| Delaware                                                                                          |         | 43-1930755                                             |
|---------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------|
| (State or other jurisdiction of incorporation or organization) |    | (I.R.S. Employer Identification Number) |

| 701 Poyntz Avenue, Manhattan, Kansas     |         | 66502           |
|--------------------------------------------------------------|--------------|-----------------|
| (Address of principal executive offices) |    | (Zip Code) |

----

|                     |                                                        | Page Number   |
|--------------------------|-------------------------------------------------------------|---------------|
|                     |                                                        |          |
| PART I                   |
|                     |                                                        |          |
| Item 1.                  | Financial Statements                                        | 2 - 19        |
| Item 2.                  | Management's Discussion and Analysis of Financial Condition |          |
|                     | and Results of Operations                                   | 20 – 28 |
| Item 3.                  | Quantitative and Qualitative Disclosures about              |          |
|                     | Market Risk                                                 | 28 - 29       |
| Item 4.                  | Controls and Procedures                                     | 30            |
|                     |                                                        |          |
| PART II                  |
|                     |                                                        |          |
| Item 1.                  | Legal Proceedings                                           | 31            |
| Item 1A.                 | Risk Factors                                                | 31            |
| Item 2.                  | Unregistered Sales of Equity Securities and                 |          |
|                     | Use of Proceeds                                             | 31            |
| Item 3.                  | Defaults Upon Senior Securities                             | 31            |
| Item 4.                  | [Removed and Reserved]                                      | 31            |
| Item 5.                  | Other Information                                           | 31            |
| Item 6.                  | Exhibits                                                    | 31            |
|                     |                                                        |          |
| Form 10-Q Signature Page | 32                                                          |

----

| (Dollars in thousands)                                                                                                                            |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                                                                                                              |   | 2011      |    |   | 2010         |   |
| Assets                                                                                                                                            |   |      |    |   |         |   |
| Cash and cash equivalents                                                                                                                         |   | $         | 10,540  |   |         | $      | 9,735 |   |
| Investment securities:                                                                                                                            |   |      |    |   |         |   |   |   |
| Available-for-sale, at fair value                                                                                                                 |   |      | 181,334 |   |         |   | 167,689 |   |
| Other securities                                                                                                                                  |   |      | 8,197   |   |         |   | 8,183 |   |
| Loans, net                                                                                                                                        |   |      | 309,514 |   |         |   | 306,668 |   |
| Loans held for sale                                                                                                                               |   |      | 3,351   |   |         |   | 12,576 |   |
| Premises and equipment, net                                                                                                                       |   |      | 15,038  |   |         |   | 15,225 |   |
| Real estate owned                                                                                                                                 |   |      | 2,912   |   |         |   | 3,194 |   |
| Bank owned life insurance                                                                                                                         |   |      | 15,718  |   |         |   | 13,080 |   |
| Goodwill                                                                                                                                          |   |      | 12,894  |   |         |   | 12,894 |   |
| Other intangible assets, net                                                                                                                      |   |      | 2,123   |   |         |   | 2,233 |   |
| Accrued interest and other assets                                                                                                                 |   |      | 10,114  |   |         |   | 10,029 |   |
| Total assets                                                                                                                                      |   | $         | 571,735 |   |         | $      | 561,506 |   |
|                                                                                                                                              |   |      |    |   |         |   |   |   |
| Liabilities and Stockholders’ Equity                                                                                                        |   |      |    |   |         |   |   |   |
| Liabilities:                                                                                                                                      |   |      |    |   |         |   |   |   |
| Deposits:                                                                                                                                         |   |      |    |   |         |   |   |   |
| Non-interest-bearing demand                                                                                                                       |   | $         | 59,324  |   |         | $      | 52,683 |   |
| Money market and NOW                                                                                                                              |   |      | 179,088 |   |         |   | 167,815 |   |
| Savings                                                                                                                                           |   |      | 35,905  |   |         |   | 32,369 |   |
| Time, $100,000 and greater                                                                                                                        |   |      | 49,438  |   |         |   | 49,390 |   |
| Time, other                                                                                                                                       |   |      | 125,338 |   |         |   | 129,057 |   |
| Total deposits                                                                                                                                    |   |      | 449,093 |   |         |   | 431,314 |   |
|                                                                                                                                              |   |      |    |   |         |   |   |   |
| Federal Home Loan Bank borrowings                                                                                                                 |   |      | 35,790  |   |         |   | 44,300 |   |
| Other borrowings                                                                                                                                  |   |      | 25,328  |   |         |   | 26,001 |   |
| Accrued interest, taxes, and other liabilities                                                                                                    |   |      | 6,946   |   |         |   | 6,074 |   |
| Total liabilities                                                                                                                                 |   |      | 517,157 |   |         |   | 507,689 |   |
|                                                                                                                                              |   |      |    |   |         |   |   |   |
| Commitments and contingencies                                                                                                                     |   |      |    |   |         |   |   |   |
|                                                                                                                                              |   |      |    |   |         |   |   |   |
| Stockholders’ equity:                                                                                                                       |   |      |    |   |         |   |   |   |
| Preferred stock, $0.01 par, 200,000 shares authorized; none issued                                                                                |   |      | -       |   |         |   | - |   |
| Common stock, $0.01 par, 7,500,000 shares authorized; 2,639,450 and 2,636,891 shares issued at March 31, 2011 and December 31, 2010, respectively |   |      | 26      |   |         |   | 26 |   |
| Additional paid-in capital                                                                                                                        |   |      | 27,154  |   |         |   | 27,102 |   |
| Retained earnings                                                                                                                                 |   |      | 26,243  |   |         |   | 25,767 |   |
| Accumulated other comprehensive income                                                                                                            |   |      | 1,155   |   |         |   | 922 |   |
| Total stockholders’ equity                                                                                                                  |   |      | 54,578  |   |         |   | 53,817 |   |
|                                                                                                                                              |   |      |    |   |         |   |   |   |
| Total liabilities and stockholders’ equity                                                                                                  |   | $         | 571,735 |   |         | $      | 561,506 |   |

----

|                                                |   | Three months ended |   |
|-----------------------------------------------------|--------|--------------------|--------|
| (Dollars in thousands, except per share amounts)    |   | March 31,          |   |
|                                                |   | 2011               |   |   | 2010 |   |
| Interest income:                                    |   |               |   |   |   |   |
| Loans:                                              |   |               |   |   |   |   |
| Taxable                                             |   | $                  | 4,271  |   |   | $ | 4,792 |   |
| Tax-exempt                                          |   |               | 86     |   |   |   | 78 |   |
| Investment securities:                              |   |               |   |   |   |   |   |   |
| Taxable                                             |   |               | 604    |   |   |   | 794 |   |
| Tax-exempt                                          |   |               | 598    |   |   |   | 627 |   |
| Other                                               |   |               | 2      |   |   |   | 1 |   |
| Total interest income                               |   |               | 5,561  |   |   |   | 6,292 |   |
| Interest expense:                                   |   |               |   |   |   |   |   |   |
| Deposits                                            |   |               | 760    |   |   |   | 1,039 |   |
| Borrowings                                          |   |               | 487    |   |   |   | 685 |   |
| Total interest expense                              |   |               | 1,247  |   |   |   | 1,724 |   |
| Net interest income                                 |   |               | 4,314  |   |   |   | 4,568 |   |
| Provision for loan losses                           |   |               | 400    |   |   |   | 700 |   |
| Net interest income after provision for loan losses |   |               | 3,914  |   |   |   | 3,868 |   |
| Non-interest income:                                |   |               |   |   |   |   |   |   |
| Fees and service charges                            |   |               | 1,137  |   |   |   | 1,005 |   |
| Gains on sales of loans, net                        |   |               | 619    |   |   |   | 511 |   |
| Bank owned life insurance                           |   |               | 144    |   |   |   | 124 |   |
| Other                                               |   |               | 137    |   |   |   | 125 |   |
| Total non-interest income                           |   |               | 2,037  |   |   |   | 1,765 |   |
| Investment securities gains:                        |   |               |   |   |   |   |   |   |
| Gains on sales of investment securities             |   |               | -      |   |   |   | 563 |   |
| Investment securities gains                         |   |               | -      |   |   |   | 563 |   |
| Non-interest expense:                               |   |               |   |   |   |   |   |   |
| Compensation and benefits                           |   |               | 2,374  |   |   |   | 2,324 |   |
| Occupancy and equipment                             |   |               | 708    |   |   |   | 719 |   |
| Professional fees                                   |   |               | 285    |   |   |   | 134 |   |
| Data processing                                     |   |               | 198    |   |   |   | 208 |   |
| Amortization of intangibles                         |   |               | 179    |   |   |   | 179 |   |
| Federal deposit insurance premiums                  |   |               | 175    |   |   |   | 179 |   |
| Advertising                                         |   |               | 159    |   |   |   | 118 |   |
| Foreclosure and real estate owned expense           |   |               | 25     |   |   |   | 182 |   |
| Other                                               |   |               | 728    |   |   |   | 765 |   |
| Total non-interest expense                          |   |               | 4,831  |   |   |   | 4,808 |   |
| Earnings before income taxes                        |   |               | 1,120  |   |   |   | 1,388 |   |
| Income tax expense                                  |   |               | 142    |   |   |   | 245 |   |
| Net earnings                                        |   | $                  | 978    |   |   | $ | 1,143 |   |
| Earnings per share:                                 |   |               |   |   |   |   |   |   |
| Basic                                               |   | $                  | 0.37   |   |   | $ | 0.44 |   |
| Diluted                                             |   | $                  | 0.37   |   |   | $ | 0.44 |   |
| Dividends per share                                 |   | $                  | 0.19   |   |   | $ | 0.18 |   |

----

|                                                                 |   | Three months ended |    |
|----------------------------------------------------------------------|--------|--------------------|---------|
| (Dollars in thousands)                                               |   | March 31,          |    |
|                                                                 |   | 2011               |    |   | 2010 |   |
|                                                                 |   |               |    |   |   |   |
| Net cash provided by (used in) operating activities                  |   | $                  | 9,128   |   |   | $ | (2,013 | ) |
|                                                                 |   |               |    |   |   |   |   |   |
| Investing activities:                                                |   |               |    |   |   |   |   |   |
| Net increase in loans                                                |   |               | (4,387  | ) |   |   | (4,154 | ) |
| Maturities and prepayments of investment securities                  |   |               | 15,257  |   |   |   | 8,789 |   |
| Purchases of investment securities                                   |   |               | (28,754 | ) |   |   | (18,058 | ) |
| Proceeds from sale of investment securities                          |   |               | -       |   |   |   | 10,097 |   |
| Proceeds from sales of foreclosed assets                             |   |               | 1,475   |   |   |   | 142 |   |
| Purchases of premises and equipment, net                             |   |               | (41     | ) |   |   | (26 | ) |
| Net cash used in investing activities                                |   |               | (16,450 | ) |   |   | (3,210 | ) |
| Financing activities:                                                |   |               |    |   |   |   |   |   |
| Net increase in deposits                                             |   |               | 17,779  |   |   |   | 7,987 |   |
| Federal Home Loan Bank advance repayments                            |   |               | (10     | ) |   |   | (5,009 | ) |
| Change in Federal Home Loan Bank line of credit, net                 |   |               | (8,500  | ) |   |   | - |   |
| Other borrowings, net                                                |   |               | (673    | ) |   |   | 505 |   |
| Proceeds from issuance of common stock under stock option plans      |   |               | 28      |   |   |   | 143 |   |
| Excess tax benefit related to stock option plans                     |   |               | 5       |   |   |   | 31 |   |
| Payment of dividends                                                 |   |               | (502    | ) |   |   | (475 | ) |
| Net cash provided by financing activities                            |   |               | 8,127   |   |   |   | 3,182 |   |
| Net increase (decrease) in cash and cash equivalents                 |   |               | 805     |   |   |   | (2,041 | ) |
| Cash and cash equivalents at beginning of period                     |   |               | 9,735   |   |   |   | 12,379 |   |
| Cash and cash equivalents at end of period                           |   | $                  | 10,540  |   |   | $ | 10,338 |   |
|                                                                 |   |               |    |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                    |   |               |    |   |   |   |   |   |
| Cash (refunds) paid during the period for income taxes               |   | $                  | (575    | ) |   | $ | 450 |   |
| Cash paid during the period for interest                             |   |               | 1,314   |   |   |   | 1,838 |   |
|                                                                 |   |               |    |   |   |   |   |   |
| Supplemental schedule of noncash investing and financing activities: |   |               |    |   |   |   |   |   |
| Transfer of loans to real estate owned                               |   | $                  | 1,198   |   |   | $ | 2,095 |   |

----

| (Dollars in thousands, except per share amounts) |   | Commonstock |   |   | Additionalpaid-incapital |   |   | Retainedearnings |   |   | Treasurystock |   |   | Accumulated othercomprehensiveincome |   |   | Total  |   |
|--------------------------------------------------------------------------------|--------|-------------|--------|--------|--------------------------|--------|--------|------------------|--------|--------|---------------|--------|--------|-------------------------------------------|--------|--------|--------|--------|
| Balance at December 31, 2009                                                   |   | $           | 25     |   |                     | $      | 24,844 |             |   | $      | 27,523        |   |   | $                                         | -      |   |   | $      | 1,503 |   |   | $ | 53,895 |   |
| Comprehensive income:                                                          |   |        |   |   |                     |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net earnings                                                                   |   |        | -      |   |                     |   | -      |             |   |   | 1,143         |   |   |                                      | -      |   |   |   | - |   |   |   | 1,143 |   |
| Change in fair value of investment securities available-for-sale, net of tax   |   |        | -      |   |                     |   | -      |             |   |   | -             |   |   |                                      | -      |   |   |   | (312 | ) |   |   | (312 | ) |
| Total comprehensive income                                                     |   |        |   |   |                     |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 831 |   |
| Dividends paid ($0.18 per share)                                               |   |        | -      |   |                     |   | -      |             |   |   | (475          | )      |   |                                      | -      |   |   |   | - |   |   |   | (475 | ) |
| Stock based compensation                                                       |   |        | -      |   |                     |   | 39     |             |   |   | -             |   |   |                                      | -      |   |   |   | - |   |   |   | 39 |   |
| Exercise of stock options, 14,486 shares, including excess tax benefit of $31  |   |        | -      |   |                     |   | 174    |             |   |   | -             |   |   |                                      | -      |   |   |   | - |   |   |   | 174 |   |
| Balance at March 31, 2010                                                      |   | $           | 25     |   |                     | $      | 25,057 |             |   | $      | 28,191        |   |   | $                                         | -      |   |   | $      | 1,191 |   |   | $ | 54,464 |   |
|                                                                           |   |        |   |   |                     |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                                   |   | $           | 26     |   |                     | $      | 27,102 |             |   | $      | 25,767        |   |   | $                                         | -      |   |   | $      | 922 |   |   | $ | 53,817 |   |
| Comprehensive income:                                                          |   |        |   |   |                     |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net earnings                                                                   |   |        | -      |   |                     |   | -      |             |   |   | 978           |   |   |                                      | -      |   |   |   | - |   |   |   | 978 |   |
| Change in fair value of investment securities available-for-sale, net of tax   |   |        | -      |   |                     |   | -      |             |   |   | -             |   |   |                                      | -      |   |   |   | 233 |   |   |   | 233 |   |
| Total comprehensive income                                                     |   |        |   |   |                     |   |   |             |   |   |          |   |   |                                      |   |   |   |   |   |   |   |   | 1,211 |   |
| Dividends paid ($0.19 per share)                                               |   |        | -      |   |                     |   | -      |             |   |   | (502          | )      |   |                                      | -      |   |   |   | - |   |   |   | (502 | ) |
| Stock based compensation                                                       |   |        | -      |   |                     |   | 19     |             |   |   | -             |   |   |                                      | -      |   |   |   | - |   |   |   | 19 |   |
| Exercise of stock options, 2,559 shares, including excess tax benefit of $5    |   |        | -      |   |                     |   | 33     |             |   |   | -             |   |   |                                      | -      |   |   |   | - |   |   |   | 33 |   |
| Balance at March 31, 2011                                                      |   | $           | 26     |   |                     | $      | 27,154 |             |   | $      | 26,243        |   |   | $                                         | -      |   |   | $      | 1,155 |   |   | $ | 54,578 |   |

----

| 1.  | Interim Financial Statements |
|----------|------------------------------|

| 2. | Goodwill and Other Intangible Assets |
|----|--------------------------------------|

|                             |   | Three months ended March 31, |   |
|----------------------------------|--------|--------------------------------------------------|--------|
| (Dollars in thousands) |   | 2011                                             |   |   |   |   |   | 2010 |   |
|                             |   | Fair value atacquisition               |   |   | Accumulatedamortization |   |   | Fair value atacquisition |   |   | Accumulatedamortization |   |
| Balance at beginning of period   |   | $                                                | 5,445  |   |   | $ | (4,272 | ) |   | $ | 5,482 |   |   | $ | (3,767 | ) |
| Additions                        |   |                                             | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Adjustments to prior estimates   |   |                                             | -      |   |   |   | - |   |   |   | (37 | ) |   |   |   |   |
| Amortization                     |   |                                             | -      |   |   |   | (108 | ) |   |   | - |   |   |   | (129 | ) |
| Balance at end of period         |   | $                                                | 5,445  |   |   | $ | (4,380 | ) |   | $ | 5,445 |   |   | $ | (3,896 | ) |

|                             |   | Three months ended March 31, |   |
|----------------------------------|--------|--------------------------------------------------|--------|
| (Dollars in thousands) |   | 2011                                             |   |   | 2010 |   |
|                             |   | Cost                                             |   |   | Accumulatedamortization |   |   | Cost |   |   | Accumulatedamortization |   |
| Balance at beginning of period   |   | $                                                | 1,880  |   |   | $ | (820 | ) |   | $ | 1,447 |   |   | $ | (681 | ) |
| Additions                        |   |                                             | 69     |   |   |   | - |   |   |   | 63 |   |   |   | - |   |
| Prepayments                      |   |                                             | (19    | ) |   |   | 19 |   |   |   | (14 | ) |   |   | 14 |   |
| Amortization                     |   |                                             | -      |   |   |   | (71 | ) |   |   | - |   |   |   | (50 | ) |
| Balance at end of period         |   | $                                                | 1,930  |   |   | $ | (872 | ) |   | $ | 1,496 |   |   | $ | (717 | ) |

----

| (Dollars in thousands) |   | Amortization |   |
|------------------------|--------|--------------|--------|
|                   |   | expense      |   |
| Remainder of 2011      |   | $            | 515    |   |
| 2012                   |   |         | 599    |   |
| 2013                   |   |         | 515    |   |
| 2014                   |   |         | 419    |   |
| 2015                   |   |         | 68     |   |
| Thereafter             |   |         | 7      |   |

| 3.  | Investments |
|----------|-------------|

|                              |   | As of March 31, 2011 |    |
|-----------------------------------|--------|----------------------|---------|
|                              |   |                 |    |   | Gross |   |   | Gross |   |   |   |   |
|                              |   | Amortized            |    |   | unrealized |   |   | unrealized |   |   | Estimated |   |
| (Dollars in thousands)            |   | cost                 |    |   | gains |   |   | losses |   |   | fair value |   |
|                              |   |                 |    |   |   |   |   |   |   |   |   |   |
| U. S. federal agency obligations  |   | $                    | 21,454  |   |   | $ | 113 |   |   | $ | (25 | ) |   | $ | 21,542 |   |
| Municipal obligations, tax exempt |   |                 | 63,441  |   |   |   | 2,168 |   |   |   | (182 | ) |   |   | 65,427 |   |
| Municipal obligations, taxable    |   |                 | 4,232   |   |   |   | 17 |   |   |   | (58 | ) |   |   | 4,191 |   |
| Mortgage-backed securities        |   |                 | 80,125  |   |   |   | 829 |   |   |   | (398 | ) |   |   | 80,556 |   |
| Common stocks                     |   |                 | 693     |   |   |   | 212 |   |   |   | (12 | ) |   |   | 893 |   |
| Pooled trust preferred securities |   |                 | 1,125   |   |   |   | - |   |   |   | (840 | ) |   |   | 285 |   |
| Certificates of deposit           |   |                 | 8,440   |   |   |   | - |   |   |   | - |   |   |   | 8,440 |   |
| Total                             |   | $                    | 179,510 |   |   | $ | 3,339 |   |   | $ | (1,515 | ) |   | $ | 181,334 |   |

|                              |   | As of December 31, 2010 |    |
|-----------------------------------|--------|-------------------------|---------|
|                              |   |                    |    |   | Gross |   |   | Gross |   |   |   |   |
|                              |   | Amortized               |    |   | unrealized |   |   | unrealized |   |   | Estimated |   |
| (Dollars in thousands)            |   | cost                    |    |   | gains |   |   | losses |   |   | fair value |   |
|                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| U. S. federal agency obligations  |   | $                       | 22,060  |   |   | $ | 147 |   |   | $ | (20 | ) |   | $ | 22,187 |   |
| Municipal obligations, tax exempt |   |                    | 63,725  |   |   |   | 1,907 |   |   |   | (345 | ) |   |   | 65,287 |   |
| Municipal obligations, taxable    |   |                    | 4,232   |   |   |   | 12 |   |   |   | (56 | ) |   |   | 4,188 |   |
| Mortgage-backed securities        |   |                    | 60,238  |   |   |   | 847 |   |   |   | (281 | ) |   |   | 60,804 |   |
| Common stocks                     |   |                    | 693     |   |   |   | 190 |   |   |   | (55 | ) |   |   | 828 |   |
| Pooled trust preferred securities |   |                    | 1,125   |   |   |   | - |   |   |   | (889 | ) |   |   | 236 |   |
| Certificates of deposit           |   |                    | 14,159  |   |   |   | - |   |   |   | - |   |   |   | 14,159 |   |
| Total                             |   | $                       | 166,232 |   |   | $ | 3,103 |   |   | $ | (1,646 | ) |   | $ | 167,689 |   |

----

|                              |   |       |   |   | As of March 31, 2011 |   |
|-----------------------------------|--------|------------|--------|--------|----------------------|--------|
| (Dollars in thousands)            |   |       |   |   | Less than 12 months  |   |   | 12 months or longer |   |   | Total |   |
|                              |   | No. of     |   |   | Fair                 |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                              |   | securities |   |   | value                |   |   | losses |   |   | value |   |   | losses |   |   | value |   |   | losses |   |
| U. S. federal agency obligations  |   |       | 5      |   |                 | $      | 4,089 |   |   | $ | (25 | ) |   | $ | - |   |   | $ | - |   |   | $ | 4,089 |   |   | $ | (25 | ) |
| Municipal obligations, tax exempt |   |       | 20     |   |                 |   | 7,015 |   |   |   | (182 | ) |   |   | - |   |   |   | - |   |   |   | 7,015 |   |   |   | (182 | ) |
| Municipal obligations, taxable    |   |       | 11     |   |                 |   | 3,955 |   |   |   | (58 | ) |   |   | - |   |   |   | - |   |   |   | 3,955 |   |   |   | (58 | ) |
| Mortgage-backed securities        |   |       | 20     |   |                 |   | 35,540 |   |   |   | (398 | ) |   |   | - |   |   |   | - |   |   |   | 35,540 |   |   |   | (398 | ) |
| Common stocks                     |   |       | 3      |   |                 |   | 63 |   |   |   | (12 | ) |   |   | - |   |   |   | - |   |   |   | 63 |   |   |   | (12 | ) |
| Pooled trust preferred securities |   |       | 2      |   |                 |   | - |   |   |   | - |   |   |   | 285 |   |   |   | (840 | ) |   |   | 285 |   |   |   | (840 | ) |
| Total                             |   |       | 61     |   |                 | $      | 50,662 |   |   | $ | (675 | ) |   | $ | 285 |   |   | $ | (840 | ) |   | $ | 50,947 |   |   | $ | (1,515 | ) |

|                              |   |       |   |   | As of December 31, 2010 |   |
|-----------------------------------|--------|------------|--------|--------|-------------------------|--------|
| (Dollars in thousands)            |   |       |   |   | Less than 12 months     |   |   | 12 months or longer |   |   | Total |   |
|                              |   | No. of     |   |   | Fair                    |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                              |   | securities |   |   | value                   |   |   | losses |   |   | value |   |   | losses |   |   | value |   |   | losses |   |
| U. S. federal agency obligations  |   |       | 4      |   |                    | $      | 3,104 |   |   | $ | (20 | ) |   | $ | - |   |   | $ | - |   |   | $ | 3,104 |   |   | $ | (20 | ) |
| Municipal obligations, tax exempt |   |       | 28     |   |                    |   | 8,645 |   |   |   | (278 | ) |   |   | 439 |   |   |   | (67 | ) |   |   | 9,084 |   |   |   | (345 | ) |
| Municipal obligations, taxable    |   |       | 10     |   |                    |   | 2,922 |   |   |   | (56 | ) |   |   | - |   |   |   | - |   |   |   | 2,922 |   |   |   | (56 | ) |
| Mortgage-backed securities        |   |       | 11     |   |                    |   | 15,331 |   |   |   | (281 | ) |   |   | - |   |   |   | - |   |   |   | 15,331 |   |   |   | (281 | ) |
| Common stocks                     |   |       | 4      |   |                    |   | 445 |   |   |   | (55 | ) |   |   | - |   |   |   | - |   |   |   | 445 |   |   |   | (55 | ) |
| Pooled trust preferred securities |   |       | 2      |   |                    |   | - |   |   |   | - |   |   |   | 236 |   |   |   | (889 | ) |   |   | 236 |   |   |   | (889 | ) |
| Total                             |   |       | 59     |   |                    | $      | 30,447 |   |   | $ | (690 | ) |   | $ | 675 |   |   | $ | (956 | ) |   | $ | 31,122 |   |   | $ | (1,646 | ) |

----

| (Dollars in thousands) |   |   |   |   |    |   |   |     | Cumulative |   |      |   |   |     |   |   |
|------------------------|--------|--------|--------|--------|---------|--------|--------|----------|------------|--------|-----------|--------|--------|----------|--------|--------|
|                   |   |   |   |   | Moody's |   |   | Original |       |   | Principal |   |   | realized |   |   | Cost |   |   | Unrealized |   |   | Fair |   |
| Investment             |   | Class  |   |   | rating  |   |   | par      |       |   | payments  |   |   | losses   |   |   | basis |   |   | loss |   |   | value |   |
| PreTSL VIII            |   | B      |   |   | C       |   |   | $        | 1,000      |   |      | $      | -      |     |   | $      | (619 | ) |   | $ | 381 |   |   | $ | (296 | ) |   | $ | 85 |   |
| PreTSL IX              |   | B      |   |   | C       |   |   |     | 1,000      |   |      |   | (21    | )        |   |   | (235 | ) |   |   | 744 |   |   |   | (544 | ) |   |   | 200 |   |
| PreTSL XVII            |   | C      |   |   | C       |   |   |     | 500        |   |      |   | (11    | )        |   |   | (489 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                  |   |   |   |   |    |   |   | $        | 2,500      |   |      | $      | (32    | )        |   | $      | (1,343 | ) |   | $ | 1,125 |   |   | $ | (840 | ) |   | $ | 285 |   |

----

| (Dollars in thousands)                    |   | Amortized |    |   | Estimated  |   |
|-------------------------------------------|--------|-----------|---------|--------|------------|--------|
|                                      |   | cost      |    |   | fair value |   |
| Due in less than one year                 |   | $         | 30,742  |   |       | $      | 30,908 |   |
| Due after one year but within five years  |   |      | 100,847 |   |       |   | 101,914 |   |
| Due after five years but within ten years |   |      | 32,583  |   |       |   | 33,686 |   |
| Due after ten years                       |   |      | 14,645  |   |       |   | 13,933 |   |
| Common stocks                             |   |      | 693     |   |       |   | 893 |   |
| Total                                     |   | $         | 179,510 |   |       | $      | 181,334 |   |

|                   |   | Three months ended |   |
|------------------------|--------|--------------------|--------|
| (Dollars in thousands) |   | March 31,          |   |
|                   |   | 2011               |   |   | 2010 |   |
| Realized gains         |   | $                  | -      |   |   | $ | 563 |   |
| Realized losses        |   |               | -      |   |   |   | - |   |
| Total                  |   | $                  | -      |   |   | $ | 563 |   |

| 4.  | Loans and Allowance for Loan Losses |
|----------|-------------------------------------|

|                                         |   | March 31,              |    |   | December 31, |   |
|----------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                         |   | 2011                   |    |   | 2010         |   |
|                                         |   | (Dollars in thousands) |    |
| One-to-four family residential real estate   |   | $                      | 77,654  |   |         | $      | 79,631 |   |
| Construction and land                        |   |                   | 23,703  |   |         |   | 23,652 |   |
| Commercial real estate                       |   |                   | 93,817  |   |         |   | 92,124 |   |
| Commercial loans                             |   |                   | 59,863  |   |         |   | 57,286 |   |
| Agriculture loans                            |   |                   | 36,404  |   |         |   | 38,836 |   |
| Municipal loans                              |   |                   | 8,437   |   |         |   | 5,393 |   |
| Consumer loans                               |   |                   | 13,913  |   |         |   | 14,385 |   |
| Total gross loans                            |   |                   | 313,791 |   |         |   | 311,307 |   |
| Net deferred loan costs and loans in process |   |                   | 105     |   |         |   | 328 |   |
| Allowance for loan losses                    |   |                   | (4,382  | )      |         |   | (4,967 | ) |
| Loans, net                                   |   | $                      | 309,514 |   |         | $      | 306,668 |   |

----

| (Dollars in thousands)          |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |
|---------------------------------|--------|-----------------------------------------|--------|--------|----------------------|--------|--------|-----------------------|--------|--------|-----------------|--------|--------|------------------|--------|--------|----------------|--------|--------|---------------|--------|--------|--------|--------|
|                            |   | Three months ended March 31, 2011       |   |
|                            |   | One-to-fourfamilyresidentialreal estate |   |   | Constructionand land |   |   | Commercialreal estate |   |   | Commercialloans |   |   | Agricultureloans |   |   | Municipalloans |   |   | Consumerloans |   |   | Total  |   |
|                            |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |
| Allowance for loan losses:      |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |
| Balance at December 31, 2010    |   | $                                       | 395    |   |                 | $      | 1,186  |                  |   | $      | 1,576           |   |   | $                | 1,173  |   |           | $      | 399    |          |   | $      | 99     |   |   | $ | 139 |   |   | $ | 4,967 |   |
| Charge-offs                     |   |                                    | (103   | )      |                 |   | -      |                  |   |   | (434            | )      |   |             | (458   | )      |           |   | (1     | )             |   |   | -      |   |   |   | (28 | ) |   |   | (1,024 | ) |
| Recoveries                      |   |                                    | 22     |   |                 |   | -      |                  |   |   | -               |   |   |             | 4      |   |           |   | 1      |          |   |   | -      |   |   |   | 12 |   |   |   | 39 |   |
| Net charge-offs                 |   |                                    | (81    | )      |                 |   | -      |                  |   |   | (434            | )      |   |             | (454   | )      |           |   | -      |          |   |   | -      |   |   |   | (16 | ) |   |   | (985 | ) |
| Provision for loan losses       |   |                                    | 47     |   |                 |   | 256    |                  |   |   | 169             |   |   |             | (9     | )      |           |   | (40    | )             |   |   | 16     |   |   |   | (39 | ) |   |   | 400 |   |
| Balance at March 31, 2011       |   |                                    | 361    |   |                 |   | 1,442  |                  |   |   | 1,311           |   |   |             | 710    |   |           |   | 359    |          |   |   | 115    |   |   |   | 84 |   |   |   | 4,382 |   |
|                            |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:      |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for loss |   |                                    | 24     |   |                 |   | 654    |                  |   |   | -               |   |   |             | 103    |   |           |   | -      |          |   |   | 69     |   |   |   | - |   |   |   | 850 |   |
| Collectively evaluated for loss |   |                                    | 337    |   |                 |   | 788    |                  |   |   | 1,311           |   |   |             | 607    |   |           |   | 359    |          |   |   | 46     |   |   |   | 84 |   |   |   | 3,532 |   |
| Total                           |   |                                    | 361    |   |                 |   | 1,442  |                  |   |   | 1,311           |   |   |             | 710    |   |           |   | 359    |          |   |   | 115    |   |   |   | 84 |   |   |   | 4,382 |   |
|                            |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan balances:                  |   |                                    |   |   |                 |   |   |                  |   |   |            |   |   |             |   |   |           |   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for loss |   |                                    | 716    |   |                 |   | 1,217  |                  |   |   | -               |   |   |             | 333    |   |           |   | 65     |          |   |   | 775    |   |   |   | 63 |   |   |   | 3,169 |   |
| Collectively evaluated for loss |   |                                    | 76,938 |   |                 |   | 22,486 |                  |   |   | 93,817          |   |   |             | 59,530 |   |           |   | 36,339 |          |   |   | 7,662  |   |   |   | 13,850 |   |   |   | 310,622 |   |
| Total                           |   | $                                       | 77,654 |   |                 | $      | 23,703 |                  |   | $      | 93,817          |   |   | $                | 59,863 |   |           | $      | 36,404 |          |   | $      | 8,437  |   |   | $ | 13,913 |   |   | $ | 313,791 |   |

|                       |   | Three months ended March 31, 2010       |   |
|---------------------------------|--------|-----------------------------------------|--------|
|                            |   | One-to-fourfamilyresidentialreal estate |   |   | Constructionand land |   |   | Commercialreal estate |   |   | Commercialloans |   |   | Agricultureloans |   |   | Municipalloans |   |   | Consumerloans |   |   | Total |   |
|                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009    |   | $                                       | 625    |   |   | $ | 1,326 |   |   | $ | 705 |   |   | $ | 623 |   |   | $ | 2,103 |   |   | $ | - |   |   | $ | 86 |   |   | $ | 5,468 |   |
| Charge-offs                     |   |                                    | (73    | ) |   |   | (19 | ) |   |   | - |   |   |   | (9 | ) |   |   | - |   |   |   | - |   |   |   | (46 | ) |   |   | (147 | ) |
| Recoveries                      |   |                                    | 1      |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 12 |   |   |   | 16 |   |
| Net charge-offs                 |   |                                    | (72    | ) |   |   | (19 | ) |   |   | - |   |   |   | (6 | ) |   |   | - |   |   |   | - |   |   |   | (34 | ) |   |   | (131 | ) |
| Provision for loan losses       |   |                                    | 5      |   |   |   | 307 |   |   |   | (16 | ) |   |   | 2 |   |   |   | 342 |   |   |   | 26 |   |   |   | 34 |   |   |   | 700 |   |
| Balance at March 31, 2010       |   |                                    | 558    |   |   |   | 1,614 |   |   |   | 689 |   |   |   | 619 |   |   |   | 2,445 |   |   |   | 26 |   |   |   | 86 |   |   |   | 6,037 |   |
|                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for loss |   |                                    | 28     |   |   |   | 1,101 |   |   |   | 139 |   |   |   | 74 |   |   |   | 2,085 |   |   |   | - |   |   |   | 3 |   |   |   | 3,430 |   |
| Collectively evaluated for loss |   |                                    | 530    |   |   |   | 513 |   |   |   | 550 |   |   |   | 545 |   |   |   | 360 |   |   |   | 26 |   |   |   | 83 |   |   |   | 2,607 |   |
| Total                           |   |                                    | 558    |   |   |   | 1,614 |   |   |   | 689 |   |   |   | 619 |   |   |   | 2,445 |   |   |   | 26 |   |   |   | 86 |   |   |   | 6,037 |   |
|                            |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan balances:                  |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for loss |   |                                    | 949    |   |   |   | 5,241 |   |   |   | 2,706 |   |   |   | 479 |   |   |   | 2,343 |   |   |   | - |   |   |   | 57 |   |   |   | 11,775 |   |
| Collectively evaluated for loss |   |                                    | 87,900 |   |   |   | 28,949 |   |   |   | 96,709 |   |   |   | 58,997 |   |   |   | 43,668 |   |   |   | 5,499 |   |   |   | 16,118 |   |   |   | 337,840 |   |
| Total                           |   | $                                       | 88,849 |   |   | $ | 34,190 |   |   | $ | 99,415 |   |   | $ | 59,476 |   |   | $ | 46,011 |   |   | $ | 5,499 |   |   | $ | 16,175 |   |   | $ | 349,615 |   |

----

| (Dollars in thousands)                     |   |                            |   |   |                            |   |   |                                 |   |   |                        |   |   |             |   |   |   |   |
|--------------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------|--------|--------|-----------------------------|--------|--------|------------------|--------|--------|--------|--------|
|                                       |   | As of March 31, 2011            |   |
|                                       |   | 30-59 daysdelinquentandaccruing |   |   | 60-89 daysdelinquentandaccruing |   |   | 90 days ormoredelinquentand accruing |   |   | Total pastdue loansaccruing |   |   | Non-accrualloans |   |   | Total  |   |
|                                       |   |                            |   |   |                            |   |   |                                 |   |   |                        |   |   |             |   |   |   |   |
| One-to-four family residential real estate |   | $                               | 1,186  |   |                            | $      | -      |                                 |   | $      | 146                         |   |   | $                | 1,332  |   |   | $      | 185 |   |   | $ | 1,517 |   |
| Construction and land                      |   |                            | -      |   |                            |   | -      |                                 |   |   | -                           |   |   |             | -      |   |   |   | 1,217 |   |   |   | 1,217 |   |
| Commercial loans                           |   |                            | 20     |   |                            |   | -      |                                 |   |   | -                           |   |   |             | 20     |   |   |   | 333 |   |   |   | 353 |   |
| Agriculture loans                          |   |                            | -      |   |                            |   | -      |                                 |   |   | -                           |   |   |             | -      |   |   |   | 65 |   |   |   | 65 |   |
| Municipal loans                            |   |                            | -      |   |                            |   | -      |                                 |   |   | -                           |   |   |             | -      |   |   |   | 232 |   |   |   | 232 |   |
| Consumer loans                             |   |                            | 57     |   |                            |   | 10     |                                 |   |   | -                           |   |   |             | 67     |   |   |   | 63 |   |   |   | 130 |   |
| Total                                      |   | $                               | 1,263  |   |                            | $      | 10     |                                 |   | $      | 146                         |   |   | $                | 1,419  |   |   | $      | 2,095 |   |   | $ | 3,514 |   |
|                                       |   |                            |   |   |                            |   |   |                                 |   |   |                        |   |   |             |   |   |   |   |   |   |   |   |   |   |
| Percent of gross loans                     |   |                            | 0.40   | %      |                            |   | 0.00   | %                                    |   |   | 0.05                        | %      |   |             | 0.45   | %      |   |   | 0.67 | % |   |   | 1.12 | % |

|                                       |   | As of December 31, 2010         |   |
|--------------------------------------------|--------|---------------------------------|--------|
|                                       |   | 30-59 daysdelinquentandaccruing |   |   | 60-89 daysdelinquentandaccruing |   |   | 90 days ormoredelinquentand accruing |   |   | Total pastdue loansaccruing |   |   | Non-accrualloans |   |   | Total |   |
|                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to-four family residential real estate |   | $                               | 80     |   |   | $ | 962 |   |   | $ | - |   |   | $ | 1,042 |   |   | $ | 523 |   |   | $ | 1,565 |   |
| Construction and land                      |   |                            | -      |   |   |   | 56 |   |   |   | - |   |   |   | 56 |   |   |   | 1,229 |   |   |   | 1,285 |   |
| Commercial real estate                     |   |                            | 116    |   |   |   | - |   |   |   | - |   |   |   | 116 |   |   |   | 1,390 |   |   |   | 1,506 |   |
| Commercial loans                           |   |                            | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 733 |   |   |   | 733 |   |
| Agriculture loans                          |   |                            | -      |   |   |   | 1 |   |   |   | - |   |   |   | 1 |   |   |   | 65 |   |   |   | 66 |   |
| Municipal loans                            |   |                            | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 759 |   |   |   | 759 |   |
| Consumer loans                             |   |                            | 125    |   |   |   | 34 |   |   |   | - |   |   |   | 159 |   |   |   | 118 |   |   |   | 277 |   |
| Total                                      |   | $                               | 321    |   |   | $ | 1,053 |   |   | $ | - |   |   | $ | 1,374 |   |   | $ | 4,817 |   |   | $ | 6,191 |   |
|                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of gross loans                     |   |                            | 0.10   | % |   |   | 0.34 | % |   |   | 0.00 | % |   |   | 0.44 | % |   |   | 1.55 | % |   |   | 1.99 | % |

----

| (Dollars in thousands)                     |   |                       |   |   |                      |   |   |                             |   |   |                          |   |   |                     |   |   |                            |   |   |                                 |   |
|--------------------------------------------|--------|----------------------------|--------|--------|---------------------------|--------|--------|----------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|---------------------------------|--------|--------|--------------------------------------|--------|
|                                       |   | As of March 31, 2011       |   |
|                                       |   | Unpaidcontractualprincipal |   |   | Impairedloan balance |   |   | Impairedloanswithout anallowance |   |   | Impairedloans withanallowance |   |   | Relatedallowancerecorded |   |   | Year-to-dateaverage loanbalance |   |   | Year-to-dateinterestincomerecognized |   |
|                                       |   |                       |   |   |                      |   |   |                             |   |   |                          |   |   |                     |   |   |                            |   |   |                                 |   |
| One-to-four family residential real estate |   | $                          | 1,006  |   |                      | $      | 716    |                             |   | $      | 689                           |   |   | $                        | 27     |   |                            | $      | 24     |                                 |   | $ | 717 |   |   | $ | 10 |   |
| Construction and land                      |   |                       | 4,681  |   |                      |   | 1,217  |                             |   |   | 125                           |   |   |                     | 1,092  |   |                            |   | 654    |                                 |   |   | 1,226 |   |   |   | - |   |
| Commercial loans                           |   |                       | 333    |   |                      |   | 333    |                             |   |   | -                             |   |   |                     | 333    |   |                            |   | 103    |                                 |   |   | 333 |   |   |   | - |   |
| Agriculture loans                          |   |                       | 65     |   |                      |   | 65     |                             |   |   | 65                            |   |   |                     | -      |   |                            |   | -      |                                 |   |   | 65 |   |   |   | - |   |
| Municipal loans                            |   |                       | 775    |   |                      |   | 775    |                             |   |   | 644                           |   |   |                     | 131    |   |                            |   | 69     |                                 |   |   | 764 |   |   |   | 21 |   |
| Consumer loans                             |   |                       | 63     |   |                      |   | 63     |                             |   |   | 63                            |   |   |                     | -      |   |                            |   | -      |                                 |   |   | 64 |   |   |   | - |   |
| Total impaired loans                       |   | $                          | 6,923  |   |                      | $      | 3,169  |                             |   | $      | 1,586                         |   |   | $                        | 1,583  |   |                            | $      | 850    |                                 |   | $ | 3,169 |   |   | $ | 31 |   |

|                                       |   | As of December 31, 2010    |   |
|--------------------------------------------|--------|----------------------------|--------|
|                                       |   | Unpaidcontractualprincipal |   |   | Impairedloan balance |   |   | Impairedloanswithout anallowance |   |   | Impairedloans withanallowance |   |   | Relatedallowancerecorded |   |   | Year-to-dateaverage loanbalance |   |   | Year-to-dateinterestincomerecognized |   |
|                                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to-four family residential real estate |   | $                          | 1,352  |   |   | $ | 1,054 |   |   | $ | 879 |   |   | $ | 175 |   |   | $ | 99 |   |   | $ | 1,366 |   |   | $ | 9 |   |
| Construction and land                      |   |                       | 4,684  |   |   |   | 1,229 |   |   |   | - |   |   |   | 1,229 |   |   |   | 382 |   |   |   | 3,008 |   |   |   | - |   |
| Commercial real estate                     |   |                       | 1,390  |   |   |   | 1,390 |   |   |   | - |   |   |   | 1,390 |   |   |   | 397 |   |   |   | 1,400 |   |   |   | - |   |
| Commercial loans                           |   |                       | 733    |   |   |   | 733 |   |   |   | - |   |   |   | 733 |   |   |   | 503 |   |   |   | 733 |   |   |   | - |   |
| Agriculture loans                          |   |                       | 65     |   |   |   | 65 |   |   |   | 65 |   |   |   | - |   |   |   | - |   |   |   | 70 |   |   |   | - |   |
| Municipal loans                            |   |                       | 759    |   |   |   | 759 |   |   |   | 628 |   |   |   | 131 |   |   |   | 65 |   |   |   | 759 |   |   |   | - |   |
| Consumer loans                             |   |                       | 118    |   |   |   | 118 |   |   |   | 118 |   |   |   | - |   |   |   | - |   |   |   | 74 |   |   |   | - |   |
| Total impaired loans                       |   | $                          | 9,101  |   |   | $ | 5,348 |   |   | $ | 1,690 |   |   | $ | 3,658 |   |   | $ | 1,446 |   |   | $ | 7,410 |   |   | $ | 9 |   |

----

| 5.  | Earnings per Share |
|----------|--------------------|

| (Dollars in thousands, except per share amounts)     |   | Three months ended March 31, |      |
|------------------------------------------------------|--------|------------------------------|-----------|
|                                                 |   | 2011                         |      |   | 2010 |   |
| Net earnings                                         |   | $                            | 978       |   |   | $ | 1,143 |   |
|                                                 |   |                         |      |   |   |   |   |   |
| Weighted average common shares outstanding - basic   |   |                         | 2,638,768 |   |   |   | 2,614,268 |   |
| Assumed exercise of stock options                    |   |                         | 656       |   |   |   | 2,271 |   |
| Weighted average common shares outstanding - diluted |   |                         | 2,639,424 |   |   |   | 2,616,539 |   |
| Net earnings per share (1):                          |   |                         |      |   |   |   |   |   |
| Basic                                                |   | $                            | 0.37      |   |   | $ | 0.44 |   |
| Diluted                                              |   | $                            | 0.37      |   |   | $ | 0.44 |   |

| 6.  | Comprehensive Income |
|----------|----------------------|

| (Dollars in thousands)                                                                                                                                        |   | Three months ended March 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|
|                                                                                                                                                          |   | 2011                         |   |   | 2010 |   |
| Net earnings                                                                                                                                                  |   | $                            | 978    |   |   | $ | 1,143 |   |
|                                                                                                                                                          |   |                         |   |   |   |   |   |   |
| Unrealized holding gains on available-for-sale securities for which a  portion of an other-than- temporary impairment has been recorded in earnings |   |                         | 49     |   |   |   | 57 |   |
| Net unrealized holding gains on all other available-for-sale securities                                                                                       |   |                         | 318    |   |   |   | 6 |   |
| Less reclassification adjustment for gains included in earnings                                                                                               |   |                         | -      |   |   |   | (563 | ) |
| Net unrealized gains (losses)                                                                                                                                 |   |                         | 367    |   |   |   | (500 | ) |
| Income tax expense (benefit)                                                                                                                                  |   |                         | 134    |   |   |   | (188 | ) |
| Total comprehensive income                                                                                                                                    |   | $                            | 1,211  |   |   | $ | 831 |   |

----

| 7.  | Fair Value of Financial Instruments and Fair Value Measurements |
|----------|-----------------------------------------------------------------|

|   | • Level 1:  Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • Level 2:  Quoted prices for similar assets in active markets, quoted prices in markets that are not active or quoted prices that contain observable inputs such as yield curves, volatilities, prepayment speeds and other inputs derived from market data. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • Level 3:  Quoted prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Dollars in thousands)           |   |           |    |   |              |   |    |     |   |   |       |   |
|----------------------------------|--------|----------------|---------|--------|-------------------|--------|---------|----------|--------|--------|------------|--------|
|                             |   | March 31, 2011 |    |   | December 31, 2010 |   |
|                             |   | Carrying       |    |   | Estimated         |   |    | Carrying |   |   | Estimated  |   |
|                             |   | amount         |    |   | fair value        |   |    | amount   |   |   | fair value |   |
| Financial assets:                |   |           |    |   |              |   |    |     |   |   |       |   |
| Investment securities:           |   |           |    |   |              |   |    |     |   |   |       |   |
| Available-for-sale               |   | $              | 181,334 |   |              | $      | 181,334 |     |   | $      | 167,689    |   |   | $ | 167,689 |   |
| Other securities                 |   |           | 8,197   |   |              |   | 8,197   |     |   |   | 8,183      |   |   |   | 8,183 |   |
| Loans, net                       |   |           | 309,514 |   |              |   | 310,860 |     |   |   | 306,668    |   |   |   | 308,014 |   |
| Loans held for sale              |   |           | 3,351   |   |              |   | 3,435   |     |   |   | 12,576     |   |   |   | 12,576 |   |
| Mortgage servicing rights        |   |           | 1,058   |   |              |   | 2,362   |     |   |   | 1,060      |   |   |   | 2,787 |   |
| Accrued interest receivable      |   |           | 2,802   |   |              |   | 2,802   |     |   |   | 2,649      |   |   |   | 2,649 |   |
|                             |   |           |    |   |              |   |    |     |   |   |       |   |   |   |   |   |
| Financial liabilities:           |   |           |    |   |              |   |    |     |   |   |       |   |   |   |   |   |
| Non-maturity deposits            |   | $              | 274,317 |   |              | $      | 274,317 |     |   | $      | 252,867    |   |   | $ | 252,867 |   |
| Time deposits                    |   |           | 174,776 |   |              |   | 176,124 |     |   |   | 178,447    |   |   |   | 180,084 |   |
| FHLB borrowings                  |   |           | 35,790  |   |              |   | 38,246  |     |   |   | 44,300     |   |   |   | 46,600 |   |
| Other borrowings                 |   |           | 25,328  |   |              |   | 22,668  |     |   |   | 26,001     |   |   |   | 22,590 |   |
| Derivative financial instruments |   |           | 2       |   |              |   | 2       |     |   |   | 68         |   |   |   | 68 |   |
| Accrued interest payable         |   |           | 608     |   |              |   | 608     |     |   |   | 675        |   |   |   | 675 |   |

----

----

| (Dollars in thousands)            |   |   |   |   | As of March 31, 2011 |   |
|-----------------------------------|--------|--------|--------|--------|----------------------|--------|
|                              |   |   |   |   | Fair value hierarchy |   |
|                              |   | Total  |   |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                           |   |   |   |   |                 |   |   |   |   |   |   |   |
| Available-for-sale securities     |   |   |   |   |                 |   |   |   |   |   |   |   |
| U. S. federal agency obligations  |   | $      | 21,542 |   |                 | $      | - |   |   | $ | 21,542 |   |   | $ | - |   |
| Municipal obligations, tax exempt |   |   | 65,427 |   |                 |   | - |   |   |   | 65,427 |   |   |   | - |   |
| Municipal obligations, taxable    |   |   | 4,191  |   |                 |   | - |   |   |   | 4,191 |   |   |   | - |   |
| Mortgage-backed securities        |   |   | 80,556 |   |                 |   | - |   |   |   | 80,556 |   |   |   | - |   |
| Common stocks                     |   |   | 893    |   |                 |   | 893 |   |   |   | - |   |   |   | - |   |
| Pooled trust preferred securities |   |   | 285    |   |                 |   | - |   |   |   | - |   |   |   | 285 |   |
| Certificates of deposit           |   |   | 8,440  |   |                 |   | - |   |   |   | 8,440 |   |   |   | - |   |
| Liabilities:                      |   |   |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Derivative financial instruments  |   | $      | 2      |   |                 | $      | - |   |   | $ | - |   |   | $ | 2 |   |

| (Dollars in thousands)            |   |   |   |   | As of December 31, 2010 |   |
|-----------------------------------|--------|--------|--------|--------|-------------------------|--------|
|                              |   |   |   |   | Fair value hierarchy    |   |
|                              |   | Total  |   |   | Level 1                 |   |   | Level 2 |   |   | Level 3 |   |
| Assets:                           |   |   |   |   |                    |   |   |   |   |   |   |   |
| Available-for-sale securities     |   |   |   |   |                    |   |   |   |   |   |   |   |
| U. S. federal agency obligations  |   | $      | 22,187 |   |                    | $      | - |   |   | $ | 22,187 |   |   | $ | - |   |
| Municipal obligations, tax exempt |   |   | 65,287 |   |                    |   | - |   |   |   | 65,287 |   |   |   | - |   |
| Municipal obligations, taxable    |   |   | 4,188  |   |                    |   | - |   |   |   | 4,188 |   |   |   | - |   |
| Mortgage-backed securities        |   |   | 60,804 |   |                    |   | - |   |   |   | 60,804 |   |   |   | - |   |
| Common stocks                     |   |   | 828    |   |                    |   | 828 |   |   |   | - |   |   |   | - |   |
| Pooled trust preferred securities |   |   | 236    |   |                    |   | - |   |   |   | - |   |   |   | 236 |   |
| Certificates of deposit           |   |   | 14,159 |   |                    |   | - |   |   |   | 14,159 |   |   |   | - |   |
| Liabilities:                      |   |   |   |   |                    |   |   |   |   |   |   |   |   |   |   |   |
| Derivative financial instruments  |   | $      | 68     |   |                    | $      | - |   |   | $ | - |   |   | $ | 68 |   |

----

| (Dollars in thousands)                                    |   |            |   |   | Derivative  |   |
|-----------------------------------------------------------|--------|-----------------|--------|--------|-------------|--------|
|                                                      |   | Available-for   |   |   | financial   |   |
|                                                      |   | sale-securities |   |   | instruments |   |
| Level 3 asset (liability) fair value at December 31, 2010 |   | $               | 236    |   |        | $      | (68 | ) |
| Total gains:                                              |   |            |   |   |        |   |   |   |
| Included in earnings                                      |   |            | -      |   |        |   | 66 |   |
| Included in other comprehensive income                    |   |            | 49     |   |        |   | - |   |
| Level 3 asset (liability) fair value at March 31, 2011    |   | $               | 285    |   |        | $      | (2 | ) |

----

| (Dollars in thousands)    |   |   |   |   | As of March 31, 2011 |   |   |    |   |
|---------------------------|--------|--------|--------|--------|----------------------|--------|--------|---------|--------|
|                      |   |   |   |   | Fair value hierarchy |   |   | Total   |   |
|                      |   | Total  |   |   | Level 1              |   |   | Level 2 |   |   | Level 3 |   |   | losses |   |
| Assets:                   |   |   |   |   |                 |   |   |    |   |   |   |   |   |   |   |
| Impaired loans            |   | $      | 2,319  |   |                 | $      | -      |    |   | $ | - |   |   | $ | 2,319 |   |   | $ | (277 | ) |
| Loans held for sale       |   |   | 3,435  |   |                 |   | -      |    |   |   | 3,435 |   |   |   | - |   |   |   | - |   |
| Mortgage servicing rights |   |   | 2,362  |   |                 |   | -      |    |   |   | - |   |   |   | 2,362 |   |   |   | - |   |
| Real estate owned         |   | $      | 2,912  |   |                 | $      | -      |    |   | $ | - |   |   | $ | 2,912 |   |   | $ | - |   |

| (Dollars in thousands)    |   |   |   |   | As of December 31 ,2010 |   |   |    |   |
|---------------------------|--------|--------|--------|--------|-------------------------|--------|--------|---------|--------|
|                      |   |   |   |   | Fair value hierarchy    |   |   | Total   |   |
|                      |   | Total  |   |   | Level 1                 |   |   | Level 2 |   |   | Level 3 |   |   | losses |   |
| Assets:                   |   |   |   |   |                    |   |   |    |   |   |   |   |   |   |   |
| Impaired loans            |   | $      | 3,902  |   |                    | $      | -      |    |   | $ | - |   |   | $ | 3,092 |   |   | $ | (1,146 | ) |
| Loans held for sale       |   |   | 12,576 |   |                    |   | -      |    |   |   | 12,576 |   |   |   | - |   |   |   | (49 | ) |
| Mortgage servicing rights |   |   | 2,787  |   |                    |   | -      |    |   |   | - |   |   |   | 2,787 |   |   |   | - |   |
| Real estate owned         |   | $      | 3,194  |   |                    | $      | -      |    |   | $ | - |   |   | $ | 3,194 |   |   | $ | (367 | ) |

| 8.  | Impact of Recent Accounting Pronouncements |
|----------|--------------------------------------------|

| 9.  | Subsequent Events |
|----------|-------------------|

----

----

| (Dollars in thousands)       |   | Three months ended March 31, |   |
|------------------------------|--------|------------------------------|--------|
|                         |   | 2011                         |   |   | 2010 |   |
| Net earnings:                |   |                         |   |   |   |   |
| Net earnings                 |   | $                            | 978    |   |   | $ | 1,143 |   |
| Basic earnings per share     |   | $                            | 0.37   |   |   | $ | 0.44 |   |
| Diluted earnings per share   |   | $                            | 0.37   |   |   | $ | 0.44 |   |
| Earnings ratios:             |   |                         |   |   |   |   |   |   |
| Return on average assets (1) |   |                         | 0.69   | % |   |   | 0.79 | % |
| Return on average equity (1) |   |                         | 7.16   | % |   |   | 8.50 | % |
| Equity to total assets       |   |                         | 9.55   | % |   |   | 9.29 | % |
| Net interest margin (1) (2)  |   |                         | 3.80   | % |   |   | 3.81 | % |
| Dividend payout ratio        |   |                         | 51.35  | % |   |   | 41.30 | % |

----

----

----

----

|                     |   |   |   |   |              |   |   |              |   |   |       |   |   | To be well-capitalized |   |
|--------------------------|--------|--------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|------------|--------|--------|------------------------|--------|
|                     |   |   |   |   |              |   |   |              |   |   |       |   |   | under prompt           |   |
| (Dollars in thousands)   |   |   |   |   |              |   |   | For capital       |   |   | corrective |   |
|                     |   | Actual |   |   | adequacy purposes |   |   | action provisions |   |
|                     |   | Amount |   |   | Ratio             |   |   | Amount            |   |   | Ratio      |   |   | Amount                 |   |   | Ratio |   |
| As of March 31, 2011     |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |
| Leverage                 |   | $      | 53,126 |   |              |   | 9.6    | %                 |   | $      | 22,097     |   |   |                   | 4.0    | % |   | $ | 27,621 |   |   |   | 5.0 | % |
| Tier 1 Capital           |   | $      | 53,126 |   |              |   | 14.3   | %                 |   | $      | 14,904     |   |   |                   | 4.0    | % |   | $ | 22,355 |   |   |   | 6.0 | % |
| Total Risk Based Capital |   | $      | 60,525 |   |              |   | 16.2   | %                 |   | $      | 29,807     |   |   |                   | 8.0    | % |   | $ | 37,259 |   |   |   | 10.0 | % |
|                     |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2010  |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| Leverage                 |   | $      | 55,258 |   |              |   | 10.0   | %                 |   | $      | 22,094     |   |   |                   | 4.0    | % |   | $ | 27,617 |   |   |   | 5.0 | % |
| Tier 1 Capital           |   | $      | 55,258 |   |              |   | 15.0   | %                 |   | $      | 14,722     |   |   |                   | 4.0    | % |   | $ | 22,083 |   |   |   | 6.0 | % |
| Total Risk Based Capital |   | $      | 59,925 |   |              |   | 16.3   | %                 |   | $      | 29,445     |   |   |                   | 8.0    | % |   | $ | 36,806 |   |   |   | 10.0 | % |

----

|                     |   |   |   |   |              |   |   |              |   |   |       |   |   | To be well-capitalized |   |
|--------------------------|--------|--------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|------------|--------|--------|------------------------|--------|
|                     |   |   |   |   |              |   |   |              |   |   |       |   |   | under prompt           |   |
| (Dollars in thousands)   |   |   |   |   |              |   |   | For capital       |   |   | corrective |   |
|                     |   | Actual |   |   | adequacy purposes |   |   | action provisions |   |
|                     |   | Amount |   |   | Ratio             |   |   | Amount            |   |   | Ratio      |   |   | Amount                 |   |   | Ratio |   |
| As of March 31, 2011     |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |
| Leverage                 |   | $      | 59,143 |   |              |   | 10.7   | %                 |   | $      | 22,020     |   |   |                   | 4.0    | % |   | $ | 27,525 |   |   |   | 5.0 | % |
| Tier 1 Capital           |   | $      | 59,143 |   |              |   | 15.9   | %                 |   | $      | 14,842     |   |   |                   | 4.0    | % |   | $ | 22,263 |   |   |   | 6.0 | % |
| Total Risk Based Capital |   | $      | 63,606 |   |              |   | 17.1   | %                 |   | $      | 29,684     |   |   |                   | 8.0    | % |   | $ | 37,105 |   |   |   | 10.0 | % |
|                     |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2010  |   |   |   |   |              |   |   |              |   |   |       |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| Leverage                 |   | $      | 57,798 |   |              |   | 10.5   | %                 |   | $      | 22,024     |   |   |                   | 4.0    | % |   | $ | 27,530 |   |   |   | 5.0 | % |
| Tier 1 Capital           |   | $      | 57,798 |   |              |   | 15.8   | %                 |   | $      | 14,660     |   |   |                   | 4.0    | % |   | $ | 21,990 |   |   |   | 6.0 | % |
| Total Risk Based Capital |   | $      | 62,384 |   |              |   | 17.0   | %                 |   | $      | 29,320     |   |   |                   | 8.0    | % |   | $ | 36,650 |   |   |   | 10.0 | % |

----

|                                                                             |   | Three months ended     |    |   | Three months ended |   |
|----------------------------------------------------------------------------------|--------|------------------------|---------|--------|--------------------|--------|
|                                                                             |   | March 31, 2011         |    |   | March 31, 2010     |   |
|                                                                             |   | Averagebalance         |    |   | Interest           |   |   | Averageyield/rate |   |   | Averagebalance |   |   | Interest |   |   | Averageyield/rate |   |
|                                                                             |   | (Dollars in thousands) |    |
| Assets                                                                           |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                         |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities (1)                                                        |   | $                      | 186,096 |   |               | $      | 1,497 |   |   |   | 3.26 | % |   | $ | 174,998 |   |   | $ | 1,724 |   |   |   | 4.00 | % |
| Loans receivable, net (2)                                                        |   |                   | 310,514 |   |               |   | 4,400 |   |   |   | 5.75 | % |   |   | 347,499 |   |   |   | 4,908 |   |   |   | 5.73 | % |
| Total interest-earning assets                                                    |   |                   | 496,610 |   |               |   | 5,897 |   |   |   | 4.82 | % |   |   | 522,497 |   |   |   | 6,632 |   |   |   | 5.15 | % |
| Non-interest-earning assets                                                      |   |                   | 69,254  |   |               |   |   |   |   |   |   |   |   |   | 65,028 |   |   |   |   |   |   |   |   |   |
| Total                                                                            |   | $                      | 565,864 |   |               |   |   |   |   |   |   |   |   | $ | 587,525 |   |   |   |   |   |   |   |   |   |
|                                                                             |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                             |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                    |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit                                                          |   | $                      | 176,258 |   |               | $      | 645 |   |   |   | 1.48 | % |   | $ | 191,885 |   |   | $ | 891 |   |   |   | 1.88 | % |
| Money market and NOW accounts                                                    |   |                   | 175,595 |   |               |   | 102 |   |   |   | 0.24 | % |   |   | 164,797 |   |   |   | 129 |   |   |   | 0.32 | % |
| Savings accounts                                                                 |   |                   | 33,947  |   |               |   | 13 |   |   |   | 0.16 | % |   |   | 30,500 |   |   |   | 19 |   |   |   | 0.25 | % |
| Total deposits                                                                   |   |                   | 385,800 |   |               |   | 760 |   |   |   | 0.80 | % |   |   | 387,182 |   |   |   | 1,039 |   |   |   | 1.09 | % |
| FHLB advances and other borrowings                                               |   |                   | 62,885  |   |               |   | 487 |   |   |   | 3.14 | % |   |   | 82,322 |   |   |   | 685 |   |   |   | 3.37 | % |
| Total interest-bearing liabilities                                               |   |                   | 448,685 |   |               |   | 1,247 |   |   |   | 1.13 | % |   |   | 469,504 |   |   |   | 1,724 |   |   |   | 1.49 | % |
| Non-interest-bearing liabilities                                                 |   |                   | 62,983  |   |               |   |   |   |   |   |   |   |   |   | 63,491 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                             |   |                   | 54,196  |   |               |   |   |   |   |   |   |   |   |   | 54,530 |   |   |   |   |   |   |   |   |   |
| Total                                                                            |   | $                      | 565,864 |   |               |   |   |   |   |   |   |   |   | $ | 587,525 |   |   |   |   |   |   |   |   |   |
|                                                                             |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate spread (3)                                                         |   |                   |    |   |               |   |   |   |   |   | 3.69 | % |   |   |   |   |   |   |   |   |   |   | 3.66 | % |
| Net interest margin (4)                                                          |   |                   |    |   |               | $      | 4,650 |   |   |   | 3.80 | % |   |   |   |   |   | $ | 4,908 |   |   |   | 3.81 | % |
| Tax equivalent interest - imputed                                                |   |                   |    |   |               |   | 336 |   |   |   |   |   |   |   |   |   |   |   | 340 |   |   |   |   |   |
| Net interest income                                                              |   |                   |    |   |               | $      | 4,314 |   |   |   |   |   |   |   |   |   |   | $ | 4,568 |   |   |   |   |   |
|                                                                             |   |                   |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of average interest-earning assets to average interest-bearing liabilities |   |                   |    |   |               |   |   |   |   |   | 110.7 | % |   |   |   |   |   |   | 111.3 | % |   |   |   |   |

|   | (1) | Income on investment securities includes all securities, including interest bearing deposits in other financial institutions.  Income on tax exempt securities is presented on a fully tax equivalent basis, using a 34% federal tax rate. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes loans classified as non-accrual.  Income on tax exempt loans is presented on a fully tax equivalent basis, using a 34% federal tax rate. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Net interest margin represents annualized net interest income divided by average interest-earning assets. |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

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|                  |   | Three months ended March 31,        |   |
|-----------------------|--------|-------------------------------------|--------|
|                  |   | 2011 vs 2010                        |   |
|                  |   | Increase/(decrease) attributable to |   |
|                  |   | Volume                              |   |   | Rate |   |   | Net |   |
|                  |   | (Dollars in thousands)              |   |
| Interest income:      |   |                                |   |   |   |   |   |   |   |
| Investment securities |   | $                                   | 118    |   |   | $ | (345 | ) |   | $ | (227 | ) |
| Loans                 |   |                                | (525   | ) |   |   | 17 |   |   |   | (508 | ) |
| Total                 |   |                                | (407   | ) |   |   | (328 | ) |   |   | (735 | ) |
| Interest expense:     |   |                                |   |   |   |   |   |   |   |   |   |   |
| Deposits              |   |                                | (4     | ) |   |   | (275 | ) |   |   | (279 | ) |
| Other borrowings      |   |                                | (154   | ) |   |   | (44 | ) |   |   | (198 | ) |
| Total                 |   |                                | (158   | ) |   |   | (319 | ) |   |   | (477 | ) |
| Net interest income   |   | $                                   | (249   | ) |   | $ | (9 | ) |   | $ | (258 | ) |

|                    |   | Dollar change in net           |   |   | Percent change in   |   |
|-------------------------|--------|--------------------------------|--------|--------|---------------------|--------|
| Scenario                |   | interest income ($000’s) |   |   | net interest income |   |
| 200 basis point rising  |   | $                              | 990    |   |                |   | 5.4 | % |
| 100 basis point rising  |   | $                              | 526    |   |                |   | 2.9 | % |
| 100 basis point falling |   | $                              | ( 908  | )      |                |   | (4.9 | )% |

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|   | · | The strength of the United States economy in general and the strength of the local economies in which we conduct our operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of our assets. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters, including enacted Dodd-Frank Act and the rules and regulations promulgated thereunder, and the effects of further increases in FDIC premiums. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The effects of changes in interest rates (including the effects of changes in the rate of prepayments of our assets) and the policies of the Board of Governors of the Federal Reserve System.   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our ability to compete with other financial institutions as effectively as we currently intend due to increases in competitive pressures in the financial services sector.   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our inability to obtain new customers and to retain existing customers. |
|--------|--------|-------------------------------------------------------------------------|

|   | · | The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Technological changes implemented by us and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to us and our customers. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our ability to develop and maintain secure and reliable electronic systems. |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | Our ability to retain key executives and employees and the difficulty that we may experience in replacing key executives and employees in an effective manner. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Consumer spending and saving habits which may change in a manner that affects our business adversely. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | Our ability to successfully integrate acquired businesses and future growth. |
|--------|--------|------------------------------------------------------------------------------|

|   | · | The costs, effects and outcomes of existing or future litigation. |
|--------|--------|-------------------------------------------------------------------|

|   | · | Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The economic impact of past and any future terrorist attacks, acts of war or threats thereof, and the response of the United States to any such threats and attacks. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our ability to effectively manage our credit risk. |
|--------|--------|----------------------------------------------------|

|   | · | Our ability to forecast probable loan losses and maintain an adequate allowance for loan losses. |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | The effects of declines in the value of our investment portfolio. |
|--------|--------|-------------------------------------------------------------------|

|   | · | Our ability to raise additional capital if needed. |
|--------|--------|----------------------------------------------------|

|   | · | The effects of declines in real estate markets. |
|--------|--------|-------------------------------------------------|

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| Exhibit 31.1 |         | Certificate of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)                                                                       |
|-------------------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit 31.2 |         | Certificate of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)                                                                       |
| Exhibit 32.1 |         | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| Exhibit 32.2 |    | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

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|               | LANDMARK BANCORP, INC.                  |
|--------------------|-----------------------------------------|
|               |                                    |
| Date: May 12, 2011 | /s/ Patrick L. Alexander                |
|               | Patrick L. Alexander                    |
|               | President and Chief Executive Officer   |
|               |                                    |
| Date: May 12, 2011 | /s/ Mark A. Herpich                     |
|               | Mark A. Herpich                         |
|               | Vice President, Secretary, Treasurer    |
|               |   and Chief Financial Officer |

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