |
| Amount                     |   |  $                  23,943      |   |  $                 31,106 |   |  $                  33,255 |   |  $                25,193 |   |  $              21,916 |
| Other real estate owned    |   |  12,941                                                                                                         |   |  11,816                                                                                                   |   |  10,715                                                                                                         |   |  11,279                                                                                             |   |  11,249                                                                                 |
|                       |   |                                                                                                                 |   |                                                                                                           |   |                                                                                                                 |   |                                                                                                     |   |                                                                                         |
|                       |   |  $                  36,884 |   |  $                 42,922 |   |  $                  43,970 |   |  $                36,472 |   |  $              33,165 |
|                       |   |                                                                                                                 |   |                                                                                                           |   |                                                                                                                 |   |                                                                                                     |   |                                                                                         |
| Percentage of total assets |   | 6.32%                                                                                                                |   | 7.08%                                                                                                          |   | 7.14%                                                                                                                |   | 6.18%                                                                                                    |   | 5.35%                                                                                        |

----

|                                 |   | Sept 30,                                                                                                                                        |   | June 30,                                                                                                   |   | Mar 31,                                                                                            |   | Dec 31,                                                                                           |   | Sept 30,                                                                                   |
|--------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------|
|                                 |   | 2010                                                                                                                                            |   | 2010                                                                                                       |   | 2010                                                                                               |   | 2009                                                                                              |   | 2009                                                                                       |
|                                 |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Loans 90 days past due and           |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| still accruing                       |   |  $                       738 |   |  $                959 |   |  $                2,535 |   |  $               4,787 |   |  $             1,661 |
|                                 |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Nonaccrual loans                     |   |  23,943                                                                                                                                    |   |  31,106                                                                                               |   |  33,255                                                                                       |   |  25,913                                                                                      |   |  21,916                                                                               |
|                                 |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Other real estate owned              |   |  12,941                                                                                                                                    |   |  11,816                                                                                               |   |  10,715                                                                                       |   |  11,279                                                                                      |   |  11,249                                                                               |
|                                 |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Allowance for loan losses            |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Beginning balance                    |   |  $                    9,500                      |   |  $              9,091                     |   |  $              10,522            |   |  $               9,527 |   |  $             9,618      |
| Provision for loan losses            |   |  1,410                                                                                                                                     |   |  1,240                                                                                                |   |  500                                                                                          |   |  3,020                                                                                       |   |  6,000                                                                                |
| Charge-offs                          |   |  (1,091)                                                                                                                                   |   |  (954)                                                                                                |   |  (2,114)                                                                                      |   |  (2,026)                                                                                     |   |  (6,091)                                                                              |
| Recoveries                           |   |  -                                                                                                                                         |   |  123                                                                                                  |   |  183                                                                                          |   |  1                                                                                           |   |  -                                                                                    |
| Ending balance                       |   |  $                    9,819                      |   |  $              9,500                     |   |  $               9,091       |   |  $             10,522            |   |  $             9,527      |
|                                 |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Ratios                               |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Allowance for loan losses to         |   |                                                                                                                                            |   |                                                                                                       |   |                                                                                               |   |                                                                                              |   |                                                                                       |
| Loans, net of unearned income        |   | 2.14%                                                                                                                                           |   | 2.05%                                                                                                      |   | 1.96%                                                                                              |   | 2.25%                                                                                             |   | 2.02%                                                                                      |
| Nonaccrual loans                     |   | 41.01%                                                                                                                                          |   | 30.54%                                                                                                     |   | 27.34%                                                                                             |   | 40.61%                                                                                            |   | 43.47%                                                                                     |
| Nonperforming assets to total assets |   | 6.32%                                                                                                                                           |   | 7.06%                                                                                                      |   | 7.14%                                                                                              |   | 6.17%                                                                                             |   | 5.35%                                                                                      |

----

| Loan Portfolio, Net                        |
|--------------------------------------------|
| (In thousands)                             |
|                                       |   |   |   |   |   |   |   |   |
|                                       |   | September 30, 2010 |   | December 31, 2009 |
|                                       |   | Amount |   | % |   | Amount |   | % |
|                                       |   |   |   |   |   |   |   |   |
| Commercial                                 |   |  $   32,133 |   | 7.0% |   |  $   39,576 |   | 8.5% |
| Real estate - residential                  |   |  99,456 |   | 21.7% |   |  93,657 |   | 20.0% |
| Real estate - commercial                   |   |  258,055 |   | 56.3% |   |  240,830 |   | 51.5% |
| Real estate - construction                 |   |  57,988 |   | 12.7% |   |  81,688 |   | 17.5% |
| Consumer                                   |   |  10,494 |   | 2.3% |   |  11,609 |   | 2.5% |
|                                       |   |   |   |   |   |   |   |   |
| Total loans                                |   |  458,126 |   | 100.0% |   |  467,360 |   | 100.0% |
| Less:  deferred costs, net       |   |  504 |   |   |   |  209 |   |   |
| Less:  allowance for loan losses |   |  (9,819) |   |   |   |  (10,522) |   |   |
|                                       |   |   |   |   |   |   |   |   |
| Total loans, net                           |   |  $  448,811 |   |   |   |  $  457,047 |   |   |

----

----

| Analysis of Allowance for Loan Losses           |
|-------------------------------------------------|
| (In thousands)                                  |
|                                            |   |   |   |   |
|                                            |   | Nine Months Ended |
|                                            |   | September 30, |
|                                            |   | 2010 |   | 2009 |
|                                            |   |   |   |   |
| Beginning balance                               |   |  $                  10,522 |   |  $                       6,059 |
| Provision for loan losses                       |   |  3,150 |   |  10,200 |
| Charge-offs                                     |   |   |   |   |
| Commercial and industrial                       |   |  $                    (804) |   |  $                     (5,201) |
| Real estate - residential                       |   |  (957) |   |  (226) |
| Real estate - commercial                        |   |  (1,228) |   |  - |
| Real estate - construction                      |   |  (1,017) |   |  (460) |
| Consumer                                        |   |  (153) |   |  (855) |
|                                            |   |  (4,159) |   |  (6,742) |
| Recoveries                                      |   |   |   |   |
| Commercial and industrial                       |   |  203 |   |  - |
| Real estate - residential                       |   |  1 |   |  - |
| Real estate - commercial                        |   |  - |   |  - |
| Real estate - construction                      |   |  101 |   |  3 |
| Consumer                                        |   |  1 |   |  7 |
|                                            |   |  306 |   |  10 |
| Net charge-offs                                 |   |  (3,853) |   |  (6,732) |
|                                            |   |   |   |   |
| Ending balance                                  |   |  $                    9,819 |   |  $                       9,527 |
|                                            |   |   |   |   |
| Loans outstanding at end of period (1)          |   |  $                458,126 |   | $                   471,621 |
| Ratio of allowance for loan losses as           |   |   |   |   |
| a percent of loans outstanding at               |   |   |   |   |
| end of period                                   |   | 2.14% |   | 2.02% |
|                                            |   |   |   |   |
| Average loans outstanding for the period (1)    |   |  $                465,087 |   |  $                   478,607 |
| Ratio of net charge-offs to average loans       |   |   |   |   |
| outstanding for the period                      |   | 0.83% |   | 1.41% |
|                                            |   |   |   |   |
| (1)  Loans are net of deferred costs. |   |   |   |   |

----

----

| Analysis of Capital                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------|
| (In thousands)                                                                                                                   |
|                                                                                                                             |   |   |   |   |
|                                                                                                                             |   | September 30, |   | December 31, |
|                                                                                                                             |   | 2010 |   | 2009 * |
|                                                                                                                             |   |   |   |   |
| Tier 1 capital                                                                                                                   |   |   |   |   |
| Preferred stock                                                                                                                  |   |  $              59 |   |  $               59 |
| Common stock                                                                                                                     |   |  16,954 |   |  16,922 |
| Additional paid-in capital                                                                                                       |   |  40,611 |   |  40,569 |
| Retained earnings (deficit)                                                                                                      |   |  (9,119) |   |  (9,741) |
| Warrant Surplus                                                                                                                  |   |  732 |   |  732 |
| Discount on preferred stock                                                                                                      |   |  (529) |   |  (636) |
| Qualifying trust preferred securities                                                                                            |   |  8,764 |   |  8,764 |
| Total equity                                                                                                                     |   |  57,472 |   |  56,669 |
| Total Tier 1 capital                                                                                                             |   |  57,472 |   |  56,669 |
|                                                                                                                             |   |   |   |   |
| Tier 2 capital                                                                                                                   |   |   |   |   |
| Allowance for loan losses (1)                                                                                                    |   |  6,082 |   |  6,310 |
| Total Tier 2 capital                                                                                                             |   |  6,082 |   |  6,310 |
|                                                                                                                             |   |   |   |   |
| Total risk-based capital                                                                                                         |   |  63,554 |   |  62,979 |
|                                                                                                                             |   |   |   |   |
| Risk-weighted assets                                                                                                             |   |  $      482,798 |   | $     500,602 |
|                                                                                                                             |   |   |   |   |
| Capital ratios                                                                                                                   |   |   |   |   |
| Tier 1 capital to risk-weighted assets                                                                                           |   | 11.9% |   | 11.3% |
| Total capital to risk-weighted assets                                                                                            |   | 13.2% |   | 12.6% |
| Leverage ratio (Tier 1 capital to                                                                                                |   |   |   |   |
| average assets)                                                                                                                  |   | 9.6% |   | 9.4% |
| Equity to total assets                                                                                                           |   | 9.8% |   | 8.1% |
|                                                                                                                             |   |   |   |   |
| (1) Amount is limited to 1.25 percent of                                                                                         |   |   |   |   |
| the Company's gross risk weighted assets                                                                                         |   |   |   |
|                                                                                                                             |   |   |   |   |
| * Certain December 31, 2009 amounts have been revised.  See Note 2 to the condensed consolidated financial statements. |

----

----

| Village Bank and Trust Financial Corp.                                                                                 |
|------------------------------------------------------------------------------------------------------------------------|
| Interest Rate Sensitivity GAP Analysis                                                                                 |
| September 30, 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                                                                                                             |   |  $            32,184 |   |  $            11,192 |   |  $              21,379 |   |  $            40,629 |   |   $              145,049 |   |  $          250,433 |
| Variable rate                                                                                                          |   |  114,515 |   |  2,912 |   |  9,897 |   |  14,721 |   |  65,648 |   |  207,693 |
| Investment securities                                                                                                  |   |  2,107 |   |  - |   |  - |   |  5,400 |   |  20,805 |   |  28,312 |
| Loans held for sale                                                                                                    |   |  26,522 |   |  - |   |  - |   |  - |   |  - |   |  26,522 |
| Federal funds sold                                                                                                     |   |  6,652 |   |  - |   |  - |   |  - |   |  - |   |  6,652 |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total rate sensitive assets                                                                                            |   |  181,980 |   |  14,104 |   |  31,276 |   |  60,750 |   |  231,502 |   |  519,612 |
| Cumulative rate sensitive assets                                                                                       |   |  181,980 |   |  196,084 |   |  227,360 |   |  288,110 |   |  519,612 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Sensitive Liabilities                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest checking (2)                                                                                                  |   |  - |   |  - |   |  - |   |  32,013 |   |  - |   |  32,013 |
| Money market accounts                                                                                                  |   |  92,663 |   |  - |   |  - |   |  - |   |  - |   |  92,663 |
| Savings (2)                                                                                                            |   |  - |   |  - |   |  - |   |  10,464 |   |  - |   |  10,464 |
| Certificates of deposit                                                                                                |   |  46,912 |   |  75,487 |   |  91,214 |   |  77,599 |   |  22,909 |   |  314,121 |
| FHLB advances                                                                                                          |   |  - |   |   |   |  5,000 |   |  15,750 |   |  8,000 |   |  28,750 |
| Trust Preferred Securities                                                                                             |   |  - |   |  - |   |  - |   |   |   |  8,764 |   |  8,764 |
| Federal funds purchased                                                                                                |   |  - |   |  - |   |  - |   |  - |   |  - |   |  - |
| Other borrowings                                                                                                       |   |  4,784 |   |  - |   |  - |   |  - |   |  - |   |  4,784 |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total rate sensitive liabilities                                                                                       |   |  144,359 |   |  75,487 |   |  96,214 |   |  135,826 |   |  39,673 |   |  491,559 |
| Cumulative rate sensitive liabilities                                                                                  |   |  144,359 |   |  219,846 |   |  316,060 |   |  451,886 |   |  491,559 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rate sensitivity gap for period                                                                                        |   |  $            37,621 |   |  $          (61,383) |   |  $            (64,938) |   |  $          (75,076) |   |  $              191,829 |   |  $            28,053 |
| Cumulative rate sensitivity gap                                                                                        |   |  $            37,621 |   |  $          (23,762) |   |  $            (88,700) |   |  $        (163,776) |   |  $                28,053 |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of cumulative gap to total assets                                                                                |   | 6.4% |   | (4.0)% |   | (15.1)% |   | (27.9)% |   | 4.8% |   |   |
| Ratio of cumulative rate sensitive                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| assets to cumulative rate sensitive                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                                                                                            |   | 126.1% |   | 89.2% |   | 71.9% |   | 63.8% |   | 105.7% |   |   |
| Ratio of cumulative gap to cumulative                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| rate sensitive assets                                                                                                  |   | 20.7% |   | (12.1)% |   | (39.0)% |   | (56.8)% |   | 5.4% |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Includes nonaccrual loans of approximately $23,943,000, 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 |
|--------|------|-----------------------------------------------------------------------------------------------------|

----

|                          | VILLAGE BANK AND TRUST FINANCIAL CORP.(Registrant) |                                  |
|-------------------------------|----------------------------------------------------|---------------------------------------|
|                          |                                               |                                  |   |
|                          |                                               |                                  |   |
| Date:  November 12, 2010 | By:                                                | /s/Thomas W. Winfree                  |   |
|                          |                                               | President and Chief Executive Officer |   |
|                          |                                               |                                  |   |
|                          |                                               |                                  |   |

|                          |   |                                              |
|-------------------------------|--------|---------------------------------------------------|
|                          |   |                                              |   |
| Date:  November 12, 2010 | By:    | /s/C. Harril Whitehurst, Jr.                      |   |
|                          |   | Senior Vice President and Chief Financial Officer |   |
|                          |   |                                              |   |
|                          |   |                                              |   |

----

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

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

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

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