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|  Lewis J. CritelliPresident & Chief Executive Officer  We strongly encourage you to read the financial section of this Annual Report for a more detailed analysis of our results.    |   We are truly pleased to report to you that your Company had a very solid financial performance in 2010 in what continues to be an inordinately challenging economic environment. Norwood Financial Corp had record earnings of $7,313,000 for the year ended December 31, 2010, an increase of $250,000 or 3.5% over the prior year. Earnings per share on a fully diluted basis were $2.64 in 2010 increasing from $2.55 in 2009. With the increase in earnings and our continued strong capital position, we declared cash dividends of $1.13 per share compared to $1.09 per share in 2009.  This marks the nineteenth consecutive year of increased cash dividends for our stockholders.  The return on average assets for the year was 1.37% with a return on average equity of 10.87%.Norwood ended the year with total assets of $537.0 million, loans receivable of $356.9 million, total deposits of $393.9 million and stockholders’ equity of $67.7 million. The Company’s capital position remains strong and is at the top level of its peer group in all measures of regulatory capital.Loans receivable totaled $356.9 million as of December 31, 2010, which is a slight decrease from 2009.  The decline was due to sales of residential mortgage |   |   loans. During the year, the Company sold $12.4 million of fixed rate residential mortgages for purposes of interest rate risk management. This was partially offset by growth in commercial real estate loans.  As a result of the continuing slowdown in the local economy, high unemployment levels and a soft real estate market, we spent a great deal of effort addressing credit quality issues.  As of December 31, 2010, total non-performing loans were $4,079,000 and represented 1.14% of total loans compared to $5,015,000 or 1.38% as of December 31, 2009. Though our credit quality ratios remain strong, we still see the slow economic climate impacting our customers.  Net charge-offs for the year totaled $837,000 compared to $465,000 in 2009. As of December 31, 2010, the allowance for loan losses totaled $5,616,000 and 1.57% of total loans, compared to $5,453,000 and 1.50% of  total loans at December 31, 2009.For the year, net interest income (fully taxable equivalent) totaled $20,662,000, an increase of $790,000 or 4.0% over 2009.  The net interest margin (fte) remained strong throughout the year and increased 1 basis point to 4.04%.  We offset a decline in the yield on earning assets by reducing our cost of deposits and other borrowings.  Other income for 2010 totaled $4,064,000 compared to $5,392,000 in 2009. The decrease was principally due to a lower level of earnings and receipts of proceeds on bank owned life insurance policies which totaled $391,000 in 2010 compared to $1,196,000 in 2009.  The Company also had a $150,000 gain on the sale of deposits related to a branch closure in the 2009 period. The 2010 period includes $307,000 in gains on the sales of  |

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|   $12.4 million of mortgage loans and the valuation of servicing rights compared to $481,000 in similar gains on $21.6 million of mortgage loan sales and servicing rights in the 2009 period.For the year ended December 31, 2010, other expense totaled $12,753,000 compared to $13,471,000 for the similar period in 2009, a decrease of $718,000.  The decrease was due in part to lower FDIC insurance assessments which totaled $474,000 in 2010 compared to $710,000 in 2009, including a $225,000 special assessment in 2009. There was also a lower level of foreclosed real estate costs which totaled $41,000 in the 2010 period and $436,000 in 2009.To perform consistently, even in a tough economic environment, Norwood Financial Corp and Wayne Bank have always relied on the following solid fundamentals of banking:Loan money to people you know using solid underwriting standards. Wayne Bank has never wavered from our high standards of lending to consumers and businesses alike, and we have money to lend to our customers.  In 2010, we originated over $33 million in commercial loan volume.  We helped to finance numerous projects that have helped our communities. Job creation in the small business sector will help lead the way for economic recovery. To assist with job creation, we have become more active in the Small Business Administration and USDA lending programs.  Both government agencies offer guarantees on certain loans made to qualifying small businesses.  We also originated over $37 million in residential mortgages and other types of consumer loans. With the current low interest rates many customers were   |   |   able to refinance, shorten the term of their mortgage and/or lower their monthly payments.Fund your loans with local deposits while maintaining a strong liquidity position.  During 2010, we increased our percentage of checking and savings accounts to 60.0% from 50.7% in 2009.  This consistent customer deposit base allows us to continue to lend to our communities. We manage the Bank to ensure that we always have ample liquidity to maintain flexibility during challenging times.We strive to operate efficiently. This is directly related to the technology we offer our customers and the methods we utilize to process data.  The challenge is to serve our customers while maintaining operating efficiencies and the regulatory controls required.  Our approach, like many community banking organizations today, has been to partner with service providers having the resources to help us meet these challenges.  After a major study of alternatives, we concluded the “Fiserv Premier” system to be our best fit for the future.  We expect to implement this new system during the second quarter of 2011. This should provide opportunities to upgrade various systems we utilize for day-to-day operations, and will directly benefit our customers.   Additionally, we will seek improved capabilities for those customers who prefer self-service banking.  We plan to offer e-statements as we continue to go paperless.  The use of online banking continues to grow and we currently have almost 9,000 Internet banking customers.  As another option, we are evaluating a mobile banking product. Our Business Link Remote Deposit Capture service |            |
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|      |  has 30 customers and will handle almost 250,000 items for those customers.  During 2011, we also plan to continue upgrading ATMs while adding self-service coin counters and automated currency handling equipment at select branches.  Maintain a high level of capital. We have never aggressively leveraged our balance sheet. Our tier 1 capital is over 17% and is at the top end of our peer group.  We have always stressed “high quality” capital which among other things means conservative accounting, strong loan loss reserves and a high component of tangible common equity. The higher the quality of capital the more prepared one is for tough times.  Wayne Bank contributed to almost 200 local causes ranging from fire companies, school athletics, art and musical events, builders’ associations and a variety of nonprofit groups.  Generous donations were also made through the Commonwealth of Pennsylvania, Department of Community and Economic Development’s Educational Improvement Tax Credit (EITC) program.  The Bank distributed almost $80,000 to six local organizations via the EITC guidelines.  We are pleased to be able to direct these funds to causes that support the local community, especially the children.  The Bank contributed to a variety of organizations, such as, The United Way of Lackawanna and Wayne Counties, the various Chambers of Commerce, the Greater Honesdale Partnership, the Wayne County YMCA, and the Pike County Builders’ Association.Management and employees serve on many boards of directors to assist in supporting them with their management |   |   and expertise.  Dorflinger-Suydam Wildlife sanctuary, the Wayne County Builders’ association, the Northeastern Pennsylvania alliance, the United Way of Lackawanna and Wayne Counties, and the Pike County Chamber of Commerce, are just a small sampling of the organizations where Wayne Bank’s employees participate on their board as members.  This is what sets a community bank apart from a regional or national bank.Teach Children to Save is a national campaign that raises awareness about the important role that banks and bankers play in helping young people develop lifelong savings habits.  It was the 14th anniversary of the organization and Wayne Bank’s employees presented interactive lessons on the importance of saving money to almost 400 students from the Delaware Valley School District in Northeastern Pennsylvania in honor of the Teach Children to Save program. Eight employees taught sixteen 3rd grade classes from Delaware Valley School District in Milford, Dingmans Ferry, and Shohola.  We firmly believe that the financial literacy of our young people is crucial to building a growing economy.Quality people build a quality organization.  We were very fortunate in 2010 to add a number of seasoned professionals to our staff.  William S. Lance was hired as senior Vice President and Chief Financial Officer of Norwood Financial Corp and Wayne Bank.  Bill has over 30 years of financial experience working with banks in Northeastern Pennsylvania and has an extensive and varied background in monitoring and overseeing the financial aspects of a bank. Terri A. Garringer filled the |
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|     |  position of Community Office Manager in Lakewood.  Mark W. Ranzan was hired as Vice President, Commercial lender and is based in the Tannersville Community Office. Mark has twenty-four years of experience in commercial lending in Monroe County.There were a number of employees who received promotions during the year for their achievements. William Henigan, who has been with Wayne Bank since 1999 as a Commercial Lender, was elevated to Senior Vice President.  Bill primarily handles commercial loan customers in Monroe County. Ryan French was promoted to Vice President, Director of Human Resources, after joining Wayne Bank in 2009. Jessica Santiago, a Customer Service Representative in the Marshalls Creek office, was promoted to Assistant Branch Manager of our Marshalls Creek office.  Jessica has been with the Bank since 2004.We are pleased to note two employees recorded milestones in their careers with Wayne Bank:  Barbara Keesler celebrated thirty years with Wayne Bank and Rosemary Engvaldsen achieved twenty-five years of service.  We appreciate their years of commitment and dedication.  A significant group of employees also reached the fifteen year mark which included: John H. Sanders, Marianne Glamann, and Mary Ann Mansour. In addition 6 employees made the mark of 10 years, and 7 employees attained 5 years of service. In total, this group of employees has almost 200 years of Wayne Bank experience.  This level of experience truly helps us better serve our customers.A number of employees made 2010 the last of their working years.  Stepping into retirement was:  Bill Murray, Mortgage |   |  Loan Originator, who had worked for the Bank since 1994; Betty Rufano, who held the position of Head Teller in the Milford Community Office and worked for the Bank since 2003; and Sally Timko, who most recently held the position of Electronic Banking Specialist in Honesdale and had started with the Bank in 1982.  We wish them extended health and many years of happiness and leisure during their retirement years.Unfortunately, during the course of the year, Norwood Financial Corp and Wayne Bank mourned the loss of a long term member of the Board of Directors, Mr. Gary Rickard.  He had served on the Board since 1978.  Mr. Rickard was well-known throughout Wayne County as a partner of his family’s farm, Clearfield Farms. We will miss his contributions and presence on the board.On December 15, 2010, we were very excited to announce that we had entered into a definitive merger agreement pursuant to which Norwood Financial Corp will acquire North Penn Bancorp, Inc. in a stock and cash transaction. This transaction will expand our existing footprint in Monroe County and give us an entry into Lackawanna County.  Wayne Bank currently has three offices in Monroe County and with the addition of North Penn Bank’s two offices we will be better positioned to serve customers throughout the county. North Penn’s three offices in Lackawanna County will give Wayne Bank a solid base in a more densely populated market west of Wayne Bank’s existing franchise.  The addition of North Penn Bank will bring Norwood’s assets to just under $700 million with 16 branches serving four counties with the addition |
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|   of Lackawanna in Northeastern PA. The merger is expected to close pending regulatory approval in June of 2011.  The staff of both organizations are busy working to integrate the banks. We expect this larger version of Wayne Bank to offer expanded products and services throughout Northeastern Pennsylvania. We look forward to welcoming the North Penn customers, stockholders and employees.For almost 140 years Wayne Bank has been a symbol of strength, safety and |   |   security for the communities, customers and stockholders we serve. We are proud to continue that tradition. Bank with confidence. Please consider us for all your financial needs.  We truly appreciate your support.                 Lewis J. Critelli              President & Chief Executive Officer |   |
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| 2010 CONSOLIDATED FINANCIAL REPORT                                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          Management's Discussion & Analysis                                                                                                       | 10 |
|                                                                                                                                                                                               |   |
|           Management's Report On Internal Control Over           Financial Reporting | 31 |
|                                                                                                                                                                                               |   |
|           Reports Of Independent Registered Public Accounting Firm                                                                               | 32 |
|                                                                                                                                                                                               |   |
|           Consolidated Balance Sheets                                                                                                            | 35 |
|                                                                                                                                                                                               |   |
|           Consolidated Statements Of Income                                                                                                      | 36 |
|                                                                                                                                                                                               |   |
|           Consolidated Statements Of Stockholders' Equity                                                                                        | 37 |
|                                                                                                                                                                                               |   |
|           Consolidated Statements Of Cash Flows                                                                                                  | 38 |
|                                                                                                                                                                                               |   |
|           Notes To Consolidated Financial Statements                                                                                             | 39 |
|                                                                                                                                                                                               |   |
|           Investor Information                                                                                                                   | 68 |

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| Net income 2009                                       |   | $      | 7,063 |   |
|-------------------------------------------------------|--------|--------|-------|--------|
| Net interest income                                   |   |   | 555   |   |
| Provision for loan losses                             |   |   | 685   |   |
| Earnings and proceeds on BOLI                         |   |   | (805  | )      |
| Gains on sales of mortgage loans and servicing rights |   |   | (174  | )      |
| Gain on sale of deposits                              |   |   | (150  | )      |
| Other income                                          |   |   | (199  | )      |
| Salaries and employee benefits                        |   |   | 322   |   |
| FDIC insurance assessments                            |   |   | 236   |   |
| Foreclosed real estate owned                          |   |   | 395   |   |
| Professional fees                                     |   |   | (239  | )      |
| Other expenses                                        |   |   | 4     |   |
| Income tax expense                                    |   |   | (380  | )      |
| Net income for 2010                                   |   | $      | 7,313 |   |

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| Net income 2008                           |   | $      | 6,677 |   |
|-------------------------------------------|--------|--------|-------|--------|
| Net interest income                       |   |   | 708   |   |
| Provision for loan losses                 |   |   | (950  | )      |
| Earnings and proceeds on BOLI             |   |   | 852   |   |
| Net realized gains on sales of securities |   |   | 481   |   |
| Other income                              |   |   | (28   | )      |
| Salaries and employee benefits            |   |   | (783  | )      |
| FDIC insurance assessments                |   |   | (620  | )      |
| Other expenses                            |   |   | 172   |   |
| Income tax expense                        |   |   | 554   |   |
| Net income for 2009                       |   | $      | 7,063 |   |

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|                                                            |   | Year-ended December 31, |    |
|-----------------------------------------------------------------|--------|-------------------------|---------|
|                                                            |   | (dollars in thousands)  |    |
|                                                            |   | 2010                    |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                            |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance balance at beginning of period                        |   | $                       | 5,453   |   |   | $ | 4,233 |   |   | $ | 4,081 |   |   | $ | 3,828 |   |   | $ | 3,669 |   |
| Charge-offs:                                                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and all other                                        |   |                    | (85     | ) |   |   | (17 | ) |   |   | (7 | ) |   |   | — |   |   |   | — |   |
| Real Estate                                                     |   |                    | (699    | ) |   |   | (358 | ) |   |   | (465 | ) |   |   | (4 | ) |   |   | — |   |
| Consumer                                                        |   |                    | (82     | ) |   |   | (139 | ) |   |   | (171 | ) |   |   | (117 | ) |   |   | (150 | ) |
| Total                                                           |   |                    | (866    | ) |   |   | (514 | ) |   |   | (643 | ) |   |   | (121 | ) |   |   | (150 | ) |
| Recoveries:                                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and all other                                        |   |                    | — |   |   |   | 11 |   |   |   | — |   |   |   | — |   |   |   | 18 |   |
| Real Estate                                                     |   |                    | 2       |   |   |   | 4 |   |   |   | 1 |   |   |   | 2 |   |   |   | 2 |   |
| Consumer                                                        |   |                    | 27      |   |   |   | 34 |   |   |   | 59 |   |   |   | 54 |   |   |   | 65 |   |
| Lease Financing                                                 |   |                    | — |   |   |   | — |   |   |   | — |   |   |   | 3 |   |   |   | 4 |   |
| Total                                                           |   |                    | 29      |   |   |   | 49 |   |   |   | 60 |   |   |   | 59 |   |   |   | 89 |   |
| Provision expense                                               |   |                    | 1,000   |   |   |   | 1,685 |   |   |   | 735 |   |   |   | 315 |   |   |   | 220 |   |
| Allowance balance at end of period                              |   | $                       | 5,616   |   |   | $ | 5,453 |   |   | $ | 4,233 |   |   | $ | 4,081 |   |   | $ | 3,828 |   |
| Allowance for loan losses as a percent                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   of total loans outstanding                          |   |                    | 1.57    | % |   |   | 1.50 | % |   |   | 1.21 | % |   |   | 1.23 | % |   |   | 1.21 | % |
| Net loans charged off as a percent of average loans outstanding |   |                    | .24     | % |   |   | .13 | % |   |   | .17 | % |   |   | .02 | % |   |   | .02 | % |
| Allowance coverage of non-performing loans                      |   |                    | 1.4     | x |   |   | 1.1 | x |   |   | 2.0 | x |   |   | 5.0 | x |   |   | 9.4 | x |

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|                                                            |   | December 31,           |    |
|-----------------------------------------------------------------|--------|------------------------|---------|
|                                                            |   | (dollars in thousands) |    |
|                                                            |   | 2010                   |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Non-accrual loans:                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and all other                                        |   | $                      | 513     |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| Real estate                                                     |   |                   | 3,527   |   |   |   | 4,916 |   |   |   | 2,087 |   |   |   | 109 |   |   |   | 392 |   |
| Consumer                                                        |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | 2 |   |   |   | 17 |   |
| Total                                                           |   |                   | 4,040   |   |   |   | 4,916 |   |   |   | 2,087 |   |   |   | 111 |   |   |   | 409 |   |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing loans which are contractually past due 90 days or more |   |                   | 39      |   |   |   | 99 |   |   |   | — |   |   |   | 52 |   |   |   | — |   |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total non-performing loans                                      |   |                   | 4,079   |   |   |   | 5,015 |   |   |   | 2,087 |   |   |   | 163 |   |   |   | 409 |   |
| Foreclosed real estate                                          |   |                   | 748     |   |   |   | 392 |   |   |   | 660 |   |   |   | — |   |   |   | — |   |
| Total non-performing assets                                     |   | $                      | 4,827   |   |   | $ | 5,407 |   |   | $ | 2,747 |   |   | $ | 163 |   |   | $ | 409 |   |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing loans to total loans                             |   |                   | 1.14    | % |   |   | 1.38 | % |   |   | .60 | % |   |   | .05 | % |   |   | .13 | % |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing loans to total assets                            |   |                   | .76     | % |   |   | .95 | % |   |   | .41 | % |   |   | .03 | % |   |   | .09 | % |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing assets to total assets                           |   |                   | .90     | % |   |   | 1.02 | % |   |   | .54 | % |   |   | .03 | % |   |   | .09 | % |

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|                                   |   | 2010                   |    |   | 2009           |   |
|----------------------------------------|--------|------------------------|---------|--------|----------------|--------|
|                                   |   | (dollars in thousands) |    |
|                                   |   | CarryingValue          |    |   | % of portfolio |   |   | CarryValue |   |   | % of portfolio |   |
| U.S. Government agencies               |   | $                      | 30,268  |   |           |   | 20.7 | % |   | $ | 39,772 |   |   |   | 30.3 | % |
| States and political subdivisions      |   |                   | 49,936  |   |           |   | 34.2 | % |   |   | 32,343 |   |   |   | 24.6 | % |
| Corporate obligations                  |   |                   | 4,249   |   |           |   | 2.9 | % |   |   | 5,240 |   |   |   | 4.0 | % |
| Mortgage-backed securities -           |   |                   |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |                   | 60,928  |   |           |   | 41.8 | % |   |   | 53,154 |   |   |   | 40.5 | % |
| Equity securities - financial services |   |                   | 604     |   |           |   | 0.4 | % |   |   | 776 |   |   |   | 0.6 | % |
| Total                                  |   | $                      | 145,985 |   |           |   | 100.0 | % |   | $ | 131,285 |   |   |   | 100.0 | % |

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|                                   |   | 3 Monthsof Less |    |   | 3-12Months |   |    | 1-3 Years |   |   | Over3 Years |   |   | Total  |    |
|----------------------------------------|--------|-----------------|---------|--------|------------|--------|---------|-----------|--------|--------|-------------|--------|--------|--------|---------|
|                                   |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |
| Federal funds sold and                 |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |
| interest-bearing deposits              |   | $               | 10,593  |   |       | $      | 250     |      |   | $      | —     |   |   | $      | — |   |   | $ | 10,843 |   |
| Securities                             |   |            | 10,916  |   |       |   | 31,003  |      |   |   | 48,110      |   |   |   | 55,956  |   |   |   | 145,985 |   |
| Loans Receivable                       |   |            | 85,565  |   |       |   | 67,052  |      |   |   | 108,295     |   |   |   | 95,943  |   |   |   | 356,855 |   |
| Total Rate Sensitive Assets (RSA)      |   |            | 107,074 |   |       |   | 98,305  |      |   |   | 156,405     |   |   |   | 151,899 |   |   |   | 513,683 |   |
|                                   |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |   |   |   |   |   |
| Non-maturity interest-bearing deposits |   |            | 25,197  |   |       |   | 28,014  |      |   |   | 74,303      |   |   |   | 31,807  |   |   |   | 159,321 |   |
| Time Deposits                          |   |            | 30,009  |   |       |   | 77,797  |      |   |   | 46,458      |   |   |   | 18,042  |   |   |   | 172,306 |   |
| Borrowings                             |   |            | 10,527  |   |       |   | 26,107  |      |   |   | 24,675      |   |   |   | 10,000  |   |   |   | 71,309 |   |
| Total Rate Sensitive Liabilities (RSL) |   |            | 65,733  |   |       |   | 131,918 |      |   |   | 145,436     |   |   |   | 59,849  |   |   |   | 402,936 |   |
|                                   |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |   |   |   |   |   |
| As of December 31, 2010                |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |   |   |   |   |   |
| Interest sensitivity gap               |   | $               | 41,341  |   |       | $      | (33,613 | )         |   | $      | 10,969      |   |   | $      | 92,050  |   |   | $ | 110,747 |   |
| Cumulative gap                         |   |            | 41,341  |   |       |   | 7,728   |      |   |   | 18,697      |   |   |   | 110,747 |   |   |   |   |   |
| RSA/RSL-cumulative                     |   |            | 162.9   | %      |       |   | 103.9   | %         |   |   | 105.5       | %      |   |   | 127.5   | % |   |   |   |   |
|                                   |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |   |   |   |   |   |
| As of December 31, 2009                |   |            |    |   |       |   |    |      |   |   |        |   |   |   |    |   |   |   |   |   |
| Interest sensitivity gap               |   | $               | 26,256  |   |       | $      | (35,423 | )         |   | $      | (20,986     | )      |   | $      | 135,313 |   |   | $ | 105,160 |   |
| Cumulative gap                         |   |            | 26,256  |   |       |   | (9,167  | )         |   |   | (30,153     | )      |   |   | 105,160 |   |   |   |   |   |
| RSA/RSL-cumulative                     |   |            | 128.9   | %      |       |   | 95.5    | %         |   |   | 91.2        | %      |   |   | 126.3   | % |   |   |   |   |

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|             |   | December 31, 2010 |    |
|------------------|--------|-------------------|---------|
|             |   | Total             |    |   | Less than 1 year |   |   | 1-3 years |   |   | 4-5 years |   |   | Over 5 years |   |
| Time deposits    |   | $                 | 172,306 |   |   | $ | 107,806 |   |   | $ | 46,458 |   |   | $ | 18,042 |   |   | $ | — |   |
| Long-term debt   |   |              | 38,000  |   |   |   | 18,000 |   |   |   | 10,000 |   |   |   | — |   |   |   | 10,000 |   |
| Operating leases |   |              | 3,105   |   |   |   | 259 |   |   |   | 536 |   |   |   | 514 |   |   |   | 1,796 |   |
|             |   | $                 | 213,411 |   |   | $ | 126,065 |   |   | $ | 56,994 |   |   | $ | 18,556 |   |   | $ | 11,796 |   |

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| Other Income (dollars in thousands)For the year-ended December 31 |   |   |    |   |   |   |   |   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                              |   | 2010   |    |   | 2009   |   |   | 2008   |   |
| Service charges on deposit accounts                               |   | $      | 151     |   |   | $      | 165    |   |   | $ | 194 |   |
| ATM Fees                                                          |   |   | 288     |   |   |   | 273    |   |   |   | 280 |   |
| NSF Fees                                                          |   |   | 1,058   |   |   |   | 1,281  |   |   |   | 1,424 |   |
| Gain on sale of deposits                                          |   |   | — |   |   |   | 150    |   |   |   | — |   |
| Safe deposit box rental                                           |   |   | 53      |   |   |   | 52     |   |   |   | 55 |   |
| Loan related service fees                                         |   |   | 292     |   |   |   | 390    |   |   |   | 281 |   |
| Debit card                                                        |   |   | 413     |   |   |   | 373    |   |   |   | 376 |   |
| Fiduciary activities                                              |   |   | 405     |   |   |   | 354    |   |   |   | 404 |   |
| Commissions on mutual funds & annuities                       |   |   | 116     |   |   |   | 112    |   |   |   | 105 |   |
| Gain on sales of mortgage loans and servicing rights              |   |   | 307     |   |   |   | 481    |   |   |   | 499 |   |
| Earnings on and proceeds from bank-owned life insurance           |   |   | 391     |   |   |   | 1,196  |   |   |   | 344 |   |
| Other income                                                      |   |   | 142     |   |   |   | 102    |   |   |   | 143 |   |
|                                                              |   |   | 3,616   |   |   |   | 4,929  |   |   |   | 4,105 |   |
| Net realized gains (losses) on sales of securities                |   |   | 448     |   |   |   | 463    |   |   |   | (18 | ) |
| Total                                                             |   | $      | 4,064   |   |   | $      | 5,392  |   |   | $ | 4,087 |   |

----

----

|           |  Closing Price Range |   | Cash dividends |
|----------------|---------------------------|--------|----------------|
|           |  High                | Low    |           | declared per share |
| Year 2010      |                      |   |           |   |   |   |   |   |
| First Quarter  | $                         | 29.18  |           | $ | 25.22 |   | $ | .28  |
| Second Quarter |                      | 28.06  |           |   | 24.18 |   |   | .28  |
| Third Quarter  |                      | 28.75  |           |   | 25.00 |   |   | .28  |
| Fourth Quarter |                      | 29.75  |           |   | 26.38 |   |   | .29  |
|           |                      |   |           |   |   |   |   |   |
| Year 2009      |                      |   |           |   |   |   |   |   |
| First Quarter  | $                    | 29.45  |           | $ | 22.95 |   | $ | .27  |
| Second Quarter |                      | 32.00  |           |   | 24.10 |   |   | .27  |
| Third Quarter  |                      | 33.25  |           |   | 30.57 |   |   | .27  |
| Fourth Quarter |                      | 31.10  |           |   | 25.50 |   |   | .28  |
|           |                      |   |           |   |   |   |   |   |

----

----

----

----

----

----

| 2010                                      |   |        |   |   |         |   |   |    |   |   |     |   |
|-------------------------------------------|--------|-------------|--------|--------|--------------|--------|--------|---------|--------|--------|----------|--------|
|                                      |   | December 31 |   |   | September 30 |   |   | June 30 |   |   | March 31 |   |
| Interest income                           |   | $           | 6,273  |   |         | $      | 6,395  |    |   | $      | 6,377    |   |   | $ | 6,642 |   |
| Interest expense                          |   |        | 1,357  |   |         |   | 1,476  |    |   |   | 1,545    |   |   |   | 1,645 |   |
| Net interest income                       |   |        | 4,916  |   |         |   | 4,919  |    |   |   | 4,832    |   |   |   | 4,997 |   |
| Provision for loan losses                 |   |        | 270    |   |         |   | 250    |    |   |   | 150      |   |   |   | 330 |   |
| Other income                              |   |        | 943    |   |         |   | 874    |    |   |   | 952      |   |   |   | 847 |   |
| Net realized gains on sales of securities |   |        | 68     |   |         |   | 161    |    |   |   | 64       |   |   |   | 155 |   |
| Other expense                             |   |        | 3,305  |   |         |   | 3,112  |    |   |   | 3,176    |   |   |   | 3,160 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Income before income taxes                |   |        | 2,352  |   |         |   | 2,592  |    |   |   | 2,522    |   |   |   | 2,509 |   |
| Income tax expense                        |   |        | 544    |   |         |   | 702    |    |   |   | 704      |   |   |   | 712 |   |
| NET INCOME                                |   | $           | 1,808  |   |         | $      | 1,890  |    |   | $      | 1,818    |   |   | $ | 1,797 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Basic earnings per share                  |   | $           | .65    |   |         | $      | .68    |    |   | $      | .66      |   |   | $ | .65 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Diluted earnings per share                |   | $           | .65    |   |         | $      | .68    |    |   | $      | .66      |   |   | $ | .65 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| 2009                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
|                                      |   | December 31 |   |   | September 30 |   |   | June 30 |   |   | March 31 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Interest income                           |   | $           | 6,722  |   |         | $      | 6,680  |    |   | $      | 6,743    |   |   | $ | 6,690 |   |
| Interest expense                          |   |        | 1,895  |   |         |   | 1,914  |    |   |   | 1,908    |   |   |   | 2,009 |   |
| Net interest income                       |   |        | 4,827  |   |         |   | 4,766  |    |   |   | 4,835    |   |   |   | 4,681 |   |
| Provision for loan losses                 |   |        | 1,100  |   |         |   | 140    |    |   |   | 220      |   |   |   | 225 |   |
| Other income                              |   |        | 1,885  |   |         |   | 928    |    |   |   | 996      |   |   |   | 1,120 |   |
| Net realized gain on sales of securities  |   |        | 40     |   |         |   | 90     |    |   |   | 172      |   |   |   | 161 |   |
| Other expense                             |   |        | 3,702  |   |         |   | 3,174  |    |   |   | 3,320    |   |   |   | 3,275 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Income before income taxes                |   |        | 1,950  |   |         |   | 2,470  |    |   |   | 2,463    |   |   |   | 2,462 |   |
| Income tax expense                        |   |        | 148    |   |         |   | 695    |    |   |   | 714      |   |   |   | 725 |   |
| NET INCOME                                |   | $           | 1,802  |   |         | $      | 1,775  |    |   | $      | 1,749    |   |   | $ | 1,737 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Basic earnings per share                  |   | $           | 0.65   |   |         | $      | 0.64   |    |   | $      | 0.64     |   |   | $ | 0.64 |   |
|                                      |   |        |   |   |         |   |   |    |   |   |     |   |   |   |   |   |
| Diluted earnings per share                |   | $           | 0.65   |   |         | $      | 0.64   |    |   | $      | 0.62     |   |   | $ | 0.63 |   |

----

----

| Year Ended December 31                         |   | 2010              |    |   | 2009        |   |   | 2008    |   |
|------------------------------------------------|--------|-------------------|---------|--------|-------------|--------|--------|---------|--------|
|                                           |   | AverageBalance(2) |    |   | Interest(1) |   |   | AvgRate |   |   | AverageBalance(2) |   |   | Interest(1) |   |   | AvgRate |   |   | AverageBalance(2) |   |   | Interest(1) |   |   | AvgRate |   |
|                                           |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS                                         |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Earning Assets:                       |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                             |   | $                 | 3,000   |   |        | $      | 10     |    |   |   | .33 | % |   | $ | 2,031 |   |   | $ | 5 |   |   |   | 0.25 | % |   | $ | 1,082 |   |   | $ | 28 |   |   |   | 2.59 | % |
| Interest bearing deposits with banks           |   |              | 16,415  |   |        |   | 47     |    |   |   | .29 |   |   |   | 4,552 |   |   |   | 14 |   |   |   | 0.31 |   |   |   | 66 |   |   |   | 1 |   |   |   | 1.52 |   |
| Securities held to maturity                    |   |              | 280     |   |        |   | 24     |    |   |   | 8.57 |   |   |   | 707 |   |   |   | 61 |   |   |   | 8.63 |   |   |   | 706 |   |   |   | 61 |   |   |   | 8.64 |   |
| Securities available for sale                  |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                        |   |              | 95,121  |   |        |   | 2,969  |    |   |   | 3.12 |   |   |   | 100,120 |   |   |   | 4,131 |   |   |   | 4.13 |   |   |   | 108,809 |   |   |   | 5,207 |   |   |   | 4.79 |   |
| Tax-exempt                                     |   |              | 40,332  |   |        |   | 2,340  |    |   |   | 5.80 |   |   |   | 29,283 |   |   |   | 1,699 |   |   |   | 5.80 |   |   |   | 22,108 |   |   |   | 1,266 |   |   |   | 5.73 |   |
| Total  securities available for sale |   |              | 135,453 |   |        |   | 5,309  |    |   |   | 3.92 |   |   |   | 129,403 |   |   |   | 5,830 |   |   |   | 4.51 |   |   |   | 130,917 |   |   |   | 6,473 |   |   |   | 4.94 |   |
| Loans receivable (3,4)                         |   |              | 355,980 |   |        |   | 21,295 |    |   |   | 5.98 |   |   |   | 356,345 |   |   |   | 21,688 |   |   |   | 6.09 |   |   |   | 335,137 |   |   |   | 22,161 |   |   |   | 6.61 |   |
| Total interest earning assets                  |   |              | 511,128 |   |        |   | 26,685 |    |   |   | 5.22 |   |   |   | 493,038 |   |   |   | 27,598 |   |   |   | 5.60 |   |   |   | 467,908 |   |   |   | 28,724 |   |   |   | 6.14 |   |
| Non-interest earning assets:                   |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                        |   |              | 7,402   |   |        |   |   |    |   |   |   |   |   |   | 6,935 |   |   |   |   |   |   |   |   |   |   |   | 8,102 |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                      |   |              | (5,476  | )      |        |   |   |    |   |   |   |   |   |   | (4,539 | ) |   |   |   |   |   |   |   |   |   |   | (4,013 | ) |   |   |   |   |   |   |   |   |
| Other assets                                   |   |              | 22,638  |   |        |   |   |    |   |   |   |   |   |   | 17,309 |   |   |   |   |   |   |   |   |   |   |   | 17,687 |   |   |   |   |   |   |   |   |   |
| Total non-interest earning assets              |   |              | 24,564  |   |        |   |   |    |   |   |   |   |   |   | 19,705 |   |   |   |   |   |   |   |   |   |   |   | 21,776 |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                   |   | $                 | 535,692 |   |        |   |   |    |   |   |   |   |   | $ | 512,743 |   |   |   |   |   |   |   |   |   |   | $ | 489,684 |   |   |   |   |   |   |   |   |   |
|                                           |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY           |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Bearing Liabilities:                  |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand and money market       |   | $                 | 107,997 |   |        |   | 571    |    |   |   | .53 |   |   | $ | 98,968 |   |   |   | 731 |   |   |   | 0.74 |   |   | $ | 102,358 |   |   |   | 1,449 |   |   |   | 1.42 |   |
| Savings                                        |   |              | 48,588  |   |        |   | 109    |    |   |   | .22 |   |   |   | 44,526 |   |   |   | 158 |   |   |   | 0.35 |   |   |   | 44,510 |   |   |   | 208 |   |   |   | 0.47 |   |
| Time                                           |   |              | 177,761 |   |        |   | 3,603  |    |   |   | 2.03 |   |   |   | 174,201 |   |   |   | 4,876 |   |   |   | 2.80 |   |   |   | 160,462 |   |   |   | 6,116 |   |   |   | 3.81 |   |
| Total interest-bearing deposits                |   |              | 334,346 |   |        |   | 4,283  |    |   |   | 1.28 |   |   |   | 317,695 |   |   |   | 5,765 |   |   |   | 1.81 |   |   |   | 307,330 |   |   |   | 7,773 |   |   |   | 2.53 |   |
| Short-term borrowings                          |   |              | 25,932  |   |        |   | 117    |    |   |   | .45 |   |   |   | 26,233 |   |   |   | 292 |   |   |   | 1.11 |   |   |   | 32,328 |   |   |   | 693 |   |   |   | 2.14 |   |
| Other borrowings                               |   |              | 41,712  |   |        |   | 1,623  |    |   |   | 3.89 |   |   |   | 43,000 |   |   |   | 1,669 |   |   |   | 3.88 |   |   |   | 28,710 |   |   |   | 1,228 |   |   |   | 4.28 |   |
| Total interest bearing liabilities             |   |              | 401,990 |   |        |   | 6,023  |    |   |   | 1.50 |   |   |   | 386,928 |   |   |   | 7,726 |   |   |   | 2.00 |   |   |   | 368,368 |   |   |   | 9,694 |   |   |   | 2.63 |   |
| Non-interest bearing liabilities:              |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing demand deposits           |   |              | 61,966  |   |        |   |   |    |   |   |   |   |   |   | 59,224 |   |   |   |   |   |   |   |   |   |   |   | 59,759 |   |   |   |   |   |   |   |   |   |
| Other liabilities                              |   |              | 4,433   |   |        |   |   |    |   |   |   |   |   |   | 4,615 |   |   |   |   |   |   |   |   |   |   |   | 4,908 |   |   |   |   |   |   |   |   |   |
| Total non-interest bearing liabilities         |   |              | 66,399  |   |        |   |   |    |   |   |   |   |   |   | 63,839 |   |   |   |   |   |   |   |   |   |   |   | 64,667 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                           |   |              | 67,303  |   |        |   |   |    |   |   |   |   |   |   | 61,976 |   |   |   |   |   |   |   |   |   |   |   | 56,649 |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     |   | $                 | 535,692 |   |        |   |   |    |   |   |   |   |   | $ | 512,743 |   |   |   |   |   |   |   |   |   |   | $ | 489,684 |   |   |   |   |   |   |   |   |   |
|                                           |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                            |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (tax-equivalent basis)                         |   |              |    |   |        |   | 20,662 |    |   |   | 3.72 | % |   |   |   |   |   |   | 19,872 |   |   |   | 3.60 | % |   |   |   |   |   |   | 19,030 |   |   |   | 3.51 | % |
| Tax-equivalent basis adjustment                |   |              |    |   |        |   | (998   | )       |   |   |   |   |   |   |   |   |   |   | (763 | ) |   |   |   |   |   |   |   |   |   |   | (629 | ) |   |   |   |   |
| Net Interest Income                            |   |              |    |   |        | $      | 19,664 |    |   |   |   |   |   |   |   |   |   | $ | 19,109 |   |   |   |   |   |   |   |   |   |   | $ | 18,401 |   |   |   |   |   |
|                                           |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest margin                            |   |              |    |   |        |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (tax-equivalent basis)                         |   |              |    |   |        |   |   |    |   |   | 4.04 | % |   |   |   |   |   |   |   |   |   |   | 4.03 | % |   |   |   |   |   |   |   |   |   |   | 4.07 | % |

| 1. | Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 34%. |
|----|-----------------------------------------------------------------------------------------------|
| 2. | Average balances have been calculated based on daily balances.                                |
| 3. | Loan balances include non-accrual loans and are net of unearned income.                       |
| 4. | Loan yields include the effect of amortization of deferred fees net of costs.                 |

----

----

|                                      |   | Increase/(Decrease)   |   |
|-------------------------------------------|--------|-----------------------|--------|
| (dollars in thousands)                    |   | 2010 compared to 2009 |   |   | 2009 compared to 2008 |   |
|                                      |   | Variance due to       |   |   | Variance due to |   |
|                                      |   | Volume                |   |   | Rate |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
| INTEREST EARNING ASSETS:                  |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                        |   | $                     | 3      |   |   | $ | 1 |   |   | $ | 4 |   |   | $ | 14 |   |   | $ | (37 | ) |   | $ | (23 | ) |
| Interest bearing deposits with banks      |   |                  | 34     |   |   |   | (1 | ) |   |   | 33 |   |   |   | 14 |   |   |   | (1 | ) |   |   | 13 |   |
| Securities held to maturity               |   |                  | (37    | ) |   |   | 0 |   |   |   | (37 | ) |   |   | 0 |   |   |   | 0 |   |   |   | 0 |   |
| Securities available for sale             |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                   |   |                  | (198   | ) |   |   | (964 | ) |   |   | (1,162 | ) |   |   | (395 | ) |   |   | (681 | ) |   |   | (1,076 | ) |
| Tax-exempt                                |   |                  | 641    |   |   |   | 1 |   |   |   | 642 |   |   |   | 416 |   |   |   | 17 |   |   |   | 433 |   |
| Total securities available for sale       |   |                  | 443    |   |   |   | (963 | ) |   |   | (520 | ) |   |   | 21 |   |   |   | (664 | ) |   |   | (643 | ) |
| Loans receivable                          |   |                  | (22    | ) |   |   | (371 | ) |   |   | (393 | ) |   |   | 1,353 |   |   |   | (1,826 | ) |   |   | (473 | ) |
| Total interest earning assets             |   |                  | 421    |   |   |   | (1,334 | ) |   |   | (913 | ) |   |   | 1,402 |   |   |   | (2,528 | ) |   |   | (1,126 | ) |
|                                      |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST BEARING LIABILITIES:             |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest- bearing demand and money market |   |                  | 62     |   |   |   | (222 | ) |   |   | (160 | ) |   |   | (47 | ) |   |   | (671 | ) |   |   | (718 | ) |
| Savings                                   |   |                  | 13     |   |   |   | (62 | ) |   |   | (49 | ) |   |   | 0 |   |   |   | (50 | ) |   |   | (50 | ) |
| Time                                      |   |                  | 98     |   |   |   | (1,371 | ) |   |   | (1,273 | ) |   |   | 490 |   |   |   | (1,730 | ) |   |   | (1,240 | ) |
| Total interest- bearing deposits          |   |                  | 173    |   |   |   | (1,655 | ) |   |   | (1,482 | ) |   |   | 443 |   |   |   | (2,451 | ) |   |   | (2,008 | ) |
| Short-term borrowings                     |   |                  | (3     | ) |   |   | (172 | ) |   |   | (175 | ) |   |   | (113 | ) |   |   | (288 | ) |   |   | (401 | ) |
| Long term debt                            |   |                  | (50    | ) |   |   | 4 |   |   |   | (46 | ) |   |   | 564 |   |   |   | (123 | ) |   |   | 441 |   |
| Total interest bearing liabilities        |   |                  | 120    |   |   |   | (1,823 | ) |   |   | (1,703 | ) |   |   | 894 |   |   |   | (2,862 | ) |   |   | (1,968 | ) |
| Net interest income                       |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (tax-equivalent basis)                    |   | $                     | 301    |   |   | $ | 489 |   |   | $ | 790 |   |   | $ | 508 |   |   | $ | 334 |   |   | $ | 842 |   |

----

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|           |                      |
|---------------------|---------------------------|
| Lewis J. Critelli   | William S. Lance          |
| President and Chief | Senior Vice President and |
| Exeutive Officer    | Chief Financial Officer   |

----

----

----

----

----

----

----

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|                                                                           |   | December 31,       |    |
|--------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                           |   | 2010               |    |   | 2009 |   |
|                                                                           |   | (In Thousands,     |    |
|                                                                           |   | Except Share Data) |    |
| ASSETS                                                                         |   |
| Cash and due from banks                                                        |   | $                  | 5,782   |   |   | $ | 6,498 |   |
| Interest bearing deposits with banks                                           |   |               | 7,843   |   |   |   | 7,857 |   |
| Federal funds sold                                                             |   |               | 3,000   |   |   |   | 3,000 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Cash and cash equivalents                                                      |   |               | 16,625  |   |   |   | 17,355 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Securities available for sale                                                  |   |               | 145,815 |   |   |   | 130,577 |   |
| Securities held to maturity, fair value 2010: $179, 2009: $722                 |   |               | 170     |   |   |   | 708 |   |
| Loans receivable (net of allowance for loan losses 2010: $5,616; 2009: $5,453) |   |               | 351,239 |   |   |   | 358,021 |   |
| Investment in Federal Home Loan Bank Stock, at cost                            |   |               | 3,361   |   |   |   | 3,538 |   |
| Bank premises and equipment, net                                               |   |               | 4,904   |   |   |   | 5,189 |   |
| Bank owned life insurance                                                      |   |               | 8,249   |   |   |   | 7,889 |   |
| Accrued interest receivable                                                    |   |               | 2,166   |   |   |   | 2,200 |   |
| Foreclosed real estate owned                                                   |   |               | 748     |   |   |   | 392 |   |
| Other assets                                                                   |   |               | 3,728   |   |   |   | 3,827 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Total Assets                                                                   |   | $                  | 537,005 |   |   | $ | 529,696 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                     |   |
| Liabilities                                                                    |   |               |    |   |   |   |   |   |
| Deposits:                                                                      |   |               |    |   |   |   |   |   |
| Non-interest bearing demand                                                    |   | $                  | 62,238  |   |   | $ | 59,820 |   |
| Interest bearing demand                                                        |   |               | 38,168  |   |   |   | 34,410 |   |
| Money market deposit accounts                                                  |   |               | 70,812  |   |   |   | 60,035 |   |
| Savings                                                                        |   |               | 50,341  |   |   |   | 44,423 |   |
| Time                                                                           |   |               | 172,306 |   |   |   | 192,785 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Total Deposits                                                                 |   |               | 393,865 |   |   |   | 391,473 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Short-term borrowings                                                          |   |               | 33,309  |   |   |   | 25,803 |   |
| Other borrowings                                                               |   |               | 38,000  |   |   |   | 43,000 |   |
| Accrued interest payable                                                       |   |               | 1,536   |   |   |   | 2,057 |   |
| Other liabilities                                                              |   |               | 2,597   |   |   |   | 2,892 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Total Liabilities                                                              |   |               | 469,307 |   |   |   | 465,225 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Stockholders’ Equity                                                     |   |               |    |   |   |   |   |   |
| Common stock, $.10 par value, authorized 10,000,000 shares, issued: 2,840,872  |   |               | 284     |   |   |   | 284 |   |
| Surplus                                                                        |   |               | 9,826   |   |   |   | 9,764 |   |
| Retained earnings                                                              |   |               | 58,648  |   |   |   | 54,455 |   |
| Treasury stock at cost: 2010: 72,068 shares, 2009: 68,436 shares               |   |               | (2,197  | ) |   |   | (2,122 | ) |
| Accumulated other comprehensive income                                         |   |               | 1,137   |   |   |   | 2,090 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Total Stockholders’ Equity                                               |   |               | 67,698  |   |   |   | 64,471 |   |
|                                                                           |   |               |    |   |   |   |   |   |
| Total Liabilities and Stockholders’ Equity                               |   | $                  | 537,005 |   |   | $ | 529,696 |   |

----

----

|                                                       |   | Years Ended December 31,              |    |
|------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                       |   | 2010                                  |    |   | 2009 |   |   | 2008 |   |
|                                                       |   | (In Thousands, Except per Share Data) |    |
| INTEREST INCOME                                            |   |                                  |    |   |   |   |   |   |   |
| Loans receivable, including fees                           |   | $                                     | 21,101  |   |   | $ | 21,523 |   |   | $ | 21,983 |   |
| Securities:                                                |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Taxable                                                    |   |                                  | 2,969   |   |   |   | 4,131 |   |   |   | 5,207 |   |
| Tax exempt                                                 |   |                                  | 1,560   |   |   |   | 1,162 |   |   |   | 876 |   |
| Other                                                      |   |                                  | 57      |   |   |   | 19 |   |   |   | 29 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total Interest Income                                      |   |                                  | 25,687  |   |   |   | 26,835 |   |   |   | 28,095 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                           |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                   |   |                                  | 4,283   |   |   |   | 5,765 |   |   |   | 7,773 |   |
| Short-term borrowings                                      |   |                                  | 117     |   |   |   | 292 |   |   |   | 693 |   |
| Other borrowings                                           |   |                                  | 1,623   |   |   |   | 1,669 |   |   |   | 1,228 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total Interest Expense                                     |   |                                  | 6,023   |   |   |   | 7,726 |   |   |   | 9,694 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                        |   |                                  | 19,664  |   |   |   | 19,109 |   |   |   | 18,401 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| PROVISION FOR LOAN LOSSES                                  |   |                                  | 1,000   |   |   |   | 1,685 |   |   |   | 735 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Net Interest Income after Provision for Loan Losses        |   |                                  | 18,664  |   |   |   | 17,424 |   |   |   | 17,666 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| OTHER INCOME                                               |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Service charges and fees                                   |   |                                  | 2,231   |   |   |   | 2,476 |   |   |   | 2,600 |   |
| Income from fiduciary activities                           |   |                                  | 405     |   |   |   | 354 |   |   |   | 404 |   |
| Net realized gains (losses) on sales of securities         |   |                                  | 448     |   |   |   | 463 |   |   |   | (18 | ) |
| Gain on sales of loans and servicing rights                |   |                                  | 307     |   |   |   | 481 |   |   |   | 499 |   |
| Earnings on life insurance policies                        |   |                                  | 391     |   |   |   | 1,196 |   |   |   | 344 |   |
| Gain on sale of deposits                                   |   |                                  | — |   |   |   | 150 |   |   |   | — |   |
| Other                                                      |   |                                  | 282     |   |   |   | 272 |   |   |   | 258 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total Other Income                                         |   |                                  | 4,064   |   |   |   | 5,392 |   |   |   | 4,087 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| OTHER EXPENSES                                             |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                             |   |                                  | 6,507   |   |   |   | 6,829 |   |   |   | 6,046 |   |
| Occupancy                                                  |   |                                  | 1,136   |   |   |   | 1,133 |   |   |   | 1,118 |   |
| Furniture and equipment                                    |   |                                  | 424     |   |   |   | 458 |   |   |   | 507 |   |
| Data processing related operations                         |   |                                  | 803     |   |   |   | 788 |   |   |   | 753 |   |
| Federal Deposit Insurance Corporation insurance assessment |   |                                  | 474     |   |   |   | 710 |   |   |   | 90 |   |
| Advertising                                                |   |                                  | 187     |   |   |   | 186 |   |   |   | 213 |   |
| Professional fees                                          |   |                                  | 650     |   |   |   | 411 |   |   |   | 331 |   |
| Postage and telephone                                      |   |                                  | 484     |   |   |   | 487 |   |   |   | 521 |   |
| Taxes, other than income                                   |   |                                  | 524     |   |   |   | 484 |   |   |   | 504 |   |
| Foreclosed real estate owned                               |   |                                  | 41      |   |   |   | 436 |   |   |   | 582 |   |
| Amortization of intangible assets                          |   |                                  | 52      |   |   |   | 52 |   |   |   | 52 |   |
| Other                                                      |   |                                  | 1,471   |   |   |   | 1,497 |   |   |   | 1,523 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total Other Expenses                                       |   |                                  | 12,753  |   |   |   | 13,471 |   |   |   | 12,240 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Income before Income Taxes                                 |   |                                  | 9,975   |   |   |   | 9,345 |   |   |   | 9,513 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| INCOME TAX EXPENSE                                         |   |                                  | 2,662   |   |   |   | 2,282 |   |   |   | 2,836 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Net Income                                                 |   | $                                     | 7,313   |   |   | $ | 7,063 |   |   | $ | 6,677 |   |
|                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |
| EARNINGS PER SHARE                                         |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Basic                                                      |   | $                                     | 2.65    |   |   | $ | 2.57 |   |   | $ | 2.44 |   |
| Diluted                                                    |   | $                                     | 2.64    |   |   | $ | 2.55 |   |   | $ | 2.41 |   |

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|                                                                                                             |   | Years Ended December 31, 2010, 2009 and 2008  |      |
|------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                                             |   | Common Stock                                  |      |   |   |   |   | Retained |   |   | Treasury |   |   | Comprehensive |   |   |   |   |
|                                                                                                             |   | Shares                                        |      |   | Amount |   |   | Surplus |   |   | Earnings |   |   | Shares |   |   | Amount |   |   | Income (Loss) |   |   | Total |   |
|                                                                                                             |   | (Dollars in Thousands, Except Per Share Data) |      |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – DECEMBER 31, 2007                                                                                |   |                                          | 2,840,872 |   |   | $ | 284 |   |   | $ | 10,159 |   |   | $ | 47,030 |   |   |   | 87,256 |   |   | $ | (2,708 | ) |   | $ | 1,054 |   |   | $ | 55,819 |   |
| Comprehensive Income:                                                                                            |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income                                                                                                       |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | 6,677 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,677 |   |
| Change in unrealized gains on securities available for sale, net of reclassification adjustment and tax effects  |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 225 |   |   |   | 225 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total Comprehensive      Income                            |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,902 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared, $1.02 per share                                                                         |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | (2,789 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,789 | ) |
| Acquisition of treasury stock                                                                                    |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,632 |   |   |   | (1,583 | ) |   |   | - |   |   |   | (1,583 | ) |
| Stock options exercised                                                                                          |   |                                          | -         |   |   |   | - |   |   |   | (455 | ) |   |   | - |   |   |   | (27,979 | ) |   |   | 875 |   |   |   | - |   |   |   | 420 |   |
| Tax benefit of stock options exercised                                                                           |   |                                          | -         |   |   |   | - |   |   |   | 134 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 134 |   |
| Sale of treasury stock for ESOP                                                                                  |   |                                          | -         |   |   |   | - |   |   |   | (20 | ) |   |   | - |   |   |   | (5,599 | ) |   |   | 173 |   |   |   | - |   |   |   | 153 |   |
| Compensation expense related to stock options                                                                    |   |                                          | -         |   |   |   | - |   |   |   | 154 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 154 |   |
| Cumulative effect of net periodic postretirement benefit                           |   |                                          | -         |   |   |   | - |   |   |   |  - |   |   |   | (520 | ) |   |   | - |   |   |   | - |   |   |   |  - |   |   |   | (520 | ) |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – DECEMBER 31, 2008                                                                                |   |                                          | 2,840,872 |   |   |   | 284 |   |   |   | 9,972 |   |   |   | 50,398 |   |   |   | 104,310 |   |   |   | (3,243 | ) |   |   | 1,279 |   |   |   | 58,690 |   |
| Comprehensive income:                                                                                            |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                       |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | 7,063 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,063 |   |
| Change in unrealized gains on securities available for sale, net of reclassification adjustment and tax effects  |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 811 |   |   |   | 811 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total Comprehensive      Income                            |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,874 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared, $1.09 per share                                                                         |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | (3,006 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,006 | ) |
| Acquisition of treasury stock                                                                                    |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,519 |   |   |   | (68 | ) |   |   | - |   |   |   | (68 | ) |
| Stock options exercised                                                                                          |   |                                          | -         |   |   |   | - |   |   |   | (492 | ) |   |   | - |   |   |   | (32,528 | ) |   |   | 1,009 |   |   |   | - |   |   |   | 517 |   |
| Tax benefit of stock options exercised                                                                           |   |                                          | -         |   |   |   | - |   |   |   | 164 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 164 |   |
| Sale of treasury stock for ESOP                                                                                  |   |                                          | -         |   |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | (5,865 | ) |   |   | 180 |   |   |   | - |   |   |   | 166 |   |
| Compensation expense related to stock options                                                                    |   |                                          | -         |   |   |   | - |   |   |   | 134 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 134 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – DECEMBER 31, 2009                                                                                |   |                                          | 2,840,872 |   |   |   | 284 |   |   |   | 9,764 |   |   |   | 54,455 |   |   |   | 68,436 |   |   |   | (2,122 | ) |   |   | 2,090 |   |   |   | 64,471 |   |
| Comprehensive income:                                                                                            |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                                       |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | 7,313 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,313 |   |
| Change in unrealized losses on securities available for sale, net of reclassification adjustment and tax effects |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (953 | ) |   |   | (953 | ) |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total Comprehensive     Income                                  |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,360 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared $1.13 per share                                                                          |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | (3,120 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (3,120 | ) |
| Acquisition of treasury stock                                                                                    |   |                                          | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 18,571 |   |   |   | (529 | ) |   |   | - |   |   |   | (529 | ) |
| Stock options exercised                                                                                          |   |                                          | -         |   |   |   | - |   |   |   | (120 | ) |   |   | - |   |   |   | (9,276 | ) |   |   | 283 |   |   |   | - |   |   |   | 163 |   |
| Tax benefit on stock options                                                                                     |   |                                          | -         |   |   |   | - |   |   |   | 34 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 34 |   |
| Sale of treasury stock for ESOP                                                                                  |   |                                          | -         |   |   |   | - |   |   |   | (15 | ) |   |   | - |   |   |   | (5,663 | ) |   |   | 171 |   |   |   | - |   |   |   | 156 |   |
| Compensation expense related to stock options                                                                    |   |                                          | -         |   |   |   | - |   |   |   | 163 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 163 |   |
|                                                                                                             |   |                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – DECEMBER 31, 2010                                                                                |   |                                          | 2,840,872 |   |   | $ | 284 |   |   | $ | 9,826 |   |   | $ | 58,648 |   |   |   | 72,068 |   |   | $ | (2,197 | ) |   | $ | 1,137 |   |   | $ | 67,698 |   |

----

----

|                                                                              |   | Years Ended December 31, |     |
|-----------------------------------------------------------------------------------|--------|--------------------------|----------|
|                                                                              |   | 2010                     |     |   | 2009 |   |   | 2008 |   |
|                                                                              |   | (In Thousands)           |     |
| CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |                     |     |   |   |   |   |   |   |
| Net income                                                                        |   | $                        | 7,313    |   |   | $ | 7,063 |   |   | $ | 6,677 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                     |     |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                         |   |                     | 1,000    |   |   |   | 1,685 |   |   |   | 735 |   |
| Depreciation                                                                      |   |                     | 459      |   |   |   | 546 |   |   |   | 577 |   |
| Amortization of intangible assets                                                 |   |                     | 52       |   |   |   | 52 |   |   |   | 52 |   |
| Deferred income taxes                                                             |   |                     | (205     | ) |   |   | (749 | ) |   |   | 36 |   |
| Net amortization of securities premiums and discounts                             |   |                     | 462      |   |   |   | 156 |   |   |   | 44 |   |
| Net realized (gains) losses on sales of securities                                |   |                     | (448     | ) |   |   | (463 | ) |   |   | 18 |   |
| Gain on sale of deposits                                                          |   |                     | —  |   |   |   | (150 | ) |   |   | — |   |
| Gain on life insurance policy                                                     |   |                     | —  |   |   |   | (816 | ) |   |   | — |   |
| Net increase in investment in life insurance                                      |   |                     | (358     | ) |   |   | (351 | ) |   |   | (301 | ) |
| Loss (gain) on sale of bank premises and equipment and foreclosed real estate     |   |                     | (3       | ) |   |   | 360 |   |   |   | 540 |   |
| Gain on sale of mortgage loans and servicing rights                               |   |                     | (307     | ) |   |   | (481 | ) |   |   | (499 | ) |
| Mortgage loans originated for sale                                                |   |                     | (12,488  | ) |   |   | (21,743 | ) |   |   | (866 | ) |
| Proceeds from sale of mortgage loans originated for sale                          |   |                     | 12,795   |   |   |   | 22,224 |   |   |   | 881 |   |
| Compensation expense related to stock options                                     |   |                     | 163      |   |   |   | 134 |   |   |   | 154 |   |
| Decrease (increase) in accrued interest receivable and other assets               |   |                     | 989      |   |   |   | (1,528 | ) |   |   | (68 | ) |
| Increase (decrease) in accrued interest payable and other liabilities             |   |                     | (843     | ) |   |   | 65 |   |   |   | (829 | ) |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net Cash Provided by Operating Activities                                         |   |                     | 8,581    |   |   |   | 6,004 |   |   |   | 7,151 |   |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Securities available for sale:                                                    |   |                     |     |   |   |   |   |   |   |   |   |   |
| Proceeds from sales                                                               |   |                     | 23,944   |   |   |   | 15,449 |   |   |   | 67 |   |
| Proceeds from maturities and principal reductions on mortgage-backed securities   |   |                     | 66,102   |   |   |   | 44,047 |   |   |   | 39,319 |   |
| Purchases                                                                         |   |                     | (106,742 | ) |   |   | (58,409 | ) |   |   | (45,254 | ) |
| Securities held to maturity, proceeds from maturities                             |   |                     | 540      |   |   |   | — |   |   |   | — |   |
| Purchase of FHLB stock                                                            |   |                     | —  |   |   |   | — |   |   |   | (2,386 | ) |
| Redemption of FHLB stock                                                          |   |                     | 177      |   |   |   | — |   |   |   | 920 |   |
| Net (increase) decrease in loans                                                  |   |                     | 5,118    |   |   |   | (14,912 | ) |   |   | (33,523 | ) |
| Proceeds from sale of mortgage loans                                              |   |                     | —  |   |   |   | — |   |   |   | 13,988 |   |
| Proceeds from life insurance policy                                               |   |                     | —  |   |   |   | 1,346 |   |   |   | — |   |
| Purchase of bank premises and equipment                                           |   |                     | (179     | ) |   |   | (248 | ) |   |   | (325 | ) |
| Proceeds from sales of premises and equipment and foreclosed real estate          |   |                     | 100      |   |   |   | 121 |   |   |   | — |   |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net Cash Used in Investing Activities                                             |   |                     | (10,940  | ) |   |   | (12,606 | ) |   |   | (27,194 | ) |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in deposits                                               |   |                     | 2,392    |   |   |   | 35,594 |   |   |   | (10,365 | ) |
| Deposits sold                                                                     |   |                     | —  |   |   |   | (3,606 | ) |   |   | — |   |
| Net increase (decrease) in short-term borrowings                                  |   |                     | 7,506    |   |   |   | (12,323 | ) |   |   | 11,440 |   |
| Proceeds from other borrowings                                                    |   |                     | —  |   |   |   | — |   |   |   | 25,000 |   |
| Repayments of other borrowings                                                    |   |                     | (5,000   | ) |   |   | — |   |   |   | (5,000 | ) |
| Stock options exercised                                                           |   |                     | 163      |   |   |   | 517 |   |   |   | 420 |   |
| Tax benefit of stock options exercised                                            |   |                     | 34       |   |   |   | 164 |   |   |   | 134 |   |
| ESOP purchase of shares from treasury stock                                       |   |                     | 156      |   |   |   | 166 |   |   |   | 153 |   |
| Purchase of treasury stock                                                        |   |                     | (529     | ) |   |   | (68 | ) |   |   | (1,583 | ) |
| Cash dividends paid                                                               |   |                     | (3,093   | ) |   |   | (2,967 | ) |   |   | (2,740 | ) |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net Cash Provided by Financing Activities                                         |   |                     | 1,629    |   |   |   | 17,477 |   |   |   | 17,459 |   |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                              |   |                     | (730     | ) |   |   | 10,875 |   |   |   | (2,584 | ) |
|                                                                              |   |                     |     |   |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS – BEGINNING                                       |   |                     | 17,355   |   |   |   | 6,480 |   |   |   | 9,064 |   |
| CASH AND CASH EQUIVALENTS – ENDING                                          |   | $                        | 16,625   |   |   | $ | 17,355 |   |   | $ | 6,480 |   |

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|                                                                                   | Years   |
|----------------------------------------------------------------------------------------|---------|
|           Buildings and improvements | 10 - 40 |
|           Furniture and equipment    | 3 - 10  |

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| 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 in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.               |
|     |                                                                                                                                                                                |
| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and are unobservable (i.e. supported with little or no market activity). |

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|                                                               |   | Years Ended December 31, |   |
|--------------------------------------------------------------------|--------|--------------------------|--------|
|                                                               |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
|                                                               |   | (In Thousands)           |   |
| Unrealized holding gains (losses) on available for sale securities |   | $                        | (994   | ) |   | $ | 1,701 |   |   | $ | 311 |   |
| Reclassification adjustment for gains (losses) realized in income  |   |                     | 448    |   |   |   | 463 |   |   |   | (18 | ) |
|                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net Unrealized Gains (Losses)                                      |   |                     | (1,442 | ) |   |   | 1,238 |   |   |   | 329 |   |
|                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income tax expense (benefit)                                       |   |                     | (489   | ) |   |   | 427 |   |   |   | 104 |   |
|                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net of Tax Amount                                                  |   | $                        | (953   | ) |   | $ | 811 |   |   | $ | 225 |   |

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|                                   |   | December 31, 2010 |    |
|----------------------------------------|--------|-------------------|---------|
|                                   |   |              |    |   | Gross |   |   | Gross |   |   |   |   |
|                                   |   | Amortized         |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                   |   | Cost              |    |   | Gains |   |   | Losses |   |   | Value |   |
|                                   |   | (In Thousands)    |    |
| AVAILABLE FOR SALE:                    |   |              |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies               |   | $                 | 30,194  |   |   | $ | 392 |   |   | $ | (318 | ) |   | $ | 30,268 |   |
| States and political subdivisions      |   |              | 49,880  |   |   |   | 510 |   |   |   | (624 | ) |   |   | 49,766 |   |
| Corporate obligations                  |   |              | 4,018   |   |   |   | 231 |   |   |   | — |   |   |   | 4,249 |   |
| Mortgage-backed securities -           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |              | 59,770  |   |   |   | 1,398 |   |   |   | (240 | ) |   |   | 60,928 |   |
|                                   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities - financial services |   |              | 224     |   |   |   | 381 |   |   |   | (1 | ) |   |   | 604 |   |
|                                   |   | $                 | 144,086 |   |   | $ | 2,912 |   |   | $ | (1,183 | ) |   | $ | 145,815 |   |
| HELD TO MATURITY:                      |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions      |   | $                 | 170     |   |   | $ | 9 |   |   | $ | — |   |   | $ | 179 |   |
|                                   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |              |    |
|                                   |   | December 31, 2009 |    |
|                                   |   |              |    |   |   | Gross |   |   | Gross |   |   |   |   |   |
|                                   |   | Amortized         |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                   |   | Cost              |    |   | Gains |   |   | Losses |   |   | Value |   |
|                                   |   | (In Thousands)    |    |
| AVAILABLE FOR SALE:                    |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies               |   | $                 | 39,607  |   |   | $ | 295 |   |   | $ | (130 | ) |   | $ | 39,772 |   |
| States and political subdivisions      |   |              | 30,872  |   |   |   | 780 |   |   |   | (17 | ) |   |   | 31,635 |   |
| Corporate obligations                  |   |              | 5,043   |   |   |   | 200 |   |   |   | (3 | ) |   |   | 5,240 |   |
| Mortgage-backed securities -           |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |              | 51,554  |   |   |   | 1,618 |   |   |   | (18 | ) |   |   | 53,154 |   |
|                                   |   |              | 127,076 |   |   |   | 2,893 |   |   |   | (168 | ) |   |   | 129,801 |   |
|                                   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity securities - financial services |   |              | 330     |   |   |   | 451 |   |   |   | (5 | ) |   |   | 776 |   |
|                                   |   | $                 | 127,406 |   |   | $ | 3,344 |   |   | $ | (173 | ) |   | $ | 130,577 |   |
| HELD TO MATURITY:                      |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions      |   | $                 | 708     |   |   | $ | 14 |   |   | $ | — |   |   | $ | 722 |   |

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|                                   |   | December 31, 2010   |   |
|----------------------------------------|--------|---------------------|--------|
|                                   |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total |   |
|                                   |   | Fair                |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                   |   | Value               |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                   |   | (In Thousands)      |   |
| U.S. Government agencies               |   | $                   | 8,696  |   |   | $ | (318 | ) |   | $ | — |   |   | $ | — |   |   | $ | 8,696 |   |   | $ | (318 | ) |
| States and political subdivisions      |   |                | 21,829 |   |   |   | (624 | ) |   |   | — |   |   |   | — |   |   |   | 21,829 |   |   |   | (624 | ) |
| Mortgage-backed securities -           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |                | 20,113 |   |   |   | (240 | ) |   |   | — |   |   |   | — |   |   |   | 20,113 |   |   |   | (240 | ) |
| Equity securities - financial services |   |                | 15     |   |   |   | (1 | ) |   |   | — |   |   |   | — |   |   |   | 15 |   |   |   | (1 | ) |
|                                   |   | $                   | 50,653 |   |   | $ | (1,183 | ) |   | $ | — |   |   | $ | — |   |   | $ | 50,653 |   |   | $ | (1,183 | ) |
|                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | December 31, 2009   |   |
|                                   |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total |   |
|                                   |   | Fair                |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                   |   | Value               |   |   | Losses |   |   | Value |   |   | Losses |   |   | Value |   |   | Losses |   |
|                                   |   | (In Thousands)      |   |
|                                   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies               |   | $                   | 15,366 |   |   | $ | (130 | ) |   | $ | — |   |   | $ | — |   |   | $ | 15,366 |   |   | $ | (130 | ) |
| States and political subdivisions      |   |                | 1,413  |   |   |   | (17 | ) |   |   | — |   |   |   | — |   |   |   | 1,413 |   |   |   | (17 | ) |
| Corporate obligations                  |   |                | 997    |   |   |   | (3 | ) |   |   | — |   |   |   | — |   |   |   | 997 |   |   |   | (3 | ) |
| Mortgage-backed securities -           |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |                | 3,655  |   |   |   | (18 | ) |   |   | — |   |   |   | — |   |   |   | 3,655 |   |   |   | (18 | ) |
| Equity Securities - financial services |   |                | 49     |   |   |   | (3 | ) |   |   | 5 |   |   |   | (2 | ) |   |   | 54 |   |   |   | (5 | ) |
|                                   |   | $                   | 21,480 |   |   | $ | (171 | ) |   | $ | 5 |   |   | $ | (2 | ) |   | $ | 21,485 |   |   | $ | (173 | ) |

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|                                   |   | Available for Sale |    |   | Held to Maturity |   |
|----------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                   |   | Amortized          |    |   | Fair             |   |   | Amortized |   |   | Fair |   |
|                                   |   | Cost               |    |   | Value            |   |   | Cost |   |   | Value |   |
|                                   |   | (In Thousands)     |    |
| Due in one year or less                |   | $                  | 1,001   |   |             | $      | 1,005 |   |   | $ | — |   |   | $ | — |   |
| Due after one year through five years  |   |               | 31,803  |   |             |   | 32,425 |   |   |   | 170 |   |   |   | 179 |   |
| Due after five years through ten years |   |               | 22,604  |   |             |   | 22,623 |   |   |   | — |   |   |   | — |   |
| Due after ten years                    |   |               | 28,684  |   |             |   | 28,230 |   |   |   | — |   |   |   | — |   |
|                                   |   |               | 84,092  |   |             |   | 84,283 |   |   |   | 170 |   |   |   | 179 |   |
| Mortgage-backed securities -           |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |               | 59,770  |   |             |   | 60,928 |   |   |   | — |   |   |   | — |   |
|                                   |   | $                  | 143,862 |   |             | $      | 145,211 |   |   | $ | 170 |   |   | $ | 179 |   |

|                                   |   | 2010           |    |   | 2009   |   |
|----------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                   |   | (In Thousands) |    |
| Real estate:                           |   |           |    |   |   |   |
| Residential                            |   | $              | 124,562 |   |   | $      | 130,318 |   |
| Commercial                             |   |           | 184,094 |   |   |   | 180,266 |   |
| Construction                           |   |           | 12,638  |   |   |   | 14,405 |   |
| Commercial, financial and agricultural |   |           | 22,386  |   |   |   | 24,116 |   |
| Consumer loans to individuals          |   |           | 13,668  |   |   |   | 14,850 |   |
|                                   |   |           | 357,348 |   |   |   | 363,955 |   |
| Unearned income and deferred fees      |   |           | (493    | )      |   |   | (481 | ) |
| Allowance for loan losses              |   |           | (5,616  | )      |   |   | (5,453 | ) |
|                                   |   | $              | 351,239 |   |   | $      | 358,021 |   |

|                                  |   | Real Estate Loans |    |   |       |   |    |         |   |   |       |   |
|---------------------------------------|--------|-------------------|---------|--------|------------|--------|---------|--------------|--------|--------|------------|--------|
|                                  |   |              |    |   |       |   |    |         |   |   | Commercial |   |   | Consumer |   |   |   |   |
|                                  |   | Residential       |    |   | Commercial |   |    | Construction |   |   | Loans      |   |   | Loans |   |   | Total |   |
| December 31, 2010                     |   |              |    |   |       |   |    |         |   |   |       |   |   |   |   |   |   |   |
| Total Loans                           |   | $                 | 124,562 |   |       | $      | 184,094 |         |   | $      | 12,638     |   |   | $ | 22,386 |   |   | $ | 13,668 |   |   | $ | 357,348 |   |
|                                  |   |              |    |   |       |   |    |         |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   | $                 | — |   |       | $      | 14,239  |         |   | $      | —    |   |   | $ | 513 |   |   | $ | — |   |   | $ | 14,752 |   |
|                                  |   |              |    |   |       |   |    |         |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for impairment |   | $                 | 124,562 |   |       | $      | 169,855 |         |   | $      | 12,638     |   |   | $ | 21,873 |   |   | $ | 13,668 |   |   | $ | 342,596 |   |

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|                                |   |       |    |   | Unpaid    |   |    |       |   |   | Average    |   |   | Interest   |    |
|-------------------------------------|--------|------------|---------|--------|-----------|--------|---------|------------|--------|--------|------------|--------|--------|------------|---------|
|                                |   | Recorded   |    |   | Principal |   |    | Associated |   |   | Recorded   |   |   | Income     |    |
|                                |   | Investment |    |   | Balance   |   |    | Allowance  |   |   | Investment |   |   | Recognized |    |
| December 31, 2010                   |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |
| With no related allowance recorded: |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |
| Real Estate Loans                   |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |
| Residential                         |   | $          | — |   |      | $      | — |       |   | $      | —    |   |   | $          | — |   |   | $ | — |   |
| Construction                        |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Commercial                          |   |       | 5,598   |   |      |   | 5,598   |       |   |   | —    |   |   |       | 5,088   |   |   |   | 266 |   |
| Commercial Loans                    |   |       | 513     |   |      |   | 513     |       |   |   | —    |   |   |       | 115     |   |   |   | — |   |
| Consumer Loans                      |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Total                               |   |       | 6,111   |   |      |   | 6,111   |       |   |   | —    |   |   |       | 5,203   |   |   |   | 266 |   |
| With an allowance recorded:         |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |   |   |   |   |   |
| Real Estate Loans                   |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |   |   |   |   |   |
| Residential                         |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Construction                        |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Commercial                          |   |       | 8,641   |   |      |   | 8,548   |       |   |   | 1,648      |   |   |       | 4,734   |   |   |   | 119 |   |
| Commercial Loans                    |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | 159     |   |   |   | — |   |
| Consumer Loans                      |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Total                               |   |       | 8,641   |   |      |   | 8,548   |       |   |   | 1,648      |   |   |       | 4,893   |   |   |   | 119 |   |
| Total:                              |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |   |   |   |   |   |
| Real Estate loans                   |   |       |    |   |      |   |    |       |   |   |       |   |   |       |    |   |   |   |   |   |
| Residential                         |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Construction                        |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Commercial                          |   |       | 14,239  |   |      |   | 14,146  |       |   |   | 1,648      |   |   |       | 9,822   |   |   |   | 385 |   |
| Commercial Loans                    |   |       | 513     |   |      |   | 513     |       |   |   | —    |   |   |       | 274     |   |   |   | — |   |
| Consumer Loans                      |   |       | — |   |      |   | — |       |   |   | —    |   |   |       | — |   |   |   | — |   |
| Total Impaired Loans                |   | $          | 14,752  |   |      | $      | 14,659  |       |   | $      | 1,618      |   |   | $          | 10,096  |   |   | $ | 385 |   |

----

----

|                         |   |   |    |   | Special |   |   |        |   |   |     |   |   |   |    |   |   |   |
|------------------------------|--------|--------|---------|--------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|
|                         |   | Pass   |    |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Loss   |    |   | Total  |   |
| December 31, 2010            |   |   |    |   |    |   |   |        |   |   |     |   |   |   |    |   |   |   |
| Commercial real estate loans |   | $      | 165,226 |   |    | $      | 1,780  |        |   | $      | 17,088   |   |   | $      | — |   |   | $      | — |   |   | $ | 184,094 |   |
| Commercial loans             |   |   | 21,759  |   |    |   | 75     |        |   |   | 552      |   |   |   | — |   |   |   | — |   |   |   | 22,386 |   |
| Total                        |   | $      | 186,985 |   |    | $      | 1,855  |        |   | $      | 17,640   |   |   | $      | — |   |   | $      | — |   |   | $ | 206,480 |   |

| December 31, 2010             |   | Performing |    |   | Nonperforming |   |    | Total  |   |
|-------------------------------|--------|------------|---------|--------|---------------|--------|---------|--------|--------|
| Residential real estate loans |   | $          | 123,623 |   |          | $      | 939     |   |   | $ | 124,562 |   |
| Construction                  |   |       | 12,638  |   |          |   | — |   |   | $ | 12,638 |   |
| Consumer loans                |   |       | 13,668  |   |          |   | — |   |   | $ | 13,668 |   |
| Total                         |   | $          | 149,929 |   |          | $      | 939     |   |   | $ | 150,868 |   |

----

----

|                      |   |    |    |   |       |   |   |       |   |   |  Greater than |   |   |    |    |   |             |   |    |   |   |
|---------------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|--------|--------------------|--------|--------|---------|---------|--------|------------------|--------|---------|--------|--------|
|                      |   |    |    |   |       |   |   |       |   |   | 90 Days            |   |   |    |    |   |  Total Past |   |    |   |   |
|                      |   |    |    |   |       |   |   |       |   |   | Past Due           |   |   |    |    |   | Due and          |   |    |   |   |
|                      |   |    |    |   | 31-60 Days |   |   | 61-90 Days |   |   | and still          |   |   | Non-    |    |   | Non-             |   |    | Total  |   |
| December 31, 2010         |   | Current |    |   | Past Due   |   |   | Past Due   |   |   | accruing           |   |   | Accrual |    |   | Accrual          |   |    | Loans  |   |
| Real Estate loans         |   |    |    |   |       |   |   |       |   |   |               |   |   |    |    |   |             |   |    |   |   |
|   Residential   |   | $       | 123,177 |   |       | $      | 407    |       |   | $      | —            |   |   | $       | 39      |   |             | $      | 939     |   |   | $ | 1,385 |   |   | $ | 124,562 |   |
|   Construction  |   |    | 12,622  |   |       |   | 16     |       |   |   | —            |   |   |    | — |   |             |   | — |   |   |   | 16 |   |   |   | 12,638 |   |
|   Commercial    |   |    | 176,981 |   |       |   | 3,047  |       |   |   | 1,478              |   |   |    | — |   |             |   | 2,588   |   |   |   | 7,113 |   |   |   | 184,094 |   |
| Commercial loans          |   |    | 21,858  |   |       |   | 15     |       |   |   | —            |   |   |    | — |   |             |   | 513     |   |   |   | 528 |   |   |   | 22,386 |   |
| Consumer  loans |   |    | 13,642  |   |       |   | 24     |       |   |   | 2                  |   |   |    | — |   |             |   | — |   |   |   | 26 |   |   |   | 13,668 |   |
| Total                     |   | $       | 348,280 |   |       | $      | 3,509  |       |   | $      | 1,480              |   |   | $       | 39      |   |             | $      | 4,040   |   |   | $ | 9,068 |   |   | $ | 357,348 |   |

|                                     |   | Years Ended December 31, |    |
|------------------------------------------|--------|--------------------------|---------|
|                                     |   | 2010                     |    |   | 2009 |   |   | 2008 |   |
|                                     |   | (In Thousands)           |    |
|                                     |   |                     |    |   |   |   |   |   |   |
| Allowance balance at beginning of period |   | $                        | 5,453   |   |   | $ | 4,233 |   |   | $ | 4,081 |   |
| Charge-offs:                             |   |                     |    |   |   |   |   |   |   |   |   |   |
| Commercial and all other                 |   |                     | (85     | ) |   |   | (17 | ) |   |   | (7 | ) |
| Real Estate                              |   |                     | (699    | ) |   |   | (358 | ) |   |   | (465 | ) |
| Consumer                                 |   |                     | (82     | ) |   |   | (139 | ) |   |   | (171 | ) |
| Total                                    |   |                     | (866    | ) |   |   | (514 | ) |   |   | (643 | ) |
| Recoveries:                              |   |                     |    |   |   |   |   |   |   |   |   |   |
| Commercial and all other                 |   |                     | — |   |   |   | 11 |   |   |   | — |   |
| Real Estate                              |   |                     | 2       |   |   |   | 4 |   |   |   | 1 |   |
| Consumer                                 |   |                     | 27      |   |   |   | 34 |   |   |   | 59 |   |
| Total                                    |   |                     | 29      |   |   |   | 49 |   |   |   | 60 |   |
| Provision expense                        |   |                     | 1,000   |   |   |   | 1,685 |   |   |   | 735 |   |
| Allowance balance at end of period       |   | $                        | 5,616   |   |   | $ | 5,453 |   |   | $ | 4,233 |   |

| (In thousands)                                       |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |
|------------------------------------------------------|--------|-------------|---------|--------|-------------|--------|---------|--------------|--------|--------|------------|--------|--------|----------|---------|--------|--------|--------|
|                                                 |   | Residential |    |   | Commercial  |   |    |         |   |   |       |   |   |     |    |   |   |   |
|                                                 |   | Real Estate |    |   | Real Estate |   |    | Construction |   |   | Commercial |   |   | Consumer |    |   | Total  |   |
| December 31, 2010                                    |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |
| Allowance for loan losses:                           |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |
|                                                 |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |
| Ending balance                                       |   | $           | 1,167   |   |        | $      | 3,976   |         |   | $      | 110        |   |   | $        | 171     |   |   | $      | 192 |   |   | $ | 5,616 |   |
|                                                 |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $           | — |   |        | $      | 1,648   |         |   | $      | —    |   |   | $        | — |   |   | $      | — |   |   | $ | 1,648 |   |
| Ending balance collectively evaluated for impairment |   | $           | 1,167   |   |        | $      | 2,328   |         |   | $      | 110        |   |   | $        | 171     |   |   | $      | 192 |   |   | $ | 3,968 |   |
|                                                 |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Total loans:                                         |   |        |    |   |        |   |    |         |   |   |       |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Ending balance                                       |   | $           | 124,562 |   |        | $      | 184,094 |         |   | $      | 12,638     |   |   | $        | 22,386  |   |   | $      | 13,668 |   |   | $ | 357,348 |   |
| Ending balance individually evaluated for impairment |   | $           | — |   |        | $      | 14,239  |         |   | $      | —    |   |   | $        | 513     |   |   | $      | — |   |   | $ | 14,752 |   |
| Ending balance collectively evaluated for impairment |   | $           | 124,562 |   |        | $      | 169,855 |         |   | $      | 12,638     |   |   | $        | 21,873  |   |   | $      | 13,668 |   |   | $ | 342,596 |   |

----

----

|                       |   | 2010           |   |   | 2009   |   |
|----------------------------|--------|----------------|--------|--------|--------|--------|
|                       |   | (In Thousands) |   |
| Land and improvements      |   | $              | 925    |   |   | $      | 925 |   |
| Buildings and improvements |   |           | 7,975  |   |   |   | 7,933 |   |
| Furniture and equipment    |   |           | 5,253  |   |   |   | 5,158 |   |
|                       |   |           | 14,153 |   |   |   | 14,016 |   |
| Accumulated depreciation   |   |           | (9,249 | )      |   |   | (8,827 | ) |
|                       |   | $              | 4,904  |   |   | $      | 5,189 |   |

----

----

|   | 2011       |   | $      | 259   |   |
|--------|------------|--------|--------|-------|--------|
|   | 2012       |   |   | 267   |   |
|   | 2013       |   |   | 269   |   |
|   | 2014       |   |   | 259   |   |
|   | 2015       |   |   | 255   |   |
|   | Thereafter |   |   | 1,796 |   |
|   |       |   | $      | 3,105 |   |

|   | 2011   |   | $      | 107,806 |   |
|--------|--------|--------|--------|---------|--------|
|   | 2012   |   |   | 32,063  |   |
|   | 2013   |   |   | 14,395  |   |
|   | 2014   |   |   | 13,872  |   |
|   | 2015   |   |   | 4,170   |   |
|   |   |   | $      | 172,306 |   |

|                                           |   | 2010           |   |   | 2009   |   |
|------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                           |   | (In Thousands) |   |
|                                           |   |           |   |   |   |   |
| Securities sold under agreements to repurchase |   | $              | 33,110 |   |   | $      | 25,606 |   |
| U.S. Treasury demand notes                     |   |           | 199    |   |   |   | 197 |   |
|                                           |   | $              | 33,309 |   |   | $      | 25,803 |   |

|                                                  |   | Years Ended December 31, |   |
|-------------------------------------------------------|--------|--------------------------|--------|
|                                                  |   | 2010                     |   |   | 2009 |   |
|                                                  |   | (Dollars In Thousands)   |   |
|                                                  |   |                     |   |   |   |   |
| Average balance during the year                       |   | $                        | 26,100 |   |   | $ | 26,402 |   |
| Average interest rate during the year                 |   |                     | .45    | % |   |   | 1.11 | % |
| Maximum month-end balance during the year             |   | $                        | 40,068 |   |   | $ | 35,323 |   |
| Weighted average interest rate at the end of the year |   |                     | .37    | % |   |   | .56 | % |

----

----

|                                        |   | 2010           |    |   | 2009   |   |
|---------------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                        |   | (In Thousands) |    |
| Notes with the FHLB:                        |   |           |    |   |   |   |
| Fixed rate note due September 2010 at 3.53% |   | $              | — |   |   | $      | 5,000 |   |
| Convertible note due January 2011 at 5.24%  |   |           | 3,000   |   |   |   | 3,000 |   |
| Convertible note due August 2011 at 2.69%   |   |           | 10,000  |   |   |   | 10,000 |   |
| Fixed rate note due September 2011 at 4.06% |   |           | 5,000   |   |   |   | 5,000 |   |
| Convertible note due October 2012 at 4.37%  |   |           | 5,000   |   |   |   | 5,000 |   |
| Convertible note due May 2013 at 3.015%     |   |           | 5,000   |   |   |   | 5,000 |   |
| Convertible note due January 2017 at 4.71%  |   |           | 10,000  |   |   |   | 10,000 |   |
|                                        |   | $              | 38,000  |   |   | $      | 43,000 |   |

|   | 2011       |   |   | 18,000  |   |
|--------|------------|--------|--------|---------|--------|
|   | 2012       |   |   | 5,000   |   |
|   | 2013       |   |   | 5,000   |   |
|   | 2014       |   |   | — |   |
|   | Thereafter |   |   | 10,000  |   |
|   |       |   | $      | 38,000  |   |

----

----

|                            |   | 2010   |    |   | 2009   |   |
|---------------------------------|--------|--------|---------|--------|--------|--------|
| Allocated shares                |   |   | 138,556 |   |   |   | 158,903 |   |
| Shares released from allocation |   |   | 52,353  |   |   |   | 32,006 |   |
|                            |   |   |    |   |   |   |   |   |
| Total ESOP shares               |   |   | 190,909 |   |   |   | 190,909 |   |

|     |   | Years Ended December 31, |   |
|----------|--------|--------------------------|--------|
|     |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
|     |   | (In Thousands)           |   |
| Current  |   | $                        | 2,867  |   |   | $ | 3,031 |   |   | $ | 2,800 |   |
| Deferred |   |                     | (205   | ) |   |   | (749 | ) |   |   | 36 |   |
|     |   | $                        | 2,662  |   |   | $ | 2,282 |   |   | $ | 2,836 |   |

----

----

|                                                             |   | Percentage of Income     |   |
|------------------------------------------------------------------|--------|--------------------------|--------|
|                                                             |   | before Income Taxes      |   |
|                                                             |   | Years Ended December 31, |   |
|                                                             |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Tax at statutory rates                                           |   |                     | 34.0   | % |   |   | 34.0 | % |   |   | 34.0 | % |
| Tax exempt interest income, net of interest expense disallowance |   |                     | (6.2   | ) |   |   | (5.0 | ) |   |   | (3.9 | ) |
| Incentive stock options                                          |   |                     | 0.5    |   |   |   | 0.4 |   |   |   | 0.5 |   |
| Earnings on life insurance                                       |   |                     | (1.1   | ) |   |   | (4.1 | ) |   |   | (0.7 | ) |
| Other                                                            |   |                     | (0.5   | ) |   |   | (0.9 | ) |   |   | (0.1 | ) |
|                                                             |   |                     | 26.7   | % |   |   | 24.4 | % |   |   | 29.8 | % |

|                                       |   | 2010           |   |   | 2009   |   |
|--------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                       |   | (In Thousands) |   |
| Deferred tax assets:                       |   |           |   |   |   |   |
| Allowance for loan losses                  |   | $              | 1,789  |   |   | $      | 1,682 |   |
| Deferred compensation                      |   |           | 491    |   |   |   | 482 |   |
| Intangible assets                          |   |           | 5      |   |   |   | 26 |   |
| Other                                      |   |           | 191    |   |   |   | 122 |   |
| Foreclosed real estate valuation allowance |   |           | 123    |   |   |   | 126 |   |
|                                       |   |           |   |   |   |   |   |   |
| Total Deferred Tax Assets                  |   |           | 2,599  |   |   |   | 2,438 |   |
|                                       |   |           |   |   |   |   |   |   |
| Deferred tax liabilities:                  |   |           |   |   |   |   |   |   |
| Premises and equipment                     |   |           | 276    |   |   |   | 268 |   |
| Deferred loan fees                         |   |           | 225    |   |   |   | 277 |   |
| Net unrealized gains on securities         |   |           | 591    |   |   |   | 1,080 |   |
|                                       |   |           |   |   |   |   |   |   |
| Total Deferred Tax Liabilities             |   |           | 1,092  |   |   |   | 1,625 |   |
|                                       |   |           |   |   |   |   |   |   |
| Net Deferred Tax Asset                     |   | $              | 1,507  |   |   | $      | 813 |   |

----

----

|                                     |   | Actual |   |   | For Capital Adequacy Purposes |   |   | To Be Well Capitalizedunder Prompt Corrective Action |   |
|------------------------------------------|--------|--------|--------|--------|-------------------------------|--------|--------|------------------------------------------------------|--------|
|                                     |   | Amount |   |   | Ratio                         |   |   | Amount                                               |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                     |   |   |   |   |                          |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2010:           |   |   |   |   |                          |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $      | 69,713 |   |                          |   | 19.23  | %                                                    |   | $ | ≥28,995 |   |   |   | ≥8.00 | % |   | $ | ≥36,243 |   |   |   | ≥10.00 | % |
| Tier 1 capital (to risk-weighted assets) |   |   | 65,027 |   |                          |   | 17.94  |                                                 |   |   | ≥14,497 |   |   |   | ≥4.00 |   |   |   | ≥21,746 |   |   |   | ≥6.00 |   |
| Tier 1 capital (to average assets)       |   |   | 65,027 |   |                          |   | 12.14  |                                                 |   |   | ≥21,432 |   |   |   | ≥4.00 |   |   |   | ≥26,790 |   |   |   | ≥5.00 |   |
|                                     |   |   |   |   |                          |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2009:           |   |   |   |   |                          |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $      | 65,197 |   |                          |   | 17.85  | %                                                    |   | $ | ≥29,227 |   |   |   | ≥8 .00 | % |   | $ | ≥36,534 |   |   |   | ≥10.00 | % |
| Tier 1 capital (to risk-weighted assets) |   |   | 60,469 |   |                          |   | 16.55  |                                                 |   |   | ≥14,614 |   |   |   | ≥4.00 |   |   |   | ≥21,920 |   |   |   | ≥6.00 |   |
| Tier 1 capital (to average assets)       |   |   | 60,469 |   |                          |   | 11.53  |                                                 |   |   | ≥20,974 |   |   |   | ≥4.00 |   |   |   | ≥26,217 |   |   |   | ≥5.00 |   |

----

----

|                           |   |    |    |   | 2010     |   |    |      |   |   |    |   |   | 2009     |    |   |      |          |   |    |   |   | 2008     |   |    |      |    |
|--------------------------------|--------|---------|---------|--------|----------|--------|---------|-----------|--------|--------|---------|--------|--------|----------|---------|--------|-----------|---------------|--------|---------|--------|--------|----------|--------|---------|-----------|---------|
|                           |   |    |    |   | Weighted |   |    |      |   |   |    |   |   | Weighted |    |   |      |          |   |    |   |   | Weighted |   |    |      |    |
|                           |   |    |    |   | Average  |   |    | Average   |   |   |    |   |   | Average  |    |   | Average   |          |   |    |   |   | Average  |   |    | Average   |    |
|                           |   |    |    |   | Exercise |   |    | Intrinsic |   |   |    |   |   | Exercise |    |   | Intrinsic |          |   |    |   |   | Exercise |   |    | Intrinsic |    |
|                           |   | Options |    |   | Price    |   |    | Value     |   |   | Options |   |   | Price    |    |   | Value     |          |   | Options |   |   | Price    |   |    | Value     |    |
|                           |   |    |    |   |     |   |    |      |   |   |    |   |   |     |    |   |      |          |   |    |   |   |     |   |    |      |    |
| Outstanding, beginning of year |   |    | 170,915 |   |     | $      | 28.07   |      |   |   |    |   |   | 176,443  |    |   | $         | 25.78         |   |    |   |   |     |   | 180,422 |      |    | $ | 24.04 |   |   |   |   |
| Granted                        |   |    | 28,000  |   |     |   | 27.74   |      |   |   |    |   |   | 27,000   |    |   |      | 28.60         |   |    |   |   |     |   | 24,000  |      |    |   | 27.50 |   |   |   |   |
| Exercised                      |   |    | (9,276  | )      |     |   | 17.68   |      |   |   |    |   |   | (32,528  | )       |   |      | 15.83         |   |    |   |   |     |   | (27,979 | )         |    |   | 14.98 |   |   |   |   |
| Forfeited                      |   |    | — |   |     |   | — |      |   |   |    |   |   | —  |    |   |      |  — |   |    |   |   |     |   | — |      |    |   |  — |   |   |   |   |
|                           |   |    |    |   |     |   |    |      |   |   |    |   |   |     |    |   |      |          |   |    |   |   |     |   |    |      |    |   |   |   |   |   |   |
| Outstanding, end of year       |   |    | 189,639 |   |     | $      | 28.52   |      |   | $      | 146,361 |   |   |     | 170,915 |   |      | $             | 28.07  |    |   | $      | 286,464  |   |    |      | 176,443 |   |   | $ | 25.95 |   |   | $ | 273,487 |   |
|                           |   |    |    |   |     |   |    |      |   |   |    |   |   |     |    |   |      |          |   |    |   |   |     |   |    |      |    |   |   |   |   |   |   |   |   |   |
| Exercisable, end of year       |   |    | 161,639 |   |     | $      | 28.66   |      |   | $      | 145,471 |   |   |     | 146,915 |   |      |          | 27.98  |    |   |   | 259,461  |   |    |      |    |   |   |   |   |   |   |   |   |   |

|                                           |   | Years Ended December 31, |   |
|------------------------------------------------|--------|--------------------------|--------|
|                                           |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Dividend yield                                 |   |                     | 3.04   | % |   |   | 2.89 | % |   |   | 2.79 | % |
| Expected life                                  |   | 7 years                  |   |   | 7 years |   |   | 7 years |   |
| Expected volatility                            |   |                     | 27.18  | % |   |   | 27.39 | % |   |   | 25.08 | % |
| Risk-free interest rate                        |   |                     | 2.72   | % |   |   | 3.11 | % |   |   | 2.01 | % |
| Weighted average fair value of options granted |   | $                        | 6.12   |   |   | $ | 6.77 |   |   | $ | 5.43 |   |

----

----

|   |   | Options Outstanding |    |   | Average Exercise Price |   |   | Remaining Life, Years |   |   | Options Exercisable |   |   | Average Exercise Price |    |
|--------|--------|---------------------|---------|--------|------------------------|--------|--------|-----------------------|--------|--------|---------------------|--------|--------|------------------------|---------|
|   |   |                |    |   |                   |   |   |                  |   |   |                |   |   |                   |    |
|   |   |                | 1,575   |   |                   | $      | 16.98  |                  |   |   | 1.0                 |   |   |                   | 1,575   |   |   | $ | 16.98 |   |
|   |   |                | 6,298   |   |                   |   | 19.05  |                  |   |   | 2.0                 |   |   |                   | 6,298   |   |   |   | 19.05 |   |
|   |   |                | 17,616  |   |                   |   | 23.95  |                  |   |   | 3.0                 |   |   |                   | 17,616  |   |   |   | 23.95 |   |
|   |   |                | 20,475  |   |                   |   | 30.00  |                  |   |   | 4.0                 |   |   |                   | 20,475  |   |   |   | 30.00 |   |
|   |   |                | 24,675  |   |                   |   | 30.38  |                  |   |   | 5.3                 |   |   |                   | 24,675  |   |   |   | 30.38 |   |
|   |   |                | 22,000  |   |                   |   | 31.50  |                  |   |   | 6.0                 |   |   |                   | 22,000  |   |   |   | 31.50 |   |
|   |   |                | 22,000  |   |                   |   | 31.25  |                  |   |   | 7.0                 |   |   |                   | 22,000  |   |   |   | 31.25 |   |
|   |   |                | 23,000  |   |                   |   | 27.50  |                  |   |   | 8.0                 |   |   |                   | 23,000  |   |   |   | 27.50 |   |
|   |   |                | 1,000   |   |                   |   | 28.90  |                  |   |   | 8.3                 |   |   |                   | 1,000   |   |   |   | 28.90 |   |
|   |   |                | 23,000  |   |                   |   | 28.59  |                  |   |   | 9.0                 |   |   |                   | 23,000  |   |   |   | 28.59 |   |
|   |   |                | 1,000   |   |                   |   | 26.88  |                  |   |   | 9.2                 |   |   |                   | — |   |   |   | — |   |
|   |   |                | 27,000  |   |                   |   | 27.77  |                  |   |   | 10.0                |   |   |                   | — |   |   |   | — |   |
| Total  |   |                | 189,639 |   |                   | $      | 28.52  |                  |   |   | 6.6                 |   |   |                   | 161,639 |   |   | $ | 28.66 |   |

|                                                                                                 |   | Years Ended December 31,              |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                 |   | 2010                                  |   |   | 2009 |   |   | 2008 |   |
|                                                                                                 |   | (In Thousands, Except per Share Data) |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |
| Numerator, net income                                                                                |   | $                                     | 7,313  |   |   | $ | 7,063 |   |   | $ | 6,677 |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                         |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per share, weighted average shares                                    |   |                                  | 2,762  |   |   |   | 2,750 |   |   |   | 2,740 |   |
| Effect of dilutive securities, employee stock options                                                |   |                                  | 4      |   |   |   | 16 |   |   |   | 29 |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Denominator for diluted earnings per share, adjusted weighted average shares and assumed conversions |   |                                  | 2,766  |   |   |   | 2,766 |   |   |   | 2,769 |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per common share                                                                      |   | $                                     | 2.65   |   |   | $ | 2.57 |   |   | $ | 2.44 |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per common share                                                                    |   | $                                     | 2.64   |   |   | $ | 2.55 |   |   | $ | 2.41 |   |

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|                                       |   | December 31,   |   |
|--------------------------------------------|--------|----------------|--------|
|                                       |   | 2010           |   |   | 2009 |   |
|                                       |   | (In Thousands) |   |
|                                       |   |           |   |   |   |   |
| Commitments to grant loans                 |   | $              | 21,448 |   |   | $ | 17,713 |   |
| Unfunded commitments under lines of credit |   |           | 30,311 |   |   |   | 36,809 |   |
| Standby letters of credit                  |   |           | 3,605  |   |   |   | 3,679 |   |
|                                       |   | $              | 55,364 |   |   | $ | 58,201 |   |

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| 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 in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.            |
|     |                                                                                                                                                                             |
| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |

|                                   |   | Fair Value Measurement Reporting Date using |    |
|----------------------------------------|--------|---------------------------------------------|---------|
| Description                            |   | Total                                       |    |   | (Level 1)Quoted Prices in Active Markets for Identical Assets |   |   | (Level 2)Significant Other Observable Inputs |   |   | (Level 3)Significant Unobservable Inputs |   |
| December 31, 2010                      |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Available for Sale:                    |   |                                        |    |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies               |   | $                                           | 30,268  |   |   | $ | — |   |   | $ | 30,268 |   |   | $ | — |   |
| States and political subdivisions      |   |                                        | 49,766  |   |   |   | — |   |   |   | 49,766 |   |   |   | — |   |
| Corporate obligations                  |   |                                        | 4,249   |   |   |   | — |   |   |   | 4,249 |   |   |   | — |   |
| Mortgage-backed securities -           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |                                        | 60,928  |   |   |   | — |   |   |   | 60,928 |   |   |   | — |   |
| Equity securities - financial services |   |                                        | 604     |   |   |   | 604 |   |   |   | — |   |   |   | — |   |
| Total available for sale               |   | $                                           | 145,815 |   |   | $ | 604 |   |   | $ | 145,211 |   |   | $ | — |   |
|                                   |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                      |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available for Sale:                    |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies               |   | $                                           | 39,772  |   |   | $ | — |   |   | $ | 39,772 |   |   | $ | — |   |
| States and political subdivisions      |   |                                        | 31,635  |   |   |   | — |   |   |   | 31,635 |   |   |   | — |   |
| Corporate obligations                  |   |                                        | 5,240   |   |   |   | — |   |   |   | 5,240 |   |   |   | — |   |
| Mortgage-backed securities -           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| government sponsored entities          |   |                                        | 53,154  |   |   |   | — |   |   |   | 53,154 |   |   |   | — |   |
| Equity securities - financial services |   |                                        | 776     |   |   |   | 776 |   |   |   | — |   |   |   | — |   |
| Total available for sale               |   | $                                           | 130,577 |   |   | $ | 776 |   |   | $ | 129,801 |   |   | $ | — |   |

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----

|                         |   | Fair Value Measurement Reporting Date using |   |
|------------------------------|--------|---------------------------------------------|--------|
| Description                  |   | Total                                       |   |   | (Level 1)Quoted Prices in Active Markets for Identical Assets |   |   | (Level 2)Significant Other Observable Inputs |   |   | (Level 3)Significant Unobservable Inputs |   |
| December 31, 2010            |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Impaired Loans               |   | $                                           | 13,104 |   |   | $ | — |   |   | $ | 7,038 |   |   | $ | 6,066 |   |
| Foreclosed real estate owned |   |                                        | 748    |   |   |   | — |   |   |   | 748 |   |   |   | — |   |
|                         |   | $                                           | 13,852 |   |   | $ | — |   |   | $ | 7,786 |   |   | $ | 6,066 |   |
| December 31, 2009            |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired Loans               |   | $                                           | 7,991  |   |   | $ | — |   |   | $ | 3,797 |   |   | $ | 4,194 |   |
| Foreclosed real estate owned |   |                                        | 392    |   |   |   | — |   |   |   | 392 |   |   |   | — |   |
|                         |   | $                                           | 8,383  |   |   | $ | — |   |   | $ | 4,189 |   |   | $ | 4,194 |   |

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|                                                                                 |   | December 31, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                                                                 |   | Carrying          |    |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                                                                 |   | Amount            |    |   | Value             |   |   | Amount |   |   | Value |   |
|                                                                                 |   | (In Thousands)    |    |
| Financial assets:                                                                    |   |              |    |   |              |   |   |   |   |   |   |   |
| Cash and due from banks, interest bearing deposits with banks and federal funds sold |   | $                 | 16,625  |   |              | $      | 16,625 |   |   | $ | 17,355 |   |   | $ | 17,355 |   |
| Securities                                                                           |   |              | 145,985 |   |              |   | 145,994 |   |   |   | 131,285 |   |   |   | 131,299 |   |
| Loans receivable, net                                                                |   |              | 351,239 |   |              |   | 358,873 |   |   |   | 358,021 |   |   |   | 368,180 |   |
| Mortgage servicing rights                                                            |   |              | 250     |   |              |   | 274 |   |   |   | 179 |   |   |   | 179 |   |
| Investment in FHLB stock                                                             |   |              | 3,361   |   |              |   | 3,361 |   |   |   | 3,538 |   |   |   | 3,538 |   |
| Accrued interest receivable                                                          |   |              | 2,166   |   |              |   | 2,166 |   |   |   | 2,200 |   |   |   | 2,200 |   |
|                                                                                 |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                               |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                             |   |              | 393,865 |   |              |   | 395,157 |   |   |   | 391,473 |   |   |   | 392,445 |   |
| Short-term borrowings                                                                |   |              | 33,309  |   |              |   | 33,309 |   |   |   | 25,803 |   |   |   | 25,803 |   |
| Other borrowings                                                                     |   |              | 38,000  |   |              |   | 40,413 |   |   |   | 43,000 |   |   |   | 45,591 |   |
| Accrued interest payable                                                             |   |              | 1,536   |   |              |   | 1,536 |   |   |   | 2,057 |   |   |   | 2,057 |   |
|                                                                                 |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance sheet financial instruments:                                             |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit and outstanding letters of credit                       |   |              | — |   |              |   | — |   |   |   | — |   |   |   | — |   |

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| BALANCE SHEETS                                                                    |   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   |   |   |   | December 31, |   |
|                                                                              |   |   |   |   | 2010 |   |   | 2009 |   |
|                                                                              |   |   |   |   | (In Thousands) |   |
| ASSETS                                                                            |   |
| Cash on deposit in bank subsidiary                                                |   |   |   |   | $ | 346 |   |   | $ | 697 |   |
| Securities available for sale                                                     |   |   |   |   |   | 212 |   |   |   | 359 |   |
| Investment in bank subsidiary                                                     |   |   |   |   |   | 66,163 |   |   |   | 62,571 |   |
| Other assets                                                                      |   |   |   |   |   | 1,812 |   |   |   | 1,620 |   |
|                                                                              |   |   |   |   | $ | 68,533 |   |   | $ | 65,247 |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                        |   |
| Liabilities                                                                       |   |   |   |   | $ | 835 |   |   | $ | 776 |   |
| Stockholders’ equity                                                        |   |   |   |   |   | 67,698 |   |   |   | 64,471 |   |
|                                                                              |   |   |   |   | $ | 68,533 |   |   | $ | 65,247 |   |
| STATEMENTS OF INCOME                                                              |   |
|                                                                              |   | Years Ended December 31, |   |
|                                                                              |   | 2010 |   |   |   | 2009 |   |   |   | 2008 |   |
|                                                                              |   | (In Thousands) |   |
| Income:                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Dividends from bank subsidiary                                                    |   | $ | 3,120 |   |   | $ | 3,005 |   |   | $ | 3,990 |   |
| Other interest income                                                             |   |   | 17 |   |   |   | 19 |   |   |   | 25 |   |
| Net realized gain (loss) on sales of securities                                   |   |   | 66 |   |   |   | (134 | ) |   |   | (62 | ) |
|                                                                              |   |   | 3,203 |   |   |   | 2,890 |   |   |   | 3,953 |   |
| Expenses                                                                          |   |   | 323 |   |   |   | 176 |   |   |   | 164 |   |
|                                                                              |   |   | 2,880 |   |   |   | 2,714 |   |   |   | 3,789 |   |
| Income tax benefit                                                                |   |   | (82 | ) |   |   | (99 | ) |   |   | (68 | ) |
|                                                                              |   |   | 2,962 |   |   |   | 2,813 |   |   |   | 3,857 |   |
| Equity in undistributed earnings of subsidiary                                    |   |   | 4,351 |   |   |   | 4,250 |   |   |   | 2,820 |   |
| Net Income                                                                        |   | $ | 7,313 |   |   | $ | 7,063 |   |   | $ | 6,677 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS OF CASH FLOWS                                                          |   |
|                                                                              |   | Years Ended December 31, |   |
|                                                                              |   |   | 2010 |   |   |   | 2009 |   |   |   | 2008 |   |
|                                                                              |   | (In Thousands) |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                        |   | $ | 7,313 |   |   | $ | 7,063 |   |   | $ | 6,677 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Undistributed earnings of bank subsidiary                                         |   |   | (4,351 | ) |   |   | (4,250 | ) |   |   | (2,820 | ) |
| Net (gains) losses on sales of securities                                         |   |   | (66 | ) |   |   | 134 |   |   |   | — |   |
| Other, net                                                                        |   |   | (144 | ) |   |   | (300 | ) |   |   | (190 | ) |
| Net Cash Provided by Operating Activities                                         |   |   | 2,752 |   |   |   | 2,647 |   |   |   | 3,667 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of securities                                                  |   |   | 166 |   |   |   | 22 |   |   |   | 17 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Cash Provided by Investing Activities                                         |   |   | 166 |   |   |   | 22 |   |   |   | 17 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options exercised                                                           |   |   | 163 |   |   |   | 517 |   |   |   | 420 |   |
| Tax benefit of stock options exercised                                            |   |   | 34 |   |   |   | 164 |   |   |   | 134 |   |
| ESOP purchase of shares from treasury stock                                       |   |   | 156 |   |   |   | 166 |   |   |   | 153 |   |
| Acquisition of treasury stock                                                     |   |   | (529 | ) |   |   | (68 | ) |   |   | (1,583 | ) |
| Cash dividends paid                                                               |   |   | (3,093 | ) |   |   | (2,967 | ) |   |   | (2,740 | ) |
| Net Cash Used in Financing Activities                                             |   |   | (3,269 | ) |   |   | (2,188 | ) |   |   | (3,616 | ) |
| Net Increase (Decrease) in Cash and Cash Equivalents                              |   |   | (351 | ) |   |   | 481 |   |   |   | 68 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - Beginning                                             |   |   | 697 |   |   |   | 216 |   |   |   | 148 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents - Ending                                                |   | $ | 346 |   |   | $ | 697 |   |   | $ | 216 |   |

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| Boenning & Scattergood, Inc.  | Janney Montgomery Scott, LLC  |
|-----------------------------------|-------------------------------|
| West Conshohocken, PA             | Scranton, PA  18503 |
| 800-496-1170                      | 800-638-4417                  |
|                              |                          |
| RBC Capital Markets               | Stifel Nicolaus               |
| Philadelphia, PA  19103 | St. Louis, MO                 |
| 888-848-4677                      | 314-342-2000                  |

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