----

| LETTER TO SHAREHOLDERS                                                 | 1      |
|------------------------------------------------------------------------|--------|
|                                                                   |   |
| MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING | 2      |
|                                                                   |   |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                | 3      |
|                                                                   |   |
| CONSOLIDATED FINANCIAL STATEMENTS                                      |   |
|                                                                   |   |
| CONSOLIDATED BALANCE SHEETS                                            | 4      |
|                                                                   |   |
| CONSOLIDATED STATEMENTS OF INCOME                                      | 5      |
|                                                                   |   |
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY       | 6      |
|                                                                   |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                  | 7      |
|                                                                   |   |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                             | 8      |
|                                                                   |   |
| COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA                         | 37     |
|                                                                   |   |
| MANAGEMENT’S DISCUSSION AND ANALYSIS                             | 38     |
|                                                                   |   |
| COMPANY INFORMATION                                                    | 50     |

----

|   | · | Director fees were cut. |
|--------|--------|-------------------------|

|   | · | The incentive compensation program was suspended. |
|--------|--------|---------------------------------------------------|

|   | · | Salaries were frozen since the beginning of 2010. |
|--------|--------|---------------------------------------------------|

|   | · | Staffing was reduced. |
|--------|--------|-----------------------|

|   | · | Conferences were eliminated. |
|--------|--------|------------------------------|

|   | · | Other expenses such as marketing were reduced. |
|--------|--------|------------------------------------------------|

|   | · | Lenders were reassigned from some or all of their business development duties to devote time to work with struggling borrowers to get them through the crisis. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Edward J. McKeon        | Cynthia A. Mahl              |
|-------------------------|------------------------------|
| President and           | Executive Vice President and |
| Chief Executive Officer | Chief Financial Officer      |

----

|   | /s/ Crowe Horwath LLP |
|--------|-----------------------|

----

| WESTERN RESERVE BANCORP, INC. |
|-------------------------------|
| CONSOLIDATED BALANCE SHEETS   |
| December 31, 2010 and 2009    |
|                          |

|                                                                |   | December 31, |        |
|---------------------------------------------------------------------|--------|--------------|-------------|
|                                                                |   | 2010         |        |   | 2009 |   |
| ASSETS                                                              |   |         |        |   |   |   |
| Cash and due from financial institutions                            |   | $            | 2,343,069   |   |   | $ | 2,657,830 |   |
| Interest-bearing deposits in other financial institutions           |   |         | 11,923,425  |   |   |   | 15,005,771 |   |
| Federal funds sold                                                  |   |         | 230,000     |   |   |   | 515,000 |   |
| Cash and cash equivalents                                           |   |         | 14,496,494  |   |   |   | 18,178,601 |   |
|                                                                |   |         |        |   |   |   |   |   |
| Securities available for sale                                       |   |         | 12,993,197  |   |   |   | 10,019,225 |   |
| Loans held for sale                                                 |   |         | 236,000     |   |   |   | 690,000 |   |
| Loans, net of allowance of $4,544,316 and $2,316,715                |   |         | 154,960,478 |   |   |   | 164,860,130 |   |
| Restricted stock                                                    |   |         | 966,100     |   |   |   | 826,900 |   |
| Other real estate owned                                             |   |         | 991,450     |   |   |   | 1,067,814 |   |
| Premises and equipment, net                                         |   |         | 1,029,685   |   |   |   | 950,848 |   |
| Bank owned life insurance                                           |   |         | 2,434,183   |   |   |   | 2,334,187 |   |
| Prepaid Federal Deposit Insurance Corporation premiums              |   |         | 618,005     |   |   |   | 971,938 |   |
| Accrued interest receivable and other assets                        |   |         | 2,838,804   |   |   |   | 2,033,310 |   |
|                                                                |   | $            | 191,564,396 |   |   | $ | 201,932,953 |   |
|                                                                |   |         |        |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                |   |         |        |   |   |   |   |   |
| Deposits                                                            |   |         |        |   |   |   |   |   |
| Noninterest-bearing                                                 |   | $            | 22,934,531  |   |   | $ | 22,789,030 |   |
| Interest-bearing                                                    |   |         | 148,704,510 |   |   |   | 155,453,259 |   |
| Total deposits                                                      |   |         | 171,639,041 |   |   |   | 178,242,289 |   |
| Federal Home Loan Bank advances                                     |   |         | 1,900,000   |   |   |   | 3,400,000 |   |
| Accrued interest payable and other liabilities                      |   |         | 688,299     |   |   |   | 807,324 |   |
| Total Liabilities                                                   |   |         | 174,227,340 |   |   |   | 182,449,613 |   |
|                                                                |   |         |        |   |   |   |   |   |
| Shareholders' Equity                                                |   |         |        |   |   |   |   |   |
| Cumulative preferred stock, no par value, $1,000 liquidation value: |   |         |        |   |   |
| Series A, fixed rate, 4,700 shares authorized and                   |   |         |        |   |   |   |   |   |
| issued at December 31, 2010 and 2009                                |   |         | 4,700,000   |   |   |   | 4,700,000 |   |
| Discount on Series A preferred stock                                |   |         | (204,381    | ) |   |   | (264,939 | ) |
| Series B, fixed rate, 235 shares authorized and                     |   |         |        |   |   |   |   |   |
| issued at December 31, 2010 and 2009                                |   |         | 235,000     |   |   |   | 235,000 |   |
| Premium on Series B preferred stock                                 |   |         | 19,941      |   |   |   | 25,850 |   |
| Common stock, no par value, $1 stated value, 1,500,000 shares       |   |         |        |   |   |
| authorized, 586,084 and 584,727 shares issued and                   |   |         |        |   |   |   |   |   |
| outstanding as of December 31, 2010 and 2009                        |   |         | 586,084     |   |   |   | 584,727 |   |
| Additional paid-in capital                                          |   |         | 9,981,912   |   |   |   | 9,933,257 |   |
| Retained earnings                                                   |   |         | 1,809,618   |   |   |   | 4,036,186 |   |
| Accumulated other comprehensive income                              |   |         | 208,882     |   |   |   | 233,259 |   |
| Total Shareholders' Equity                                          |   |         | 17,337,056  |   |   |   | 19,483,340 |   |
|                                                                |   | $            | 191,564,396 |   |   | $ | 201,932,953 |   |

----

|                                                |   | Year ended December 31 |       |
|-----------------------------------------------------|--------|------------------------|------------|
|                                                |   | 2010                   |       |   | 2009 |   |
| Interest and dividend income                        |   |                   |       |   |   |   |
| Loans, including fees                               |   | $                      | 8,527,328  |   |   | $ | 8,186,473 |   |
| Taxable securities                                  |   |                   | 256,014    |   |   |   | 280,388 |   |
| Tax exempt securities                               |   |                   | 180,880    |   |   |   | 171,968 |   |
| Dividends on restricted stock                       |   |                   | 44,802     |   |   |   | 38,602 |   |
| Federal funds sold and other short term funds       |   |                   | 48,749     |   |   |   | 56,742 |   |
|                                                |   |                   | 9,057,773  |   |   |   | 8,734,173 |   |
| Interest expense                                    |   |                   |       |   |   |   |   |   |
| Deposits                                            |   |                   | 2,122,919  |   |   |   | 2,628,106 |   |
| Federal Home Loan Bank advances                     |   |                   | 84,909     |   |   |   | 152,699 |   |
|                                                |   |                   | 2,207,828  |   |   |   | 2,780,805 |   |
| Net interest income                                 |   |                   | 6,849,945  |   |   |   | 5,953,368 |   |
|                                                |   |                   |       |   |   |   |   |   |
| Provision for loan losses                           |   |                   | 4,912,609  |   |   |   | 885,400 |   |
|                                                |   |                   |       |   |   |   |   |   |
| Net interest income after provision for loan losses |   |                   | 1,937,336  |   |   |   | 5,067,968 |   |
|                                                |   |                   |       |   |   |   |   |   |
| Noninterest income                                  |   |                   |       |   |   |   |   |   |
| Service charges on deposit accounts                 |   |                   | 192,302    |   |   |   | 205,117 |   |
| Net gains on sales of loans                         |   |                   | 123,472    |   |   |   | 26,200 |   |
| Other                                               |   |                   | 321,276    |   |   |   | 263,020 |   |
|                                                |   |                   | 637,050    |   |   |   | 494,337 |   |
| Noninterest expense                                 |   |                   |       |   |   |   |   |   |
| Salaries and employee benefits                      |   |                   | 2,462,843  |   |   |   | 2,542,335 |   |
| Occupancy and equipment                             |   |                   | 858,723    |   |   |   | 882,549 |   |
| Federal deposit insurance                           |   |                   | 377,983    |   |   |   | 363,637 |   |
| Data processing                                     |   |                   | 443,670    |   |   |   | 388,820 |   |
| Professional fees                                   |   |                   | 222,521    |   |   |   | 216,883 |   |
| Taxes other than income and payroll                 |   |                   | 194,740    |   |   |   | 188,676 |   |
| Directors' fees                                     |   |                   | 154,135    |   |   |   | 144,650 |   |
| Collection and other real estate owned              |   |                   | 301,088    |   |   |   | 182,987 |   |
| Marketing and advertising                           |   |                   | 98,207     |   |   |   | 94,212 |   |
| Community relations and contributions               |   |                   | 56,816     |   |   |   | 68,204 |   |
| Other                                               |   |                   | 416,180    |   |   |   | 329,866 |   |
|                                                |   |                   | 5,586,906  |   |   |   | 5,402,819 |   |
| Income (loss) before income taxes                   |   |                   | (3,012,520 | ) |   |   | 159,486 |   |
|                                                |   |                   |       |   |   |   |   |   |
| Income tax (benefit) expense                        |   |                   | (1,096,751 | ) |   |   | (29,734 | ) |
| Net income (loss)                                   |   | $                      | (1,915,769 | ) |   | $ | 189,220 |   |
|                                                |   |                   |       |   |   |   |   |   |
| Preferred stock dividends and amortization, net     |   |                   | 310,799    |   |   |   | 194,249 |   |
| Net income (loss) available to common shareholders  |   | $                      | (2,226,568 | ) |   | $ | (5,029 | ) |
|                                                |   |                   |       |   |   |   |   |   |
| Earnings (loss) per common share:                   |   |                   |       |   |   |   |   |   |
| Basic                                               |   | $                      | (3.80      | ) |   | $ | (0.01 | ) |
| Diluted                                             |   | $                      | (3.80      | ) |   | $ | (0.01 | ) |
|                                                |   |                   |       |   |   |   |   |   |
| Average shares outstanding (basic)                  |   |                   | 585,283    |   |   |   | 584,017 |   |
| Average shares outstanding (diluted)                |   |                   | 585,283    |   |   |   | 584,017 |   |

----

| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY |
|------------------------------------------------------------------|
| For the years ended December 31, 2010 and 2009                   |
|                                                        |

|                              |   |            |      |   |   |   |    |       |   |   |      |   |   | Accumulated   |       |   |          |   |
|-----------------------------------|--------|-----------------|-----------|--------|--------|--------|---------|------------|--------|--------|-----------|--------|--------|---------------|------------|--------|---------------|--------|
|                              |   |            |      |   |   |   |    | Additional |   |   |      |   |   | Other         |       |   | Total         |   |
|                              |   | Preferred       |      |   | Common |   |    | Paid-In    |   |   | Retained  |   |   | Comprehensive |       |   | Shareholders' |   |
|                              |   | Stock, net |      |   | Stock  |   |    | Capital    |   |   | Earnings  |   |   | Income        |       |   | Equity        |   |
| Balance, January 1, 2009          |   | $               | -         |   |   | $      | 583,330 |       |   | $      | 9,912,293 |   |   | $             | 4,041,215  |   |          | $      | 173,882 |   |   | $ | 14,710,720 |   |
|                              |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Comprehensive income:             |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Net income (loss)                 |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | 189,220    |   |          |   | - |   |   |   | 189,220 |   |
| Change in unrealized gain on      |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| securities available for sale,    |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| net of tax                        |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | -          |   |          |   | 59,377 |   |   |   | 59,377 |   |
| Total comprehensive income        |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   | 248,597 |   |
| Stock based compensation expense: |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |
| Stock options recognized over     |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| the vesting period                |   |            | -         |   |   |   | -       |       |   |   | 2,085     |   |   |          | -          |   |          |   | - |   |   |   | 2,085 |   |
| Common stock issued               |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| (1,397 shares) under Employee     |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Stock Purchase Plan (ESPP)        |   |            | -         |   |   |   | 1,397   |       |   |   | 18,879    |   |   |          | -          |   |          |   | - |   |   |   | 20,276 |   |
| Senior preferred stock issued     |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| (4,700 shares Series A), net      |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| of offering costs                 |   |            | 4,397,213 |   |   |   | -       |       |   |   | -         |   |   |          | -          |   |          |   | - |   |   |   | 4,397,213 |   |
| Accretion of discount on          |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Series A preferred stock          |   |            | 37,848    |   |   |   | -       |       |   |   | -         |   |   |          | (37,848    | )      |          |   | - |   |   |   | - |   |
| Preferred stock issued            |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| (235 shares Series B)             |   |            | 264,543   |   |   |   | -       |       |   |   | -         |   |   |          | -          |   |          |   | - |   |   |   | 264,543 |   |
| Amortization of premium on        |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Series B preferred stock          |   |            | (3,693    | )      |   |   | -       |       |   |   | -         |   |   |          | 3,693      |   |          |   | - |   |   |   | - |   |
| Dividends on preferred stock      |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | (160,094   | )      |          |   | - |   |   |   | (160,094 | ) |
|                              |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Balance, December 31, 2009        |   |            | 4,695,911 |   |   |   | 584,727 |       |   |   | 9,933,257 |   |   |          | 4,036,186  |   |          |   | 233,259 |   |   |   | 19,483,340 |   |
|                              |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Comprehensive income:             |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Net income (loss)                 |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | (1,915,769 | )      |          |   | - |   |   |   | (1,915,769 | ) |
| Change in unrealized gain on      |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| securities available for sale,    |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| net of tax                        |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | -          |   |          |   | (24,377 | ) |   |   | (24,377 | ) |
| Total comprehensive income        |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   | (1,940,146 | ) |
| Stock based compensation expense: |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |
| Stock options recognized over     |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| the vesting period                |   |            | -         |   |   |   | -       |       |   |   | 1,426     |   |   |          | -          |   |          |   | - |   |   |   | 1,426 |   |
| Modification of stock options     |   |            | -         |   |   |   | -       |       |   |   | 35,035    |   |   |          | -          |   |          |   | - |   |   |   | 35,035 |   |
| Common stock issued               |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| (1,357 shares) under Employee     |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Stock Purchase Plan (ESPP)        |   |            | -         |   |   |   | 1,357   |       |   |   | 12,194    |   |   |          | -          |   |          |   | - |   |   |   | 13,551 |   |
| Accretion of discount on          |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Series A preferred stock          |   |            | 60,558    |   |   |   | -       |       |   |   | -         |   |   |          | (60,558    | )      |          |   | - |   |   |   | - |   |
| Amortization of premium on        |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Series B preferred stock          |   |            | (5,909    | )      |   |   | -       |       |   |   | -         |   |   |          | 5,909      |   |          |   | - |   |   |   | - |   |
| Dividends on preferred stock      |   |            | -         |   |   |   | -       |       |   |   | -         |   |   |          | (256,150   | )      |          |   | - |   |   |   | (256,150 | ) |
|                              |   |            |      |   |   |   |    |       |   |   |      |   |   |          |       |   |          |   |   |   |   |   |   |   |
| Balance, December 31, 2010        |   | $               | 4,750,560 |   |   | $      | 586,084 |       |   | $      | 9,981,912 |   |   | $             | 1,809,618  |   |          | $      | 208,882 |   |   | $ | 17,337,056 |   |

----

| CONSOLIDATED STATEMENTS OF CASH FLOWS          |
|------------------------------------------------|
| For the years ended December 31, 2010 and 2009 |
|                                      |

|                                                                       |   | Year ended December 31, |       |
|----------------------------------------------------------------------------|--------|-------------------------|------------|
|                                                                       |   | 2010                    |       |   | 2009 |   |
| Cash flows from operating activities                                       |   |                    |       |   |   |   |
| Net income (loss)                                                          |   | $                       | (1,915,769 | ) |   | $ | 189,220 |   |
| Adjustments to reconcile net income to net cash from operating activities: |   |                    |       |   |   |   |   |   |
| Provision for loan losses                                                  |   |                    | 4,912,609  |   |   |   | 885,400 |   |
| Depreciation                                                               |   |                    | 174,289    |   |   |   | 180,575 |   |
| Net amortization (accretion) of securities                                 |   |                    | 1,249      |   |   |   | (11,541 | ) |
| Stock-based compensation                                                   |   |                    | 36,461     |   |   |   | 2,085 |   |
| Loans originated for sale                                                  |   |                    | (2,697,200 | ) |   |   | (2,217,100 | ) |
| Proceeds from sales of loan originations                                   |   |                    | 4,366,199  |   |   |   | 1,553,300 |   |
| Gains on sales of loans                                                    |   |                    | (123,472   | ) |   |   | (26,200 | ) |
| Loss on disposal of fixed assets                                           |   |                    | 3,409      |   |   |   | - |   |
| Write-down of other real estate owned                                      |   |                    | 76,364     |   |   |   | - |   |
| Increase in cash surrender value of bank owned life insurance              |   |                    | (99,996    | ) |   |   | (102,522 | ) |
| Net change in other assets and other liabilities                           |   |                    | (455,894   | ) |   |   | (1,486,846 | ) |
| Net cash from operating activities                                         |   |                    | 4,278,249  |   |   |   | (1,033,629 | ) |
|                                                                       |   |                    |       |   |   |   |   |   |
| Cash flows from investing activities                                       |   |                    |       |   |   |   |   |   |
| Available for sale securities:                                             |   |                    |       |   |   |   |   |   |
| Purchases                                                                  |   |                    | (4,709,597 | ) |   |   | (1,540,746 | ) |
| Maturities, repayments and calls                                           |   |                    | 1,697,442  |   |   |   | 1,837,348 |   |
| Purchase of restricted stock                                               |   |                    | (139,200   | ) |   |   | (98,500 | ) |
| Net decrease (increase) in loans                                           |   |                    | 3,793,381  |   |   |   | (25,037,052 | ) |
| Purchases of premises and equipment                                        |   |                    | (256,535   | ) |   |   | (125,342 | ) |
| Proceeds from sale of other real estate owned                              |   |                    | -          |   |   |   | 395,669 |   |
| Net cash from investing activities                                         |   |                    | 385,491    |   |   |   | (24,568,623 | ) |
|                                                                       |   |                    |       |   |   |   |   |   |
| Cash flows from financing activities                                       |   |                    |       |   |   |   |   |   |
| Net (decrease) increase in deposits                                        |   |                    | (6,603,248 | ) |   |   | 21,524,433 |   |
| Net (repayment) proceeds on line of credit                                 |   |                    | -          |   |   |   | (500,000 | ) |
| Repayment of FHLB advances                                                 |   |                    | (1,500,000 | ) |   |   | (3,100,000 | ) |
| Net proceeds from issuance of preferred stock                              |   |                    | -          |   |   |   | 4,661,756 |   |
| Dividends on preferred stock                                               |   |                    | (256,150   | ) |   |   | (128,075 | ) |
| Proceeds from issuance of common stock under ESPP                          |   |                    | 13,551     |   |   |   | 20,276 |   |
| Net cash from financing activities                                         |   |                    | (8,345,847 | ) |   |   | 22,478,390 |   |
|                                                                       |   |                    |       |   |   |   |   |   |
| Change in cash and cash equivalents                                        |   |                    | (3,682,107 | ) |   |   | (3,123,862 | ) |
| Cash and cash equivalents at beginning of period                           |   |                    | 18,178,601 |   |   |   | 21,302,463 |   |
| Cash and cash equivalents at end of period                                 |   | $                       | 14,496,494 |   |   | $ | 18,178,601 |   |
|                                                                       |   |                    |       |   |   |   |   |   |
| Supplemental cash flow information:                                        |   |                    |       |   |   |   |   |   |
| Interest paid                                                              |   | $                       | 2,247,335  |   |   | $ | 2,821,415 |   |
| Income taxes paid                                                          |   |                    | 70,000     |   |   |   | 165,000 |   |
|                                                                       |   |                    |       |   |   |   |   |   |
| Supplemental disclosure of noncash investing activities:                   |   |                    |       |   |   |   |   |   |
| Transfer from loans to other real estate owned                             |   | $                       | -          |   |   | $ | 1,173,483 |   |
| Transfer from loans to other repossessed assets                            |   |                    | 102,135    |   |   |   | - |   |
| Transfer from loans to loans held for sale                                 |   |                    | 1,091,527  |   |   | $ | - |   |

----

----

----

----

----

----

----

----

|                         |   |      |       |   | Gross      |   |    | Gross      |   |   |       |   |
|------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|------------|--------|
|                         |   | Amortized |       |   | Unrealized |   |    | Unrealized |   |   |       |   |
|                         |   | Cost      |       |   | Gains      |   |    | Losses     |   |   | Fair Value |   |
| December 31, 2010            |   |      |       |   |       |   |    |       |   |   |       |   |
| Mortgage-backed residential: |   |      |       |   |       |   |    |       |   |   |
| Guaranteed by GNMA           |   | $         | 4,048,961  |   |       | $      | 2,936   |       |   | $      | (45,584    | )      |   | $ | 4,006,313 |   |
| Issued by FHLMC              |   |      | 1,556,847  |   |       |   | 80,434  |       |   |   | -          |   |   |   | 1,637,281 |   |
| Issued by FNMA               |   |      | 1,927,112  |   |       |   | 131,517 |       |   |   | (174       | )      |   |   | 2,058,455 |   |
| Tax-free municipal           |   |      | 4,890,165  |   |       |   | 158,571 |       |   |   | (3,258     | )      |   |   | 5,045,478 |   |
| Taxable municipal            |   |      | 253,625    |   |       |   | -       |       |   |   | (7,955     | )      |   |   | 245,670 |   |
|                         |   | $         | 12,676,710 |   |       | $      | 373,458 |       |   | $      | (56,971    | )      |   | $ | 12,993,197 |   |
|                         |   |      |       |   |       |   |    |       |   |   |       |   |   |   |   |   |
| December 31, 2009            |   |      |       |   |       |   |    |       |   |   |       |   |   |   |   |   |
| Mortgage-backed residential: |   |      |       |   |       |   |    |       |   |   |       |   |   |
| Issued by FHLMC              |   | $         | 2,283,657  |   |       | $      | 77,747  |       |   | $      | -          |   |   | $ | 2,361,404 |   |
| Issued by FNMA               |   |      | 2,765,111  |   |       |   | 137,625 |       |   |   |       |   |   |   | 2,902,736 |   |
| Tax-free municipal           |   |      | 4,617,035  |   |       |   | 141,682 |       |   |   | (3,632     | )      |   |   | 4,755,085 |   |
|                         |   | $         | 9,665,803  |   |       | $      | 357,054 |       |   | $      | (3,632     | )      |   | $ | 10,019,225 |   |

|                        |   | Amortized |       |   | Fair   |   |
|-----------------------------|--------|-----------|------------|--------|--------|--------|
|                        |   | Cost      |       |   | Value  |   |
| Less than one year          |   | $         | 237,330    |   |   | $      | 242,386 |   |
| One to five years           |   |      | 573,842    |   |   |   | 597,385 |   |
| Five to ten years           |   |      | 3,671,266  |   |   |   | 3,788,407 |   |
| Ten to fifteen years        |   |      | 661,352    |   |   |   | 662,970 |   |
| Mortgage-backed residential |   |      | 7,532,920  |   |   |   | 7,702,049 |   |
|                        |   | $         | 12,676,710 |   |   | $      | 12,993,197 |   |

----

|               |   | Less than 12 Months |      |   | 12 Months or more |   |    | Total  |   |
|--------------------|--------|---------------------|-----------|--------|-------------------|--------|---------|--------|--------|
|               |   | Fair                |      |   | Unrealized        |   |    | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|               |   | Value               |      |   | Loss              |   |    | Value  |   |   | Loss |   |   | Value |   |   | Loss |   |
| December 31, 2010  |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Guaranteed by GNMA |   | $                   | 3,499,522 |   |              | $      | (45,584 | )      |   | $ | - |   |   | $ | - |   |   | $ | 3,499,522 |   |   | $ | (45,584 | ) |
| Issued by FNMA     |   |                | 48,751    |   |              |   | (174    | )      |   |   | - |   |   |   | - |   |   |   | 48,751 |   |   |   | (174 | ) |
| Tax-free municipal |   |                | 396,740   |   |              |   | (3,258  | )      |   |   | - |   |   |   | - |   |   |   | 396,740 |   |   |   | (3,258 | ) |
| Taxable municipal  |   |                | 245,670   |   |              |   | (7,955  | )      |   |   | - |   |   |   | - |   |   |   | 245,670 |   |   |   | (7,955 | ) |
| Total              |   | $                   | 4,190,683 |   |              | $      | (56,971 | )      |   | $ | - |   |   | $ | - |   |   | $ | 4,190,683 |   |   | $ | (56,971 | ) |
|               |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009  |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax-free municipal |   | $                   | 220,527   |   |              | $      | (3,632  | )      |   | $ | - |   |   | $ | - |   |   | $ | 220,527 |   |   | $ | (3,632 | ) |
| Total              |   | $                   | 220,527   |   |              | $      | (3,632  | )      |   | $ | - |   |   | $ | - |   |   | $ | 220,527 |   |   | $ | (3,632 | ) |

----

|                           |   | 2010   |        |   | 2009   |   |
|--------------------------------|--------|--------|-------------|--------|--------|--------|
| Commercial real estate         |   | $      | 113,451,159 |   |   | $      | 125,324,772 |   |
| Commercial business            |   |   | 27,141,540  |   |   |   | 23,998,524 |   |
| Residential mortgages:         |   |   |        |   |   |   |   |   |
| Home equity lines of credit    |   |   | 11,620,756  |   |   |   | 10,211,566 |   |
| 1-4 family residential         |   |   | 806,411     |   |   |   | 933,687 |   |
| Consumer:                      |   |   |        |   |   |   |   |   |
| Installment                    |   |   | 4,926,165   |   |   |   | 4,118,808 |   |
| Purchased auto loans           |   |   | 1,558,763   |   |   |   | 2,589,488 |   |
|                           |   |   | 159,504,794 |   |   |   | 167,176,845 |   |
| Less allowance for loan losses |   |   | 4,544,316   |   |   |   | 2,316,715 |   |
|                           |   | $      | 154,960,478 |   |   | $      | 164,860,130 |   |

|                      |   | 2010   |       |   | 2009   |   |
|---------------------------|--------|--------|------------|--------|--------|--------|
| Beginning balance         |   | $      | 2,316,715  |   |   | $      | 1,743,470 |   |
| Provision for loan losses |   |   | 4,912,609  |   |   |   | 885,400 |   |
| Loans charged off         |   |   | (2,724,139 | )      |   |   | (335,137 | ) |
| Recoveries                |   |   | 39,131     |   |   |   | 22,982 |   |
| Ending balance            |   | $      | 4,544,316  |   |   | $      | 2,316,715 |   |

|                                                                      |   | CommercialReal Estate |        |   | CommercialBusiness |   |       | ResidentialMortgages |   |   | Consumer   |   |   | Unallocated |      |   | Total  |   |
|---------------------------------------------------------------------------|--------|-----------------------|-------------|--------|--------------------|--------|------------|----------------------|--------|--------|------------|--------|--------|-------------|-----------|--------|--------|--------|
| Allowance for loan losses attributable to loans evaluated for impairment: |   |                  |        |   |               |   |       |                 |   |   |       |   |   |        |      |   |   |   |
| Individually                                                              |   | $                     | 1,574,734   |   |               | $      | 101,258    |                 |   | $      | 28,303     |   |   | $           | -         |   |   |   |   |   | $ | 1,704,295 |   |
| Collectively                                                              |   |                  | 1,891,771   |   |               |   | 565,179    |                 |   |   | 134,069    |   |   |        | 34,776    |   |   |   | 214,226 |   |   |   | 2,840,021 |   |
|                                                                      |   |                  |        |   |               |   |       |                 |   |   |       |   |   |        |      |   |   |   |   |   |   |   |   |   |
| Total ending allowance                                                    |   | $                     | 3,466,505   |   |               | $      | 666,437    |                 |   | $      | 162,372    |   |   | $           | 34,776    |   |   | $      | 214,226 |   |   | $ | 4,544,316 |   |
|                                                                      |   |                  |        |   |               |   |       |                 |   |   |       |   |   |        |      |   |   |   |   |   |   |   |   |   |
| Loans evaluated for impairment at year-end:                               |   |                  |        |   |               |   |       |                 |   |   |       |   |   |        |      |   |   |   |   |   |   |   |   |   |
| Individually                                                              |   | $                     | 8,429,959   |   |               | $      | 436,289    |                 |   | $      | 292,483    |   |   | $           | -         |   |   | $      | - |   |   | $ | 9,158,731 |   |
| Collectively                                                              |   |                  | 105,021,200 |   |               |   | 26,705,251 |                 |   |   | 12,134,684 |   |   |        | 6,484,928 |   |   |   | - |   |   |   | 150,346,063 |   |
|                                                                      |   |                  |        |   |               |   |       |                 |   |   |       |   |   |        |      |   |   |   |   |   |   |   |   |   |
| Total ending loans                                                        |   | $                     | 113,451,159 |   |               | $      | 27,141,540 |                 |   | $      | 12,427,167 |   |   | $           | 6,484,928 |   |   | $      | - |   |   | $ | 159,504,794 |   |

----

|                                                       |   | 2010   |      |   | 2009   |   |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Year-end loans with no allocated allowance for loan losses |   | $      | 3,722,329 |   |   | $      | 3,322,718 |   |
| Year-end loans with allocated allowance for loan losses    |   |   | 5,436,402 |   |   |   | 2,103,343 |   |
|                                                       |   | $      | 9,158,731 |   |   | $      | 5,426,061 |   |
|                                                       |   |   |      |   |   |   |   |   |
| Amount of the allowance for loan losses allocated          |   | $      | 1,704,295 |   |   | $      | 361,000 |   |
| Average of impaired loans during the year                  |   | $      | 7,649,218 |   |   | $      | 2,972,672 |   |

|                        |   | UnpaidPrincipalBalance |      |   | RecordedInvestment |   |      | Allowance forLoan LossesAllocated |   |
|-----------------------------|--------|------------------------|-----------|--------|--------------------|--------|-----------|-----------------------------------|--------|
| With no allowance recorded: |   |                   |      |   |               |   |      |
| Commercial real estate      |   | $                      | 3,854,343 |   |               | $      | 3,335,723 |                              |   | $ | - |   |
| Commercial business         |   |                   | 334,881   |   |               |   | 334,881   |                              |   |   | - |   |
| Residential mortgage:       |   |                   |      |   |               |   |      |                              |   |   |   |   |
| Home equity line of credit  |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
| 1-4 family residential      |   |                   | 51,725    |   |               |   | 51,725    |                              |   |   | - |   |
| Consumer:                   |   |                   | -         |   |               |   | -         |                              |   |   |   |   |
| Installment                 |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
| Purchased auto loans        |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
|                        |   |                   |      |   |               |   |      |                              |   |   |   |   |
| With an allowance recorded: |   |                   |      |   |               |   |      |                              |   |
| Commercial real estate      |   |                   | 5,094,236 |   |               |   | 5,094,236 |                              |   |   | 1,574,734 |   |
| Commercial business         |   |                   | 101,408   |   |               |   | 101,408   |                              |   |   | 101,258 |   |
| Residential mortgage:       |   |                   |      |   |               |   |      |                              |   |   |   |   |
| Home equity line of credit  |   |                   | 240,758   |   |               |   | 240,758   |                              |   |   | 28,303 |   |
| 1-4 family residential      |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
| Consumer:                   |   |                   |      |   |               |   |      |                              |   |   |   |   |
| Installment                 |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
| Purchased auto loans        |   |                   | -         |   |               |   | -         |                              |   |   | - |   |
| Total                       |   | $                      | 9,677,351 |   |               | $      | 9,158,731 |                              |   | $ | 1,704,295 |   |

----

|                       |   | Nonaccrual |      |   | Loans PastDue Over 90Days and StillAccruing |   |
|----------------------------|--------|------------|-----------|--------|---------------------------------------------|--------|
| Commercial real estate     |   | $          | 6,866,564 |   |                                        | $      | - |   |
| Commercial business        |   |       | 387,251   |   |                                        |   | - |   |
| Residential mortgage:      |   |       |      |   |                                        |   |   |   |
| Home equity line of credit |   |       | 240,758   |   |                                        |   | - |   |
| 1-4 family residential     |   |       | 51,725    |   |                                        |   | - |   |
| Consumer:                  |   |       |      |   |                                        |   |   |   |
| Installment                |   |       | -         |   |                                        |   | - |   |
| Purchased auto loans       |   |       | -         |   |                                        |   | 8,131 |   |
| Total                      |   | $          | 7,546,298 |   |                                        | $      | 8,131 |   |

|                       |   | 30 - 59 DaysPast Due |    |   | 60 - 89 DaysPast Due |   |   | Over 90 DaysPast Due |   |   | Total PastDue |   |   | Not Past Due |      |   | Total  |   |
|----------------------------|--------|------------------------------------------|---------|--------|------------------------------------------|--------|--------|-------------------------------------|--------|--------|--------------------|--------|--------|------------------------|-----------|--------|--------|--------|
| Commercial real estate     |   | $                                        | 244,449 |   |                                     | $      | -      |                                |   | $      | 2,485,133          |   |   | $                      | 2,729,582 |   |   | $      | 110,721,577 |   |   | $ | 113,451,159 |   |
| Commercial business        |   |                                     | 101,155 |   |                                     |   | 54,284 |                                |   |   | 178,978            |   |   |                   | 334,417   |   |   |   | 26,807,123 |   |   |   | 27,141,540 |   |
| Residential mortgage:      |   |                                     |    |   |                                     |   |   |                                |   |   |               |   |   |                   |      |   |   |   |   |   |   |   |   |   |
| Home equity line of credit |   |                                     | -       |   |                                     |   | -      |                                |   |   | -                  |   |   |                   | -         |   |   |   | 11,620,756 |   |   |   | 11,620,756 |   |
| 1-4 family residential     |   |                                     | 75,653  |   |                                     |   | -      |                                |   |   | 51,725             |   |   |                   | 127,378   |   |   |   | 679,033 |   |   |   | 806,411 |   |
| Consumer:                  |   |                                     |    |   |                                     |   |   |                                |   |   |               |   |   |                   |      |   |   |   |   |   |   |   |   |   |
| Installment                |   |                                     | -       |   |                                     |   | -      |                                |   |   | -                  |   |   |                   | -         |   |   |   | 4,926,165 |   |   |   | 4,926,165 |   |
| Purchased auto loans       |   |                                     | 12,149  |   |                                     |   | -      |                                |   |   | 8,131              |   |   |                   | 20,280    |   |   |   | 1,538,483 |   |   |   | 1,558,763 |   |
| Total                      |   | $                                        | 433,406 |   |                                     | $      | 54,284 |                                |   | $      | 2,723,967          |   |   | $                      | 3,211,657 |   |   | $      | 156,293,137 |   |   | $ | 159,504,794 |   |

----

----

|                       |   | Pass   |        |   | SpecialMention |   |       | Substandard |   |   | Doubtful   |   |   | Not Rated |   |       | Total  |   |
|----------------------------|--------|--------|-------------|--------|----------------|--------|------------|-------------|--------|--------|------------|--------|--------|-----------|--------|------------|--------|--------|
|                       |   |   |        |   |           |   |       |        |   |   |       |   |   |      |   |       |   |   |
| Commercial real estate     |   | $      | 85,034,950  |   |           | $      | 10,717,741 |        |   | $      | 17,698,468 |   |   | $         | -      |       |   | $      | - |   |   | $ | 113,451,159 |   |
| Commercial business        |   |   | 24,023,215  |   |           |   | 1,229,339  |        |   |   | 1,888,986  |   |   |      | -      |       |   |   | - |   |   |   | 27,141,540 |   |
| Residential mortgage:      |   |   |        |   |           |   |       |        |   |   |       |   |   |      |   |       |   |   |   |   |   |   |   |   |
| Home equity line of credit |   |   |        | 73,250 |           |   |       | 709,912     |   |   |       | -      |   |      |   | 10,837,594 |   |   |   | 11,620,756 |   |
| 1-4 family residential     |   |   |        |   |           |   |       |        |   |   | 51,725     |   |   |      |   |       |   |   | 754,686 |   |   |   | 806,411 |   |
| Consumer:                  |   |   |        |   |           |   |       |        |   |   |       |   |   |      |   |       |   |   |   |   |   |   |   |   |
| Installment                |   |   |        |   |           |   |       |        |   |   |       |   |   |      |   |       |   |   | 4,926,165 |   |   |   | 4,926,165 |   |
| Purchased auto loans       |   |   |        |   |           |   |       |        |   |   |       |   |   |      |   |       |   |   | 1,558,763 |   |   |   | 1,558,763 |   |
| Total                      |   | $      | 109,058,165 |   |           | $      | 12,020,330 |        |   | $      | 20,349,091 |   |   | $         | -      |       |   | $      | 18,077,208 |   |   | $ | 159,504,794 |   |

|          |   | Residential mortgage                      |       |   | Consumer                   |   |
|---------------|--------|-------------------------------------------|------------|--------|----------------------------|--------|
|          |   | Home equitylines of credit |       |   | 1-4 familyresidential |   |   | Installment |   |   | Purchasedauto loans |   |
| Performing    |   | $                                         | 11,379,998 |   |                       | $      | 754,686 |   |   | $ | 4,926,165 |   |   | $ | 1,550,632 |   |
| Nonperforming |   |                                      | 240,758    |   |                       |   | 51,725 |   |   |   | - |   |   |   | 8,131 |   |
| Total         |   | $                                         | 11,620,756 |   |                       | $      | 806,411 |   |   | $ | 4,926,165 |   |   | $ | 1,558,763 |   |

| Beginning balance                      |   | $      | 1,895,608 |   |
|----------------------------------------|--------|--------|-----------|--------|
| New loans and draws on lines of credit |   |   | 117,780   |   |
| Repayments                             |   |   | (105,032  | )      |
| Ending balance                         |   | $      | 1,908,356 |   |

----

----

|                                                          |   | Fair Value Measurements Using |   |
|---------------------------------------------------------------|--------|-------------------------------|--------|
|                                                          |   | Quoted Prices in              |   |   | Significant |   |   |   |   |
|                                                          |   | Active Markets                |   |   | Other |   |   | Significant |   |
|                                                          |   | for Identical                 |   |   | Observable |   |   | Unobservable |   |
|                                                          |   | Assets                        |   |   | Inputs |   |   | Inputs |   |
|                                                          |   | (Level One)                   |   |   | (Level Two) |   |   | (Level Three) |   |
| December 31, 2010                                             |   |                          |   |   |   |   |   |   |   |
| Assets and liabilities measured at fair value:                |   |                          |   |   |   |   |   |   |   |
| ·     on a recurring basis:     |   |                          |   |   |   |   |   |   |   |
| Investment securities available for sale                      |   |                          |   |   |   |   |   |   |   |
| Mortgage-backed residential                                   |   |                          |   |   |   |   |   |   |   |
| Guaranteed by GNMA                                            |   | $                             | -      |   |   | $ | 4,006,313 |   |   | $ | - |   |
| Issued by FHLMC                                               |   |                          | -      |   |   |   | 1,637,281 |   |   |   | - |   |
| Issued by FNMA                                                |   |                          | -      |   |   |   | 2,058,455 |   |   |   | - |   |
| Tax-free municipal                                            |   |                          | -      |   |   |   | 5,045,478 |   |   |   | - |   |
| Taxable municipal                                             |   |                          | -      |   |   |   | 245,670 |   |   |   | - |   |
|                                                          |   |                          |   |   |   |   |   |   |   |   |   |   |
| ·      on a nonrecurring basis: |   |                          |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                                |   |                          |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate                                        |   |                          | -      |   |   |   | - |   |   |   | 2,038,206 |   |
| Commercial business                                           |   |                          | -      |   |   |   | - |   |   |   | 150 |   |
| Home equity line of credit                                    |   |                          | -      |   |   |   | - |   |   |   | 212,455 |   |
| Other real estate owned                                       |   |                          | -      |   |   |   | - |   |   |   | 991,450 |   |
|                                                          |   |                          |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009                                             |   |                          |   |   |   |   |   |   |   |   |   |   |
| Assets and liabilities measured at fair value                 |   |                          |   |   |   |   |   |   |   |   |   |   |
| ·      on a recurring basis:    |   |                          |   |   |   |   |   |   |   |   |   |   |
| Investment securities available for sale                      |   |                          |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed residential                                   |   |                          |   |   |   |   |   |   |   |   |   |   |
| Issued by FHLMC                                               |   | $                             | -      |   |   | $ | 2,361,404 |   |   | $ | - |   |
| Issued by FNMA                                                |   |                          | -      |   |   |   | 2,902,736 |   |   |   | - |   |
| Tax-exempt municipal                                          |   |                          | -      |   |   |   | 4,755,085 |   |   |   | - |   |
|                                                          |   |                          |   |   |   |   |   |   |   |   |   |   |
| ·     on a nonrecurring basis:       |   |                          |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                                                |   |                          | -      |   |   |   | - |   |   |   | 1,742,343 |   |

----

|                            |   | 2010           |         |   | 2009                |   |
|---------------------------------|--------|----------------|--------------|--------|---------------------|--------|
|                            |   | CarryingAmount |         |   | EstimatedFair Value |   |   | CarryingAmount |   |   | EstimatedFair Value |   |
| Financial assets:               |   |           |         |   |                |   |   |   |   |   |   |   |
| Cash and cash equivalents       |   | $              | 14,496,494   |   |                | $      | 14,496,000 |   |   | $ | 18,178,601 |   |   | $ | 18,179,000 |   |
| Securities available for sale   |   |           | 12,993,197   |   |                |   | 12,993,000 |   |   |   | 10,019,225 |   |   |   | 10,019,000 |   |
| Loans, net of allowance         |   |           | 154,960,478  |   |                |   | 152,301,000 |   |   |   | 164,860,130 |   |   |   | 164,395,000 |   |
| Loans held for sale             |   |           | 236,000      |   |                |   | 241,000 |   |   |   | 690,000 |   |   |   | 697,000 |   |
| Accrued interest receivable     |   |           | 468,759      |   |                |   | 469,000 |   |   |   | 491,845 |   |   |   | 492,000 |   |
|                            |   |           |         |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:          |   |           |         |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Demand and savings deposits     |   |           | (103,466,486 | )      |                |   | (103,466,000 | ) |   |   | (98,800,893 | ) |   |   | (98,801,000 | ) |
| Time deposits                   |   |           | (68,172,555  | )      |                |   | (67,553,000 | ) |   |   | (79,441,396 | ) |   |   | (79,453,000 | ) |
| Federal Home Loan Bank advances |   |           | (1,900,000   | )      |                |   | (1,934,000 | ) |   |   | (3,400,000 | ) |   |   | (3,401,000 | ) |
| Accrued interest payable        |   |           | (76,566      | )      |                |   | (77,000 | ) |   |   | (116,073 | ) |   |   | (116,000 | ) |

|                          |   | 2010   |       |   | 2009   |   |
|-------------------------------|--------|--------|------------|--------|--------|--------|
| Leasehold improvements        |   | $      | 1,181,594  |   |   | $      | 1,181,594 |   |
| Furniture and equipment       |   |   | 1,129,735  |   |   |   | 878,229 |   |
|                          |   |   | 2,311,329  |   |   |   | 2,059,823 |   |
| Less accumulated depreciation |   |   | (1,281,644 | )      |   |   | (1,108,975 | ) |
|                          |   | $      | 1,029,685  |   |   | $      | 950,848 |   |

----

| 2011   |   | $      | 427,586   |   |
|--------|--------|--------|-----------|--------|
| 2012   |   |   | 436,137   |   |
| 2013   |   |   | 399,597   |   |
| 2014   |   |   | 135,276   |   |
|   |   | $      | 1,398,596 |   |

|                    |   | 2010   |        |   | 2009   |   |
|-------------------------|--------|--------|-------------|--------|--------|--------|
| Interest-bearing demand |   | $      | 11,048,838  |   |   | $      | 9,772,226 |   |
| Savings                 |   |   | 39,019,690  |   |   |   | 37,143,147 |   |
| Money market            |   |   | 30,463,427  |   |   |   | 29,107,414 |   |
| Time under $100,000     |   |   | 28,641,574  |   |   |   | 34,488,126 |   |
| Time $100,000 and over  |   |   | 39,530,981  |   |   |   | 44,942,346 |   |
|                    |   | $      | 148,704,510 |   |   | $      | 155,453,259 |   |

| 2011       |   | $      | 37,480,597 |   |
|------------|--------|--------|------------|--------|
| 2012       |   |   | 16,203,038 |   |
| 2013       |   |   | 10,006,944 |   |
| 2014       |   |   | 1,032,557  |   |
| 2015       |   |   | 3,437,173  |   |
| Thereafter |   |   | 12,246     |   |
|       |   | $      | 68,172,555 |   |

----

|                 |   | Rate or        |   |   | Average |   |   |   |   |   |      |   |
|----------------------|--------|----------------|--------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|
|                 |   | Range of Rates |   |   | Rate    |   |   | 2010   |   |   | 2009      |   |
| Fixed-rate advances: |   |           |   |   |    |   |   |   |   |   |      |   |
| Maturing March 2010  |   |           | 2.70   | %      |    |   | 2.70   | %      |   | $      | -         |   |   | $ | 500,000 |   |
| Maturing April 2010  |   |           | 4.57   | %      |    |   | 4.57   | %      |   |   | -         |   |   |   | 1,000,000 |   |
| Maturing March 2011  |   |           | 3.06   | %      |    |   | 3.06   | %      |   |   | 400,000   |   |   |   | 400,000 |   |
| Maturing June 2011   |   |           | 3.65   | %      |    |   | 3.65   | %      |   |   | 1,000,000 |   |   |   | 1,000,000 |   |
| Maturing March 2012  |   |           | 3.50   | %      |    |   | 3.50   | %      |   |   | 300,000   |   |   |   | 300,000 |   |
| Maturing March 2013  |   |           | 3.75   | %      |    |   | 3.75   | %      |   |   | 200,000   |   |   |   | 200,000 |   |
|                 |   |           |   |   |    |   |   |   |   | $      | 1,900,000 |   |   | $ | 3,400,000 |   |

----

|                               |   | 2010   |       |   | 2009   |   |
|------------------------------------|--------|--------|------------|--------|--------|--------|
| Current                            |   | $      | (284,241   | )      |   | $      | 217,530 |   |
| Deferred                           |   |   | (812,510   | )      |   |   | (247,264 | ) |
| Total income tax (benefit) expense |   | $      | (1,096,751 | )      |   | $      | (29,734 | ) |

----

|                                 |   | 2010   |       |   | 2009   |   |
|--------------------------------------|--------|--------|------------|--------|--------|--------|
| Income tax at statutory rate         |   | $      | (1,024,257 | )      |   | $      | 54,225 |   |
| Tax exempt income                    |   |   | (58,023    | )      |   |   | (54,035 | ) |
| Income from life insurance contracts |   |   | (33,999    | )      |   |   | (34,857 | ) |
| Other, net                           |   |   | 19,528     |   |   |   | 4,933 |   |
|                                 |   | $      | (1,096,751 | )      |   | $      | (29,734 | ) |

|                                             |   | 2010   |      |   | 2009   |   |
|--------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Deferred tax assets:                             |   |   |      |   |   |   |
| Bad debt deduction                               |   | $      | 1,318,592 |   |   | $      | 642,355 |   |
| Deferred loan fees and costs                     |   |   | 20,430    |   |   |   | 22,858 |   |
| Deferred compensation                            |   |   | 99,653    |   |   |   | 93,890 |   |
| Accrued expenses                                 |   |   | 519       |   |   |   | 340 |   |
| Stock option expense                             |   |   | 48,625    |   |   |   | 48,140 |   |
| Nonaccrual loan interest income                  |   |   | 45,063    |   |   |   | 28,961 |   |
| Depreciation                                     |   |   | -         |   |   |   | 2,591 |   |
| Deferred income                                  |   |   | 27,617    |   |   |   | - |   |
| OREO writedowns                                  |   |   | 19,062    |   |   |   | - |   |
| Tax credit carryforwards                         |   |   | 85,827    |   |   |   | - |   |
| Other                                            |   |   | 3,224     |   |   |   | 4,077 |   |
|                                             |   |   | 1,668,612 |   |   |   | 843,212 |   |
| Deferred tax liabilities:                        |   |   |      |   |   |   |   |   |
| Unrealized gain on securities available for sale |   |   | (107,606  | )      |   |   | (120,164 | ) |
| Prepaid expenses                                 |   |   | (40,537   | )      |   |   | (37,740 | ) |
| FHLB stock dividends                             |   |   | (27,710   | )      |   |   | (27,710 | ) |
| Depreciation                                     |   |   | (10,093   | )      |   |   | - |   |
|                                             |   |   | (185,946  | )      |   |   | (185,614 | ) |
| Net deferred tax asset                           |   | $      | 1,482,666 |   |   | $      | 657,598 |   |

----

|                                     |   | Year Ended December 31, 2010 |         |
|------------------------------------------|--------|------------------------------|--------------|
|                                     |   | Shares                       |         |   | Weighted AverageExercise Price |   |
| Options outstanding at beginning of year |   |                         | 104,387      |   |   | $ | 18.62 |   |
| Granted                                  |   |                         | —      |   |   |   | — |   |
| Exercised                                |   |                         | —      |   |   |   | — |   |
| Forfeited                                |   |                         |  (6,250 | ) |   |   | 18.08 |   |
| Options outstanding at end of year       |   |                         | 98,137       |   |   | $ | 18.65 |   |
|                                     |   |                         |         |   |   |   |   |   |
| Options exercisable at year-end          |   |                         | 97,637       |   |   | $ | 18.60 |   |

|                            | 2010           |
|---------------------------------|----------------|
| Risk-free interest rate         | 2.42% to 2.79% |
| Expected option life (years)    | 5.0 to 6.0     |
| Expected stock price volatility | 22.9% to 24.4% |
| Dividend yield                  | 0.00%          |

----

|                     |                    |   | Outstanding  |   |        | Exercisable                                        |   |
|--------------------------|-------------------------|--------|--------------|--------|-------------|----------------------------------------------------|--------|
| Range of Exercise Prices |                    |   |  Number |   |        | Weighted Average RemainingContractual Life (years) |   |   | Number |   |   | Weighted AverageExercise Price |   |
|                     | $16.00-$19.99           |   |         |   | 74,366      |                                               |   | 3.5 |   |   |   | 74,366 |   |   | $ | 16.70 |   |
|                     | $20.00-$23.99           |   |         |   | 10,625      |                                               |   | 5.1 |   |   |   | 10,625 |   |   |   | 20.05 |   |
|                     | $24.00-$31.99           |   |         |   | 9,139       |                                               |   | 3.2 |   |   |   | 8,639 |   |   |   | 27.03 |   |
|                     | $32.00                  |   |         |   |  4,007 |                                               |   | 2.8 |   |   |   | 4,007 |   |   |   | 32.00 |   |
|                     | Outstanding at year-end |   |         |   | 98,137      |                                               |   | 3.6 |   |   |   | 97,637 |   |   | $ | 18.60 |   |

|   |   | Compensation Costs |      |
|--------|--------|--------------------|-----------|
| 2011   |   | $                  | 729       |   |
| 2012   |   |               |  709 |   |
| Total  |   | $                  | 1,438     |   |

----

|                                                 |   | 2010      |      |   | 2009               |   |
|------------------------------------------------------|--------|-----------|-----------|--------|--------------------|--------|
|                                                 |   | FixedRate |      |   | Variable Rate |   |   | FixedRate |   |   | Variable Rate |   |
| Commitments to extend credit (net of participations) |   | $         | 314,000   |   |               | $      | 2,697,000 |   |   | $ | 5,224,000 |   |   | $ | 9,413,000 |   |
| Unused home equity and overdraft lines of credit     |   |      | —   |   |               |   | 10,949,000 |   |   |   | — |   |   |   | 11,444,000 |   |
| Unused commercial lines of credit                    |   |      | 1,930,000 |   |               |   | 18,323,000 |   |   |   | 92,000 |   |   |   | 13,605,000 |   |

----

|     ($ in thousands)     |   | Western ReserveBank |   |   | Minimum RequiredFor CapitalAdequacy Purposes |   |   | Minimum To Be Well-CapitalizedUnder PromptCorrective ActionProvisions |   |
|----------------------------------------------|--------|---------------------|--------|--------|----------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
| 2010                                         |   | Amount              |   |   | Ratio                                        |   |   | Amount                                                                     |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| Total Capital torisk-weighted assets         |   | $                   | 18,060 |   |                                         |   | 11.3   | %                                                                          |   | $ | 12,766 |   |   |   | 8.0 | % |   | $ | 15,958 |   |   |   | 10.0 | % |
| Tier 1 (Core) Capital torisk-weighted assets |   |                | 16,029 |   |                                         |   | 10.0   | %                                                                          |   |   | 6,383 |   |   |   | 4.0 | % |   |   | 9,575 |   |   |   | 6.0 | % |
| Tier 1 (Core) Capital toaverage assets       |   |                | 16,029 |   |                                         |   | 8.0    | %                                                                          |   |   | 8,017 |   |   |   | 4.0 | % |   |   | 10,021 |   |   |   | 5.0 | % |
|                                         |   |                |   |   |                                         |   |   |                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                         |   |                |   |   |                                         |   |   |                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital torisk-weighted assets         |   | $                   | 21,270 |   |                                         |   | 12.3   | %                                                                          |   | $ | 13,835 |   |   |   | 8.0 | % |   | $ | 17,294 |   |   |   | 10.0 | % |
| Tier 1 (Core) Capital torisk-weighted assets |   |                | 15,106 |   |                                         |   | 8.7    | %                                                                          |   |   | 6,918 |   |   |   | 4.0 | % |   |   | 10,376 |   |   |   | 6.0 | % |
| Tier 1 (Core) Capital toaverage assets       |   |                | 15,106 |   |                                         |   | 7.7    | %                                                                          |   |   | 7,824 |   |   |   | 4.0 | % |   |   | 9,780 |   |   |   | 5.0 | % |

----

| CONDENSED BALANCE SHEETS                   |   |
|--------------------------------------------|--------|
|                                       |   |
|                                       |   | December 31, |   |
|                                       |   | 2010 |   |   | 2009 |   |
| ASSETS                                |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                  |   | $ | 331,514 |   |   | $ | 78,831 |   |
| Investment in bank subsidiary              |   |   | 16,923,349 |   |   |   | 15,338,873 |   |
| Restricted stock                           |   |   | 70,000 |   |   |   | 70,000 |   |
| Subordinated debt due from bank subsidiary |   |   | - |   |   |   | 4,000,000 |   |
| Other assets                               |   |   | 60,537 |   |   |   | 64,751 |   |
|                                       |   | $ | 17,385,400 |   |   | $ | 19,552,455 |   |
|                                       |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY       |   |   |   |   |   |   |   |   |
| Other liabilities                          |   | $ | 48,344 |   |   | $ | 69,115 |   |
| Shareholders' equity                       |   |   | 17,337,056 |   |   |   | 19,483,340 |   |
|                                       |   | $ | 17,385,400 |   |   | $ | 19,552,455 |   |

| CONDENSED STATEMENTS OF INCOME                    |   |
|---------------------------------------------------|--------|
| Years ended December 31, 2010 and 2009            |   |
|                                              |   |   |   |   |   |   |
|                                              |   | 2010 |   |   | 2009 |   |
| Interest and dividend income                      |   | $ | 66,320 |   |   | $ | 33,522 |   |
| Operating expenses                                |   |   | 103,810 |   |   |   | 97,657 |   |
| Income (loss) before income tax and               |   |   |   |   |   |   |   |   |
| undistributed income of bank subsidiary           |   |   | (37,490 | ) |   |   | (64,135 | ) |
| Income tax benefit                                |   |   | 12,868 |   |   |   | 21,806 |   |
| Equity in undistributed income of bank subsidiary |   |   | (1,891,147 | ) |   |   | 231,549 |   |
| Net income (loss)                                 |   | $ | (1,915,769 | ) |   | $ | 189,220 |   |
|                                              |   |   |   |   |   |   |   |   |
| Preferred stock dividends and amortization, net   |   |   | 310,799 |   |   |   | 194,249 |   |
| Net income (loss) available to common             |   |   |   |   |   |   |   |   |
| shareholders                                      |   | $ | (2,226,568 | ) |   | $ | (5,029 | ) |

----

| CONDENSED STATEMENTS OF CASH FLOWS                |   |
|---------------------------------------------------|--------|
| Years ended December 31, 2010 and 2009            |   |
|                                              |   |   |   |   |   |   |
|                                              |   | 2010 |   |   | 2009 |   |
| Cash flow from operating activities               |   |   |   |   |   |   |
| Net income (loss)                                 |   | $ | (1,915,769 | ) |   | $ | 189,220 |   |
| Stock based compensation                          |   |   | 36,461 |   |   |   | 2,085 |   |
| Equity in undistributed income of bank subsidiary |   |   | 1,891,147 |   |   |   | (231,549 | ) |
| Change in other assets and liabilities            |   |   | (16,557 | ) |   |   | 12,389 |   |
| Net cash flows from operating activities          |   |   | (4,718 | ) |   |   | (27,855 | ) |
|                                              |   |   |   |   |   |   |   |   |
| Cash flows from investing activities              |   |   |   |   |   |   |   |   |
| Net (increase) decrease in loans to subsidiary    |   |   | 4,000,000 |   |   |   | (4,000,000 | ) |
| Purchase of restricted stock                      |   |   | - |   |   |   | (45,000 | ) |
| Investment in bank subsidiary                     |   |   | (3,500,000 | ) |   |   | - |   |
| Net cash flows from investing activities          |   |   | 500,000 |   |   |   | (4,045,000 | ) |
|                                              |   |   |   |   |   |   |   |   |
| Cash flow from financing activities               |   |   |   |   |   |   |   |   |
| Net (decrease) in borrowings                      |   |   | - |   |   |   | (500,000 | ) |
| Net proceeds from issuance of preferred stock     |   |   | - |   |   |   | 4,661,756 |   |
| Dividends on preferred stock                      |   |   | (256,150 | ) |   |   | (128,075 | ) |
| Proceeds from issuance of common stock            |   |   |   |   |   |   |   |   |
| under Employee Stock Purchase Plan                |   |   | 13,551 |   |   |   | 20,276 |   |
| Net cash flows from financing activities          |   |   | (242,599 | ) |   |   | 4,053,957 |   |
|                                              |   |   |   |   |   |   |   |   |
| Change in cash and cash equivalents               |   |   | 252,683 |   |   |   | (18,898 | ) |
| Cash and cash equivalents at beginning of year    |   |   | 78,831 |   |   |   | 97,729 |   |
| Cash and cash equivalents at end of year          |   | $ | 331,514 |   |   | $ | 78,831 |   |

----

|                                                                                         |   | 2010   |    |   | 2009   |   |
|----------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Unrealized holding gains (losses) on available for sale securities arising during the period |   | $      | (36,935 | )      |   | $      | 89,964 |   |
| Tax effect                                                                                   |   |   | 12,558  |   |   |   | (30,587 | ) |
| Net-of-tax amount                                                                            |   | $      | (24,377 | )      |   | $      | 59,377 |   |

|                                                 |   | Year ended December 31, |       |
|------------------------------------------------------|--------|-------------------------|------------|
|                                                 |   | 2010                    |       |   | 2009 |   |
| Numerator:                                           |   |                    |       |   |   |   |
| Net income                                           |   | $                       | (1,915,769 | ) |   | $ | 189,220 |   |
| Preferred stock dividends and amortization, net      |   |                    | (310,799   | ) |   |   | (194,249 | ) |
| Net income (loss) available to common shareholders   |   |                    | (2,226,568 | ) |   |   | (5,029 | ) |
|                                                 |   |                    |       |   |   |   |   |   |
| Denominator:                                         |   |                    |       |   |   |   |   |   |
| Denominator for basic earnings per share available   |   |                    |       |   |   |   |   |   |
| to common shareholders-weighted average shares       |   |                    | 585,283    |   |   |   | 584,017 |   |
|                                                 |   |                    |       |   |   |   |   |   |
| Effect of dilutive shares:                           |   |                    |       |   |   |   |   |   |
| Nonqualified stock options                           |   |                    | -          |   |   |   | - |   |
|                                                 |   |                    |       |   |   |   |   |   |
| Denominator for diluted earnings per share available |   |                    |       |   |   |   |   |   |
| to common shareholders                               |   |                    | 585,283    |   |   |   | 584,017 |   |
|                                                 |   |                    |       |   |   |   |   |   |
| Basic earnings (loss) per common share               |   | $                       | (3.80      | ) |   | $ | (0.01 | ) |
|                                                 |   |                    |       |   |   |   |   |   |
| Diluted earnings (loss) per common share             |   | $                       | (3.80      | ) |   | $ | (0.01 | ) |
|                                                 |   |                    |       |   |   |   |   |   |
| Stock options not considered in computing            |   |                    |       |   |   |   |   |   |
| diluted earnings per common share because            |   |                    |       |   |   |   |   |   |
| they were antidilutive                               |   |                    | 98,137     |   |   |   | 104,387 |   |

----

----

| ($000’s except per share data)                         |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                         |   |   |    |   |   |   |
| Balance Sheet Data:                                          |   |   |    |   |   |   |
| Total assets                                                 |   | $      | 191,564 |   |   | $      | 201,933 |   |
| Securities available for sale                                |   |   | 12,993  |   |   |   | 10,019 |   |
| Total loans                                                  |   |   | 159,505 |   |   |   | 167,177 |   |
| Allowance for loan losses                                    |   |   | 4,544   |   |   |   | 2,317 |   |
| Total deposits                                               |   |   | 171,639 |   |   |   | 178,242 |   |
| Shareholders’ equity                                   |   |   | 17,337  |   |   |   | 19,483 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Income Statement Data:                                       |   |   |    |   |   |   |   |   |
| Total interest income                                        |   | $      | 9,058   |   |   | $      | 8,734 |   |
| Total interest expense                                       |   |   | 2,208   |   |   |   | 2,781 |   |
| Net interest income                                          |   |   | 6,850   |   |   |   | 5,953 |   |
| Provision for loan losses                                    |   |   | 4,913   |   |   |   | 885 |   |
| Net interest income after provision for loan losses          |   |   | 1,937   |   |   |   | 5,068 |   |
| Noninterest income                                           |   |   | 637     |   |   |   | 494 |   |
| Noninterest expense                                          |   |   | 5,587   |   |   |   | 5,403 |   |
| Income (loss) before income tax                              |   |   | (3,013  | )      |   |   | 159 |   |
| Income tax (benefit) expense                                 |   |   | (1,097  | )      |   |   | (30 | ) |
| Net income (loss)                                            |   | $      | (1,916  | )      |   | $      | 189 |   |
| Preferred stock dividends and amortization, net              |   |   | 311     |   |   |   | 194 |   |
| Net income (loss) available to common shareholders           |   | $      | (2,227  | )      |   | $      | (5 | ) |
|                                                         |   |   |    |   |   |   |   |   |
| Per Share Data:                                              |   |   |    |   |   |   |   |   |
| Basic income (loss) per common share                         |   | $      | (3.80   | )      |   | $      | (0.01 | ) |
| Diluted income (loss) per common share                       |   |   | (3.80   | )      |   |   | (0.01 | ) |
| Tangible common equity per common share at year-end (a)      |   |   | 21.48   |   |   |   | 25.29 |   |
| Cash dividends per common share                              |   |   | n/a     |   |   |   | n/a |   |
|                                                         |   |   |    |   |   |   |   |   |
| Average shares used in basic income per share calculations   |   |   | 585,283 |   |   |   | 584,017 |   |
| Average shares used in diluted income per share calculations |   |   | 585,283 |   |   |   | 584,017 |   |
|                                                         |   |   |    |   |   |   |   |   |
| Operating Ratios:                                            |   |   |    |   |   |   |   |   |
| Total loans to total deposits                                |   |   | 92.93   | %      |   |   | 93.79 | % |
| Total shareholders’ equity to total assets             |   |   | 9.05    | %      |   |   | 9.65 | % |
| Average shareholders’ equity to average assets         |   |   | 9.11    | %      |   |   | 9.46 | % |
| Return on average equity                                     |   |   | (10.10  | )%     |   |   | 1.06 | % |
| Return on average assets                                     |   |   | (0.92   | )%     |   |   | 0.10 | % |
| Dividend payout ratio                                        |   |   | n/a     |   |   |   | n/a |   |
| Allowance for loan losses to total loans                     |   |   | 2.85    | %      |   |   | 1.39 | % |
| Average assets                                               |   | $      | 208,103 |   |   | $      | 189,388 |   |
| Average shareholders’ equity                           |   |   | 18,967  |   |   |   | 17,922 |   |

----

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|                                      |   | December 31, 2010 |        |   | December 31, 2009   |   |
|-------------------------------------------|--------|-------------------|-------------|--------|---------------------|--------|
|                                      |   | Amount            |        |   | Percentof Portfolio |   |   | Amount |   |   | Percentof Portfolio |   |
| Noninterest bearing demand deposits       |   | $                 | 22,934,000  |   |                |   | 13.4 | % |   | $ | 22,789,000 |   |   |   | 12.8 | % |
| Interest-bearing NOW accounts             |   |              | 11,049,000  |   |                |   | 6.4 |   |   |   | 9,772,000 |   |   |   | 5.5 |   |
| Savings and money market accounts         |   |              | 69,483,000  |   |                |   | 40.5 |   |   |   | 66,250,000 |   |   |   | 37.2 |   |
| Certificates of deposit (CDs)             |   |              | 59,625,000  |   |                |   | 34.7 |   |   |   | 70,794,000 |   |   |   | 39.7 |   |
| Individual Retirement Arrangements (IRAs) |   |              | 8,548,000   |   |                |   | 5.0 |   |   |   | 8,637,000 |   |   |   | 4.8 |   |
|    Total Deposits          |   | $                 | 171,639,000 |   |                |   | 100.0 | % |   | $ | 178,242,000 |   |   |   | 100.0 | % |

----

----

|                                       |   | Year ended        |    |   | Year ended        |   |
|--------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                       |   | December 31, 2010 |    |   | December 31, 2009 |   |
|                                       |   | Average           |    |   |              |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                       |   | Balance           |    |   | Interest          |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| ($ in thousands)                           |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                   |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and other               |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| short term funds                           |   | $                 | 19,779  |   |              | $      | 49 |   |   |   | 0.25 | % |   | $ | 16,799 |   |   | $ | 57 |   |   |   | 0.34 | % |
| Securities — taxable                 |   |              | 6,213   |   |              |   | 256 |   |   |   | 4.31 | % |   |   | 5,735 |   |   |   | 280 |   |   |   | 4.92 | % |
| Securities — tax exempt              |   |              | 4,973   |   |              |   | 264 |   |   |   | 5.54 | % |   |   | 4,590 |   |   |   | 247 |   |   |   | 5.57 | % |
| Restricted stock                           |   |              | 932     |   |              |   | 45 |   |   |   | 4.81 | % |   |   | 777 |   |   |   | 39 |   |   |   | 4.97 | % |
| Loans                                      |   |              | 168,798 |   |              |   | 8,527 |   |   |   | 5.05 | % |   |   | 155,568 |   |   |   | 8,186 |   |   |   | 5.26 | % |
| Total interest-earning assets              |   |              | 200,695 |   |              |   | 9,141 |   |   |   | 4.55 | % |   |   | 183,469 |   |   |   | 8,809 |   |   |   | 4.81 | % |
| Noninterest earning assets                 |   |              | 7,407   |   |              |   |   |   |   |   |   |   |   |   | 5,919 |   |   |   |   |   |   |   |   |   |
| Total assets                               |   | $                 | 208,102 |   |              |   |   |   |   |   |   |   |   | $ | 189,388 |   |   |   |   |   |   |   |   |   |
|                                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:              |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transaction accounts (NOW)                 |   | $                 | 10,313  |   |              |   | 45 |   |   |   | 0.44 | % |   | $ | 8,344 |   |   |   | 48 |   |   |   | 0.57 | % |
| Market rate savings accounts               |   |              | 74,480  |   |              |   | 491 |   |   |   | 0.66 | % |   |   | 67,941 |   |   |   | 609 |   |   |   | 0.90 | % |
| Time deposits                              |   |              | 80,367  |   |              |   | 1,587 |   |   |   | 1.97 | % |   |   | 71,293 |   |   |   | 1,971 |   |   |   | 2.77 | % |
| Federal Home Loan Bank                     |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| advances and other borrowings              |   |              | 2,341   |   |              |   | 85 |   |   |   | 3.63 | % |   |   | 4,196 |   |   |   | 153 |   |   |   | 3.64 | % |
| Total interest-bearing liabilities         |   |              | 167,501 |   |              |   | 2,208 |   |   |   | 1.32 | % |   |   | 151,774 |   |   |   | 2,781 |   |   |   | 1.83 | % |
| Noninterest-bearing liabilities            |   |              | 21,635  |   |              |   |   |   |   |   |   |   |   |   | 19,692 |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                       |   |              | 18,967  |   |              |   |   |   |   |   |   |   |   |   | 17,922 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity |   | $                 | 208,103 |   |              |   |   |   |   |   |   |   |   | $ | 189,388 |   |   |   |   |   |   |   |   |   |
|                                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                        |   |              |    |   |              |   | 6,933 |   |   |   |   |   |   |   |   |   |   |   | 6,028 |   |   |   |   |   |
| Tax equivalent adjustment                  |   |              |    |   |              |   | (83 | ) |   |   |   |   |   |   |   |   |   |   | (75 | ) |   |   |   |   |
| Net interest income per                    |   |              |    |   |              | $      | 6,850 |   |   |   |   |   |   |   |   |   |   | $ | 5,953 |   |   |   |   |   |
| financial statements                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin                        |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Net yield on average earning assets)      |   |              |    |   |              |   |   |   |   |   | 3.45 | % |   |   |   |   |   |   |   |   |   |   | 3.29 | % |

----

|   | Volume Variance - change in volume multiplied by the previous year's rate. |
|--------|----------------------------------------------------------------------------|

|   | Rate Variance - change in rate multiplied by the previous year's volume. |
|--------|--------------------------------------------------------------------------|

|   | Rate/Volume Variance - change in volume multiplied by the change in rate.  This variance was allocated to volume variance and rate variance in proportion to the relationship of the absolute dollar amount of the change in each. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Summary of Changes in Net Interest Income |   |
|------------------------------------|--------|-------------------------------------------|--------|
|                               |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | 2010 vs. 2009                             |   |   | 2009 vs. 2008 |   |
|                               |   | Increase (Decrease) due to                |   |   | Increase (Decrease) due to |   |
|                               |   | Volume                                    |   |   | Rate |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
| ($ in thousands)                   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income:                   |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold and other       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| short term funds                   |   | $                                         | 9      |   |   | $ | (17 | ) |   | $ | (8 | ) |   | $ | 48 |   |   | $ | (265 | ) |   | $ | (217 | ) |
| Securities — taxable         |   |                                      | 12     |   |   |   | (36 | ) |   |   | (24 | ) |   |   | (39 | ) |   |   | (11 | ) |   |   | (50 | ) |
| Securities — tax exempt      |   |                                      | 18     |   |   |   | (1 | ) |   |   | 17 |   |   |   | (2 | ) |   |   | 8 |   |   |   | 6 |   |
| Restricted stock                   |   |                                      | 7      |   |   |   | (1 | ) |   |   | 6 |   |   |   | 7 |   |   |   | (2 | ) |   |   | 5 |   |
| Loans                              |   |                                      | 663    |   |   |   | (322 | ) |   |   | 341 |   |   |   | 1,181 |   |   |   | (1,794 | ) |   |   | (613 | ) |
| Total interest-earning assets      |   |                                      | 709    |   |   |   | (377 | ) |   |   | 332 |   |   |   | 1,195 |   |   |   | (2,064 | ) |   |   | (869 | ) |
|                               |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                  |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transaction accounts (NOW)         |   |                                      | (10    | ) |   |   | 13 |   |   |   | 3 |   |   |   | (12 | ) |   |   | 33 |   |   |   | 21 |   |
| Market rate savings accounts       |   |                                      | (54    | ) |   |   | 172 |   |   |   | 118 |   |   |   | 192 |   |   |   | 1,091 |   |   |   | 1,283 |   |
| Time deposits                      |   |                                      | (210   | ) |   |   | 594 |   |   |   | 384 |   |   |   | (816 | ) |   |   | 451 |   |   |   | (365 | ) |
| Federal Home Loan Bank             |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| advances and other borrowings      |   |                                      | 69     |   |   |   | (1 | ) |   |   | 68 |   |   |   | 64 |   |   |   | (14 | ) |   |   | 50 |   |
| Total interest-bearing liabilities |   |                                      | (205   | ) |   |   | 778 |   |   |   | 573 |   |   |   | (572 | ) |   |   | 1,561 |   |   |   | 989 |   |
| Change in net interest income      |   | $                                         | 504    |   |   | $ | 401 |   |   | $ | 905 |   |   | $ | 623 |   |   | $ | (503 | ) |   | $ | 120 |   |

----

----

|                           |   | 2010   |    |   | 2009   |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|
| Loan expense                   |   | $      | 61,465  |   |   | $      | 54,347 |   |
| Travel and entertainment       |   |   | 69,641  |   |   |   | 38,360 |   |
| Insurance other than FDIC      |   |   | 34,211  |   |   |   | 36,992 |   |
| CDARS fees                     |   |   | 17,180  |   |   |   | 27,448 |   |
| Telephone                      |   |   | 21,207  |   |   |   | 23,682 |   |
| Supplies, postage and printing |   |   | 82,562  |   |   |   | 83,055 |   |
| Dues and memberships           |   |   | 29,269  |   |   |   | 27,015 |   |
| Other                          |   |   | 100,645 |   |   |   | 38,967 |   |
| Total                          |   | $      | 416,180 |   |   | $      | 329,866 |   |

|              |   | Commercial Real Estate |       |   | CommercialBusiness |   |       | Residential |   |   | Consumer     |   |   | Unallocated |    |   | Total  |    |
|-------------------|--------|-----------------------------|------------|--------|--------------------|--------|------------|-------------|--------|--------|--------------|--------|--------|-------------|---------|--------|--------|---------|
| Beginning Balance |   | $                           | 1,550,127  |   |               | $      | 493,530    |        |   | $      | 53,661       |   |   | $           | 60,755  |   |   | $  |  158,642 |   |   | $ | 2,316,715 |   |
| Charge-offs       |   |                        | (1,305,300 | )      |               |   | (1,365,186 | )           |   |   | (6,785       | )      |   |        | (46,868 | )      |   |    |   |   |   |   | (2,724,139 | ) |
| Recoveries        |   |                        | 15,311     |   |               |   | 358        |        |   |   | 17,475       |   |   |        | 5,987   |   |   |    |   |   |   |   | 39,131 |   |
| Provisions        |   |                        | 3,203,243  |   |               |   | 1,540,859  |        |   |   |  98,021 |   |   |        | 14,902  |   |   |    | 55,584 |   |   |   | 4,912,609 |   |
|              |   | $                           | 3,463,381  |   |               | $      | 669,561    |        |   | $      | 162,372      |   |   | $           | 34,776  |   |   | $  |  214,226 |   |   | $ | 4,544,316 |   |

----

----

----

| ($ in thousands)                   |   | NoteReference |   |   | 2011   |   |    | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015   |   |    | Thereafter |   |
|------------------------------------|--------|---------------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|------------|--------|
| Deposits without maturity          |   |          | 7      |   |   | $      | 103,466 |   |   |   |   |   |   |   |   |   |   |   |    |       |   |   |   |
| Time deposits                      |   |          | 7      |   |   |   | 37,481  |   |   | $      | 16,203 |   |   | $      | 10,007 |   |   | $      | 1,033   |       |   | $ | 3,437 |   |   | $ | 12 |   |
| FHLB advances and other borrowings |   |          | 8      |   |   |   | 1,400   |   |   |   | 300    |   |   |   | 200    |   |   |   | — |       |   |   | — |   |   |   | — |   |
| Operating leases                   |   |          | 6      |   |   |   | 428     |   |   |   | 436    |   |   |   | 400    |   |   |   | 135     |       |   |   | — |   |   |   | — |   |

----

----

----

| P.M. Jones                            | Edward J. McKeon                      |
|---------------------------------------|---------------------------------------|
| Chairman                              | President and Chief Executive Officer |
| Western Reserve Bancorp, Inc. and     | Western Reserve Bancorp, Inc. and     |
| Western Reserve Bank                  | Western Reserve Bank                  |
| Medina, Ohio                          | Medina, Ohio                          |
|                                  |                                  |
| Roland H. Bauer                       | R. Hal Nichols                        |
| President and Chief Executive Officer | Chairman and Manager                  |
| The Cypress Companies                 | Austin Associates, LLC                |
| Akron, Ohio                           | Toledo, Ohio                          |
|                                  |                                  |
| Bijay K. Jayaswal, M.D (2).           | Rory H. O’Neil                  |
| Physician, Cardiology                 | President                             |
| Medina, Ohio                          | Quetzal Corp.                         |
|                                  | Westfield Center, Ohio                |
|                                  |                                  |
| Ray E. Laribee                        | Glenn M. Smith                        |
| Attorney                              | Retired President                     |
| Laribee & Hertrick                | Smith Bros., Inc.                     |
| Medina, Ohio                          | Medina, Ohio                          |
|                                  |                                  |
| C. Richard Lynham                     | Thomas A. Tubbs                       |
| Chairman of the Board and Owner       | Bank Executive Benefits Consultant    |
| Harbor Castings, Inc.                 | Homerville, Ohio                      |
| North Canton, Ohio                    |                                  |

----