----

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| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

|  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------|

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| Delaware                                                      |   | 37-1149138                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofIncorporation or organization) |   | (I.R.S. EmployerIdentification No.) |

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| PART I   | FINANCIAL INFORMATION                                                                       |   |
|----------|---------------------------------------------------------------------------------------------|--------|
|     |                                                                                        |   |
| Item 1.  | Condensed Consolidated Financial Statements                                                 |   |
|     |                                                                                        |   |
|     | Condensed Consolidated Balance Sheets                                                       | 3      |
|     |                                                                                        |   |
|     | Condensed Consolidated Statements of Operations                                             | 4      |
|     |                                                                                        |   |
|     | Condensed Consolidated Statements of Cash Flows                                             | 5      |
|     |                                                                                        |   |
|     | Notes to Condensed Consolidated Financial Statements                                        | 6-26   |
|     |                                                                                        |   |
|     |                                                                                        |   |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27-45  |
|     |                                                                                        |   |
| Item 3.  | Quantitative and Qualitative Disclosures about Market Risk                                  | 46     |
|     |                                                                                        |   |
| Item 4.  | Controls and Procedures                                                                     | 46     |
|     |                                                                                        |   |
| PART II  | OTHER INFORMATION                                                                           |   |
|     |                                                                                        |   |
| Item 1.  | Legal Proceedings                                                                           | 47     |
| Item 1A. | Risk Factors                                                                                | 47     |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 47     |
| Item 3.  | Defaults Upon Senior Securities                                                             | 47     |
| Item 5.  | Other Information                                                                           | 47     |
| Item 6.  | Exhibits                                                                                    | 48     |
|     |                                                                                        |   |
|     | Signatures                                                                                  | 49     |
|     |                                                                                        |   |
| Exhibits |                                                                                        |   |
|     |                                                                                        |   |
|     | Section 302 Certifications                                                                  |   |
|     | Section 906 Certifications                                                                  |   |

----

|                                                                                             |   | March 31,2011 |    |   | December 31,2010 |   |
|--------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                                                                             |   | (Unaudited)   |    |   |             |   |
|                                                                                             |   |          |    |
| Assets                                                                                           |   |          |    |   |             |   |
| Cash and due from banks                                                                          |   | $             | 10,268  |   |             | $      | 10,585 |   |
| Interest-bearing demand deposits                                                                 |   |          | 86,587  |   |             |   | 75,593 |   |
| Federal funds sold                                                                               |   |          | 15,870  |   |             |   | 11,370 |   |
| Cash and cash equivalents                                                                        |   |          | 112,725 |   |             |   | 97,548 |   |
| Available-for-sale securities                                                                    |   |          | 111,358 |   |             |   | 107,250 |   |
| Held-to-maturity securities (fair values of $1,028 and $1,246)                                   |   |          | 998     |   |             |   | 1,208 |   |
| Loans held for sale                                                                              |   |          | 8,527   |   |             |   | 7,513 |   |
| Loans, net of allowance for loan losses of $24,142 and $28,199                                   |   |          | 589,551 |   |             |   | 632,963 |   |
| Interest receivable                                                                              |   |          | 3,060   |   |             |   | 3,328 |   |
| Foreclosed assets held for sale, net                                                             |   |          | 25,665  |   |             |   | 21,040 |   |
| Federal Home Loan Bank stock                                                                     |   |          | 2,886   |   |             |   | 2,885 |   |
| Cost method investments in common stock                                                          |   |          | 1,190   |   |             |   | 1,392 |   |
| Mortgage servicing rights                                                                        |   |          | 767     |   |             |   | 784 |   |
| Cash surrender value of life insurance                                                           |   |          | 15,709  |   |             |   | 15,572 |   |
| Premises and equipment                                                                           |   |          | 23,608  |   |             |   | 23,993 |   |
| Core deposit and other intangibles                                                               |   |          | 459     |   |             |   | 492 |   |
| Other assets                                                                                     |   |          | 7,508   |   |             |   | 13,213 |   |
| Total assets                                                                                     |   | $             | 904,011 |   |             | $      | 929,181 |   |
|                                                                                             |   |          |    |   |             |   |   |   |
| Liabilities                                                                                      |   |          |    |   |             |   |   |   |
| Deposits                                                                                         |   |          |    |   |             |   |   |   |
| Demand                                                                                           |   | $             | 122,916 |   |             | $      | 111,741 |   |
| Savings, NOW and money market                                                                    |   |          | 215,507 |   |             |   | 227,850 |   |
| Time                                                                                             |   |          | 413,535 |   |             |   | 406,539 |   |
| Brokered time                                                                                    |   |          | 65,853  |   |             |   | 87,084 |   |
| Total deposits                                                                                   |   |          | 817,811 |   |             |   | 833,214 |   |
| Short-term borrowings                                                                            |   |          | 10,135  |   |             |   | 13,660 |   |
| Long-term debt                                                                                   |   |          | 7,000   |   |             |   | 15,000 |   |
| Junior subordinated debentures                                                                   |   |          | 61,858  |   |             |   | 61,858 |   |
| Interest payable                                                                                 |   |          | 7,706   |   |             |   | 6,986 |   |
| Other liabilities                                                                                |   |          | 4,817   |   |             |   | 4,498 |   |
| Total liabilities                                                                                |   |          | 909,327 |   |             |   | 935,216 |   |
|                                                                                             |   |          |    |   |             |   |   |   |
| Commitments and Contingent Liabilities                                                           |   |          |    |   |             |   |   |   |
|                                                                                             |   |          |    |   |             |   |   |   |
| Stockholders’ Deficit                                                                      |   |          |    |   |             |   |   |   |
|        Mercantile Bancorp, Inc. stockholders’ deficit   |   |          |    |   |             |   |   |   |
| Common stock, $0.42 par value; authorized 30,000,000 shares;                                     |   |          |    |   |             |   |   |   |
| Issued — 8,887,113 shares at March 31, 2011 and December 31, 2010                          |   |          |    |   |             |   |   |   |
| Outstanding — 8,748,330 shares at March 31, 2011 and 8,703,330 shares at December 31, 2010 |   |          | 3,648   |   |             |   | 3,629 |   |
| Additional paid-in capital                                                                       |   |          | 12,184  |   |             |   | 11,738 |   |
| Retained deficit                                                                                 |   |          | (18,269 | )      |             |   | (19,524 | ) |
| Accumulated other comprehensive income                                                           |   |          | 1,759   |   |             |   | 2,994 |   |
|                                                                                             |   |          | (678    | )      |             |   | (1,163 | ) |
| Treasury stock, at cost                                                                          |   |          |    |   |             |   |   |   |
| Common; 138,783 shares at March 31, 2011 and 183,783 shares at December 31, 2010                 |   |          | (1,760  | )      |             |   | (2,295 | ) |
|                                                                                             |   |          |    |   |             |   |   |   |
| Total Mercantile Bancorp, Inc. stockholders’ deficit                                       |   |          | (2,438  | )      |             |   | (3,458 | ) |
|                                                                                             |   |          |    |   |             |   |   |   |
|        Noncontrolling interest                                |   |          | (2,878  | )      |             |   | (2,577 | ) |
|                                                                                             |   |          |    |   |             |   |   |   |
| Total stockholders’ deficit                                                                |   |          | (5,316  | )      |             |   | (6,035 | ) |
|                                                                                             |   |          |    |   |             |   |   |   |
| Total liabilities and stockholders’ deficit                                                |   | $             | 904,011 |   |             | $      | 929,181 |   |

----

|                                                                                                                                             |   | Three Months EndedMarch 31, |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                                                                                             |   | 2011                        |      |   | 2010 |   |
| Interest and Dividend Income                                                                                                                     |   |                        |      |   |   |   |
| Loans, including fees                                                                                                                            |   |                        |      |   |   |   |
| Taxable                                                                                                                                          |   | $                           | 8,222     |   |   | $ | 10,002 |   |
| Tax exempt                                                                                                                                       |   |                        | 226       |   |   |   | 236 |   |
| Securities                                                                                                                                       |   |                        |      |   |   |   |   |   |
| Taxable                                                                                                                                          |   |                        | 761       |   |   |   | 970 |   |
| Tax exempt                                                                                                                                       |   |                        | 204       |   |   |   | 210 |   |
| Federal funds sold                                                                                                                               |   |                        | 5         |   |   |   | 8 |   |
| Dividends on Federal Home Loan Bank Stock                                                                                                        |   |                        | 3         |   |   |   | 4 |   |
| Deposits with financial institutions and other                                                                                                   |   |                        | 32        |   |   |   | 78 |   |
| Total interest and dividend income                                                                                                               |   |                        | 9,453     |   |   |   | 11,508 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Interest Expense                                                                                                                                 |   |                        |      |   |   |   |   |   |
| Deposits                                                                                                                                         |   |                        | 3,169     |   |   |   | 4,171 |   |
| Short-term borrowings                                                                                                                            |   |                        | 35        |   |   |   | 187 |   |
| Long-term debt and junior subordinated debentures                                                                                                |   |                        | 1,010     |   |   |   | 1,013 |   |
| Total interest expense                                                                                                                           |   |                        | 4,214     |   |   |   | 5,371 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Net Interest Income                                                                                                                              |   |                        | 5,239     |   |   |   | 6,137 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Provision (Credit) for Loan Losses                                                                                                               |   |                        | (963      | ) |   |   | 3,990 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Net Interest Income After Provision For Loan Losses                                                                                              |   |                        | 6,202     |   |   |   | 2,147 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Noninterest Income                                                                                                                               |   |                        |      |   |   |   |   |   |
| Fiduciary activities                                                                                                                             |   |                        | 614       |   |   |   | 581 |   |
| Brokerage fees                                                                                                                                   |   |                        | 263       |   |   |   | 299 |   |
| Customer service fees                                                                                                                            |   |                        | 334       |   |   |   | 365 |   |
| Other service charges and fees                                                                                                                   |   |                        | 179       |   |   |   | 139 |   |
| Net gains on sales of assets                                                                                                                     |   |                        | -         |   |   |   | 8 |   |
| Net gains on loan sales                                                                                                                          |   |                        | 99        |   |   |   | 92 |   |
| Net gains on sale of available-for-sale securities                                                                                               |   |                        | 433       |   |   |   | - |   |
| Loan servicing fees                                                                                                                              |   |                        | 123       |   |   |   | 124 |   |
| Net increase in cash surrender value of life insurance                                                                                           |   |                        | 137       |   |   |   | 138 |   |
| Other                                                                                                                                            |   |                        | 18        |   |   |   | 187 |   |
| Total noninterest income                                                                                                                         |   |                        | 2,200     |   |   |   | 1,933 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Noninterest Expense                                                                                                                              |   |                        |      |   |   |   |   |   |
| Salaries and employee benefits                                                                                                                   |   |                        | 3,838     |   |   |   | 4,405 |   |
| Net occupancy expense                                                                                                                            |   |                        | 602       |   |   |   | 598 |   |
| Equipment expense                                                                                                                                |   |                        | 518       |   |   |   | 563 |   |
| Deposit insurance premium                                                                                                                        |   |                        | 661       |   |   |   | 471 |   |
| Professional fees                                                                                                                                |   |                        | 430       |   |   |   | 491 |   |
| Postage and supplies                                                                                                                             |   |                        | 144       |   |   |   | 148 |   |
| Losses on foreclosed assets, net                                                                                                                 |   |                        | 250       |   |   |   | 212 |   |
| Amortization of mortgage servicing rights                                                                                                        |   |                        | 55        |   |   |   | 39 |   |
| Other than temporary impairment losses on cost method investments                                                                                |   |                        | 202       |   |   |   | - |   |
| Other                                                                                                                                            |   |                        | 1,567     |   |   |   | 1,489 |   |
| Total noninterest expense                                                                                                                        |   |                        | 8,267     |   |   |   | 8,416 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Income (Loss) from Continuing Operations Before Income Taxes                                                                                     |   |                        | 135       |   |   |   | (4,336 | ) |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Income Tax Expense (Benefit)                                                                                                                     |   |                        | 2         |   |   |   | (1,190 | ) |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Income (Loss) from Continuing Operations                                                                                                         |   |                        | 133       |   |   |   | (3,146 | ) |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Discontinued Operations                                                                                                                          |   |                        |      |   |   |   |   |   |
| Income from discontinued operations (including gain on sale in 2010 of $4,254), net of income tax expense of $0 and $2,045, respectively         |   |                        | 821       |   |   |   | 3,197 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
|                Net Income                                             |   |                        | 954       |   |   |   | 51 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
|                Less: Net loss attributable to noncontrolling interest |   |                        | (301      | ) |   |   | (933 | ) |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Net Income attributable to Mercantile Bancorp, Inc.                                                                                              |   | $                           | 1,255     |   |   | $ | 984 |   |
|                                                                                                                                             |   |                        |      |   |   |   |   |   |
| Weighted Average Shares Outstanding                                                                                                              |   |                        | 8,716,830 |   |   |   | 8,703,330 |   |
| Basic Earnings (Loss) Per Share                                                                                                                  |   |                        |      |   |   |   |   |   |
| Continuing operations                                                                                                                            |   | $                           | 0.05      |   |   | $ | (0.25 | ) |
| Discontinued operations                                                                                                                          |   |                        | 0.09      |   |   |   | 0.36 |   |
|           Total Basic Earnings Per Share                                                       |   | $                           | 0.14      |   |   | $ | 0.11 |   |

----

|  Three Months Ended March 31                                                                                            |   | 2011   |    |   | 2010   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Operating Activities                                                                                                         |   |   |    |   |   |   |
| Net income before attribution of noncontrolling interest                                                                     |   | $      | 954     |   |   | $      | 51 |   |
| Net loss attributable to noncontrolling interest                                                                             |   |   | (301    | )      |   |   | (933 | ) |
| Net income attributable to Mercantile Bancorp, Inc.                                                                          |   |   | 1,255   |   |   |   | 984 |   |
| Items not requiring (providing) cash                                                                                         |   |   |    |   |   |   |   |   |
| Depreciation                                                                                                                 |   |   | 395     |   |   |   | 454 |   |
| Provision (credit) for loan losses                                                                                           |   |   | (963    | )      |   |   | 4,038 |   |
| Amortization (accretion) of premiums and discounts on securities                                                             |   |   | 159     |   |   |   | 169 |   |
| Amortization of core deposit intangibles and other purchase accounting adjustments                                           |   |   | 27      |   |   |   | 38 |   |
| Deferred income taxes                                                                                                        |   |   | -       |   |   |   | 616 |   |
| Net realized gains on sale of available-for-sale securities                                                                  |   |   | (433    | )      |   |   | - |   |
| Other than temporary impairment losses on cost method investments                                                            |   |   | 202     |   |   |   | - |   |
| Losses on foreclosed assets                                                                                                  |   |   | 250     |   |   |   | 212 |   |
| Gains on loan sales                                                                                                          |   |   | (100    | )      |   |   | (101 | ) |
| Amortization of mortgage servicing rights                                                                                    |   |   | 55      |   |   |   | 39 |   |
| Gain on sale of Marine Bank & Trust and Brown County State Bank                                                          |   |   | (821    | )      |   |   | (4,254 | ) |
| Gains on sale of premises and equipment                                                                                      |   |   | -       |   |   |   | (8 | ) |
| Federal Home Loan Bank stock dividends                                                                                       |   |   | (1      | )      |   |   | (2 | ) |
| Net increase in cash surrender value of life insurance                                                                       |   |   | (137    | )      |   |   | (177 | ) |
| Changes in                                                                                                                   |   |   |    |   |   |   |   |   |
| Loans originated for sale                                                                                                    |   |   | (8,892  | )      |   |   | (6,601 | ) |
| Proceeds from sales of loans                                                                                                 |   |   | 7,940   |   |   |   | 6,556 |   |
| Interest receivable                                                                                                          |   |   | 268     |   |   |   | 279 |   |
| Other assets                                                                                                                 |   |   | 5,705   |   |   |   | 1,981 |   |
| Interest payable                                                                                                             |   |   | 720     |   |   |   | 424 |   |
| Other liabilities                                                                                                            |   |   | 319     |   |   |   | (62 | ) |
| Noncontrolling interest in subsidiary                                                                                        |   |   | (301    | )      |   |   | (933 | ) |
| Net cash provided by operating activities                                                                                    |   |   | 5,647   |   |   |   | 3,652 |   |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Investing Activities                                                                                                         |   |   |    |   |   |   |   |   |
| Cash received from sales of Marine Bank & Trust and Brown County State Bank                                              |   |   | 3       |   |   |   | 14,706 |   |
| Purchases of available-for-sale securities                                                                                   |   |   | (16,817 | )      |   |   | (3,156 | ) |
| Proceeds from maturities of available-for-sale securities                                                                    |   |   | 10,505  |   |   |   | 11,814 |   |
| Proceeds from the sales of available-for-sale securities                                                                     |   |   | 2,069   |   |   |   | - |   |
| Proceeds from maturities of held-to-maturity securities                                                                      |   |   | 210     |   |   |   | 371 |   |
| Net change in loans                                                                                                          |   |   | 37,675  |   |   |   | 13,652 |   |
| Purchases of premises and equipment                                                                                          |   |   | (19     | )      |   |   | (23 | ) |
| Proceeds from sales of foreclosed assets                                                                                     |   |   | 1,829   |   |   |   | 4,235 |   |
| Net cash provided by investing activities                                                                                    |   |   | 35,455  |   |   |   | 41,599 |   |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Financing Activities                                                                                                         |   |   |    |   |   |   |   |   |
| Net decrease in demand deposits, money market, NOW and savings accounts                                                      |   |   | (1,168  | )      |   |   | (34,968 | ) |
| Net decrease in time and brokered time deposits                                                                              |   |   | (14,232 | )      |   |   | (41,242 | ) |
| Net increase (decrease) in short-term borrowings                                                                             |   |   | (3,525  | )      |   |   | 5,945 |   |
| Repayments of long-term debt                                                                                                 |   |   | (8,000  | )      |   |   | (10,172 | ) |
| Purchase by Mercantile Bancorp, Inc. of Mid-America debenture of $1,000,000 by the issuance of45,000 shares of common stock: |   |   |    |   |   |   |   |   |
|       - Increase in additional paid-in-capital                                                 |   |   | 446     |   |   |   | - |   |
|       - Issuance of treasury stock                                                             |   |   | 535     |   |   |   | - |   |
|       - Issuance of common stock                                                               |   |   | 19      |   |   |   | - |   |
| Net cash used in financing activities                                                                                        |   |   | (25,925 | )      |   |   | (80,437 | ) |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Increase (Decrease) In Cash and Cash Equivalents                                                                             |   |   | 15,177  |   |   |   | (35,186 | ) |
| Cash and Cash Equivalents, Beginning of Period                                                                               |   |   | 97,548  |   |   |   | 123,391 |   |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Cash and Cash Equivalents, End of Period                                                                                     |   | $      | 112,725 |   |   | $      | 88,205 |   |
|                                                                                                                         |   |   |    |   |   |   |   |   |
| Supplemental Cash Flows Information                                                                                          |   |   |    |   |   |   |   |   |
| Interest paid                                                                                                                |   | $      | 3,494   |   |   | $      | 6,077 |   |
| Income taxes received                                                                                                        |   | $      | (5,028  | )      |   | $      | (530 | ) |
| Real estate acquired in settlement of loans                                                                                  |   | $      | 6,653   |   |   | $      | 6,152 |   |
| Purchase of Mid-America debenture from minority shareholders                                                                 |   | $      | (1,000  | )      |   | $      | - |   |

----

----

|                                        |   | AmortizedCost |    |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Fair Value |   |
|---------------------------------------------|--------|---------------|---------|--------|------------------------|--------|--------|-------------------------|--------|--------|------------|--------|
| Available-for-sale Securities:              |   |          |    |   |                   |   |   |                    |   |   |       |   |
| March 31, 2011:                             |   |          |    |   |                   |   |   |                    |   |   |       |   |
| U.S. Government agencies                    |   | $             | 3,449   |   |                   | $      | 75     |                    |   | $      | —    |   |   | $ | 3,524 |   |
| Mortgage-backed securities: GSE residential |   |          | 72,725  |   |                   |   | 1,590  |                    |   |   | (49        | )      |   |   | 74,266 |   |
| State and political subdivisions            |   |          | 32,629  |   |                   |   | 701    |                    |   |   | (543       | )      |   |   | 32,787 |   |
| Equity securities                           |   |          | 679     |   |                   |   | 160    |                    |   |   | (58        | )      |   |   | 781 |   |
|                                        |   |          |    |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
|                                        |   | $             | 109,482 |   |                   | $      | 2,526  |                    |   | $      | (650       | )      |   | $ | 111,358 |   |
|                                        |   |          |    |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
| Available-for-sale Securities:              |   |          |    |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
| December 31, 2010:                          |   |          |    |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
| U.S. Government agencies                    |   | $             | 3,649   |   |                   | $      | 78     |                    |   | $      | —    |   |   | $ | 3,727 |   |
| Mortgage-backed securities: GSE residential |   |          | 65,094  |   |                   |   | 1,860  |                    |   |   | (6         | )      |   |   | 66,948 |   |
| State and political subdivisions            |   |          | 33,906  |   |                   |   | 714    |                    |   |   | (658       | )      |   |   | 33,962 |   |
| Equity securities                           |   |          | 2,314   |   |                   |   | 390    |                    |   |   | (91        | )      |   |   | 2,613 |   |
|                                        |   |          |    |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
|                                        |   | $             | 104,963 |   |                   | $      | 3,042  |                    |   | $      | (755       | )      |   | $ | 107,250 |   |

|                                        |   | AmortizedCost |   |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Fair Value |   |
|---------------------------------------------|--------|---------------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|------------|--------|
| Held-to-maturity Securities:                |   |          |   |   |                   |   |   |                    |   |   |       |   |
| March 31, 2011:                             |   |          |   |   |                   |   |   |                    |   |   |       |   |
| Mortgage-backed securities: GSE residential |   | $             | 998    |   |                   | $      | 30     |                    |   | $      | —    |   |   | $ | 1,028 |   |
|                                        |   |          |   |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
| December 31, 2010:                          |   |          |   |   |                   |   |   |                    |   |   |       |   |   |   |   |   |
| Mortgage-backed securities: GSE residential |   | $             | 1,208  |   |                   | $      | 38     |                    |   | $      | —    |   |   | $ | 1,246 |   |

----

|                                        |   | Available-for-sale |    |   | Held-to-maturity |   |
|---------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                        |   | AmortizedCost      |    |   | FairValue        |   |   | AmortizedCost |   |   | FairValue |   |
|                                        |   |               |    |   |             |   |   |   |   |   |   |   |
| Within one year                             |   | $                  | 5,142   |   |             | $      | 10,649 |   |   | $ | — |   |   | $ | — |   |
| One to five years                           |   |               | 15,928  |   |             |   | 11,162 |   |   |   | — |   |   |   | — |   |
| Five to ten years                           |   |               | 12,959  |   |             |   | 12,596 |   |   |   | — |   |   |   | — |   |
| After ten years                             |   |               | 2,049   |   |             |   | 1,904 |   |   |   | — |   |   |   | — |   |
|                                        |   |               | 36,078  |   |             |   | 36,311 |   |   |   | — |   |   |   | — |   |
| Mortgage-backed securities: GSE residential |   |               | 72,725  |   |             |   | 74,266 |   |   |   | 998 |   |   |   | 1,028 |   |
| Equity securities                           |   |               | 679     |   |             |   | 781 |   |   |   | — |   |   |   | — |   |
|                                        |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Totals                                      |   | $                  | 109,482 |   |             | $      | 111,358 |   |   | $ | 998 |   |   | $ | 1,028 |   |

|                                        |   | Less Than 12 Months |   |   | 12 Months or More |   |   | Total      |   |
|---------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|------------|--------|
| Description ofSecurities                    |   | Fair Value          |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                                        |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| March 31, 2011                              |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities: GSE residential |   | $                   | 9,555  |   |              | $      | (49    | )          |   | $ | — |   |   | $ | — |   |   | $ | 9,555 |   |   | $ | (49 | ) |
| State and political subdivisions            |   |                | 10,720 |   |              |   | (543   | )          |   |   | — |   |   |   | — |   |   |   | 10,720 |   |   |   | (543 | ) |
| Equity securities                           |   |                | 320    |   |              |   | (58    | )          |   |   | — |   |   |   | — |   |   |   | 320 |   |   |   | (58 | ) |
|                                        |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total temporarily impaired securities       |   | $                   | 20,595 |   |              | $      | (650   | )          |   | $ | — |   |   | $ | — |   |   | $ | 20,595 |   |   | $ | (650 | ) |
|                                        |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                           |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities: GSE residential |   | $                   | 2,303  |   |              | $      | (6     | )          |   | $ | — |   |   | $ | — |   |   | $ | 2,303 |   |   | $ | (6 | ) |
| State and political subdivisions            |   |                | 10,608 |   |              |   | (657   | )          |   |   | 114 |   |   |   | (1 | ) |   |   | 10,722 |   |   |   | (658 | ) |
| Equity securities                           |   |                | 287    |   |              |   | (91    | )          |   |   | — |   |   |   | — |   |   |   | 287 |   |   |   | (91 | ) |
|                                        |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total temporarily impaired securities       |   | $                   | 13,198 |   |              | $      | (754   | )          |   | $ | 114 |   |   | $ | (1 | ) |   | $ | 13,312 |   |   | $ | (755 | ) |

----

|                       |   | March 31, 2011 |    |   | December 31, 2010 |   |
|----------------------------|--------|----------------|---------|--------|-------------------|--------|
|                       |   |           |    |   |              |
| Commercial and financial   |   | $              | 132,595 |   |              | $      | 146,463 |   |
| Agricultural               |   |           | 9,612   |   |              |   | 11,708 |   |
| Real estate - farmland     |   |           | 14,884  |   |              |   | 15,528 |   |
| Real estate - construction |   |           | 78,892  |   |              |   | 91,553 |   |
| Real estate - commercial   |   |           | 141,978 |   |              |   | 153,767 |   |
| Real estate - residential  |   |           | 188,469 |   |              |   | 189,479 |   |
| Consumer                   |   |           | 55,790  |   |              |   | 60,177 |   |
|                       |   |           |    |   |              |   |   |   |
| Total loans                |   |           | 622,220 |   |              |   | 668,675 |   |
|                       |   |           |    |   |              |   |   |   |
| Less                       |   |           |    |   |              |   |   |   |
| Allowance for loan losses  |   |           | 24,142  |   |              |   | 28,199 |   |
|                       |   |           |    |   |              |   |   |   |
| Net loans                  |   | $              | 598,078 |   |              | $      | 640,476 |   |

----

|   | ● | investing funds properly for the benefit of the Company’s shareholders and the protection of its depositors; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------|

|   | ● | serving the legitimate needs of the communities in the Company’s markets while obtaining a balance between maximum yield and minimum risk; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | ● | developing and maintaining adequate diversification of the loan portfolio as a whole and of the loans within each category |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------|

----

----

|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
|---------------------------------------|--------|----------------------------|---------|--------|--------------|--------|--------|-----------------------|--------|--------|---------------------------|--------|--------|-------------------------|--------|--------|--------------------------|--------|---------|----------------------------------|--------|--------|---------|--------|
|                                  |   | March 31, 2011             |    |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
|                                  |   | Commercial & Financial |    |   | Agricultural |   |   | Real Estate- Farmland |   |   | Real Estate- Construction |   |   | Real Estate- Commercial |   |   | Real Estate- Residential |   |    | Installment Loans to Individuals |   |   | Total   |   |
|                                  |   | (dollars in thousands)     |    |
| Allowance for loan losses:            |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
| Balance, beginning of year            |   | $                          | 4,540   |   |         | $      | 44     |                  |   | $      | 73                        |   |   | $                       | 12,288 |   |                     | $      | 4,625   |                             |   | $      | 5,126   |   |   | $ | 1,503 |   |   | $ | 28,199 |   |
| Provision (Credit) charged to expense |   |                       | (99     | )      |         |   | (10    | )                     |   |   | (7                        | )      |   |                    | 300    |   |                     |   | 32      |                             |   |   | (930    | )      |   |   | (249 | ) |   |   | (963 | ) |
| Losses charged off                    |   |                       | 1,298   |   |         |   | 4      |                  |   |   | -                         |   |   |                    | 1,559  |   |                     |   | 89      |                             |   |   | 218     |   |   |   | 94 |   |   |   | 3,262 |   |
| Recoveries                            |   |                       | 13      |   |         |   | 4      |                  |   |   | -                         |   |   |                    | 2      |   |                     |   | 77      |                             |   |   | 45      |   |   |   | 27 |   |   |   | 168 |   |
| Balance, end of period                |   | $                          | 3,156   |   |         | $      | 34     |                  |   | $      | 66                        |   |   | $                       | 11,031 |   |                     | $      | 4,645   |                             |   | $      | 4,023   |   |   | $ | 1,187 |   |   | $ | 24,142 |   |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                          | 1,180   |   |         | $      | -      |                  |   | $      | -                         |   |   | $                       | 6,541  |   |                     | $      | 2,106   |                             |   | $      | 1,091   |   |   | $ | 766 |   |   | $ | 11,684 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                          | 1,976   |   |         | $      | 34     |                  |   | $      | 66                        |   |   | $                       | 4,490  |   |                     | $      | 2,539   |                             |   | $      | 2,932   |   |   | $ | 421 |   |   | $ | 12,458 |   |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                          | 132,595 |   |         | $      | 9,612  |                  |   | $      | 14,884                    |   |   | $                       | 78,892 |   |                     | $      | 141,978 |                             |   | $      | 188,469 |   |   | $ | 55,790 |   |   | $ | 622,220 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                          | 2,752   |   |         | $      | 230    |                  |   | $      | -                         |   |   | $                       | 43,580 |   |                     | $      | 24,852  |                             |   | $      | 5,048   |   |   | $ | 2,263 |   |   | $ | 78,725 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                          | 129,843 |   |         | $      | 9,382  |                  |   | $      | 14,884                    |   |   | $                       | 35,312 |   |                     | $      | 117,126 |                             |   | $      | 183,421 |   |   | $ | 53,527 |   |   | $ | 543,495 |   |

|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
|---------------------------------------|--------|----------------------------|---------|--------|--------------|--------|--------|-----------------------|--------|--------|---------------------------|--------|--------|-------------------------|--------|--------|--------------------------|--------|---------|----------------------------------|--------|--------|---------|--------|
|                                  |   | December 31, 2010          |    |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
|                                  |   | Commercial & Financial |    |   | Agricultural |   |   | Real Estate- Farmland |   |   | Real Estate- Construction |   |   | Real Estate- Commercial |   |   | Real Estate- Residential |   |    | Installment Loans to Individuals |   |   | Total   |   |
|                                  |   | (dollars in thousands)     |    |
| Allowance for loan losses:            |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |
| Balance, beginning of year            |   | $                          | 3,023   |   |         | $      | 200    |                  |   | $      | 300                       |   |   | $                       | 5,840  |   |                     | $      | 2,974   |                             |   | $      | 4,956   |   |   | $ | 1,558 |   |   | $ | 18,851 |   |
| Provision (Credit) charged to expense |   |                       | 8,845   |   |         |   | (157   | )                     |   |   | (188                      | )      |   |                    | 19,452 |   |                     |   | 3,003   |                             |   |   | 3,359   |   |   |   | 653 |   |   |   | 34,967 |   |
| Losses charged off                    |   |                       | 7,411   |   |         |   | 18     |                  |   |   | 39                        |   |   |                    | 13,057 |   |                     |   | 1,355   |                             |   |   | 3,247   |   |   |   | 788 |   |   |   | 25,915 |   |
| Recoveries                            |   |                       | 83      |   |         |   | 19     |                  |   |   | -                         |   |   |                    | 53     |   |                     |   | 3       |                             |   |   | 58      |   |   |   | 80 |   |   |   | 296 |   |
| Balance, end of period                |   | $                          | 4,540   |   |         | $      | 44     |                  |   | $      | 73                        |   |   | $                       | 12,288 |   |                     | $      | 4,625   |                             |   | $      | 5,126   |   |   | $ | 1,503 |   |   | $ | 28,199 |   |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                          | 2,497   |   |         | $      | -      |                  |   | $      | -                         |   |   | $                       | 8,509  |   |                     | $      | 2,207   |                             |   | $      | 1,346   |   |   | $ | 804 |   |   | $ | 15,363 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                          | 2,043   |   |         | $      | 44     |                  |   | $      | 73                        |   |   | $                       | 3,779  |   |                     | $      | 2,418   |                             |   | $      | 3,780   |   |   | $ | 699 |   |   | $ | 12,836 |   |
|                                  |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance                        |   | $                          | 146,463 |   |         | $      | 11,708 |                  |   | $      | 15,528                    |   |   | $                       | 91,553 |   |                     | $      | 153,767 |                             |   | $      | 189,479 |   |   | $ | 60,177 |   |   | $ | 668,675 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                          | 4,726   |   |         | $      | -      |                  |   | $      | -                         |   |   | $                       | 52,375 |   |                     | $      | 24,279  |                             |   | $      | 6,004   |   |   | $ | 2,348 |   |   | $ | 89,732 |   |
| Ending balance:                       |   |                       |    |   |         |   |   |                  |   |   |                      |   |   |                    |   |   |                     |   |    |                             |   |   |    |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                          | 141,737 |   |         | $      | 11,708 |                  |   | $      | 15,528                    |   |   | $                       | 39,178 |   |                     | $      | 129,488 |                             |   | $      | 183,475 |   |   | $ | 57,829 |   |   | $ | 578,943 |   |

----

| Balance, beginning of year                   |   | $      | 18.851 |   |
|----------------------------------------------|--------|--------|--------|--------|
| Provision charged to expense                 |   |   | 3,990  |   |
| Losses charged off, net of recoveries of $78 |   |   | 3,924  |   |
| Balance, end of period                       |   | $      | 18,917 |   |

----

|            |   |                          |    |   |                   |   |                    |           |   |
|-----------------|--------|-------------------------------|---------|--------|------------------------|--------|-------------------------|----------------|--------|
|            |   | Commercial & Agricultural |    |   | Commercial Real Estate |   | Residential Real Estate |           |   |
| Rating:         |   | March 31, 2011                |    |   | December 31, 2010      |   |                    | March 31, 2011 |   |   | December 31, 2010 |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
|            |   |                          |    |   |                   |   |                    |           |   |   |   |   |   |   |   |   |   |
| Pass            |   | $                             | 119,600 |   |                   | $      | 133,363                 |           |   | $ | 149,393 |   |   | $ | 167,302 |   |   | $ | 170,584 |   |   | $ | 171,904 |   |
| Special Mention |   |                          | 16,429  |   |                   |   | 15,076                  |           |   |   | 17,698 |   |   |   | 17,523 |   |   |   | 3,898 |   |   |   | 3,988 |   |
| Substandard     |   |                          | 1,399   |   |                   |   | 2,130                   |           |   |   | 66,893 |   |   |   | 74,252 |   |   |   | 5,048 |   |   |   | 6,074 |   |
| Doubtful        |   |                          | 1,353   |   |                   |   | 2,712                   |           |   |   | 1,770 |   |   |   | 1,770 |   |   |   | — |   |   |   | — |   |
| Total           |   | $                             | 138,781 |   |                   | $      | 153,281                 |           |   | $ | 235,754 |   |   | $ | 260,847 |   |   | $ | 179,530 |   |   | $ | 181,966 |   |

|            |   |           |    |   |                |   |             |           |   |
|-----------------|--------|----------------|---------|--------|---------------------|--------|------------------|----------------|--------|
|            |   | Consumer       |    |   | Loans Held for Sale |   | Floor Plan Loans |           |   |
| Rating:         |   | March 31, 2011 |    |   | December 31, 2010   |   |             | March 31, 2011 |   |   | December 31, 2010 |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
|            |   |           |    |   |                |   |             |           |   |   |   |   |   |   |   |   |   |
| Pass            |   | $              | 53,465  |   |                | $      | 57,760           |           |   | $ | 8,527 |   |   | $ | 7,513 |   |   | $ | 3,426 |   |   | $ | 4,891 |   |
| Special Mention |   |           | 62      |   |                |   | 70               |           |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Substandard     |   |           | 2,263   |   |                |   | 2,345            |           |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Doubtful        |   |           | — |   |                |   | 2                |           |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total           |   | $              | 55,790  |   |                | $      | 60,177           |           |   | $ | 8,527 |   |   | $ | 7,513 |   |   | $ | 3,426 |   |   | $ | 4,891 |   |

|                             |   |               |   |
|----------------------------------|--------|--------------------|--------|
|                             |   | March 31, 2011     |   |
|                             |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | GreaterThan90 Days |   |   | Total PastDue |   |   | Current |   |   | Total Loans Receivable |   |   | Total Loans >90 Days &Accruing |   |
|                             |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and financial         |   | $                  | 517    |   |   | $ | 167 |   |   | $ | 1,116 |   |   | $ | 1,800 |   |   | $ | 130,795 |   |   | $ | 132,595 |   |   | $ | - |   |
| Agricultural                     |   |               | 67     |   |   |   | - |   |   |   | - |   |   |   | 67 |   |   |   | 9,545 |   |   |   | 9,612 |   |   |   | - |   |
| Real estate - farmland           |   |               | 134    |   |   |   | - |   |   |   | 409 |   |   |   | 543 |   |   |   | 14,341 |   |   |   | 14,884 |   |   |   | - |   |
| Real estate - construction       |   |               | 4,532  |   |   |   | - |   |   |   | 20,986 |   |   |   | 25,518 |   |   |   | 53,374 |   |   |   | 78,892 |   |   |   | - |   |
| Real estate - commercial         |   |               | 6,183  |   |   |   | 2,133 |   |   |   | 9,208 |   |   |   | 17,524 |   |   |   | 124,454 |   |   |   | 141,978 |   |   |   | - |   |
| Real estate - residential        |   |               | 1,301  |   |   |   | 2,018 |   |   |   | 2,298 |   |   |   | 5,617 |   |   |   | 182,852 |   |   |   | 188,469 |   |   |   | 51 |   |
| Installment loans to individuals |   |               | 394    |   |   |   | 42 |   |   |   | 23 |   |   |   | 459 |   |   |   | 55,331 |   |   |   | 55,790 |   |   |   | 13 |   |
| Total                            |   | $                  | 13,128 |   |   | $ | 4,360 |   |   | $ | 34,040 |   |   | $ | 51,528 |   |   | $ | 570,692 |   |   | $ | 622,220 |   |   | $ | 64 |   |

|                             |   | December 31, 2010        |    |
|----------------------------------|--------|--------------------------|---------|
|                             |   | 30-59 Days Past Due |    |   | 60-89 Days Past Due |   |   | Greater Than90 Days |   |   | Total Past Due |   |   | Current |   |   | Total Loans Receivable |   |   | Total Loans > 90 Days &Accruing |   |
| Commercial and financial         |   | $                        | 112     |   |   | $ | 243 |   |   | $ | 2,284 |   |   | $ | 2,639 |   |   | $ | 143,824 |   |   | $ | 146,463 |   |   | $ | — |   |
| Agricultural                     |   |                     | — |   |   |   | — |   |   |   | 2 |   |   |   | 2 |   |   |   | 11,706 |   |   |   | 11,708 |   |   |   | 2 |   |
| Real estate - farmland           |   |                     | 357     |   |   |   | — |   |   |   | — |   |   |   | 357 |   |   |   | 15,171 |   |   |   | 15,528 |   |   |   | — |   |
| Real estate - construction       |   |                     | 2,606   |   |   |   | 5,480 |   |   |   | 21,816 |   |   |   | 29,902 |   |   |   | 61,651 |   |   |   | 91,553 |   |   |   | — |   |
| Real estate - commercial         |   |                     | 1,878   |   |   |   | 1,779 |   |   |   | 9,133 |   |   |   | 12,790 |   |   |   | 140,977 |   |   |   | 153,767 |   |   |   | — |   |
| Real estate - residential        |   |                     | 1,632   |   |   |   | 2,496 |   |   |   | 3,347 |   |   |   | 7,475 |   |   |   | 182,004 |   |   |   | 189,479 |   |   |   | 262 |   |
| Installment loans to individuals |   |                     | 220     |   |   |   | 150 |   |   |   | 43 |   |   |   | 413 |   |   |   | 59,764 |   |   |   | 60,177 |   |   |   | 27 |   |
| Total                            |   | $                        | 6,805   |   |   | $ | 10,148 |   |   | $ | 36,625 |   |   | $ | 53,578 |   |   | $ | 615,097 |   |   | $ | 668,675 |   |   | $ | 291 |   |

----

|                                          |   |            |    |
|-----------------------------------------------|--------|-----------------|---------|
|                                          |   | March 31, 2011  |    |
|                                          |   | RecordedBalance |    |   | UnpaidPrincipalBalance |   |   | SpecificAllowance |   |   | AverageInvestment in Impaired Loans |   |   | InterestIncomeRecognized |   |
| Loans without a specific valuation allowance: |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and agriculture                    |   | $               | 377     |   |   | $ | 377 |   |   | $ | — |   |   | $ | 682 |   |   | $ | 15 |   |
| Commercial real estate                        |   |            | 24,873  |   |   |   | 24,873 |   |   |   | — |   |   |   | 26,857 |   |   |   | 148 |   |
| Residential real estate                       |   |            | 2,118   |   |   |   | 2,118 |   |   |   | — |   |   |   | 2,932 |   |   |   | 11 |   |
| Consumer                                      |   |            | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans with a specific valuation allowance:    |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and agriculture                    |   |            | 2,376   |   |   |   | 2,376 |   |   |   | 1,180 |   |   |   | 3,057 |   |   |   | 40 |   |
| Commercial real estate                        |   |            | 43,788  |   |   |   | 43,790 |   |   |   | 8,647 |   |   |   | 44,802 |   |   |   | 246 |   |
| Residential real estate                       |   |            | 2,930   |   |   |   | 2,929 |   |   |   | 1,091 |   |   |   | 3,594 |   |   |   | 29 |   |
| Consumer                                      |   |            | 2,263   |   |   |   | 2,263 |   |   |   | 766 |   |   |   | 2,305 |   |   |   | 14 |   |
|                                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total:                                        |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                    |   | $               | 71,414  |   |   | $ | 71,416 |   |   | $ | 9,827 |   |   | $ | 75,398 |   |   | $ | 449 |   |
| Residential                                   |   | $               | 5,048   |   |   | $ | 5,047 |   |   | $ | 1,091 |   |   | $ | 6,526 |   |   | $ | 40 |   |
| Consumer                                      |   | $               | 2,263   |   |   | $ | 2,263 |   |   | $ | 766 |   |   | $ | 2,305 |   |   | $ | 14 |   |

----

|                                          |   | December 31, 2010 |    |
|-----------------------------------------------|--------|-------------------|---------|
|                                          |   | RecordedBalance   |    |   | UnpaidPrincipal Balance |   |   | SpecificAllowance |   |   | AverageInvestment in Impaired Loans |   |   | InterestIncomeRecognized |   |
| Loans without a specific valuation allowance: |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and agriculture                    |   | $                 | 987     |   |   | $ | 987 |   |   | $ | — |   |   | $ | 2,283 |   |   | $ | 177 |   |
| Commercial real estate                        |   |              | 25,984  |   |   |   | 25,984 |   |   |   | — |   |   |   | 46,808 |   |   |   | 1,489 |   |
| Residential real estate                       |   |              | 1,626   |   |   |   | 1,626 |   |   |   | — |   |   |   | 4,784 |   |   |   | 41 |   |
| Consumer                                      |   |              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans with a specific valuation allowance:    |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and agriculture                    |   |              | 3,739   |   |   |   | 3,739 |   |   |   | 2,497 |   |   |   | 2,927 |   |   |   | 171 |   |
| Commercial real estate                        |   |              | 50,670  |   |   |   | 50,670 |   |   |   | 10,716 |   |   |   | 37,726 |   |   |   | 1,402 |   |
| Residential real estate                       |   |              | 4,378   |   |   |   | 4,378 |   |   |   | 1,346 |   |   |   | 4,293 |   |   |   | 63 |   |
| Consumer                                      |   |              | 2,348   |   |   |   | 2,348 |   |   |   | 804 |   |   |   | 1,930 |   |   |   | 104 |   |
|                                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total:                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                    |   | $                 | 81,380  |   |   | $ | 81,380 |   |   | $ | 13,213 |   |   | $ | 89,744 |   |   | $ | 3,239 |   |
| Residential                                   |   | $                 | 6,004   |   |   | $ | 6,004 |   |   | $ | 1,346 |   |   | $ | 9,077 |   |   | $ | 104 |   |
| Consumer                                      |   | $                 | 2,348   |   |   | $ | 2,348 |   |   | $ | 804 |   |   | $ | 1,930 |   |   | $ | 104 |   |

|                             |   | March 31, |    |   | December 31, |   |
|----------------------------------|--------|-----------|---------|--------|--------------|--------|
|                             |   | 2011      |    |   | 2010         |   |
|                             |   |      |    |   |         |   |
| Commercial and financial         |   | $         | 1,623   |   |         | $      | 2,579 |   |
| Agricultural                     |   |      | — |   |         |   | — |   |
| Real estate - farmland           |   |      | 540     |   |         |   | 134 |   |
| Real estate - construction       |   |      | 25,518  |   |         |   | 29,892 |   |
| Real estate - commercial         |   |      | 12,870  |   |         |   | 9,134 |   |
| Real estate - residential        |   |      | 2,613   |   |         |   | 4,041 |   |
| Installment loans to individuals |   |      | 228     |   |         |   | 216 |   |
| Total                            |   | $         | 43,392  |   |         | $      | 45,996 |   |

----

|                                    |   | Actual |   |   | Minimum for Capital Adequacy Purposes |   |   | Minimum Capital Requirement per Formal Agreement |   |
|-----------------------------------------|--------|--------|--------|--------|--------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                    |   | Amount |   |   | Ratio                                      |   |   | Amount                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As of March 31, 2011                    |   |   |   |
| Total capital(to risk-weighted assets)  |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (4,732 | )      |                                       |   | (0.7   | )%                                               |   |   | 52,089 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 51,554 |   |                                       |   | 10.9   | %                                                |   |   | 37,775 |   |   |   | 8.0 | % |   |   | 56,663 |   |   |   | 12.0 | % |
| Heartland Bank                          |   |   | 7,464  |   |                                       |   | 7.3    | %                                                |   |   | 8,158 |   |   |   | 8.0 | % |   |   | 13,256 |   |   |   | 13.0 | % |
| Royal Palm Bank of Florida              |   |   | 3,864  |   |                                       |   | 5.2    | %                                                |   |   | 6,005 |   |   |   | 8.0 | % |   |   | 9,007 |   |   |   | 12.0 | % |
|                                    |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 capital(to risk-weighted assets) |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (4,732 | )      |                                       |   | (0.7   | )%                                               |   |   | 26,045 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 45,502 |   |                                       |   | 9.6    | %                                                |   |   | 18,888 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Heartland Bank                          |   |   | 5,360  |   |                                       |   | 5.3    | %                                                |   |   | 4,079 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Royal Palm Bank of Florida              |   |   | 2,841  |   |                                       |   | 3.8    | %                                                |   |   | 3,002 |   |   |   | 4.0 | % |   |   | 7,506 |   |   |   | 10.0 | % |
|                                    |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 capital(to average assets)       |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (4,732 | )      |                                       |   | (0.5   | )%                                               |   |   | 36,059 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 45,502 |   |                                       |   | 6.8    | %                                                |   |   | 26,689 |   |   |   | 4.0 | % |   |   | 53,378 |   |   |   | 8.0 | % |
| Heartland Bank                          |   |   | 5,360  |   |                                       |   | 4.2    | %                                                |   |   | 5,156 |   |   |   | 4.0 | % |   |   | 11,602 |   |   |   | 9.0 | % |
| Royal Palm Bank of Florida              |   |   | 2,841  |   |                                       |   | 2.5    | %                                                |   |   | 4,589 |   |   |   | 4.0 | % |   |   | 9,179 |   |   |   | 8.0 | % |

|                                    |   | Actual |   |   | Minimum for Capital Adequacy Purposes |   |   | Minimum Capital Requirement per Formal Agreement |   |
|-----------------------------------------|--------|--------|--------|--------|--------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                    |   | Amount |   |   | Ratio                                      |   |   | Amount                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2010                 |   |   |   |
| Total capital(to risk-weighted assets)  |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (7,021 | )      |                                       |   | (1.0   | )%                                               |   |   | 55,900 |   |   |   | 8.00 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 50,215 |   |                                       |   | 9.9    | %                                                |   |   | 40,783 |   |   |   | 8.00 | % |   |   | 61,175 |   |   |   | 12.00 | % |
| Heartland Bank                          |   |   | 8,198  |   |                                       |   | 7.7    | %                                                |   |   | 8,507 |   |   |   | 8.00 | % |   |   | 12,760 |   |   |   | 13.00 | % |
| Royal Palm Bank of Florida              |   |   | 2,332  |   |                                       |   | 3.0    | %                                                |   |   | 6,409 |   |   |   | 8.00 | % |   |   | 9,614 |   |   |   | 12.00 | % |
|                                    |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 capital(to risk-weighted assets) |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (7,021 | )      |                                       |   | (1.0   | )%                                               |   |   | 27,950 |   |   |   | 4.00 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 43,701 |   |                                       |   | 8.6    | %                                                |   |   | 20,392 |   |   |   | 4.00 | % |   |   | N/A |   |   |   | N/A |   |
| Heartland Bank                          |   |   | 6,024  |   |                                       |   | 5.7    | %                                                |   |   | 4,253 |   |   |   | 4.00 | % |   |   | N/A |   |   |   | N/A |   |
| Royal Palm Bank of Florida              |   |   | 1,237  |   |                                       |   | 1.6    | %                                                |   |   | 3,205 |   |   |   | 4.00 | % |   |   | 8,012 |   |   |   | 10.00 | % |
|                                    |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 capital(to average assets)       |   |   |   |   |                                       |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                            |   |   | (7,021 | )      |                                       |   | (0.7   | )%                                               |   |   | 38,894 |   |   |   | 4.00 | % |   |   | N/A |   |   |   | N/A |   |
| Mercantile Bank                         |   |   | 43,701 |   |                                       |   | 6.2    | %                                                |   |   | 28,027 |   |   |   | 4.00 | % |   |   | 56,055 |   |   |   | 8.00 | % |
| Heartland Bank                          |   |   | 6,024  |   |                                       |   | 4.1    | %                                                |   |   | 5,847 |   |   |   | 4.00 | % |   |   | 11,693 |   |   |   | 9.00 | % |
| Royal Palm Bank of Florida              |   |   | 1,237  |   |                                       |   | 1.0    | %                                                |   |   | 4,954 |   |   |   | 4.00 | % |   |   | 9,908 |   |   |   | 8.00 | % |

----

|   | Level 1 | Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2 | Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities which use 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 for substantially the full term of the assets or liabilities. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                   |   |       |    |   | Fair Value Measurements Using                                 |   |
|------------------------------------------------------------------------|--------|------------|---------|--------|---------------------------------------------------------------|--------|
| March 31, 2011                                                         |   | Fair Value |    |   | Quotes Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                                   |   |       |    |   |                                                          |   |   |   |   |   |   |   |
| U.S. Government agencies                                               |   | $          | 3,524   |   |                                                          | $      | — |   |   | $ | 3,524 |   |   | $ | — |   |
| Mortgage-backed securities: GSE residential                            |   |       | 74,266  |   |                                                          |   | — |   |   |   | 74,266 |   |   |   | — |   |
| State and political subdivisions                                       |   |       | 32,787  |   |                                                          |   | — |   |   |   | 32,787 |   |   |   | — |   |
| Equity securities – common stock in other financial institutions |   |       | 781     |   |                                                          |   | 683 |   |   |   | — |   |   |   | 98 |   |
|                                                                   |   |       |    |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   | $          | 111,358 |   |                                                          | $      |   683 |   |   | $ | 110,577 |   |   | $ | 98 |   |

----

|                                                             |   |       |    |   | Fair Value Measurements Using                                 |   |
|------------------------------------------------------------------|--------|------------|---------|--------|---------------------------------------------------------------|--------|
| December 31, 2010                                                |   | Fair Value |    |   | Quotes Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                                             |   |       |    |   |                                                          |   |   |   |   |   |   |   |
| U.S. Government agencies                                         |   | $          | 3,727   |   |                                                          | $      | — |   |   | $ | 3,727 |   |   | $ | — |   |
| Mortgage-backed securities: GSE residential                      |   |       | 66,948  |   |                                                          |   | — |   |   |   | 66,948 |   |   |   | — |   |
| State and political subdivisions                                 |   |       | 33,962  |   |                                                          |   | — |   |   |   | 33,962 |   |   |   | — |   |
| Equity securities - common stock in other financial institutions |   |       | 2,613   |   |                                                          |   | 2,516 |   |   |   | — |   |   |   | 97 |   |
|                                                             |   |       |    |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | $          | 107,250 |   |                                                          | $      | 2,516 |   |   | $ | 104,637 |   |   | $ | 97 |   |

|                                                                                                                                                                                    |   | For the Three Months EndedMarch 31 |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                                                                                                                    |   | 2011                               |    |   | 2010 |   |
|                                                                                                                                                                                    |   |                               |    |   |   |   |
| Beginning balance                                                                                                                                                                       |   | $                                  | 97      |   |   | $ | 135 |   |
| Total realized and unrealized gains and losses:                                                                                                                                         |   |                               |    |   |   |   |   |   |
| Included in net income                                                                                                                                                                  |   |                               | — |   |   |   | — |   |
| Included in other comprehensive income                                                                                                                                                  |   |                               | — |   |   |   | — |   |
| Purchases                                                                                                                                                                               |   |                               | 1       |   |   |   | — |   |
| Settlements                                                                                                                                                                             |   |                               | — |   |   |   | (38 | ) |
| Transfers in and/or out of Level 3                                                                                                                                                      |   |                               | — |   |   |   | — |   |
|                                                                                                                                                                                    |   |                               |    |   |   |   |   |   |
| Balance, March 31                                                                                                                                                                       |   | $                                  | 98      |   |   | $ | 97 |   |
|                                                                                                                                                                                    |   |                               |    |   |   |   |   |   |
| Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date |   | $                                  | — |   |   | $ | — |   |

----

|                             |   |       |   |   | Fair Value Measurements Using                                 |   |
|----------------------------------|--------|------------|--------|--------|---------------------------------------------------------------|--------|
| Carrying value at March 31, 2011 |   | Fair Value |   |   | Quotes Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
|                             |   |       |   |   |                                                          |   |   |   |   |   |   |   |
| Impaired loans                   |   | $          | 15,732 |   |                                                          | $      | — |   |   | $ | — |   |   | $ | 15,732 |   |
| Foreclosed assets held for sale  |   |       | 613    |   |                                                          |   | — |   |   |   | — |   |   |   | 613 |   |
| Cost method investments          |   |       | 202    |   |                                                          |   | — |   |   |   | — |   |   |   | 202 |   |

|                                |   |       |   |   | Fair Value Measurements Using                                 |   |
|-------------------------------------|--------|------------|--------|--------|---------------------------------------------------------------|--------|
| Carrying value at December 31, 2010 |   | Fair Value |   |   | Quotes Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                                |   |       |   |   |                                                          |   |   |   |   |   |   |   |
| Impaired loans                      |   | $          | 48,611 |   |                                                          | $      | — |   |   | $ | — |   |   | $ | 48,611 |   |
| Foreclosed assets held for sale     |   |       | 12,860 |   |                                                          |   | — |   |   |   | — |   |   |   | 12,860 |   |
| Mortgage servicing rights           |   |       | 784    |   |                                                          |   | — |   |   |   | — |   |   |   | 784 |   |

----

|                                                        |   | March 31, 2011  |    |   | December 31, 2010 |   |
|-------------------------------------------------------------|--------|-----------------|---------|--------|-------------------|--------|
|                                                        |   | Carrying Amount |    |   | Fair Value        |   |   | Carrying Amount |   |   | Fair Value |   |
| Financial assets                                            |   |            |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                                   |   | $               | 112,723 |   |              | $      | 112,725 |   |   | $ | 97,548 |   |   | $ | 97,548 |   |
| Available-for-sale securities                               |   |            | 113,358 |   |              |   | 113,358 |   |   |   | 104,963 |   |   |   | 107,250 |   |
| Held-to-maturity securities                                 |   |            | 998     |   |              |   | 1,028 |   |   |   | 1,208 |   |   |   | 1,246 |   |
| Loans held for sale                                         |   |            | 8,527   |   |              |   | 8,527 |   |   |   | 7,513 |   |   |   | 7,513 |   |
| Loans, net of allowance for loan losses                     |   |            | 589,551 |   |              |   | 605,299 |   |   |   | 632,963 |   |   |   | 657,110 |   |
| Federal Home Loan Bank stock                                |   |            | 2,886   |   |              |   | 2,886 |   |   |   | 2,885 |   |   |   | 2,885 |   |
| Cost method investments in common stock                     |   |            | 1,190   |   |              |   | 1,190 |   |   |   | 1,392 |   |   |   | 1,392 |   |
| Interest receivable                                         |   |            | 3,060   |   |              |   | 3,060 |   |   |   | 3,327 |   |   |   | 3,328 |   |
|                                                        |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities                                       |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                    |   |            | 817,811 |   |              |   | 813,377 |   |   |   | 833,214 |   |   |   | 827,922 |   |
| Short-term borrowings                                       |   |            | 10,135  |   |              |   | 10,135 |   |   |   | 13,660 |   |   |   | 13,660 |   |
| Long-term debt and junior subordinated debentures           |   |            | 68,858  |   |              |   | 38,377 |   |   |   | 76,858 |   |   |   | 46,449 |   |
| Interest payable                                            |   |            | 7,706   |   |              |   | 7,706 |   |   |   | 6,986 |   |   |   | 6,986 |   |
|                                                        |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unrecognized financial instruments (net of contract amount) |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to originate loans                              |   |            | — |   |              |   | — |   |   |   | — |   |   |   | — |   |
| Letters of credit                                           |   |            | — |   |              |   | — |   |   |   | — |   |   |   | — |   |
| Lines of credit                                             |   |            | — |   |              |   | — |   |   |   | — |   |   |   | — |   |

----

|                                                  |   | Three Months EndedMarch 31, 2011 |   |   | Twelve Months Ended December 31, 2010 |   |
|-------------------------------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|
|                                                  |   |                                  |   |   |                                  |   |
| Computed at the statutory rate (35%)                  |   | $                                     | 47     |   |                                  | $      | (14,924 | ) |
| Increase (decrease) resulting from                    |   |                                  |   |   |                                  |   |   |   |
| Graduated tax rates                                   |   |                                  | (1     | )      |                                  |   | 426 |   |
| Tax exempt income                                     |   |                                  | (140   | )      |                                  |   | (620 | ) |
| State income taxes                                    |   |                                  | (198   | )      |                                  |   | (2,190 | ) |
| Increase in cash surrender value of life insurance    |   |                                  | (47    | )      |                                  |   | (193 | ) |
| Changes in the deferred tax asset valuation allowance |   |                                  | 386    |   |                                  |   | 29,767 |   |
| Other                                                 |   |                                  | (45    | )      |                                  |   | (19 | ) |
|                                                  |   |                                  |   |   |                                  |   |   |   |
| Actual tax expense                                    |   | $                                     | 2      |   |                                  | $      | 12,247 |   |

----

|                                                                                  |   | March 31, 2011 |    |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------|--------|---------------------|---------|--------|-------------------|--------|
| Deferred tax assets                                                                   |   |                |    |   |              |   |
| Allowance for loan losses                                                             |   | $                   | 9,009   |   |              | $      | 9,708 |   |
| Accrued compensated absences                                                          |   |                | 129     |   |              |   | 135 |   |
| Deferred compensation                                                                 |   |                | 824     |   |              |   | 801 |   |
| Accrued postretirement benefits                                                       |   |                | 138     |   |              |   | 132 |   |
| Deferred loss on investments                                                          |   |                | 2,416   |   |              |   | 2,304 |   |
| Capital loss carryforward on disposal of HNB                                          |   |                | 3,036   |   |              |   | 3,465 |   |
| Net operating loss carryforward                                                       |   |                | 17,775  |   |              |   | 16,617 |   |
| Deferred loan fees                                                                    |   |                | 52      |   |              |   | 48 |   |
| Alternative minimum tax credits                                                       |   |                | 1,074   |   |              |   | 1,074 |   |
| Other                                                                                 |   |                | 3,367   |   |              |   | 3,475 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
|                                                                                  |   |                | 37,820  |   |              |   | 37,759 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
| Deferred tax liabilities                                                              |   |                |    |   |              |   |   |   |
| Federal Home Loan Bank stock dividends                                                |   |                | 255     |   |              |   | 251 |   |
| Depreciation                                                                          |   |                | 496     |   |              |   | 510 |   |
| State taxes                                                                           |   |                | 1,031   |   |              |   | 1,031 |   |
| Mortgage servicing rights                                                             |   |                | 301     |   |              |   | 302 |   |
| Unrealized gains on available-for-sale securities                                     |   |                | 661     |   |              |   | 822 |   |
| Purchase accounting adjustments                                                       |   |                | 91      |   |              |   | 89 |   |
| Other                                                                                 |   |                | 166     |   |              |   | 165 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
|                                                                                  |   |                | 3,001   |   |              |   | 3,170 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
| Net deferred tax asset before valuation allowance                                     |   | $                   | 34,819  |   |              | $      | 34,589 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
| Valuation allowance                                                                   |   |                |    |   |              |   |   |   |
| Beginning balance                                                                     |   | $                   | (34,589 | )      |              | $      | (5,590 | ) |
| Increase during the period                                                            |   |                | (386    | )      |              |   | (29,767 | ) |
| Decrease during the period resulting from the elimination to discontinuing operations |   |                | 316     |   |              |   | - |   |
| (Increase) decrease during the period                                                 |   |                | (160    | )      |              |   | 768 |   |
|                                                                                  |   |                |    |   |              |   |   |   |
| Ending balance                                                                        |   |                | (34,819 | )      |              |   | (34,589 | ) |
|                                                                                  |   |                |    |   |              |   |   |   |
| Net deferred tax asset                                                                |   | $__-                |    |   | $                 | -      |   |

----

| Cash and cash equivalents                         |   | $      | 4,343   |   |
|---------------------------------------------------|--------|--------|---------|--------|
| Available-for-sale securities                     |   |   | 39,306  |   |
| Held-to-maturity securities                       |   |   | 1,027   |   |
| Loans, net of allowance for loan losses of $1,183 |   |   | 206,872 |   |
| Interest receivable                               |   |   | 2,300   |   |
| Federal Home Loan Bank stock                      |   |   | 1,574   |   |
| Premises and equipment                            |   |   | 3,698   |   |
| Other assets                                      |   |   | 19,465  |   |
|                                              |   |   |    |   |
| Total assets disposed                             |   |   | 278,585 |   |
|                                              |   |   |    |   |
| Deposits                                          |   |   | 232,330 |   |
| Long-term debt                                    |   |   | 13,500  |   |
| Interest payable                                  |   |   | 559     |   |
| Other liabilities                                 |   |   | 10,469  |   |
|                                              |   |   |    |   |
| Total liabilities released                        |   |   | 256,858 |   |
|                                              |   |   |    |   |
| Net assets disposed                               |   | $      | 21,727  |   |

|                         |   | Three Months Ended March 31, |   |
|------------------------------|--------|------------------------------|--------|
|                         |   | 2011                         |   |   | 2010 |   |
|                         |   |                         |   |   |   |   |
| Interest and dividend income |   | $                            | -      |   |   | $ | 2,206 |   |
| Interest expense             |   |                         | -      |   |   |   | 572 |   |
| Net interest margin          |   |                         | -      |   |   |   | 1,634 |   |
|                         |   |                         |   |   |   |   |   |   |
| Provision for loan loss      |   |                         | -      |   |   |   | 48 |   |
| Noninterest income           |   |                         | 821    |   |   |   | 4,522 |   |
| Noninterest expense          |   |                         | -      |   |   |   | 866 |   |
|                         |   |                         |   |   |   |   |   |   |
| Net income before taxes      |   |                         | 821    |   |   |   | 5,242 |   |
|                         |   |                         |   |   |   |   |   |   |
| Income tax expense           |   |                         | -      |   |   |   | 2,045 |   |
|                         |   |                         |   |   |   |   |   |   |
| Net income                   |   | $                            | 821    |   |   | $ | 3,197 |   |

----

|                                                                                                                                             |   | For the Three MonthsEnded March 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                             |   | 2011                                |   |   | 2010 |   |
|                                                                                                                                             |   |                                |   |   |   |   |
| Net income                                                                                                                                       |   | $                                   | 954    |   |   | $ | 51 |   |
|                                                                                                                                             |   |                                |   |   |   |   |   |   |
| Other comprehensive income (loss):                                                                                                               |   |                                |   |   |   |   |   |   |
| Unrealized appreciation (depreciation) on available-for-sale securities:                                                                         |   |                                |   |   |   |   |   |   |
| Unrealized appreciation (depreciation) on available-for-sale securities, net of tax expense (benefit) of $(73) for 2011 and $206 for 2010        |   |                                | (113   | ) |   |   | 303 |   |
| Less reclassification adjustment for the sale of Marine Bank & Trust and Brown County State Bank                                             |   |                                | 818    |   |   |   | — |   |
| Less reclassification adjustment for realized gains included in income net of tax expense of $164 for 2011                                       |   |                                | 268    |   |   |   | — |   |
| Less reclassification adjustment for other than temporary losses included in income net of tax benefit of $(77) for 2011                         |   |                                | (125   | ) |   |   | — |   |
| Total unrealized appreciation (depreciation) on available-for-sale securities, net of tax expense (benefit) of $(160) for 2011 and $206 for 2010 |   |                                | (1,074 | ) |   |   | 303 |   |
|   Plus valuation allowance on deferred tax liability on available-for-sale securities                                                       |   |                                | (160   | ) |   |   | — |   |
|                                                                                                                                             |   |                                |   |   |   |   |   |   |
| Total other comprehensive income (loss), net of tax                                                                                              |   |                                | (1,234 | ) |   |   | 303 |   |
|                                                                                                                                             |   |                                |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                                                      |   |                                | (280   | ) |   |   | 354 |   |
|                                                                                                                                             |   |                                |   |   |   |   |   |   |
| Comprehensive income (loss) attributable to the noncontrolling interest                                                                          |   |                                | (301   | ) |   |   | (933 | ) |
|                                                                                                                                             |   |                                |   |   |   |   |   |   |
| Comprehensive income attributable to Mercantile Bancorp, Inc.                                                                                    |   | $                                   | 21     |   |   | $ | 1,287 |   |

----

----

| ·   | projections of revenues, income, earnings per share, capital expenditures, assets, liabilities, dividends,      capital structure, or other financial items; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | descriptions of plans or objectives of management for future operations, products, or services, including pending acquisition transactions; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | forecasts of future economic performance; and |
|--------------------|-----------------------------------------------|

| ·   | descriptions of assumptions underlying or relating to any of the foregoing. |
|--------------------|-----------------------------------------------------------------------------|

|   | • | the effects of current and future business and economic conditions in the markets the Company serves change or are less favorable than it expected; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | deposit attrition, operating costs, customer loss and business disruption are greater than the Company expected; |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | competitive factors including product and pricing pressures among financial services organizations may increase; |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | • | the effects of changes in interest rates on the level and composition of deposits, loan demand, the values of loan collateral, securities and interest sensitive assets and liabilities may lead to a reduction in the Company’s net interest margins; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in market rates and prices may adversely impact securities, loans, deposits, mortgage servicing rights, and other financial instruments; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the legislative or regulatory developments, including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry, such as the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and the extensive rule making it requires to be undertaken by various regulatory agencies may adversely affect the Company’s business, financial condition and results of operations; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | personal or commercial bankruptcies increase; |
|--------|---------|-----------------------------------------------|

|   | • | the Company’s ability to expand and grow its business and operations, including the establishment of additional branches and acquisition of additional banks or branches of banks, may be more difficult or costly than the Company expected; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes in accounting principles, policies or guidelines; |
|--------|---------|-----------------------------------------------------------|

|   | • | credit risks, including credit risks resulting from the devaluation of collateral debt obligations and/or structured investment vehicles on the capital markets to which the Company currently has no direct exposure; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | the failure of assumptions underlying the Company’s deferred tax valuation assumptions; |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | • | the failure of assumptions underlying the establishment of the Company’s allowance for loan losses; |
|--------|---------|-----------------------------------------------------------------------------------------------------------|

|   | • | construction and development loans are based upon estimates of costs and value associated with the complete project.  These estimates may be inaccurate, and cause the Company to be exposed to more losses on these projects than on other loans; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | changes occur in the securities markets; |
|--------|---------|------------------------------------------|

|   | • | technology-related changes may be harder to make or more expensive than the Company anticipated; |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | worldwide political and social unrest, including acts of war and terrorism; |
|--------|---------|-----------------------------------------------------------------------------|

|   | • | changes occur in monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | impairment of the goodwill and core deposit intangibles the Company has recorded with acquisitions and the resulting adverse impact on the Company’s profitability; and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the occurrence of any event, change or other circumstance that could result in the Company’s failure to develop and implement successfully capital raising and debt restructuring plans. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mercantile Bank (“Mercantile Bank”), located in Quincy, Illinois; and |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Royal Palm Bancorp, Inc. (“Royal Palm”), the sole shareholder of Royal Palm Bank of Florida (“Royal Palm Bank”), located in Naples, Florida. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·           | 2.5% of Premier Community Bank of the Emerald Coast (“Premier Community”), located in Crestview, Florida; |
|---------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·           | 4.9% of Brookhaven Bank (“Brookhaven”), located in Atlanta, Georgia; |
|---------------------------------------------------------------|----------------------------------------------------------------------------------|

| ·           | 3.7% of Paragon National Bank (“Paragon”), located in Memphis, Tennessee; |
|---------------------------------------------------------------|---------------------------------------------------------------------------------------|

| ·           | 4.1% of Solera National Bancorp, Inc. (“Solera”), the sole shareholder of Solera National Bank, located in Lakewood, Colorado; |
|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                                                                                      |   | For the three months ended March 31 |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------------------|
|                                                                                                      |   | 2011                                |   |   | 2010 |
|                                                                                                      |   | Average Balance                     |   |   | Income/Expense |   |   | Yield/Rate |   |   | Average Balance |   |   | Income/Expense |   |   | Yield/Rate |   |
| Assets                                                                                                    |   | (dollars in thousands)              |
| Interest-bearing demand deposits                                                                          |   | $                                   | 72,821 |   |   | $ | 32 |   |   |   | 0.18 | % |   | $ | 78,271 |   |   | $ | 78 |   |   |   | 0.40 | % |
| Federal funds sold                                                                                        |   |                                | 10,684 |   |   |   | 5 |   |   |   | 0.19 | % |   |   | 13,695 |   |   |   | 8 |   |   |   | 0.23 | % |
| Securities:                                                                                               |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. treasuries and government agencies                                                                   |   |                                | 3,567 |   |   |   | 21 |   |   |   | 2.35 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Mortgage-backed securities: GSE residential                                                               |   |                                | 33,046 |   |   |   | 241 |   |   |   | 2.92 | % |   |   | 34,183 |   |   |   | 290 |   |   |   | 3.39 | % |
| Other securities                                                                                          |   |                                | 50,641 |   |   |   | 499 |   |   |   | 3.94 | % |   |   | 65,639 |   |   |   | 680 |   |   |   | 4.14 | % |
| Total taxable                                                                                             |   |                                | 87,254 |   |   |   | 761 |   |   |   | 3.49 | % |   |   | 99,822 |   |   |   | 970 |   |   |   | 3.89 | % |
| Non-taxable — State and political subdivision (3)                                                   |   |                                | 23,518 |   |   |   | 204 |   |   |   | 3.47 | % |   |   | 28,755 |   |   |   | 210 |   |   |   | 2.92 | % |
| Loans (net of unearned discount ) (1)(2)                                                                  |   |                                | 643,819 |   |   |   | 8,448 |   |   |   | 5.25 | % |   |   | 772,837 |   |   |   | 10,238 |   |   |   | 5.30 | % |
| Federal Home Loan Bank stock                                                                              |   |                                | 2,885 |   |   |   | 3 |   |   |   | 0.42 | % |   |   | 2,900 |   |   |   | 4 |   |   |   | 0.55 | % |
| Total interest-earning assets                                                                             |   |                                | 840,981 |   |   | $ | 9,453 |   |   |   | 4.50 | % |   |   | 996,280 |   |   | $ | 11,508 |   |   |   | 4.62 | % |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                   |   |                                | 9,779 |   |   |   |   |   |   |   |   |   |   |   | 10,010 |   |   |   |   |   |   |   |   |   |
| Interest receivable                                                                                       |   |                                | 3,366 |   |   |   |   |   |   |   |   |   |   |   | 3,797 |   |   |   |   |   |   |   |   |   |
| Foreclosed assets held for sale, net                                                                      |   |                                | 22,806 |   |   |   |   |   |   |   |   |   |   |   | 14,833 |   |   |   |   |   |   |   |   |   |
| Cost method investments in common stock                                                                   |   |                                | 1,325 |   |   |   |   |   |   |   |   |   |   |   | 1,392 |   |   |   |   |   |   |   |   |   |
| Cash surrender value of life insurance                                                                    |   |                                | 15,638 |   |   |   |   |   |   |   |   |   |   |   | 15,083 |   |   |   |   |   |   |   |   |   |
| Premises and equipment                                                                                    |   |                                | 23,804 |   |   |   |   |   |   |   |   |   |   |   | 25,444 |   |   |   |   |   |   |   |   |   |
| Other                                                                                                     |   |                                | 10,878 |   |   |   |   |   |   |   |   |   |   |   | 22,867 |   |   |   |   |   |   |   |   |   |
| Goodwill                                                                                                  |   |                                | - |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |
| Intangible assets                                                                                         |   |                                | 1,238 |   |   |   |   |   |   |   |   |   |   |   | 1,922 |   |   |   |   |   |   |   |   |   |
| Allowance for loan loss                                                                                   |   |                                | (27,803 | ) |   |   |   |   |   |   |   |   |   |   | (19,001 | ) |   |   |   |   |   |   |   |   |
| Discontinued operations, Assets held for sale                                                             |   |                                | - |   |   |   |   |   |   |   |   |   |   |   | 172,547 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                              |   | $                                   | 902,012 |   |   |   |   |   |   |   |   |   |   | $ | 1,245,174 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity                                                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction deposits                                                                     |   | $                                   | 69,638 |   |   | $ | 36 |   |   |   | 0.21 | % |   | $ | 68,745 |   |   | $ | 46 |   |   |   | 0.27 | % |
| Savings deposits                                                                                          |   |                                | 45,645 |   |   |   | 23 |   |   |   | 0.20 | % |   |   | 48,104 |   |   |   | 45 |   |   |   | 0.37 | % |
| Money-market deposits                                                                                     |   |                                | 102,085 |   |   |   | 131 |   |   |   | 0.51 | % |   |   | 133,485 |   |   |   | 201 |   |   |   | 0.60 | % |
| Time and brokered time deposits                                                                           |   |                                | 486,747 |   |   |   | 2,979 |   |   |   | 2.45 | % |   |   | 572,973 |   |   |   | 3,879 |   |   |   | 2.71 | % |
| Short-term borrowings                                                                                     |   |                                | 10,773 |   |   |   | 35 |   |   |   | 1.30 | % |   |   | 25,426 |   |   |   | 187 |   |   |   | 2.94 | % |
| Long term debt                                                                                            |   |                                | 13,428 |   |   |   | 132 |   |   |   | 3.93 | % |   |   | 17,063 |   |   |   | 220 |   |   |   | 5.16 | % |
| Junior subordinated debentures                                                                            |   |                                | 61,858 |   |   |   | 878 |   |   |   | 5.68 | % |   |   | 61,858 |   |   |   | 793 |   |   |   | 5.13 | % |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                                                                        |   |                                | 790,174 |   |   | $ | 4,214 |   |   |   | 2.13 | % |   |   | 927,654 |   |   | $ | 5,371 |   |   |   | 2.32 | % |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits                                                                                           |   |                                | 107,451 |   |   |   |   |   |   |   |   |   |   |   | 99,303 |   |   |   |   |   |   |   |   |   |
| Interest payable                                                                                          |   |                                | 7,468 |   |   |   |   |   |   |   |   |   |   |   | 4,475 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                         |   |                                | 4,147 |   |   |   |   |   |   |   |   |   |   |   | 4,728 |   |   |   |   |   |   |   |   |   |
| Discontinued operations, Liabilities held for sale                                                        |   |                                | - |   |   |   |   |   |   |   |   |   |   |   | 162,217 |   |   |   |   |   |   |   |   |   |
| Noncontrolling interest                                                                                   |   |                                | (2,741 | ) |   |   |   |   |   |   |   |   |   |   | 3,517 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                                                                                |   |                                | (4,487 | ) |   |   |   |   |   |   |   |   |   |   | 43,280 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’ equity                                                          |   | $                                   | 902,012 |   |   |   |   |   |   |   |   |   |   | $ | 1,245,174 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest spread                                                                                           |   |                                |   |   |   |   |   |   |   |   | 2.36 | % |   |   |   |   |   |   |   |   |   |   | 2.30 | % |
| Net interest income                                                                                       |   |                                |   |   |   | $ | 5,239 |   |   |   |   |   |   |   |   |   |   | $ | 6,137 |   |   |   |   |   |
| Net interest margin                                                                                       |   |                                |   |   |   |   |   |   |   |   | 2.49 | % |   |   |   |   |   |   |   |   |   |   | 2.46 | % |
| Interest-earning assets to interest-bearing liabilities                                                   |   |                                | 106.43 | % |   |   |   |   |   |   |   |   |   |   | 107.40 | % |   |   |   |   |   |   |   |   |
| (1) Non-accrual loans have been included in average loans, net of unearned discount                       |   |
| (2) Includes loans held for sale                                                                          |   |
| (3) The tax exempt income for state and political subdivisions is not recorded on a tax equivalent basis. |   |

----

|                                              |   | For the three months ended March 31,2011 vs. 2010 |   |
|---------------------------------------------------|--------|---------------------------------------------------|--------|
|                                              |   | Increase (Decrease) Due to Change in              |   |   |   |   |
|                                              |   | Volume                                            |   |   | Rate |   |   | Total |   |
|                                              |   |                                              |   |   |   |   |   |   |   |
| Increase (decrease) in interest income:           |   |                                              |   |   |   |   |   |   |   |
| Interest-bearing bank deposits                    |   | $                                                 | (5     | ) |   | $ | (41 | ) |   | $ | (46 | ) |
| Federal funds sold                                |   |                                              | (2     | ) |   |   | (1 | ) |   |   | (3 | ) |
| Investment securities:                            |   |                                              |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasuries and Agencies                      |   |                                              | 21     |   |   |   | - |   |   |   | 21 |   |
| Mortgage-backed securities: GSE residential       |   |                                              | (9     | ) |   |   | (40 | ) |   |   | (49 | ) |
| States and political subdivision (1)              |   |                                              | (42    | ) |   |   | 36 |   |   |   | (6 | ) |
| Other securities                                  |   |                                              | (149   | ) |   |   | (32 | ) |   |   | (181 | ) |
| Loans (net of unearned discounts)                 |   |                                              | (1,694 | ) |   |   | (96 | ) |   |   | (1,790 | ) |
| Federal Home Loan Bank stock                      |   |                                              | -      |   |   |   | (1 | ) |   |   | (1 | ) |
| Change in interest income                         |   |                                              | (1,880 | ) |   |   | (175 | ) |   |   | (2,055 | ) |
| Increase (decrease) in interest expense:          |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction deposits             |   |                                              | 1      |   |   |   | (11 | ) |   |   | (10 | ) |
| Savings deposits                                  |   |                                              | (2     | ) |   |   | (20 | ) |   |   | (22 | ) |
| Money-market deposits                             |   |                                              | (43    | ) |   |   | (27 | ) |   |   | (70 | ) |
| Time and brokered time deposits                   |   |                                              | (550   | ) |   |   | (350 | ) |   |   | (900 | ) |
| Short-term borrowings                             |   |                                              | (77    | ) |   |   | (75 | ) |   |   | (152 | ) |
| Long-term debt and junior subordinated debentures |   |                                              | (48    | ) |   |   | 45 |   |   |   | (3 | ) |
| Change in interest expense                        |   |                                              | (719   | ) |   |   | (438 | ) |   |   | (1,157 | ) |
|                                              |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in net interest income        |   | $                                                 | (1,161 | ) |   | $ | 263 |   |   | $ | (898 | ) |

| (1)  The tax exempt income for state and political subdivisions is not recorded on a tax equivalent basis. |
|----------------------------------------------------------------------------------------------------------------------|

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|                                                   |   | For the Three Months Ended March 31 |   |
|--------------------------------------------------------|--------|-------------------------------------|--------|
|                                                   |   | 2011                                |   |   | 2010 |   |
|                                                   |   |                                |   |   |   |   |
| Fiduciary activities                                   |   | $                                   | 614    |   |   | $ | 581 |   |
| Brokerage fees                                         |   |                                | 263    |   |   |   | 299 |   |
| Customer service fees                                  |   |                                | 334    |   |   |   | 365 |   |
| Other service charges and fees                         |   |                                | 179    |   |   |   | 139 |   |
| Net gains (losses) on sales of assets                  |   |                                | -      |   |   |   | 8 |   |
| Net gains on loan sales                                |   |                                | 99     |   |   |   | 92 |   |
| Net gains on sale of available-for-sale securities     |   |                                | 433    |   |   |   | - |   |
| Loan servicing fees                                    |   |                                | 123    |   |   |   | 124 |   |
| Net increase in cash surrender value of life insurance |   |                                | 137    |   |   |   | 138 |   |
| Other                                                  |   |                                | 18     |   |   |   | 187 |   |
|                                                   |   |                                |   |   |   |   |   |   |
| Total noninterest income                               |   | $                                   | 2,200  |   |   | $ | 1,933 |   |

|                                                              |   | For the Three Months Ended March 31 |   |
|-------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                              |   | 2011                                |   |   | 2010 |   |
|                                                              |   |                                |   |   |   |   |
| Salaries and employee benefits                                    |   | $                                   | 3,838  |   |   | $ | 4,405 |   |
| Net occupancy expense                                             |   |                                | 602    |   |   |   | 598 |   |
| Equipment expense                                                 |   |                                | 518    |   |   |   | 563 |   |
| Deposit insurance premium                                         |   |                                | 661    |   |   |   | 471 |   |
| Professional fees                                                 |   |                                | 430    |   |   |   | 491 |   |
| Postage and supplies                                              |   |                                | 144    |   |   |   | 148 |   |
| Losses on foreclosed assets, net                                  |   |                                | 250    |   |   |   | 212 |   |
| Amortization of mortgage servicing rights                         |   |                                | 55     |   |   |   | 39 |   |
| Other than temporary impairment losses on cost method investments |   |                                | 202    |   |   |   | - |   |
| Other                                                             |   |                                | 1,567  |   |   |   | 1,489 |   |
|                                                              |   |                                |   |   |   |   |   |   |
| Total noninterest expense                                         |   | $                                   | 8,267  |   |   | $ | 8,416 |   |

----

----

|                                                                         |   | March 31, 2011         |    |   | December 31, 2010 |   |
|------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                                                                         |   | Amount                 |    |   | Percent           |   |   | Amount |   |   | Percent |   |
|                                                                         |   | (dollars in thousands) |    |
| Commercial and financial                                                     |   | $                      | 132,595 |   |              |   | 21.31 | % |   | $ | 146,463 |   |   |   | 21.90 | % |
| Agricultural                                                                 |   |                   | 9,612   |   |              |   | 1.54 | % |   |   | 11,708 |   |   |   | 1.75 | % |
| Real estate — farmland                                                 |   |                   | 14,884  |   |              |   | 2.39 | % |   |   | 15,528 |   |   |   | 2.32 | % |
| Real estate — construction                                             |   |                   | 78,892  |   |              |   | 12.68 | % |   |   | 91,553 |   |   |   | 13.69 | % |
| Real estate — commercial                                               |   |                   | 141,978 |   |              |   | 22.82 | % |   |   | 153,767 |   |   |   | 23.00 | % |
| Real estate — residential (1)                                          |   |                   | 188,469 |   |              |   | 30.29 | % |   |   | 189,479 |   |   |   | 28.34 | % |
| Installment loans to individuals                                             |   |                   | 55,790  |   |              |   | 8.97 | % |   |   | 60,177 |   |   |   | 9.00 | % |
|                                                                         |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                                  |   |                   | 622,220 |   |              |   | 100.00 | % |   |   | 668,675 |   |   |   | 100.00 | % |
|                                                                         |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                    |   |                   | 24,142  |   |              |   |   |   |   |   | 28,199 |   |   |   |   |   |
| Total loans, including loans held for sale, net of allowance for loan losses |   | $                      | 598,078 |   |              |   |   |   |   | $ | 640,476 |   |   |   |   |   |

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|                                                                                          |   | March 31,2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                                                          |   |          |    |   |              |   |
| Nonaccrual loans                                                                              |   |          |    |   |              |   |
| Commercial and financial                                                                      |   | $             | 1,623   |   |              | $      | 2,579 |   |
| Agricultural                                                                                  |   |          | — |   |              |   | — |   |
| Real estate — farmland                                                                  |   |          | 540     |   |              |   | 134 |   |
| Real estate — construction                                                              |   |          | 25,518  |   |              |   | 29,892 |   |
| Real estate — commercial                                                                |   |          | 12,870  |   |              |   | 9,134 |   |
| Real estate — residential                                                               |   |          | 2,613   |   |              |   | 4,041 |   |
| Installment loans to individuals                                                              |   |          | 228     |   |              |   | 216 |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Total nonaccrual loans                                                                        |   |          | 43,392  |   |              |   | 45,996 |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Loans 90 days past due and still accruing                                                     |   |          | 64      |   |              |   | 290 |   |
| Restructured loans                                                                            |   |          | 6,870   |   |              |   | 6,995 |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Total nonperforming loans                                                                     |   |          | 50,326  |   |              |   | 53,281 |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Other real estate owned                                                                       |   |          | 25,613  |   |              |   | 21,091 |   |
| Other foreclosed assets                                                                       |   |          | 52      |   |              |   | — |   |
| Other assets acquired in satisfaction of debt previously contracted                           |   |          | — |   |              |   | — |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Total nonperforming other assets                                                              |   |          | 25,665  |   |              |   | 21,091 |   |
|                                                                                          |   |          |    |   |              |   |   |   |
| Total nonperforming loans and nonperforming other assets                                      |   | $             | 75,991  |   |              | $      | 74,372 |   |
| Nonperforming loans to loans, before allowance for loan losses                                |   |          | 8.09    | %      |              |   | 7.97 | % |
| Nonperforming loans and nonperforming other assets to loans, before allowance for loan losses |   |          | 12.21   | %      |              |   | 11.12 | % |

----

|                                                                          |   | As of and for the Three Months Ended March 31,2011 |    |   | As of and for the Year Ended December 31, 2010 |   |
|-------------------------------------------------------------------------------|--------|----------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                                          |   |                                               |    |   |                                           |   |
| Average loans outstanding during year                                         |   | $                                                  | 643,819 |   |                                           | $      | 731,460 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Allowance for loan losses:                                                    |   |                                               |    |   |                                           |   |   |   |
| Balance at beginning of year                                                  |   | $                                                  | 28,199  |   |                                           | $      | 18,851 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Loans charged-off:                                                            |   |                                               |    |   |                                           |   |   |   |
| Commercial and financial                                                      |   |                                               | 1,298   |   |                                           |   | 7,411 |   |
| Agricultural                                                                  |   |                                               | 4       |   |                                           |   | 18 |   |
| Real estate — farmland                                                  |   |                                               | — |   |                                           |   | 39 |   |
| Real estate — construction                                              |   |                                               | 1,559   |   |                                           |   | 13,057 |   |
| Real estate — commercial                                                |   |                                               | 89      |   |                                           |   | 1,355 |   |
| Real estate — residential                                               |   |                                               | 218     |   |                                           |   | 3,247 |   |
| Installment loans to individuals                                              |   |                                               | 94      |   |                                           |   | 788 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Total charge-offs                                                             |   |                                               | 3,262   |   |                                           |   | 25,915 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Recoveries:                                                                   |   |                                               |    |   |                                           |   |   |   |
| Commercial and financial                                                      |   |                                               | 13      |   |                                           |   | 83 |   |
| Agricultural                                                                  |   |                                               | 4       |   |                                           |   | 19 |   |
| Real estate — farmland                                                  |   |                                               | — |   |                                           |   | — |   |
| Real estate — construction                                              |   |                                               | 2       |   |                                           |   | 53 |   |
| Real estate — commercial                                                |   |                                               | 77      |   |                                           |   | 3 |   |
| Real estate — residential                                               |   |                                               | 45      |   |                                           |   | 58 |   |
| Installment loans to individuals                                              |   |                                               | 27      |   |                                           |   | 80 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Total recoveries                                                              |   |                                               | 168     |   |                                           |   | 296 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Net charge-offs                                                               |   |                                               | 3,094   |   |                                           |   | 25,619 |   |
| Provision for loan losses                                                     |   |                                               | (963    | )      |                                           |   | 34,967 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Balance at end of year                                                        |   | $                                                  | 24,142  |   |                                           | $      | 28,199 |   |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Allowance for loan losses as a percent of total loans outstanding at year end |   |                                               | 3.88    | %      |                                           |   | 4.22 | % |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Allowance for loan losses as a percent of total nonperforming loans           |   |                                               | 47.97   | %      |                                           |   | 52.93 | % |
|                                                                          |   |                                               |    |   |                                           |   |   |   |
| Ratio of net charge-offs to average total loans                               |   |                                               | 0.48    | %      |                                           |   | 3.50 | % |

----

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| First Quarter 2011 Calendar Month | Total Number of Shares Purchased (1) | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) |
|-----------------------------------|--------------------------------------|----------------------------------|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|
|                              |                                 |                             |                                                                                 |                                                                                                 |
| January                           | 0                                    | N/A                              | 0                                                                                    |           $8,128,000                               |
| February                          | 0                                    | N/A                              | 0                                                                                    |           $8,128,000                               |
| March                             | 0                                    | N/A                              | 0                                                                                    |           $8,128,000                               |
| Total                             | 0                                    | N/A                              | 0                                                                                    |                                                                                                 |

----

|          |   |                                                                                                                                                |
|---------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| ExhibitNumber |   |   Identification of Exhibit                                                                                                                    |   |
|          |   |
| 31.1          |   | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                         |
|          |   |
| 31.2          |   | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                         |
|          |   |
| 32.1          |   | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|          |   |
| 32.2          |   | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

----

|               |   |   |   |                                                               |   |
|--------------------|--------|--------|--------|--------------------------------------------------------------------|--------|
| Date: May 16, 2011 |   | By:    |   | /s/ Ted T. Awerkamp                                                |   |
|               |   |   |   | Ted T. Awerkamp                                                    |   |
|               |   |   |   | President and Chief Executive Officer(principal executive officer) |   |
|               |   |   |   |
| Date: May 16, 2011 |   | By:    |   | /s/ Michael P. McGrath                                             |   |
|               |   |   |   | Michael P. McGrath                                                 |   |
|               |   |   |   | Executive Vice President, Treasurer, Secretary and                 |   |
|               |   |   |   | Chief Financial Officer                                            |   |
|               |   |   |   | (principal financial officer/principal accounting officer)         |   |