|   | ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------|--------------------------------------------------------------------------------------|

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

| New York                                                                                          |         | 22-2385448                           |
|---------------------------------------------------------------------------------------------------|--------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |         | (I.R.S. Employer Identification No.) |
|                                                                                              |         |                                 |
| 4866 State Rte. 52, Jeffersonville, New York                                                      |         | 12748                                |
| (Address of principal executive offices)                                                          |    | (Zip Code)                           |

| (845) 482-4000                                                                      |
|-------------------------------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

| Title of each class |         | Name of each exchange on which registered |
|---------------------|--------------|-------------------------------------------|
| NONE                |    | NONE                                      |

| Yes  ̈ | No x |
|------------|------|

| Yes  ̈ | No x |
|------------|------|

| Yes x | No o |
|-------|------|

| Yes  ̈ | No o |
|------------|------|

| Yes  ̈ | No x |
|------------|------|

| Class                                   |         | Outstanding at March 24, 2011 |
|-----------------------------------------|--------------|-------------------------------|
| Common Stock, $0.50 par value per share |    | 4,234,505 shares              |

| Document                                                          |         | Parts Into Which Incorporated |
|-------------------------------------------------------------------|--------------|----------------------------------------------|
|                                                              |         |                                         |
| Proxy Statement for the Annual Meeting of Stockholders to be held |         | Part III Items 10, 11, 12, 13 and 14         |
| April 26, 2011 (Proxy Statement)                                  |    |                                         |

----

|     |                                                                     | Page   |
|----------|--------------------------------------------------------------------------|--------|
|     |                                                                     |   |
| PART I   |                                                                     |   |
|     |                                                                     |   |
| Item 1.  | Business                                                                 | 3      |
|     |                                                                     |   |
| Item 1A. | Risk Factors                                                             | 8      |
|     |                                                                     |   |
| Item 1B. | Unresolved Staff Comments                                                | 12     |
|     |                                                                     |   |
| Item 2.  | Properties                                                               | 12     |
|     |                                                                     |   |
| Item 3.  | Legal Proceedings                                                        | 12     |
|     |                                                                     |   |
| Item 4.  | (Removed and Reserved)                                                   |   |
|     |                                                                     |   |
| PART II  |                                                                     |   |
|     |                                                                     |   |
| Item 5.  | Market for the Registrant’s Common Equity,                         |   |
|     | Related Stockholder Matters and Issuer Purchases of Equity Securities    | 13     |
|     |                                                                     |   |
| Item 6.  | Selected Financial Data                                                  | 14     |
|     |                                                                     |   |
| Item 7.  | Management’s Discussion and Analysis of                            |   |
|     | Financial Condition and Results of Operations                            | 15     |
|     |                                                                     |   |
| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk               | 29     |
|     |                                                                     |   |
| Item 8.  | Financial Statements and Supplementary Data                              | 30     |
|     |                                                                     |   |
| Item 9.  | Changes in and Disagreements with Accountants                            |   |
|     | on Accounting and Financial Disclosure                                   | 66     |
|     |                                                                     |   |
| Item 9A. | Controls and Procedures                                                  | 66     |
|     |                                                                     |   |
| Item 9B. | Other Information                                                        | 66     |
|     |                                                                     |   |
| PART III |                                                                     |   |
|     |                                                                     |   |
| Item 10. | Directors, Executive Officers and Corporate Governance                   | 67     |
|     |                                                                     |   |
| Item 11. | Executive Compensation                                                   | 67     |
|     |                                                                     |   |
| Item 12. | Security Ownership of Certain Beneficial Owners                          |   |
|     | and Management, and Related Stockholder Matters                          | 67     |
|     |                                                                     |   |
| Item 13. | Certain Relationships and Related Transactions and Director Independence | 67     |
|     |                                                                     |   |
| Item 14. | Principal Accountant and Fees and Services                               | 67     |
|     |                                                                     |   |
| PART IV  |                                                                     |   |
|     |                                                                     |   |
| Item 15. | Exhibits, Financial Statement Schedules                                  | 68     |
|     |                                                                     |   |
|     | Signatures                                                               | 69     |

----

----

----

|                        |   | Basis Points         |          |
|-----------------------------|--------|---------------------------|---------------|
| DIF Reserve Ratio |   | Risk Category I |          |   | Risk Category II |   |   | Risk Category III |   |   | Risk Category IV |   |
| < 1.15%                  |   |                      | 2.5 – 9 |   |   |   | 9 – 24 |   |   |   | 18 – 33 |   |   |   | 30 – 45 |   |
| 1.15 – 2%             |   |                      | 1.5 – 7 |   |   |   | 7 – 22 |   |   |   | 14 – 29 |   |   |   | 25 – 40 |   |
| 2 – 2.5%              |   |                      | 1 – 6   |   |   |   | 5 – 20 |   |   |   | 12 – 27 |   |   |   | 23 – 38 |   |
| > 2.5%                   |   |                      | 0.5 – 5 |   |   |   | 4.5 – 19 |   |   |   | 10 – 25 |   |   |   | 20 – 35 |   |

----

----

----

| Tax Expense (Benefit) |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal                         |   | $      | 559    |   |   | $      | (791   | )      |   | $ | 1,135 |   |
| State                           |   |   | 60     |   |   |   | 57     |   |   |   | 57 |   |
| Deferred tax (benefit)          |   |   | (337   | )      |   |   | 1,417  |   |   |   | (2,053 | ) |
| Total income taxes              |   | $      | 282    |   |   | $      | 683    |   |   | $ | (861 | ) |

----

|   | · | The establishment of the Financial Stability Oversight Counsel, which will be responsible for identifying and monitoring systemic risks posed by financial firms, activities, and practices. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Enhanced supervision of large bank holding companies (i.e., those with over $50 billion in total consolidated assets), with more stringent supervisory standards to be applied to them. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The creation of a special regime to allow for the orderly liquidation of systemically important financial companies, including the establishment of an orderly liquidation fund. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The development of regulations to address derivatives markets, including clearing and exchange trading requirements and a framework for regulating derivatives-market participants. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Enhanced supervision of credit-rating agencies through the Office of Credit Ratings within the SEC. |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | Increased regulation of asset-backed securities, including a requirement that issuers of asset-backed securities retain at least 5% of the risk of the asset-backed securities. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The establishment of a Bureau of Consumer Financial Protection, within the Federal Reserve, to serve as a dedicated consumer-protection regulatory body. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Amendments to the Truth in Lending Act aimed at improving consumer protections with respect to mortgage originations, including originator compensation, minimum repayment standards, and prepayment considerations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Premises and Equipment                         |   | 2010   |   |
|------------------------------------------------|--------|--------|--------|
| Land                                           |   | $      | 1,057  |   |
| Buildings and improvements                     |   |   | 6,563  |   |
| Furniture and fixtures                         |   |   | 337    |   |
| Equipment                                      |   |   | 4,191  |   |
|                                           |   |   | 12,148 |   |
| Less accumulated depreciation and amortization |   |   | 6,864  |   |
| Total premises and equipment, net              |   | $      | 5,284  |   |

| ITEM 3. | LEGAL PROCEEDINGS |
|---------|-------------------|

----

| ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|------------------------------------------------------------------------------------------------------------------------|

|                                  |   |   |   |   |   |   |   | Cash      |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|-----------|--------|
|                                  |   | Sales  |   |   | Sales  |   |   | dividends |   |
| For the Quarter Ended: |   | low    |   |   | high   |   |   | paid      |   |
| December 31, 2010                     |   | $      | 10.04  |   |   | $      | 11.25  |      |   | $ | 0.13 |   |
| September 30, 2010                    |   | $      | 10.00  |   |   | $      | 11.25  |      |   | $ | 0.13 |   |
| June 30, 2010                         |   | $      | 11.00  |   |   | $      | 12.45  |      |   | $ | 0.13 |   |
| March 31, 2010                        |   | $      | 9.50   |   |   | $      | 12.60  |      |   | $ | 0.13 |   |
| December 31, 2009                     |   | $      | 9.00   |   |   | $      | 10.03  |      |   | $ | 0.13 |   |
| September 30, 2009                    |   | $      | 8.62   |   |   | $      | 9.75   |      |   | $ | 0.13 |   |
| June 30, 2009                         |   | $      | 8.56   |   |   | $      | 9.75   |      |   | $ | 0.13 |   |
| March 31, 2009                        |   | $      | 8.52   |   |   | $      | 9.78   |      |   | $ | 0.13 |   |

----

|                       |   | Period Ending December 31, |   |
|----------------------------|--------|-------------------------------------------|--------|
| Index:                     |   | 2005                                      |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Jeffersonville Bancorp     |   |                                      | 100.00 |   |   |   | 80.99 |   |   |   | 61.58 |   |   |   | 44.22 |   |   |   | 46.32 |   |   |   | 53.74 |   |
| NASDAQ Composite Index     |   |                                      | 100.00 |   |   |   | 110.39 |   |   |   | 122.15 |   |   |   | 73.32 |   |   |   | 106.57 |   |   |   | 125.91 |   |
| SNL Bank $250M-$500M Index |   |                                      | 100.00 |   |   |   | 104.48 |   |   |   | 84.92 |   |   |   | 48.50 |   |   |   | 44.89 |   |   |   | 50.24 |   |

| ITEM 6. | SELECTED FINANCIAL DATA |
|---------|-------------------------|

| December 31,                                          |   | 2010   |      |   | 2009   |   |      | 2008   |   |   | 2007      |   |   | 2006   |      |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Results of Operations                                      |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
| Interest income                                            |   | $      | 21,838    |   |   | $      | 21,827    |   |   | $      | 22,953    |   |   | $      | 23,479    |   |   | $ | 23,881 |   |
| Interest expense                                           |   |   | 4,365     |   |   |   | 5,847     |   |   |   | 7,228     |   |   |   | 8,615     |   |   |   | 8,211 |   |
| Net interest income                                        |   |   | 17,473    |   |   |   | 15,980    |   |   |   | 15,725    |   |   |   | 14,864    |   |   |   | 15,670 |   |
| Provision (credit) for loan losses                         |   |   | 2,300     |   |   |   | 1,300     |   |   |   | 265       |   |   |   | (370      | ) |   |   | 90 |   |
| Net income                                                 |   |   | 3,129     |   |   |   | 3,084     |   |   |   | 2,702     |   |   |   | 4,275     |   |   |   | 4,943 |   |
| Financial Condition                                        |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total assets                                               |   | $      | 430,787   |   |   | $      | 422,684   |   |   | $      | 398,567   |   |   | $      | 387,430   |   |   | $ | 397,291 |   |
| Total deposits                                             |   |   | 350,906   |   |   |   | 352,205   |   |   |   | 296,724   |   |   |   | 299,242   |   |   |   | 325,073 |   |
| Gross loans                                                |   |   | 282,147   |   |   |   | 279,407   |   |   |   | 267,563   |   |   |   | 252,985   |   |   |   | 250,760 |   |
| Stockholders’ equity                                 |   |   | 47,498    |   |   |   | 44,663    |   |   |   | 42,662    |   |   |   | 43,958    |   |   |   | 41,275 |   |
| Average Balances                                           |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Total assets                                               |   | $      | 439,150   |   |   | $      | 415,678   |   |   | $      | 393,964   |   |   | $      | 389,384   |   |   | $ | 400,535 |   |
| Total deposits                                             |   |   | 366,486   |   |   |   | 327,257   |   |   |   | 300,984   |   |   |   | 315,941   |   |   |   | 326,136 |   |
| Gross loans                                                |   |   | 279,174   |   |   |   | 270,361   |   |   |   | 259,713   |   |   |   | 250,277   |   |   |   | 246,890 |   |
| Stockholders’ equity                                 |   |   | 46,605    |   |   |   | 43,755    |   |   |   | 43,929    |   |   |   | 42,249    |   |   |   | 42,272 |   |
| Financial Ratios                                           |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Net income to average total assets                         |   |   | 0.71      | %      |   |   | 0.74      | %      |   |   | 0.69      | %      |   |   | 1.10      | % |   |   | 1.23 | % |
| Net income to average stockholders’ equity           |   |   | 6.71      | %      |   |   | 7.05      | %      |   |   | 6.15      | %      |   |   | 10.12     | % |   |   | 11.69 | % |
| Average stockholders’ equity to average total assets |   |   | 10.61     | %      |   |   | 10.53     | %      |   |   | 11.15     | %      |   |   | 10.85     | % |   |   | 10.55 | % |
| Share and Per Share Data                                   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Basic earnings per share                                   |   | $      | 0.74      |   |   | $      | 0.73      |   |   | $      | 0.64      |   |   | $      | 1.00      |   |   | $ | 1.13 |   |
| Dividends per share                                        |   | $      | 0.52      |   |   | $      | 0.52      |   |   | $      | 0.52      |   |   | $      | 0.50      |   |   | $ | 0.48 |   |
| Dividend payout ratio                                      |   |   | 70.4      | %      |   |   | 71.4      | %      |   |   | 81.5      | %      |   |   | 49.9      | % |   |   | 42.4 | % |
| Book value at year end                                     |   | $      | 11.22     |   |   | $      | 10.55     |   |   | $      | 10.08     |   |   | $      | 10.38     |   |   | $ | 9.59 |   |
| Total dividends paid                                       |   | $      | 2,202,000 |   |   | $      | 2,202,000 |   |   | $      | 2,202,000 |   |   | $      | 2,134,000 |   |   | $ | 2,098,000 |   |
| Average number of shares outstanding                       |   |   | 4,234,459 |   |   |   | 4,234,321 |   |   |   | 4,234,321 |   |   |   | 4,266,397 |   |   |   | 4,376,494 |   |
| Shares outstanding at year end                             |   |   | 4,234,505 |   |   |   | 4,234,321 |   |   |   | 4,234,321 |   |   |   | 4,234,321 |   |   |   | 4,305,348 |   |

----

|                    |   | December 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |   | December 31, |   |   | September 30, |   |   | June 30, |   |   | March 31, |   |
|------------------------------|--------|-------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|----------------|--------|--------|-------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|----------------|--------|
|                         |   | 2010              |   |   | 2010               |   |   | 2010          |   |   | 2010           |   |   | 2009              |   |   | 2009               |   |   | 2009          |   |   | 2009           |   |
| Interest income              |   | $                 | 5,389  |   |               | $      | 5,484  |          |   | $      | 5,572          |   |   | $                 | 5,393  |   |               | $      | 5,482  |          |   | $      | 5,565          |   |   | $ | 5,407 |   |   | $ | 5,373 |   |
| Interest expense             |   |              | (958   | )      |               |   | (1,110 | )             |   |   | (1,153         | )      |   |              | (1,144 | )      |               |   | (1,277 | )             |   |   | (1,438         | )      |   |   | (1,539 | ) |   |   | (1,593 | ) |
| Net interest income          |   |              | 4,431  |   |               |   | 4,374  |          |   |   | 4,419          |   |   |              | 4,249  |   |               |   | 4,205  |          |   |   | 4,127          |   |   |   | 3,868 |   |   |   | 3,780 |   |
| Provision for loan losses    |   |              | (650   | )      |               |   | (650   | )             |   |   | (800           | )      |   |              | (200   | )      |               |   | (800   | )             |   |   | (350           | )      |   |   | — |   |   |   | (150 | ) |
| Non-interest income          |   |              | 844    |   |               |   | 673    |          |   |   | 654            |   |   |              | 786    |   |               |   | 993    |          |   |   | 890            |   |   |   | 854 |   |   |   | 891 |   |
| Non-interest expenses        |   |              | (3,542 | )      |               |   | (3,540 | )             |   |   | (3,676         | )      |   |              | (3,961 | )      |               |   | (3,671 | )             |   |   | (3,570         | )      |   |   | (3,645 | ) |   |   | (3,655 | ) |
| Income before income taxes   |   |              | 1,083  |   |               |   | 857    |          |   |   | 597            |   |   |              | 874    |   |               |   | 727    |          |   |   | 1,097          |   |   |   | 1,077 |   |   |   | 866 |   |
| Income tax (expense) benefit |   |              | (142   | )      |               |   | (89    | )             |   |   | 32             |   |   |              | (83    | )      |               |   | (91    | )             |   |   | (281           | )      |   |   | (199 | ) |   |   | (112 | ) |
| Net income                   |   | $                 | 941    |   |               | $      | 768    |          |   | $      | 629            |   |   | $                 | 791    |   |               | $      | 636    |          |   | $      | 816            |   |   | $ | 878 |   |   | $ | 754 |   |
| Basic earnings per share     |   | $                 | 0.22   |   |               | $      | 0.18   |          |   | $      | 0.15           |   |   | $                 | 0.19   |   |               | $      | 0.15   |          |   | $      | 0.19           |   |   | $ | 0.21 |   |   | $ | 0.18 |   |

| ITEM 7.  | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------------------|---------------------------------------------------------------------------------------------|

----

----

----

----

|   | 1. | Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Changes in national, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Changes in the nature and volume of the portfolio and terms of loans. |
|--------|----|-----------------------------------------------------------------------|

|   | 4. | Changes in the experience, ability, and depth of lending management and staff. |
|--------|----|--------------------------------------------------------------------------------|

|   | 5. | Changes in volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications. |
|--------|----|----------------------------------------------------------------------------------------------------------------------|

|   | 6. | Changes in the quality of the Bank’s loan review system, and the degree of oversight by the Bank’s Board of Directors. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------|

|   | 7. | The existence and effect of any concentrations of credit and changes in the level of such concentrations. |
|--------|----|-----------------------------------------------------------------------------------------------------------|

|   | 8. | The effect of external factors, such as competition and legal and regulatory requirements. |
|--------|----|--------------------------------------------------------------------------------------------|

----

|                                                               |   | 2010   |   |   | 2009   |   |    | 2008   |   |   | 2007    |   |   | 2006   |    |
|--------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|
| Balance at beginning of year                                       |   | $      | 3,988  |   |   | $      | 3,170   |   |   | $      | 3,352   |   |   | $      | 3,516   |   |   | $ | 3,615 |   |
| Charge-offs:                                                       |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Commercial loans - financial and agriculture                       |   |   | (254   | )      |   |   | (301    | )      |   |   | (294    | )      |   |   | (106    | ) |   |   | (208 | ) |
| Commercial mortgages                                               |   |   | (1,458 | )      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Residential mortgages(1)                                           |   |   | (220   | )      |   |   | (95     | )      |   |   | (21     | )      |   |   | (5      | ) |   |   | (66 | ) |
| Installment loans - consumer                                       |   |   | (89    | )      |   |   | (150    | )      |   |   | (179    | )      |   |   | (118    | ) |   |   | (156 | ) |
| Other loans                                                        |   |   | (88    | )      |   |   | (102    | )      |   |   | (153    | )      |   |   | (89     | ) |   |   | (103 | ) |
| Total charge-offs                                                  |   |   | (2,109 | )      |   |   | (648    | )      |   |   | (647    | )      |   |   | (318    | ) |   |   | (533 | )) |
| Recoveries:                                                        |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |
| Commercial loans - financial and agriculture                       |   |   | 51     |   |   |   | 25      |   |   |   | 80      |   |   |   | 388     |   |   |   | 187 |   |
| Residential mortgages(1)                                           |   |   | 3      |   |   |   | 3       |   |   |   | 9       |   |   |   | 5       |   |   |   | — |   |
| Installment loans - consumer                                       |   |   | 47     |   |   |   | 74      |   |   |   | 47      |   |   |   | 72      |   |   |   | 98 |   |
| Other loans                                                        |   |   | 55     |   |   |   | 64      |   |   |   | 64      |   |   |   | 59      |   |   |   | 59 |   |
| Total recoveries                                                   |   |   | 156    |   |   |   | 166     |   |   |   | 200     |   |   |   | 524     |   |   |   | 344 |   |
| Net recoveries (charge-offs)                                       |   |   | (1,953 | )      |   |   | (482    | )      |   |   | (447    | )      |   |   | 206     |   |   |   | (189 | ) |
| Provision charged (credited) to operations                         |   |   | 2,300  |   |   |   | 1,300   |   |   |   | 265     |   |   |   | (370    | ) |   |   | 90 |   |
| Balance at end of year                                             |   | $      | 4,335  |   |   | $      | 3,988   |   |   | $      | 3,170   |   |   | $      | 3,352   |   |   | $ | 3,516 |   |
| Ratio of net (recoveries) charge-offs to average outstanding loans |   |   | 0.70   | %      |   |   | 0.18    | %      |   |   | 0.17    | %      |   |   | (0.08   | )% |   |   | 0.08 | % |

----

| At December 31,                           |   | 2010   |   |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Amount of Allowance for Loan Losses:                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial mortgages                                |   | $      | 2,160  |   |   | $      | 1,799  |   |   | $      | 1,327  |   |   | $      | 1,117  |   |   | $ | 1,108 |   |
| Commercial loans – financial and agricultural |   |   | 622    |   |   |   | 561    |   |   |   | 596    |   |   |   | 338    |   |   |   | 412 |   |
| Residential mortgages(1)                            |   |   | 1,213  |   |   |   | 1,249  |   |   |   | 895    |   |   |   | 1,483  |   |   |   | 1,425 |   |
| Installment loans - consumer                        |   |   | 106    |   |   |   | 132    |   |   |   | 113    |   |   |   | 151    |   |   |   | 207 |   |
| Other loans                                         |   |   | 61     |   |   |   | 55     |   |   |   | 54     |   |   |   | 32     |   |   |   | 68 |   |
| Unallocated                                         |   |   | 173    |   |   |   | 192    |   |   |   | 185    |   |   |   | 231    |   |   |   | 296 |   |
| Total                                               |   | $      | 4,335  |   |   | $      | 3,988  |   |   | $      | 3,170  |   |   | $      | 3,352  |   |   | $ | 3,516 |   |
| Percent of Loans in Each Category to Total Loans:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial mortgages                                |   |   | 37.2   | %      |   |   | 37.3   | %      |   |   | 36.0   | %      |   |   | 34.9   | % |   |   | 34.6 | % |
| Commercial loans – financial and agricultural |   |   | 9.5    |   |   |   | 9.6    |   |   |   | 9.6    |   |   |   | 10.5   |   |   |   | 11.4 |   |
| Residential mortgages (1)                           |   |   | 50.5   |   |   |   | 50.2   |   |   |   | 51.5   |   |   |   | 51.0   |   |   |   | 50.1 |   |
| Installment loans - consumer                        |   |   | 2.3    |   |   |   | 2.4    |   |   |   | 2.5    |   |   |   | 3.2    |   |   |   | 3.9 |   |
| Other loans                                         |   |   | 0.5    |   |   |   | 0.5    |   |   |   | 0.4    |   |   |   | 0.4    |   |   |   | 0.0 |   |

| At December 31,                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Nonaccrual Loan Category:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial mortgages                           |   | $      | 9,150  |   |   | $      | 10,534 |   |   | $      | 3,667  |   |   | $      | 1,819  |   |   | $ | 1,520 |   |
| Residential mortgages (1)                      |   |   | 939    |   |   |   | 617    |   |   |   | 769    |   |   |   | 368    |   |   |   | 347 |   |
| Commercial loans                               |   |   | 1,310  |   |   |   | 886    |   |   |   | 998    |   |   |   | 1,574  |   |   |   | — |   |
| Total nonaccrual loans                         |   |   | 11,399 |   |   |   | 12,037 |   |   |   | 5,434  |   |   |   | 3,761  |   |   |   | 1,867 |   |
| Loans 90 days or more, still accruing interest |   |   | 1,091  |   |   |   | 1,270  |   |   |   | 686    |   |   |   | 883    |   |   |   | 13 |   |
| Total nonperforming loans                      |   | $      | 12,490 |   |   | $      | 13,307 |   |   | $      | 6,120  |   |   | $      | 4,644  |   |   | $ | 1,880 |   |
| Percent of Nonperforming Loans outstanding to  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Loans                                    |   |   | 4.4    | %      |   |   | 4.8    | %      |   |   | 2.3    | %      |   |   | 1.8    | % |   |   | 0.8 | % |

----

| At December 31,  |   | 2010   |    |   | 2009    |   |   | 2008   |   |   | 2007    |   |   | 2006   |   |
|----------------------------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
|                       |   | Amount |    |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
| Real Estate Mortgage Loans |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                |   | $      | 108,397 |   |    |   | 38.4   | %      |   | $      | 103,748 |   |   |   | 37.1   | % |   | $ | 103,876 |   |   |   | 38.9 | % |   | $ | 97,411 |   |   |   | 38.5 | % |   | $ | 95,520 |   |   |   | 38.1 | % |
| Commercial                 |   |   | 100,427 |   |    |   | 35.6   |   |   |   | 99,056  |   |   |   | 35.5   |   |   |   | 92,678 |   |   |   | 34.6 |   |   |   | 84,383 |   |   |   | 33.4 |   |   |   | 82,987 |   |   |   | 33.1 |   |
| Home equity                |   |   | 31,968  |   |    |   | 11.3   |   |   |   | 32,765  |   |   |   | 11.7   |   |   |   | 31,096 |   |   |   | 11.6 |   |   |   | 25,977 |   |   |   | 10.3 |   |   |   | 24,195 |   |   |   | 9.6 |   |
| Farm land                  |   |   | 4,551   |   |    |   | 1.6    |   |   |   | 4,926   |   |   |   | 1.8    |   |   |   | 3,879 |   |   |   | 1.4 |   |   |   | 3,883 |   |   |   | 1.5 |   |   |   | 3,726 |   |   |   | 1.5 |   |
| Construction - residential |   |   | 2,304   |   |    |   | 0.8    |   |   |   | 3,841   |   |   |   | 1.4    |   |   |   | 2,737 |   |   |   | 1.0 |   |   |   | 5,531 |   |   |   | 2.2 |   |   |   | 6,087 |   |   |   | 2.4 |   |
|                       |   |   | 247,647 |   |    |   | 87.7   |   |   |   | 244,336 |   |   |   | 87.5   |   |   |   | 234,266 |   |   |   | 87.5 |   |   |   | 217,185 |   |   |   | 85.9 |   |   |   | 212,515 |   |   |   | 84.7 |   |
| Other Loans                |   |   |    |   |    |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial loans           |   |   | 25,864  |   |    |   | 9.2    |   |   |   | 26,035  |   |   |   | 9.3    |   |   |   | 25,183 |   |   |   | 9.4 |   |   |   | 26,431 |   |   |   | 10.4 |   |   |   | 28,106 |   |   |   | 11.3 |   |
| Consumer installment loans |   |   | 6,375   |   |    |   | 2.3    |   |   |   | 6,752   |   |   |   | 2.4    |   |   |   | 6,642 |   |   |   | 2.5 |   |   |   | 8,054 |   |   |   | 3.2 |   |   |   | 9,773 |   |   |   | 3.9 |   |
| Other loans                |   |   | 1,383   |   |    |   | 0.5    |   |   |   | 1,402   |   |   |   | 0.5    |   |   |   | 1,042 |   |   |   | 0.4 |   |   |   | 1,042 |   |   |   | 0.4 |   |   |   | 118 |   |   |   | 0.0 |   |
| Agricultural loans         |   |   | 878     |   |    |   | 0.3    |   |   |   | 882     |   |   |   | 0.3    |   |   |   | 430 |   |   |   | 0.2 |   |   |   | 273 |   |   |   | 0.1 |   |   |   | 248 |   |   |   | 0.1 |   |
|                       |   |   | 34,500  |   |    |   | 12.3   |   |   |   | 35,071  |   |   |   | 12.5   |   |   |   | 33,297 |   |   |   | 12.5 |   |   |   | 35,800 |   |   |   | 14.1 |   |   |   | 38,245 |   |   |   | 15.3 |   |
| Total loans                |   |   | 282,147 |   |    |   | 100.0  | %      |   |   | 279,407 |   |   |   | 100.0  | % |   |   | 267,563 |   |   |   | 100.0 | % |   |   | 252,985 |   |   |   | 100.0 | % |   |   | 250,760 |   |   |   | 100.0 | % |
| Allowance for loan losses  |   |   | 4,335   |   |    |   |   |   |   |   | (3,988  | )      |   |   |   |   |   |   | (3,170 | ) |   |   |   |   |   |   | (3,352 | ) |   |   |   |   |   |   | (3,516 | ) |   |   |   |   |
| Total loans, net           |   | $      | 277,812 |   |    |   |   |   |   | $      | 275,419 |   |   |   |   |   |   | $ | 264,393 |   |   |   |   |   |   | $ | 249,633 |   |   |   |   |   |   | $ | 247,244 |   |   |   |   |   |

|                                |   |          |   |   | One year   |   |    |            |   |   |    |   |
|-------------------------------------|--------|---------------|--------|--------|-----------------|--------|---------|-----------------|--------|--------|---------|--------|
|                                |   | One year |   |   | Through         |   |    | After           |   |   |    |   |
| At December 31, 2010 |   | or less  |   |   | five years |   |    | five years |   |   | Total   |   |
| Maturities of loans:                |   |          |   |   |            |   |    |            |   |   |    |   |
| Commercial and agricultural         |   | $             | 14,572 |   |            | $      | 9,972   |            |   | $      | 2,198   |   |   | $ | 26,742 |   |
| Real estate construction            |   |          | 3,125  |   |            |   | — |            |   |   | — |   |   |   | 3,125 |   |
| Total                               |   | $             | 17,697 |   |            | $      | 9,972   |            |   | $      | 2,198   |   |   | $ | 29,867 |   |
| Interest sensitivity of loans:      |   |          |   |   |            |   |    |            |   |   |    |   |   |   |   |   |
| Predetermined rate                  |   | $             | 4,460  |   |            | $      | 9,310   |            |   | $      | 2,198   |   |   | $ | 15,968 |   |
| Variable rate                       |   |          | 13,237 |   |            |   | 662     |            |   |   | — |   |   |   | 13,899 |   |
| Total                               |   | $             | 17,697 |   |            | $      | 9,972   |            |   | $      | 2,198   |   |   | $ | 29,867 |   |

----

| Summary of Investment Securities                    |   |      |    |   |   |   |    |      |   |   |   |   |   |      |   |   |   |   |
|--------------------------------------------------------------------|--------|-----------|---------|--------|--------|--------|---------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|
| At December 31,*                                                   |   | 2010      |    |   | 2009   |   |    | 2008      |   |
|                                                               |   | Amortized |    |   | Fair   |   |    | Amortized |   |   | Fair   |   |   | Amortized |   |   | Fair   |   |
|                                                               |   | cost      |    |   | value  |   |    | cost      |   |   | value  |   |   | cost      |   |   | value  |   |
| Government sponsored enterprises                                   |   | $         | 8,570   |   |   | $      | 8,587   |      |   | $      | 9,478  |   |   | $         | 9,471  |   |   | $      | 29,000 |   |   | $ | 29,128 |   |
| Obligations of state and political subdivisions                    |   |      | 62,840  |   |   |   | 63,924  |      |   |   | 56,947 |   |   |      | 58,758 |   |   |   | 42,615 |   |   |   | 43,520 |   |
| Mortgage backed securities and collateralized mortgage obligations |   |      | 32,117  |   |   |   | 33,211  |      |   |   | 28,868 |   |   |      | 29,510 |   |   |   | 17,819 |   |   |   | 18,059 |   |
| Corporate debt and certificates of deposit                         |   |      | 4,616   |   |   |   | 4,665   |      |   |   | 1,502  |   |   |      | 1,548  |   |   |   | — |   |   |   | — |   |
| Equity securities                                                  |   |      | 541     |   |   |   | 542     |      |   |   | 549    |   |   |      | 611    |   |   |   | 794 |   |   |   | 896 |   |
|                                                          |   | $         | 108,684 |   |   | $      | 110,929 |      |   | $      | 97,344 |   |   | $         | 99,898 |   |   | $      | 90,228 |   |   | $ | 91,603 |   |

| * | The analysis shown combines the Company’s securities available for sale and held to maturity. All securities are included above at their amortized cost less impairment charges. An impairment charge of $5,162,000 was recognized for the year ended December 31, 2008. No impairment charge was recorded in 2009 or 2010. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| December 31, 2010                                                     |   | Under 1 year |   |   | 1-5 years |   |   | 5-10 years |   |   | After 10 years |   |   |    |   |
|-----------------------------------------------------------------------|--------|--------------|--------|--------|-----------|--------|--------|------------|--------|--------|----------------|--------|--------|---------|--------|
|                                                                  |   | Balance      |   |   | Rate      |   |   | Balance    |   |   | Rate           |   |   | Balance |   |   | Rate |   |   | Balance |   |   | Rate |   |   | Total |   |
| Government sponsored enterprises                                      |   | $            | 8,570  |   |      |   | 3.30   | %          |   | $      | —        |   |   |    | 0.00   | % |   | $ | — |   |   |   | 0.00 | % |   | $ | — |   |   |   | 0.00 | % |   | $ | 8,570 |   |
| Obligations of state and political subdivisions – tax exempt(1) |   |         | 10,524 |   |      |   | 3.67   |       |   |   | 32,592         |   |   |    | 3.69   |   |   |   | 19,280 |   |   |   | 3.63 |   |   |   | 444 |   |   |   | 6.00 |   |   |   | 62,840 |   |
| Mortgage backed securities and collateralized mortgage obligations    |   |         | 10,972 |   |      |   | 3.63   |       |   |   | 15,523         |   |   |    | 4.11   |   |   |   | 2,395 |   |   |   | 4.64 |   |   |   | 3,227 |   |   |   | 4.77 |   |   |   | 32,117 |   |
| Corporate debt and certificate of deposit                             |   |         | 1,404  |   |      |   | 4.88   |       |   |   | 3,212          |   |   |    | 3.99   |   |   |   | — |   |   |   | 0.00 |   |   |   | — |   |   |   | 0.00 |   |   |   | 4,616 |   |
|                                                                  |   | $            | 31,470 |   |      |   | 3.39   | %          |   | $      | 51,327         |   |   |    | 3.84   | % |   | $ | 21,675 |   |   |   | 3.74 | % |   | $ | 3,671 |   |   |   | 4.92 | % |   | $ | 108,143 |   |

----

----

----

| At December 31, 2010   |   | Deposits |   |   | FHLB Advances |   |
|---------------------------------------|--------|----------|--------|--------|--------------------|--------|
| Due three months or less              |   | $        | 19,854 |   |               | $      | — |   |
| Over three months through six months  |   |     | 12,730 |   |               |   | — |   |
| Over six months through twelve months |   |     | 13,270 |   |               |   | — |   |
| Over twelve months                    |   |     | 18,656 |   |               |   | 15,000 |   |
| Total                                 |   | $        | 64,510 |   |               | $      | 15,000 |   |

| As of December 31,                                         |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Tier I Capital                                                            |   |   |    |   |   |   |
| Banks’ equity, excluding the after-tax net other comprehensive loss |   | $      | 44,786  |   |   | $      | 43,986 |   |
| Tier II Capital                                                           |   |   |    |   |   |   |   |   |
| Allowance for loan losses (1)                                             |   | $      | 3,570   |   |   | $      | 3,580 |   |
| Total risk-based capital                                                  |   | $      | 48,356  |   |   | $      | 47,566 |   |
| Risk-weighted assets (2)                                                  |   | $      | 284,821 |   |   | $      | 285,946 |   |
| Average assets                                                            |   | $      | 430,433 |   |   | $      | 418,393 |   |
| Ratios                                                                    |   |   |    |   |   |   |   |   |
| Tier I risk-based capital (minimum 4.0%)                                  |   |   | 15.7    | %      |   |   | 15.4 | % |
| Total risk-based capital (minimum 8.0%)                                   |   |   | 17.0    | %      |   |   | 16.6 | % |
| Leverage (minimum 4.0%)                                                   |   |   | 10.4    | %      |   |   | 10.5 | % |

| 1 | For Federal Reserve risk-based capital rule purposes, the allowance for loan losses includes allowance for credit losses on off-balance sheet letters of credit and is limited to 1.25% of risk-weighted assets |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Risk-weighted assets have been reduced for the portion allowance of loan losses excluded from total risk-based capital. |
|---|-------------------------------------------------------------------------------------------------------------------------|

----

|                              |   | Less than |   |   | 1 to 3 |   |   | 3 to 5 |   |   | More than |   |   |   |    |
|-----------------------------------|--------|----------------|--------|--------|------------------|--------|--------|------------------|--------|--------|----------------|--------|--------|--------|---------|
|                              |   | 1 year    |   |   | years            |   |   | years            |   |   | 5 years   |   |   | Total  |    |
| Federal Home Loan Bank borrowings |   | $              | 604    |   |             | $      | 15,664 |             |   | $      | —        |   |   | $      | — |   |   | $ | 16,268 |   |
| Building leases                   |   |           | 141    |   |             |   | 261    |             |   |   | 190            |   |   |   | 854     |   |   |   | 1,445 |   |
| Total                             |   | $              | 744    |   |             | $      | 15,925 |             |   | $      | 190            |   |   | $      | 854     |   |   | $ | 17,713 |   |

----

| For the Year Ended December 31,                         |   | 2010    |    |   | 2009     |   |   | 2008    |   |
|---------------------------------------------------------|--------|---------|---------|--------|----------|--------|--------|---------|--------|
|                                                    |   |    |    |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |
|                                                    |   | Average |    |   | Earned   |   |   | yield/  |   |   | Average |   |   | Earned |   |   | yield/ |   |   | Average |   |   | Earned |   |   | yield/ |   |
|                                                    |   | balance |    |   | paid     |   |   | rate    |   |   | balance |   |   | paid |   |   | rate |   |   | balance |   |   | paid |   |   | rate |   |
| ASSETS                                                  |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale and held to maturity: (1) |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable securities                                      |   | $       | 53,652  |   |     | $      | 1,974  |    |   |   | 3.68 | % |   | $ | 53,641 |   |   | $ | 2,261 |   |   |   | 4.22 | % |   | $ | 58,388 |   |   | $ | 2,844 |   |   |   | 4.87 | % |
| Tax-exempt securities (2)                               |   |    | 61,667  |   |     |   | 3,516  |    |   |   | 5.70 |   |   |   | 49,558 |   |   |   | 2,965 |   |   |   | 5.98 |   |   |   | 42,675 |   |   |   | 2,626 |   |   |   | 6.15 |   |
| Total securities                                        |   |    | 115,319 |   |     |   | 5,490  |    |   |   | 4.76 |   |   |   | 103,199 |   |   |   | 5,226 |   |   |   | 5.06 |   |   |   | 101,063 |   |   |   | 5,470 |   |   |   | 5.41 |   |
| Short-term investments                                  |   |    | 122     |   |     |   | 1      |    |   |   | 0.82 |   |   |   | 3,187 |   |   |   | 11 |   |   |   | 0.35 |   |   |   | 1,106 |   |   |   | 29 |   |   |   | 2.62 |   |
| Loans                                                   |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate mortgages                                   |   |    | 200,751 |   |     |   | 12,754 |    |   |   | 6.35 |   |   |   | 193,887 |   |   |   | 12,778 |   |   |   | 6.59 |   |   |   | 188,579 |   |   |   | 13,196 |   |   |   | 7.00 |   |
| Home equity loans                                       |   |    | 32,386  |   |     |   | 1,876  |    |   |   | 5.79 |   |   |   | 31,922 |   |   |   | 1,926 |   |   |   | 6.03 |   |   |   | 28,244 |   |   |   | 1,799 |   |   |   | 6.37 |   |
| Time and demand loans                                   |   |    | 27,579  |   |     |   | 1,192  |    |   |   | 4.32 |   |   |   | 25,455 |   |   |   | 1,100 |   |   |   | 4.32 |   |   |   | 24,849 |   |   |   | 1,495 |   |   |   | 6.02 |   |
| Installment and other loans                             |   |    | 18,458  |   |     |   | 1,712  |    |   |   | 9.28 |   |   |   | 19,097 |   |   |   | 1,788 |   |   |   | 9.36 |   |   |   | 18,041 |   |   |   | 1,848 |   |   |   | 10.24 |   |
| Total loans (3)                                         |   |    | 279,174 |   |     |   | 17,534 |    |   |   | 6.28 |   |   |   | 270,361 |   |   |   | 17,592 |   |   |   | 6.51 |   |   |   | 259,713 |   |   |   | 18,338 |   |   |   | 7.06 |   |
| Total interest earning assets                           |   |    | 394,615 |   |     |   | 23,025 |    |   |   | 5.83 |   |   |   | 376,747 |   |   |   | 22,829 |   |   |   | 6.06 |   |   |   | 361,882 |   |   |   | 23,837 |   |   |   | 6.59 |   |
| Other non-interest bearing assets                       |   |    | 44,535  |   |     |   |   |    |   |   |   |   |   |   | 38,931 |   |   |   |   |   |   |   |   |   |   |   | 32,082 |   |   |   |   |   |   |   |   |   |
| Total assets                                            |   | $       | 439,150 |   |     |   |   |    |   |   |   |   |   | $ | 415,678 |   |   |   |   |   |   |   |   |   |   | $ | 393,964 |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY              |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and Super NOW deposits                              |   | $       | 38,376  |   |     | $      | 96     |    |   |   | 0.25 | % |   | $ | 33,719 |   |   | $ | 85 |   |   |   | 0.25 | % |   | $ | 30,731 |   |   | $ | 151 |   |   |   | 0.50 | % |
| Savings and insured money                               |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| market deposits                                         |   |    | 95,953  |   |     |   | 549    |    |   |   | 0.57 |   |   |   | 79,783 |   |   |   | 425 |   |   |   | 0.53 |   |   |   | 82,540 |   |   |   | 863 |   |   |   | 1.05 |   |
| Time deposits                                           |   |    | 167,894 |   |     |   | 3,112  |    |   |   | 1.85 |   |   |   | 154,124 |   |   |   | 4,051 |   |   |   | 2.63 |   |   |   | 125,460 |   |   |   | 4,731 |   |   |   | 3.77 |   |
| Total interest bearing                                  |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| deposits                                                |   |    | 302,223 |   |     |   | 3,757  |    |   |   | 1.24 |   |   |   | 267,626 |   |   |   | 4,561 |   |   |   | 1.70 |   |   |   | 238,731 |   |   |   | 5,745 |   |   |   | 2.41 |   |
| Federal funds purchased and other                       |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| short-term debt                                         |   |    | 1,154   |   |     |   | 4      |    |   |   | 0.35 |   |   |   | 799 |   |   |   | 3 |   |   |   | 0.38 |   |   |   | 7,778 |   |   |   | 123 |   |   |   | 1.58 |   |
| Federal Home Loan Bank borrowings                       |   |    | 15,000  |   |     |   | 604    |    |   |   | 4.03 |   |   |   | 30,986 |   |   |   | 1,283 |   |   |   | 4.14 |   |   |   | 32,156 |   |   |   | 1,360 |   |   |   | 4.23 |   |
| Total interest bearing                                  |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                             |   |    | 318,377 |   |     |   | 4,365  |    |   |   | 1.37 |   |   |   | 299,411 |   |   |   | 5,847 |   |   |   | 1.95 |   |   |   | 278,665 |   |   |   | 7,228 |   |   |   | 2.59 |   |
| Demand deposits                                         |   |    | 64,263  |   |     |   |   |    |   |   |   |   |   |   | 59,631 |   |   |   |   |   |   |   |   |   |   |   | 62,253 |   |   |   |   |   |   |   |   |   |
| Other non-interest bearing liabilities                  |   |    | 9,905   |   |     |   |   |    |   |   |   |   |   |   | 12,881 |   |   |   |   |   |   |   |   |   |   |   | 9,117 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                       |   |    | 392,545 |   |     |   |   |    |   |   |   |   |   |   | 371,923 |   |   |   |   |   |   |   |   |   |   |   | 350,035 |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity                              |   |    | 46,605  |   |     |   |   |    |   |   |   |   |   |   | 43,755 |   |   |   |   |   |   |   |   |   |   |   | 43,929 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’               |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equity                                                  |   | $       | 439,150 |   |     |   |   |    |   |   |   |   |   | $ | 415,678 |   |   |   |   |   |   |   |   |   |   | $ | 393,964 |   |   |   |   |   |   |   |   |   |
| Net interest income – tax effected                |   |    |    |   |     |   | 18,660 |    |   |   |   |   |   |   |   |   |   |   | 16,982 |   |   |   |   |   |   |   |   |   |   |   | 16,609 |   |   |   |   |   |
| Less: Tax gross up on exempt securities                 |   |    |    |   |     |   | (1,187 | )       |   |   |   |   |   |   |   |   |   |   | (1,002 | ) |   |   |   |   |   |   |   |   |   |   | (884 | ) |   |   |   |   |
| Net interest income per statements of income            |   |    |    |   |     |   |   |    |   | $ | 17,473 |   |   |   |   |   |   |   |   |   |   | $ | 15,980 |   |   |   |   |   |   |   |   |   |   | $ | 15,725 |   |
| Net interest spread                                     |   |    |    |   |     |   |   |    |   |   | 4.46 | % |   |   |   |   |   |   |   |   |   |   | 4.11 | % |   |   |   |   |   |   |   |   |   |   | 4.00 | % |
| Net interest margin (4)                                 |   |    |    |   |     |   |   |    |   |   | 4.73 | % |   |   |   |   |   |   |   |   |   |   | 4.51 | % |   |   |   |   |   |   |   |   |   |   | 4.59 | % |

| 1 | Yields on securities available for sale are based on amortized cost. |
|---|----------------------------------------------------------------------|

| 2 | Tax exempt securities are affected using a 34% tax rate for fully tax exempt municipals and 24% for dividends. |
|---|----------------------------------------------------------------------------------------------------------------|

| 3 | For the purpose of this schedule, interest on nonaccruing loans has been included only to the extent reflected in the consolidated income statement. However, the nonaccrual loan balances are included in the average amount outstanding. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Computed by dividing tax effected net interest income by total interest earning assets. |
|---|-----------------------------------------------------------------------------------------|

----

|                                      |   | 2010 compared to 2009 |   |   | 2009 compared to 2008 |   |
|-------------------------------------------|--------|--------------------------------------|--------|--------|--------------------------------------|--------|
|                                      |   | increase (decrease)             |   |   | increase (decrease)             |   |
|                                      |   | due to change in      |   |   | due to change in      |   |
|                                      |   | Average                              |   |   | Average                              |   |   |   |   |   | Average |   |   | Average |   |   |   |   |
|                                      |   | Volume                               |   |   | Rate                                 |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
| Interest Income                           |   |                                 |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment securities and                 |   |                                 |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities available for sale (1)    |   | $                                    | 614    |   |                                 | $      | (350 | ) |   | $ | 264 |   |   | $ | 116 |   |   | $ | (360 | ) |   | $ | (244 | ) |
| Short-term investments                    |   |                                 | (11    | )      |                                 |   | 1 |   |   |   | (10 | ) |   |   | 55 |   |   |   | (73 | ) |   |   | (18 | ) |
| Loans                                     |   |                                 | 573    |   |                                 |   | (631 | ) |   |   | (58 | ) |   |   | 752 |   |   |   | (1,498 | ) |   |   | (746 | ) |
| Total interest income                     |   |                                 | 1,176  |   |                                 |   | (980 | ) |   |   | 196 |   |   |   | 923 |   |   |   | (1,931 | ) |   |   | (1,008 | ) |
| Interest Expense                          |   |                                 |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW and Super NOW deposits                |   |                                 | 12     |   |                                 |   | (1 | ) |   |   | 11 |   |   |   | 15 |   |   |   | (81 | ) |   |   | (66 | ) |
| Savings and insured money market deposits |   |                                 | 86     |   |                                 |   | 38 |   |   |   | 124 |   |   |   | (29 | ) |   |   | (409 | ) |   |   | (438 | ) |
| Time deposits                             |   |                                 | 362    |   |                                 |   | (1,301 | ) |   |   | (939 | ) |   |   | 1,081 |   |   |   | (1,761 | ) |   |   | (680 | ) |
| Federal funds purchased and other         |   |                                 |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| short-term debt                           |   |                                 | 1      |   |                                 |   | — |   |   |   | 1 |   |   |   | (110 | ) |   |   | (10 | ) |   |   | (120 | ) |
| Federal Home Loan Bank borrowings         |   |                                 | (662   | )      |                                 |   | (17 | ) |   |   | (679 | ) |   |   | (49 | ) |   |   | (28 | ) |   |   | (77 | ) |
| Total interest expense                    |   |                                 | (201   | )      |                                 |   | (1,281 | ) |   |   | (1,482 | ) |   |   | 908 |   |   |   | (2,289 | ) |   |   | (1,381 | ) |
| Net interest income                       |   | $                                    | 1,377  |   |                                 | $      | 301 |   |   | $ | 1,678 |   |   | $ | 15 |   |   | $ | 358 |   |   | $ | 373 |   |

| 1 | Fully taxable-equivalent basis. |
|---|---------------------------------|

| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------|------------------------------------------------------------|

----

|               |   |            |   |   |                 |   |   |                    |   |   |                    |   |   | Projected                  |    |
|--------------------|--------|-----------------|--------|--------|----------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|--------|----------------------------|---------|
|               |   |            |   |   |                 |   |   |                    |   |   |                    |   |   | change in net    |    |
|               |   |            |   |   |                 |   |   |                    |   |   | Projected               |   |   | interest income       |    |
|               |   |            |   |   | Projected            |   |   | Projected dollar   |   |   | Percentage              |   |   | as a percent     |    |
| Interest Rate |   |            |   |   | annualized net  |   |   | change in net |   |   | change in net |   |   | of total stock-  |    |
| Shock (1)     |   | Prime rate |   |   | interest income |   |   | interest income    |   |   | interest income    |   |   | holders’ equity |    |
| 3.00%              |   |            | 6.25   | %      |                 | $      | 17,397 |                    |   | $      | (1,171                  | )      |   |                       | -6.3    | % |   |   | -14.7 | % |
| 2.00%              |   |            | 5.25   | %      |                 | $      | 17,817 |                    |   | $      | (751                    | )      |   |                       | -4.0    | % |   |   | -8.9 | % |
| 1.00%              |   |            | 4.25   | %      |                 | $      | 18,240 |                    |   | $      | (328                    | )      |   |                       | -1.8    | % |   |   | -2.7 | % |
| No change          |   |            | 3.25   | %      |                 | $      | 18,568 |                    |   |   | —                 |   |   |                       | — |   |   |   | — |   |
| -1.00%             |   |            | 2.25   | %      |                 | $      | 18,868 |                    |   | $      | 300                     |   |   |                       | 1.6     | % |   |   | -8.4 | % |
| -2.00%             |   |            | 1.25   | %      |                 | $      | 18,703 |                    |   | $      | 135                     |   |   |                       | 0.7     | % |   |   | -16.4 | % |
| -3.00%             |   |            | 0.25   | %      |                 | $      | 18,611 |                    |   | $      | 43                      |   |   |                       | 0.2     | % |   |   | -21.3 | % |

| 1 | Under an instantaneous interest rate shock, interest rates are modeled to change at once. This is a very conservative modeling technique that illustrates immediate rather than gradual increases or decreases in interest rates. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------|---------------------------------------------|

----

----

----

| As of December 31,                                                                                                                                                        |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                                                                                                      |   |   |    |   |   |   |
| ASSETS                                                                                                                                                                    |   |   |    |   |   |   |
| Cash and cash equivalents                                                                                                                                                 |   | $      | 7,518   |   |   | $      | 8,336 |   |
| Federal funds sold                                                                                                                                                        |   |   | — |   |   |   | 5,000 |   |
| Total Cash and Cash Equivalents                                                                                                                                           |   |   | 7,518   |   |   |   | 13,336 |   |
| Securities available for sale, at fair value                                                                                                                              |   |   | 104,668 |   |   |   | 91,320 |   |
| Securities held to maturity, estimated fair value of $6,261 at December 31, 2010 and $8,578 at December 31, 2009                                                          |   |   | 6,021   |   |   |   | 8,218 |   |
| Loans, net of allowance for loan losses of $4,335 at December 31, 2010 and $3,988 at December 31, 2009                                                                    |   |   | 277,812 |   |   |   | 275,419 |   |
| Accrued interest receivable                                                                                                                                               |   |   | 2,034   |   |   |   | 1,954 |   |
| Bank-owned life insurance                                                                                                                                                 |   |   | 15,592  |   |   |   | 14,621 |   |
| Foreclosed real estate                                                                                                                                                    |   |   | 1,816   |   |   |   | 1,397 |   |
| Premises and equipment, net                                                                                                                                               |   |   | 5,284   |   |   |   | 5,020 |   |
| Restricted investments                                                                                                                                                    |   |   | 2,806   |   |   |   | 2,341 |   |
| Other assets                                                                                                                                                              |   |   | 7,236   |   |   |   | 9,058 |   |
| Total Assets                                                                                                                                                              |   | $      | 430,787 |   |   | $      | 422,684 |   |
|                                                                                                                                                                      |   |   |    |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                |   |   |    |   |   |   |   |   |
| Liabilities                                                                                                                                                               |   |   |    |   |   |   |   |   |
| Deposits:                                                                                                                                                                 |   |   |    |   |   |   |   |   |
| Demand deposits (non-interest bearing)                                                                                                                                    |   | $      | 62,864  |   |   | $      | 64,266 |   |
| NOW and super NOW accounts                                                                                                                                                |   |   | 34,502  |   |   |   | 33,503 |   |
| Savings and insured money market deposits                                                                                                                                 |   |   | 98,951  |   |   |   | 79,905 |   |
| Time deposits                                                                                                                                                             |   |   | 154,589 |   |   |   | 174,531 |   |
| Total Deposits                                                                                                                                                            |   |   | 350,906 |   |   |   | 352,205 |   |
|                                                                                                                                                                      |   |   |    |   |   |   |   |   |
| Short-term debt                                                                                                                                                           |   |   | 9,500   |   |   |   | 212 |   |
| Federal Home Loan Bank long-term borrowings                                                                                                                               |   |   | 15,000  |   |   |   | 15,000 |   |
| Other liabilities                                                                                                                                                         |   |   | 7,883   |   |   |   | 10,604 |   |
| Total Liabilities                                                                                                                                                         |   |   | 383,289 |   |   |   | 378,021 |   |
|                                                                                                                                                                      |   |   |    |   |   |   |   |   |
| Commitments and contingent liabilities                                                                                                                                    |   |   |    |   |   |   |   |   |
|                                                                                                                                                                      |   |   |    |   |   |   |   |   |
| Stockholders’ equity                                                                                                                                                |   |   |    |   |   |   |   |   |
| Series A preferred stock, no par value; 2,000,000 shares authorized, none issued                                                                                          |   |   | — |   |   |   | — |   |
| Common stock, $0.50 par value; 11,250,000 shares authorized, 4,767,786 shares issued with 4,234,505 and 4,234,321 outstanding at December 31, 2010 and 2009, respectively |   |   | 2,384   |   |   |   | 2,384 |   |
| Paid-in capital                                                                                                                                                           |   |   | 6,483   |   |   |   | 6,483 |   |
| Treasury stock, at cost; 533,281 shares and 533,465 shares at December 31, 2010 and 2009 respectively                                                                     |   |   | (4,965  | )      |   |   | (4,967 | ) |
| Retained earnings                                                                                                                                                         |   |   | 43,158  |   |   |   | 42,231 |   |
| Accumulated other comprehensive income (loss)                                                                                                                             |   |   | 438     |   |   |   | (1,468 | ) |
| Total Stockholders’ Equity                                                                                                                                          |   |   | 47,498  |   |   |   | 44,663 |   |
| Total Liabilities and Stockholders’ Equity                                                                                                                          |   | $      | 430,787 |   |   | $      | 422,684 |   |

----

| For the Year Ended December 31,                                   |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                              |   |   |    |   |   |   |    |   |   |
| INTEREST AND DIVIDEND INCOME                                      |   |   |    |   |   |   |    |   |   |
| Loan interest and fees                                            |   | $      | 17,534  |   |   | $      | 17,592  |   |   | $ | 18,338 |   |
| Securities:                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Taxable                                                           |   |   | 1,974   |   |   |   | 2,261   |   |   |   | 2,844 |   |
| Tax-exempt                                                        |   |   | 2,329   |   |   |   | 1,963   |   |   |   | 1,742 |   |
| Federal funds sold                                                |   |   | 1       |   |   |   | 11      |   |   |   | 29 |   |
| Total Interest and Dividend Income                                |   |   | 21,838  |   |   |   | 21,827  |   |   |   | 22,953 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| INTEREST EXPENSE                                                  |   |   |    |   |   |   |    |   |   |   |   |   |
| Deposits                                                          |   |   | 3,757   |   |   |   | 4,561   |   |   |   | 5,745 |   |
| Federal Home Loan Bank borrowings                                 |   |   | 604     |   |   |   | 1,283   |   |   |   | 1,360 |   |
| Other                                                             |   |   | 4       |   |   |   | 3       |   |   |   | 123 |   |
| Total Interest Expense                                            |   |   | 4,365   |   |   |   | 5,847   |   |   |   | 7,228 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Net interest income                                               |   |   | 17,473  |   |   |   | 15,980  |   |   |   | 15,725 |   |
| Provision for loan losses                                         |   |   | 2,300   |   |   |   | 1,300   |   |   |   | 265 |   |
| Net Interest Income After Provision for Loan Losses               |   |   | 15,173  |   |   |   | 14,680  |   |   |   | 15,460 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| NON-INTEREST INCOME                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Service charges                                                   |   |   | 1,534   |   |   |   | 1,677   |   |   |   | 1,774 |   |
| Fee income                                                        |   |   | 888     |   |   |   | 869     |   |   |   | 908 |   |
| Earnings on bank-owned life insurance                             |   |   | 470     |   |   |   | 494     |   |   |   | 529 |   |
| Net gain loss on sale of securities                               |   |   | 98      |   |   |   | 544     |   |   |   | 64 |   |
| Impairment charge on securities                                   |   |   | — |   |   |   | — |   |   |   | (5,162 | ) |
| Net gain (loss) on revaluation and sale of foreclosed real estate |   |   | 135     |   |   |   | (56     | )      |   |   | (11 | ) |
| Foreclosed real estate expense                                    |   |   | (341    | )      |   |   | (63     | )      |   |   | (7 | ) |
| Life insurance benefit                                            |   |   | — |   |   |   | — |   |   |   | 1,522 |   |
| Other non-interest income                                         |   |   | 173     |   |   |   | 163     |   |   |   | 213 |   |
| Total Non-Interest Income (Loss)                                  |   |   | 2,957   |   |   |   | 3,628   |   |   |   | (170 | ) |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| NON-INTEREST EXPENSES                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Salaries and employee benefits                                    |   |   | 8,526   |   |   |   | 8,611   |   |   |   | 7,801 |   |
| Occupancy and equipment expenses                                  |   |   | 2,072   |   |   |   | 2,034   |   |   |   | 2,119 |   |
| Other non-interest expenses                                       |   |   | 4,121   |   |   |   | 3,896   |   |   |   | 3,529 |   |
| Total Non-Interest Expenses                                       |   |   | 14,719  |   |   |   | 14,541  |   |   |   | 13,449 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Income before income tax expense                                  |   |   | 3,411   |   |   |   | 3,767   |   |   |   | 1,841 |   |
| Income tax expense (benefit)                                      |   |   | 282     |   |   |   | 683     |   |   |   | (861 | ) |
| Net Income                                                        |   | $      | 3,129   |   |   | $      | 3,084   |   |   | $ | 2,702 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Basic earnings per common share                                   |   | $      | 0.74    |   |   | $      | 0.73    |   |   | $ | 0.64 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Average common shares outstanding                                 |   |   | 4,235   |   |   |   | 4,234   |   |   |   | 4,234 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash dividends declared per share                                 |   | $      | 0.52    |   |   | $      | 0.52    |   |   | $ | 0.52 |   |

----

|                                                               |   |   |    |   |    |   |    |     |   |   |     |   |   | Accumulated   |    |   |                |   |    | Common      |   |
|-------------------------------------------------------------------------|--------|--------|---------|--------|---------|--------|---------|----------|--------|--------|----------|--------|--------|---------------|---------|--------|---------------------|--------|---------|-------------|--------|
|                                                                    |   |   |    |   |    |   |    |     |   |   |     |   |   | other         |    |   |                |   |    | shares      |   |
|                                                                    |   |   |    |   |    |   |    |     |   |   |     |   |   | compre-       |    |   | Total               |   |    | issued      |   |
| For the years ended                                                     |   | Common |    |   | Paid-in |   |    | Treasury |   |   | Retained |   |   | hensive       |    |   | stockholders’ |   |    | and         |   |
| December 31, 2010, 2009 and 2008                                        |   | stock  |    |   | capital |   |    | stock    |   |   | earnings |   |   | income (loss) |    |   | equity              |   |    | outstanding |   |
|                                                                    |   |   |    |   |    |   |    |     |   |   |     |   |   |          |    |   |                |   |    |        |   |
| Balance at January 1, 2008                                              |   | $      | 2,384   |   |    | $      | 6,483   |     |   | $      | (4,967   | )      |   | $             | 41,104  |   |                | $      | (1,046  | )           |   | $ | 43,958 |   |   |   | 4,234 |   |
| Net income                                                              |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | 2,702   |   |                |   | — |        |   |   | 2,702 |   |   |   |   |   |
| Other comprehensive loss                                                |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | (1,541  | )           |   |   | (1,541 | ) |   |   |   |   |
| Comprehensive income                                                    |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | — |        |   |   | 1,161 |   |   |   |   |   |
| Adjustment to initially apply ASC 715-60 on Split Dollar Life Insurance |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | (255    | )      |                |   | — |        |   |   | (255 | ) |   |   |   |   |
| Cash dividends ($0.52 per share)                                        |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | (2,202  | )      |                |   | — |        |   |   | (2,202 | ) |   |   |   |   |
| Balance at December 31, 2008                                            |   |   | 2,384   |   |    |   | 6,483   |     |   |   | (4,967   | )      |   |          | 41,349  |   |                |   | (2,587  | )           |   |   | 42,662 |   |   |   | 4,234 |   |
| Net income                                                              |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | 3,084   |   |                |   | — |        |   |   | 3,084 |   |   |   |   |   |
| Other comprehensive income                                              |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | 1,119   |        |   |   | 1,119 |   |   |   |   |   |
| Comprehensive income                                                    |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | — |        |   |   | 4,203 |   |   |   |   |   |
| Cash dividends ($0.52 per share)                                        |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | (2,202  | )      |                |   | — |        |   |   | (2,202 | ) |   |   |   |   |
| Balance at December 31, 2009                                            |   |   | 2,384   |   |    |   | 6,483   |     |   |   | (4,967   | )      |   |          | 42,231  |   |                |   | (1,468  | )           |   |   | 44,663 |   |   |   | 4,234 |   |
| Net income                                                              |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | 3,129   |   |                |   | — |        |   |   | 3,129 |   |   |   |   |   |
| Other comprehensive income                                              |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | 1,906   |        |   |   | 1,906 |   |   |   |   |   |
| Comprehensive income                                                    |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | — |   |                |   | — |        |   |   | 5,035 |   |   |   |   |   |
| Treasury stock issued                                                   |   |   | — |   |    |   | — |     |   |   | 2        |   |   |          | — |   |                |   | — |        |   |   | 2 |   |   |   | 1 |   |
| Cash dividends ($0.52 per share)                                        |   |   | — |   |    |   | — |     |   |   | —  |   |   |          | (2,202  | )      |                |   | — |        |   |   | (2,202 | ) |   |   |   |   |
| Balance at December 31, 2010                                            |   | $      | 2,384   |   |    | $      | 6,483   |     |   | $      | (4,965   | )      |   | $             | 43,158  |   |                | $      | 438     |        |   | $ | 47,498 |   |   |   | 4,235 |   |

----

| For the Year Ended December 31,                                                   |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| OPERATING ACTIVITIES:                                                             |   |   |    |   |   |   |    |   |   |
| Net income                                                                        |   | $      | 3,129   |   |   | $      | 3,084   |   |   | $ | 2,702 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |    |   |   |   |    |   |   |   |   |   |
| Provision for loan losses                                                         |   |   | 2,300   |   |   |   | 1,300   |   |   |   | 265 |   |
| Depreciation and amortization                                                     |   |   | 712     |   |   |   | 627     |   |   |   | 655 |   |
| Net gain on sale of fixed assets                                                  |   |   | 21      |   |   |   | 8       |   |   |   | — |   |
| Net (gain) loss on revaluation and sale of foreclosed real estate                 |   |   | (135    | )      |   |   | 56      |   |   |   | 11 |   |
| Earnings on bank-owned life insurance                                             |   |   | (470    | )      |   |   | (494    | )      |   |   | (529 | ) |
| Life insurance benefit                                                            |   |   | — |   |   |   | — |   |   |   | (1,522 | ) |
| Net security gains                                                                |   |   | (98     | )      |   |   | (544    | )      |   |   | (64 | ) |
| Impairment charge on securities                                                   |   |   | — |   |   |   | — |   |   |   | 5,162 |   |
| Deferred income tax (benefit)                                                     |   |   | (337    | )      |   |   | 1,417   |   |   |   | (2,053 | ) |
| (Increase) decrease in accrued interest receivable                                |   |   | (80     | )      |   |   | (96     | )      |   |   | 261 |   |
| (Increase) decrease in other assets                                               |   |   | 830     |   |   |   | (2,578  | )      |   |   | (257 | ) |
| Increase (decrease) in other liabilities                                          |   |   | 626     |   |   |   | (2,042  | )      |   |   | 1,529 |   |
| Net Cash Provided by Operating Activities                                         |   |   | 6,498   |   |   |   | 738     |   |   |   | 6,160 |   |
| INVESTING ACTIVITIES:                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Proceeds from maturities and calls:                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Securities available for sale                                                     |   |   | 46,166  |   |   |   | 39,071  |   |   |   | 18,859 |   |
| Securities held to maturity                                                       |   |   | 4,954   |   |   |   | 2,730   |   |   |   | 6,475 |   |
| Proceeds from sales of securities available for sale                              |   |   | 2,324   |   |   |   | 17,724  |   |   |   | 4,145 |   |
| Purchases:                                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Securities available for sale                                                     |   |   | (61,929 | )      |   |   | (60,913 | )      |   |   | (21,259 | ) |
| Securities held to maturity                                                       |   |   | (2,757  | )      |   |   | (5,184  | )      |   |   | (5,920 | ) |
| Disbursement for loan originations, net of principal collections                  |   |   | (6,603  | )      |   |   | (12,665 | )      |   |   | (16,279 | ) |
| Purchase of bank owned life insurance                                             |   |   | (500    | )      |   |   | — |   |   |   | — |   |
| Proceeds from cash surrender value of bank owned life insurance                   |   |   | — |   |   |   | — |   |   |   | 2,055 |   |
| Purchase of Federal Home Loan Bank stock                                          |   |   | (1,657  | )      |   |   | (1,023  | )      |   |   | (3,821 | ) |
| Sale of Federal Home Loan Bank stock                                              |   |   | 1,211   |   |   |   | 2,117   |   |   |   | 3,384 |   |
| Net purchases of premises and equipment                                           |   |   | (997    | )      |   |   | (1,343  | )      |   |   | (569 | ) |
| Proceeds from sales of foreclosed real estate                                     |   |   | 1,685   |   |   |   | 164     |   |   |   | — |   |
| Net Cash Used in Investing Activities                                             |   |   | (18,103 | )      |   |   | (19,322 | )      |   |   | (12,930 | ) |
| FINANCING ACTIVITIES:                                                             |   |   |    |   |   |   |    |   |   |   |   |   |
| Net increase (decrease) in deposits                                               |   |   | (1,299  | )      |   |   | 55,481  |   |   |   | (2,518 | ) |
| Proceeds from Federal Home Loan Bank borrowings                                   |   |   | — |   |   |   | — |   |   |   | 15,000 |   |
| Repayments of Federal Home Loan Bank borrowings                                   |   |   | — |   |   |   | (20,000 | )      |   |   | (10,000 | ) |
| Net increase (decrease) in short-term borrowings                                  |   |   | 9,288   |   |   |   | (10,312 | )      |   |   | 5,015 |   |
| Cash dividends paid                                                               |   |   | (2,202  | )      |   |   | (2,202  | )      |   |   | (2,202 | ) |
| Net Cash Provided by Financing Activities                                         |   |   | 5,787   |   |   |   | 22,967  |   |   |   | 5,295 |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                              |   |   | (5,818  | )      |   |   | 4,383   |   |   |   | (1,475 | ) |
| Cash and Cash Equivalents at Beginning of Year                                    |   |   | 13,336  |   |   |   | 8,953   |   |   |   | 10,428 |   |
| Cash and Cash Equivalents at End of Year                                          |   | $      | 7,518   |   |   | $      | 13,336  |   |   | $ | 8,953 |   |
| SUPPLEMENTAL INFORMATION:                                                         |   |   |    |   |   |   |    |   |   |   |   |   |
| Cash paid for:                                                                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest                                                                          |   | $      | 4,470   |   |   | $      | 6,022   |   |   | $ | 7,223 |   |
| Income taxes                                                                      |   |   | 101     |   |   |   | 221     |   |   |   | 875 |   |
| Transfer of loans to foreclosed real estate                                       |   |   | 1,910   |   |   |   | 339     |   |   |   | 1,254 |   |

----

| (1) | Summary of Significant Accounting Policies |
|-----|--------------------------------------------|

----

----

----

| December 31, 2010                                                          |   | Amortized |    |   | Gross unrealized |   |    | Estimated |   |
|--------------------------------------------------------------------------------------|--------|-----------|---------|--------|-----------------------|--------|---------|-----------|--------|
| Investment Securities                                                           |   | cost      |    |   | gains                 |   |    | losses    |   |   | fair value |   |
| Available for Sale Securities:                                                       |   |      |    |   |                  |   |    |      |   |   |   |   |
| Government Sponsored Enterprises (GSE)                                               |   | $         | 8,570   |   |                  | $      | 105     |      |   | $ | (88 | ) |   | $ | 8,587 |   |
| Obligations of states and political Subdivisions – New York State              |   |      | 56,819  |   |                  |   | 1,122   |      |   |   | (276 | ) |   |   | 57,663 |   |
| Mortgage-backed securities and collateralized mortgage obligations - GSE residential |   |      | 32,117  |   |                  |   | 1,130   |      |   |   | (36 | ) |   |   | 33,211 |   |
| Corporate debt – financial services industry                                   |   |      | 4,518   |   |                  |   | 49      |      |   |   | — |   |   |   | 4,567 |   |
| Certificates of deposit - financial services industry                                |   |      | 98      |   |                  |   | — |      |   |   | — |   |   |   | 98 |   |
|                                                                                 |   |      | 102,122 |   |                  |   | 2,404   |      |   |   | (400 | ) |   |   | 104,126 |   |
| Equity securities – financial services industry                                |   |      | 541     |   |                  |   | 11      |      |   |   | (10 | ) |   |   | 542 |   |
|                                                                                 |   | $         | 102,663 |   |                  | $      | 2,415   |      |   | $ | (410 | ) |   | $ | 104,668 |   |
|                                                                                 |   |      |    |   |                  |   |    |      |   |   |   |   |   |   |   |   |
| Held to Maturity Securities- Obligations of states and political subdivisions        |   | $         | 6,021   |   |                  | $      | 240     |      |   | $ | — |   |   | $ | 6,261 |   |

----

| December 31, 2009                                                          |   | Amortized |   |   | Gross unrealized |   |    | Estimated |   |
|--------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------------------|--------|---------|-----------|--------|
| Investment Securities                                                           |   | cost      |   |   | gains                 |   |    | losses    |   |   | fair value |   |
| Available for Sale Securities:                                                       |   |      |   |   |                  |   |    |      |   |   |   |   |
| Government Sponsored Enterprises (GSE)                                               |   | $         | 9,478  |   |                  | $      | 64      |      |   | $ | (71 | ) |   | $ | 9,471 |   |
| Obligations of states and political Subdivisions – New York State              |   |      | 48,729 |   |                  |   | 1,516   |      |   |   | (65 | ) |   |   | 50,180 |   |
| Mortgage-backed securities and collateralized mortgage obligations - GSE residential |   |      | 28,868 |   |                  |   | 725     |      |   |   | (83 | ) |   |   | 29,510 |   |
| Corporate debt - financial services industry                                         |   |      | 1,404  |   |                  |   | 46      |      |   |   | — |   |   |   | 1,450 |   |
| Certificates of deposit - financial services industry                                |   |      | 98     |   |                  |   | — |      |   |   | — |   |   |   | 98 |   |
|                                                                                 |   |      | 88,577 |   |                  |   | 2,351   |      |   |   | (219 | ) |   |   | 90,709 |   |
| Equity securities – financial services industry                                |   |      | 549    |   |                  |   | 67      |      |   |   | (5 | ) |   |   | 611 |   |
|                                                                                 |   | $         | 89,126 |   |                  | $      | 2,418   |      |   | $ | (224 | ) |   | $ | 91,320 |   |
|                                                                                 |   |      |   |   |                  |   |    |      |   |   |   |   |   |   |   |   |
| Held to Maturity Securities- Obligations of state and political subdivisions         |   | $         | 8,218  |   |                  | $      | 360     |      |   | $ | — |   |   | $ | 8,578 |   |

| Net Security Gains   |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Gross proceeds                 |   | $      | 2,324   |   |   | $      | 17,724  |   |   | $ | 4,145 |   |
|                           |   |   |    |   |   |   |    |   |   |   |   |   |
| Gross realized gains           |   | $      | 102     |   |   | $      | 545     |   |   | $ | 102 |   |
| Gross realized losses          |   |   | (4      | )      |   |   | (1      | )      |   |   | (38 | ) |
| Net gain on sale of securities |   | $      | 98      |   |   | $      | 544     |   |   | $ | 64 |   |
| Impairment charge              |   | $      | — |   |   | $      | — |   |   | $ | (5,162 | ) |

----

|                                         |   | Amortized |    |   | Estimated       |   |
|----------------------------------------------|--------|-----------|---------|--------|-----------------|--------|
| Available for Sale Securities |   | cost      |    |   | fair value |   |
| Within one year                              |   | $         | 19,192  |   |            | $      | 19,340 |   |
| One to five years                            |   |      | 33,451  |   |            |   | 34,271 |   |
| Five to ten years                            |   |      | 17,362  |   |            |   | 17,304 |   |
| Over ten years                               |   |      | — |   |            |   | — |   |
|                                         |   |      | 70,005  |   |            |   | 70,915 |   |
| Mortgage-backed securities                   |   |      | 32,117  |   |            |   | 33,211 |   |
| Equity securities                            |   |      | 541     |   |            |   | 542 |   |
|                                         |   | $         | 102,663 |   |            | $      | 104,668 |   |
|                                         |   |      |    |   |            |   |   |   |
|                                         |   | Amortized |    |   | Estimated       |   |
| Held to Maturity Securities                  |   | cost      |    |   | fair value      |   |
| Within one year                              |   | $         | 1,306   |   |            | $      | 1,345 |   |
| One to five years                            |   |      | 2,353   |   |            |   | 2,460 |   |
| Five to ten years                            |   |      | 1,918   |   |            |   | 1,961 |   |
| Over ten years                               |   |      | 444     |   |            |   | 495 |   |
|                                         |   | $         | 6,021   |   |            | $      | 6,261 |   |

|                                                          |   | Less than 12 months |   |   | 12 months or more |   |   | Total      |   |
|--------------------------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|------------|--------|
| December 31, 2010                                        |   |                               |   |   | Estimated                        |   |   | Unrealized |   |   |   |   |   | Estimated |   |   | Unrealized |   |   |   |   |   | Estimated |   |   | Unrealized |   |
| Investment Securities                                         |   | No.                                |   |   | fair value                  |   |   | losses     |   |   | No. |   |   | fair value |   |   | losses |   |   | No. |   |   | fair value |   |   | losses |   |
| Available for sale:                                                |   |                               |   |   |                             |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt Securities:                                                   |   |                               |   |   |                             |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government Sponsored Enterprises                                   |   |                               | 3      |   |                             | $      | 2,433  |       |   | $ | 88 |   |   |   | — |   |   | $ | — |   |   | $ | — |   |   |   | 3 |   |   | $ | 2,433 |   |   | $ | 88 |   |
| Obligations of state and political subdivisions – NY State   |   |                               | 68     |   |                             |   | 12,389 |       |   |   | 276 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 68 |   |   |   | 12,389 |   |   |   | 276 |   |
| Mortgage-backed securities and collateralized mortgage obligations |   |                               | 6      |   |                             |   | 4,655  |       |   |   | 36 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 6 |   |   |   | 4,655 |   |   |   | 36 |   |
|                                                               |   |                               | 77     |   |                             |   | 19,477 |       |   |   | 400 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 77 |   |   |   | 19,477 |   |   |   | 400 |   |
| Equity securities – financial services industry              |   |                               | 3      |   |                             |   | 313    |       |   |   | 10 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 3 |   |   |   | 313 |   |   |   | 10 |   |
|                                                               |   |                               | 80     |   |                             | $      | 19,790 |       |   | $ | 410 |   |   |   | — |   |   | $ | — |   |   | $ | — |   |   |   | 80 |   |   | $ | 19,790 |   |   | $ | 410 |   |

----

|                                                               |   | Less than 12 months |    |   | 12 months or more |   |    | Total      |   |
|--------------------------------------------------------------------|--------|------------------------------------|---------|--------|----------------------------------|--------|---------|------------|--------|
| December 31, 2009                                        |   |                               |    |   | Estimated                        |   |    | Unrealized |   |   |   |   |   | Estimated |   |   | Unrealized |   |   |   |   |   | Estimated |   |   | Unrealized |   |
| Investment Securities                                         |   | No.                                |    |   | fair value                  |   |    | losses     |   |   | No. |   |   | fair value |   |   | losses |   |   | No. |   |   | fair value |   |   | losses |   |
| Available for sale:                                           |   |                               |    |   |                             |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt Securities:                                                   |   |                               |    |   |                             |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government Sponsored Enterprises                                   |   |                               | 7       |   |                             | $      | 7,405   |       |   | $ | 71 |   |   |   | — |   |   | $ | — |   |   | $ | — |   |   |   | 7 |   |   | $ | 7,405 |   |   | $ | 71 |   |
| Obligations of state and political subdivisions – NY State   |   |                               | 23      |   |                             |   | 6,338   |       |   |   | 62 |   |   |   | 1 |   |   |   | 129 |   |   |   | 3 |   |   |   | 24 |   |   |   | 6,467 |   |   |   | 65 |   |
| Mortgage-backed securities and collateralized mortgage obligations |   |                               | 3       |   |                             |   | 3,177   |       |   |   | 83 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 3 |   |   |   | 3,177 |   |   |   | 83 |   |
|                                                               |   |                               | 33      |   |                             |   | 16,920  |       |   |   | 216 |   |   |   | 1 |   |   |   | 129 |   |   |   | 3 |   |   |   | 34 |   |   |   | 17,049 |   |   |   | 219 |   |
| Equity securities – financial services industry              |   |                               | — |   |                             |   | — |       |   |   | — |   |   |   | 1 |   |   |   | 105 |   |   |   | 5 |   |   |   | 1 |   |   |   | 105 |   |   |   | 5 |   |
|                                                               |   |                               | 33      |   |                             | $      | 16,920  |       |   | $ | 216 |   |   |   | 2 |   |   | $ | 234 |   |   | $ | 8 |   |   |   | 35 |   |   | $ | 17,154 |   |   | $ | 224 |   |
| Held to maturity:                                                  |   |                               |    |   |                             |   |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of state and  political subdivisions         |   |                               | 1       |   |                             | $      | 56      |       |   | $ | — |   |   |   | — |   |   | $ | — |   |   | $ | — |   |   |   | 1 |   |   | $ | 56 |   |   | $ | — |   |

----

|   | · | its operating performance; |
|--------|--------|----------------------------|

|   | · | the severity and duration of declines in the fair value of its net assets related to its capital stock amount; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of FHLB; and |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | its liquidity and funding position. |
|--------|--------|-------------------------------------|

| Loans, Net                          |   | 2010   |    |   | 2009   |   |
|-------------------------------------|--------|--------|---------|--------|--------|--------|
| Commercial                          |   |   |    |   |   |   |
| Commercial real estate loans:       |   |   |    |   |   |   |
| Commercial mortgage                 |   | $      | 99,606  |   |   | $      | 96,264 |   |
| Farm land                           |   |   | 4,551   |   |   |   | 4,926 |   |
| Construction                        |   |   | 821     |   |   |   | 2,792 |   |
| Total commercial real estate loans  |   |   | 104,978 |   |   |   | 103,982 |   |
| Other commercial loans:             |   |   |    |   |   |   |   |   |
| Commercial loans                    |   |   | 25,864  |   |   |   | 26,035 |   |
| Agricultural loans                  |   |   | 878     |   |   |   | 882 |   |
| Total other commercial loans        |   |   | 26,742  |   |   |   | 26,917 |   |
| Total commercial loans              |   |   | 131,720 |   |   |   | 130,899 |   |
| Consumer                            |   |   |    |   |   |   |   |   |
| Consumer real estate loans:         |   |   |    |   |   |   |   |   |
| Residential mortgage                |   |   | 108,397 |   |   |   | 103,748 |   |
| Home equity                         |   |   | 31,968  |   |   |   | 32,765 |   |
| Construction                        |   |   | 2,304   |   |   |   | 3,841 |   |
| Total residential real estate loans |   |   | 142,669 |   |   |   | 140,354 |   |
| Other commercial loans:             |   |   |    |   |   |   |   |   |
| Consumer installment loans          |   |   | 6,375   |   |   |   | 6,752 |   |
| Other consumer loans                |   |   | 1,383   |   |   |   | 1,402 |   |
| Total other loans                   |   |   | 7,758   |   |   |   | 8,154 |   |
| Total consumer loans                |   |   | 150,427 |   |   |   | 148,508 |   |
| Total gross loans                   |   |   | 282,147 |   |   |   | 279,407 |   |
| Allowance for loan losses           |   |   | (4,335  | )      |   |   | (3,988 | ) |
| Total loans, net                    |   | $      | 277,812 |   |   | $      | 275,419 |   |

----

|                                                       |   |             |   |   | Commercial       |   |   | Commercial |   |   | Residential      |   |
|------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------|--------|--------|------------------|--------|
| Nonperforming Loans                                   |   | Total Loans |   |   | Real Estate |   |   | Other      |   |   | Real Estate |   |
| December 31, 2010:                                         |   |             |   |   |             |   |   |       |   |   |             |   |
| Nonaccrual loans                                           |   | $                | 11,399 |   |             | $      | 9,150  |       |   | $      | 1,310            |   |   | $ | 939 |   |
| Loans past due 90 days or more and still accruing interest |   |             | 1,091  |   |             |   | 143    |       |   |   | 33               |   |   |   | 915 |   |
| Total nonperforming loans                                  |   | $                | 12,490 |   |             | $      | 9,293  |       |   | $      | 1,343            |   |   | $ | 1,854 |   |
|                                                       |   |             |   |   |             |   |   |       |   |   |             |   |   |   |   |   |
| December 31, 2009:                                         |   |             |   |   |             |   |   |       |   |   |             |   |   |   |   |   |
| Nonaccrual loans                                           |   | $                | 12,037 |   |             | $      | 10,460 |       |   | $      | 960              |   |   | $ | 617 |   |
| Loans past due 90 days or more and still accruing interest |   |             | 1,270  |   |             |   | 412    |       |   |   | —          |   |   |   | 858 |   |
| Total nonperforming loans                                  |   | $                | 13,307 |   |             | $      | 10,872 |       |   | $      | 960              |   |   | $ | 1,475 |   |

|                                         |   |             |   |   | Commercial       |   |   | Commercial |   |
|----------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------|--------|
| Impaired Loans                          |   | Total Loans |   |   | Real Estate |   |   | Other      |   |
| 2010:                                        |   |             |   |   |             |   |   |       |   |
| Unpaid principal balance                     |   | $                | 11,806 |   |             | $      | 10,332 |       |   | $ | 1,474 |   |
| Recorded investment                          |   |             | 10,216 |   |             |   | 8,906  |       |   |   | 1,310 |   |
| Average balance                              |   |             | 12,448 |   |             |   | 11,003 |       |   |   | 1,445 |   |
| Interest income:                             |   |             |   |   |             |   |   |       |   |   |   |   |
| Interest contractually due at original rates |   |             | 750    |   |             |   | 701    |       |   |   | 49 |   |
| Interest income recognized                   |   |             | 229    |   |             |   | 178    |       |   |   | 51 |   |
|                                         |   |             |   |   |             |   |   |       |   |   |   |   |
| Impaired loans:                              |   |             |   |   |             |   |   |       |   |   |   |   |
| Loans with no allowance                      |   | $                | 6,407  |   |             | $      | 5,702  |       |   | $ | 705 |   |
| Loans with an allowance recorded             |   |             | 3,809  |   |             |   | 3,204  |       |   |   | 605 |   |
| Related specific allowance                   |   | $                | 831    |   |             | $      | 608    |       |   | $ | 223 |   |

----

|                                         |   |             |   |   | Commercial       |   |   | Commercial |   |
|----------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------|--------|
| Impaired Loans (continued)         |   | Total Loans |   |   | Real Estate |   |   | Other      |   |
| 2009:                                        |   |             |   |   |             |   |   |       |   |
| Unpaid principal balance                     |   | $                | 11,575 |   |             | $      | 9,708  |       |   | $ | 1,867 |   |
| Recorded investment                          |   |             | 11,421 |   |             |   | 9,561  |       |   |   | 1,860 |   |
| Average balance                              |   |             | 12,802 |   |             |   | 11,410 |       |   |   | 1,392 |   |
| Interest income:                             |   |             |   |   |             |   |   |       |   |   |   |   |
| Interest contractually due at original rates |   |             | 757    |   |             |   | 728    |       |   |   | 29 |   |
| Interest income recognized                   |   |             | 162    |   |             |   | 153    |       |   |   | 9 |   |
|                                         |   |             |   |   |             |   |   |       |   |   |   |   |
| Impaired loans:                              |   |             |   |   |             |   |   |       |   |   |   |   |
| Loans with no allowance                      |   | $                | 7,831  |   |             | $      | 6,871  |       |   | $ | 960 |   |
| Loans with an allowance recorded             |   |             | 3,590  |   |             |   | 2,690  |       |   |   | 900 |   |
| Related specific allowance                   |   | $                | 862    |   |             | $      | 762    |       |   | $ | 100 |   |
|                                         |   |             |   |   |             |   |   |       |   |   |   |   |
| 2008:                                        |   |             |   |   |             |   |   |       |   |   |   |   |
| Average loan balance                         |   | $                | 6,095  |   |             |   |   |       |   |   |   |   |
| Interest income:                             |   |             |   |   |             |   |   |       |   |   |   |   |
| Interest contractually due at original rates |   |             | 135    |   |             |   |   |       |   |   |   |   |
| Interest income recognized                   |   |             | 56     |   |             |   |   |       |   |   |   |   |

----

|                            |   | Commercial |    |   | Consumer         |   |
|--------------------------------------|--------|------------|---------|--------|------------------|--------|
| Loans by Risk Ratings |   | Total      |    |   | Real Estate |   |   | Other |   |   | Real Estate |   |   | Installment |   |   | Other |   |
|                                 |   |       |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010:                   |   |       |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                                 |   | $          | 45,078  |   |             | $      | 33,538 |   |   | $ | 11,540 |   |   |   |   |   |   |   |   |   |   |
| Pass watch                           |   |       | 53,754  |   |             |   | 43,046 |   |   |   | 10,708 |   |   |   |   |   |   |   |   |   |   |
| Special mention                      |   |       | 6,008   |   |             |   | 5,026 |   |   |   | 982 |   |   |   |   |   |   |   |   |   |   |
| Substandard                          |   |       | 24,640  |   |             |   | 22,694 |   |   |   | 1,946 |   |   |   |   |   |   |   |   |   |   |
| Doubtful                             |   |       | 831     |   |             |   | 429 |   |   |   | 402 |   |   |   |   |   |   |   |   |   |   |
| Non-reviewed                         |   |       | 151,836 |   |             |   | 245 |   |   |   | 1,164 |   |   | $ | 142,669 |   |   | $ | 6,375 |   |   | $ | 1,383 |   |
| Total                                |   | $          | 282,147 |   |             | $      | 104,978 |   |   | $ | 26,742 |   |   | $ | 142,669 |   |   | $ | 6,375 |   |   | $ | 1,383 |   |
|                                 |   |       |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                   |   |       |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                                 |   | $          | 46,535  |   |             | $      | 33,256 |   |   | $ | 13,279 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass watch                           |   |       | 56,811  |   |             |   | 49,256 |   |   |   | 7,555 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Special mention                      |   |       | 5,105   |   |             |   | 4,237 |   |   |   | 868 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Substandard                          |   |       | 21,165  |   |             |   | 16,895 |   |   |   | 4,270 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Doubtful                             |   |       | 404     |   |             |   | 130 |   |   |   | 274 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-reviewed                         |   |       | 149,387 |   |             |   | 208 |   |   |   | 671 |   |   | $ | 140,354 |   |   | $ | 6,752 |   |   | $ | 1,402 |   |
| Total                                |   | $          | 279,407 |   |             | $      | 103,982 |   |   | $ | 26,917 |   |   | $ | 140,354 |   |   | $ | 6,752 |   |   | $ | 1,402 |   |

|                   |   |            |          |   |            |   |    | Greater      |   |   |          |   |   |    |    |   |   |   |    | Over 90 |   |
|-----------------------------|--------|-----------------|---------------|--------|-----------------|--------|---------|--------------|--------|--------|---------------|--------|--------|---------|---------|--------|--------|--------|---------|--------------|--------|
|                   |   | 30-59 Days |          |   | 60-89 Days |   |    | than         |   |   | Total         |   |   |    |    |   | Total  |   |    | and          |   |
| Category of loans |   | past due   |          |   | past due   |   |    | 90 Days |   |   | past due |   |   | Current |    |   | loans  |   |    | accruing     |   |
|                   |   |            |          |   |            |   |    |         |   |   |          |   |   |    |    |   |   |   |    |         |   |
| 2010:                       |   |            |          |   |            |   |    |         |   |   |          |   |   |    |    |   |   |   |    |         |   |
| Commercial real estate      |   | $               | 4,333         |   |            | $      | 890     |         |   | $      | 6,837         |   |   | $       | 12,060  |   |   | $      | 92,918  |         |   | $ | 104,978 |   |   | $ | 143 |   |
| Residential real estate     |   |            | 2,840         |   |            |   | 1,946   |         |   |   | 1,723         |   |   |    | 6,509   |   |   |   | 136,160 |         |   |   | 142,669 |   |   |   | 915 |   |
| Commercial other            |   |            | 176           |   |            |   | 67      |         |   |   | 95            |   |   |    | 338     |   |   |   | 26,404  |         |   |   | 26,742 |   |   |   | 33 |   |
| Consumer installment        |   |            | 107           |   |            |   | 260     |         |   |   | —       |   |   |    | 367     |   |   |   | 6,008   |         |   |   | 6,375 |   |   |   | — |   |
| Other consumer              |   |            | 4             |   |            |   | — |         |   |   | —       |   |   |    | 4       |   |   |   | 1,379   |         |   |   | 1,383 |   |   |   | — |   |
| Total                       |   | $               | 7,460         |   |            | $      | 3,163   |         |   | $      | 8,655         |   |   | $       | 19,278  |   |   | $      | 262,869 |         |   | $ | 282,147 |   |   | $ | 1,091 |   |
|                        |   |            |          |   |            |   |    |         |   |   |          |   |   |    |    |   |   |   |    |         |   |   |   |   |   |   |   |   |
| 2009:                       |   |            |          |   |            |   |    |         |   |   |          |   |   |    |    |   |   |   |    |         |   |   |   |   |   |   |   |   |
| Commercial real estate      |   | $               | 2,002         |   |            | $      | 2,253   |         |   | $      | 6,259         |   |   | $       | 10,514  |   |   | $      | 93,468  |         |   | $ | 103,982 |   |   | $ | 412 |   |
| Residential real estate     |   |            | 2,559         |   |            |   | 1,978   |         |   |   | 959           |   |   |    | 5,496   |   |   |   | 134,858 |         |   |   | 140,354 |   |   |   | 858 |   |
| Commercial other            |   |            | 467           |   |            |   | 20      |         |   |   | —       |   |   |    | 487     |   |   |   | 26,430  |         |   |   | 26,917 |   |   |   | — |   |
| Consumer installment        |   |            | 101           |   |            |   | 73      |         |   |   | —       |   |   |    | 174     |   |   |   | 6,578   |         |   |   | 6,752 |   |   |   | — |   |
| Other consumer              |   |            |  — |   |            |   | — |         |   |   | —       |   |   |    | — |   |   |   | 1,402   |         |   |   | 1,402 |   |   |   | — |   |
| Total                       |   | $               | 5,129         |   |            | $      | 4,324   |         |   | $      | 7,218         |   |   | $       | 16,671  |   |   | $      | 262,736 |         |   | $ | 279,407 |   |   | $ | 1,270 |   |

----

| 1. | Changes in lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices. |
|----|----------------------------------------------------------------------------------------------------------------------------------|

| 2. | Changes in national, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Changes in the nature and volume of the portfolio and terms of loans. |
|----|-----------------------------------------------------------------------|

| 4. | Changes in the experience, ability, and depth of lending management and staff. |
|----|--------------------------------------------------------------------------------|

| 5. | Changes in volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications. |
|----|----------------------------------------------------------------------------------------------------------------------|

| 6. | Changes in the quality of the Bank’s loan review system, and the degree of oversight by the Bank’s board of directors. |
|----|------------------------------------------------------------------------------------------------------------------------------------|

| 7. | The existence and effect of any concentrations of credit and changes in the level of such concentrations. |
|----|-----------------------------------------------------------------------------------------------------------|

| 8. | The effect of external factors, such as competition and legal and regulatory requirements. |
|----|--------------------------------------------------------------------------------------------|

----

|                                 |   |   |    |   | Commercial       |   |    | Consumer |   |   |             |   |
|-------------------------------------------|--------|--------|---------|--------|------------------|--------|---------|----------|--------|--------|------------------|--------|
| Allowance for Loan Losses  |   | Total  |    |   | Real Estate |   |    | Other    |   |   | Real Estate |   |   | Installment |   |   | Other |   |   | Unallocated |   |
| December 31, 2010:                   |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |
| Beginning balance January 1               |   | $      | 3,988   |   |             | $      | 1,799   |     |   | $      | 561              |   |   | $ | 1,249 |   |   | $ | 132 |   |   | $ | 55 |   |   | $ | 192 |   |
| Charge-offs                               |   |   | (2,109  | )      |             |   | (1,458  | )        |   |   | (254             | )      |   |   | (220 | ) |   |   | (89 | ) |   |   | ( 88 | ) |   |   | — |   |
| Recoveries                                |   |   | 156     |   |             |   | — |     |   |   | 51               |   |   |   | 3 |   |   |   | 47 |   |   |   | 55 |   |   |   | — |   |
| Provision                                 |   |   | 2,300   |   |             |   | 1,819   |     |   |   | 264              |   |   |   | 181 |   |   |   | 16 |   |   |   | 39 |   |   |   | (19 | ) |
| Ending balance December 31                |   | $      | 4,335   |   |             | $      | 2,160   |     |   | $      | 622              |   |   | $ | 1,213 |   |   | $ | 106 |   |   | $ | 61 |   |   | $ | 173 |   |
| Ending balance as related to loans:       |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Evaluated collectively [general reserve]  |   | $      | 3,504   |   |             | $      | 1,552   |     |   | $      | 399              |   |   | $ | 1,213 |   |   | $ | 106 |   |   | $ | 61 |   |   | $ | 173 |   |
| Evaluated individually [specific reserve] |   |   | 831     |   |             |   | 608     |     |   |   | 223              |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                      |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                               |   | $      | 282,147 |   |             | $      | 104,978 |     |   | $      | 26,742           |   |   | $ | 142,669 |   |   | $ | 6,375 |   |   | $ | 1,383 |   |   |   |   |   |
| Loans evaluated for impairment            |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans evaluated collectively              |   |   | 271,931 |   |             |   | 96,072  |     |   |   | 25,432           |   |   |   | 142,669 |   |   |   | 6,375 |   |   |   | 1,383 |   |   |   |   |   |
| Loans evaluated individually              |   |   | 10,216  |   |             |   | 8,906   |     |   |   | 1,310            |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |   |   |
|                                      |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:                        |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning balance January 1               |   | $      | 3,170   |   |             | $      | 1,327   |     |   | $      | 596              |   |   | $ | 895 |   |   | $ | 113 |   |   | $ | 54 |   |   | $ | 185 |   |
| Charge-offs                               |   |   | (648    | )      |             |   | — |     |   |   | (300             | )      |   |   | (95 | ) |   |   | (151 | ) |   |   | (102 | ) |   |   | — |   |
| Recoveries                                |   |   | 166     |   |             |   | — |     |   |   | 25               |   |   |   | 3 |   |   |   | 74 |   |   |   | 64 |   |   |   | — |   |
| Provision                                 |   |   | 1,300   |   |             |   | 472     |     |   |   | 241              |   |   |   | 446 |   |   |   | 95 |   |   |   | 39 |   |   |   | 7 |   |
| Ending balance December 31                |   | $      | 3,988   |   |             | $      | 1,799   |     |   | $      | 561              |   |   | $ | 1,249 |   |   | $ | 132 |   |   | $ | 55 |   |   | $ | 192 |   |
| Ending balance as related to loans:       |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Evaluated collectively [general reserve]  |   | $      | 3,126   |   |             | $      | 1,037   |     |   | $      | 461              |   |   | $ | 1,249 |   |   | $ | 132 |   |   | $ | 55 |   |   | $ | 192 |   |
| Evaluated individually [specific reserve] |   |   | 862     |   |             |   | 762     |     |   |   | 100              |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|                                      |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                               |   | $      | 279,407 |   |             | $      | 103,982 |     |   | $      | 26,917           |   |   | $ | 140,354 |   |   | $ | 6,752 |   |   | $ | 1,402 |   |   |   |   |   |
| Loans evaluated for impairment            |   |   |    |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans evaluated collectively              |   |   | 267,986 |   |             |   | 94,421  |     |   |   | 25,057           |   |   |   | 140,354 |   |   |   | 6,752 |   |   |   | 1,402 |   |   |   |   |   |
| Loans evaluated individually              |   |   | 11,421  |   |             |   | 9,561   |     |   |   | 1,860            |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   |   |   |

----

|                                                      |   |   |   |   | Commercial       |   |    | Consumer |   |   |             |   |
|-----------------------------------------------------------|--------|--------|--------|--------|------------------|--------|---------|----------|--------|--------|------------------|--------|
| Allowance for Loan Losses (Continued) |   | Total  |   |   | Real Estate |   |    | Other    |   |   | Real Estate |   |   | Installment |   |   | Other |   |   | Unallocated |   |
| December 31, 2008:                                        |   |   |   |   |             |   |    |     |   |   |             |   |   |   |   |   |   |   |   |   |   |
| Beginning balance January 1                               |   | $      | 3,352  |   |             | $      | 1,117   |     |   | $      | 338              |   |   | $ | 1,483 |   |   | $ | 151 |   |   | $ | 32 |   |   | $ | 231 |   |
| Charge-offs                                               |   |   | (647   | )      |             |   | — |     |   |   | (294             | )      |   |   | (21 | ) |   |   | (178 | ) |   |   | (154 | ) |   |   | — |   |
| Recoveries                                                |   |   | 200    |   |             |   | — |     |   |   | 80               |   |   |   | 9 |   |   |   | 47 |   |   |   | 64 |   |   |   | — |   |
| Provision                                                 |   |   | 265    |   |             |   | 210     |     |   |   | 472              |   |   |   | (576 | ) |   |   | 94 |   |   |   | 111 |   |   |   | (46 | ) |
| Ending balance December 31                                |   | $      | 3,170  |   |             | $      | 1,327   |     |   | $      | 596              |   |   | $ | 895 |   |   | $ | 113 |   |   | $ | 54 |   |   | $ | 185 |   |

| Premise and Equipment, Net                     |   | 2010   |   |   | 2009   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Land                                           |   | $      | 1,057  |   |   | $      | 1,057 |   |
| Buildings and improvements                     |   |   | 6,563  |   |   |   | 6,168 |   |
| Furniture and fixtures                         |   |   | 337    |   |   |   | 226 |   |
| Equipment                                      |   |   | 4,191  |   |   |   | 4,323 |   |
|                                           |   |   | 12,148 |   |   |   | 11,774 |   |
| Less accumulated depreciation and amortization |   |   | (6,864 | )      |   |   | (6,754 | ) |
|                                           |   | $      | 5,284  |   |   | $      | 5,020 |   |

| Future Minimum Lease Payments, for the years ended: |   |   |   |
|-----------------------------------------------------|--------|--------|--------|
| 2011                                                |   | $      | 141    |   |
| 2012                                                |   |   | 135    |   |
| 2013                                                |   |   | 126    |   |
| 2014                                                |   |   | 114    |   |
| 2015                                                |   |   | 76     |   |
| 2016 and thereafter                                 |   |   | 854    |   |
|                                           |   | $      | 1,445  |   |

| Within one year     |   | $      | 104,603 |   |
|---------------------|--------|--------|---------|--------|
| One to two years    |   |   | 36,261  |   |
| Two to three years  |   |   | 4,473   |   |
| Three to four years |   |   | 3,980   |   |
| Four to five years  |   |   | 5,218   |   |
| Over five years     |   |   | 54      |   |
|                |   | $      | 154,589 |   |

----

|             |   | 2010   |   |   | 2009   |   |
|------------------|--------|--------|--------|--------|--------|--------|
| FHLB Maturities  |   | Amount |   |   | Rate   |   |   | Amount |   |   | Rate |   |
| Maturing in 2012 |   | $      | 5,000  |   |   |   | 3.79 | % |   | $ | 5,000 |   |   |   | 3.79 | % |
| Maturing in 2013 |   |   | 10,000 |   |   |   | 4.14 |   |   |   | 10,000 |   |   |   | 4.14 |   |
|             |   | $      | 15,000 |   |   |   | 4.02 | % |   | $ | 15,000 |   |   |   | 4.02 | % |

| Income Tax Expense (Benefit) |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Current:                     |   |   |   |   |   |   |   |   |   |
|   Federal          |   | $      | 559    |   |   | $      | (791   | )      |   | $ | 1,135 |   |
|   State            |   |   | 60     |   |   |   | 57     |   |   |   | 57 |   |
| Deferred                     |   |   | (337   | )      |   |   | 1,417  |   |   |   | (2,053 | ) |
|                         |   | $      | 282    |   |   | $      | 683    |   |   | $ | (861 | ) |

----

| Income Tax                                          |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Expense (Benefit)                                   |   | Amount |   |   |   | %(1)   |   |   | Amount |   |   |   | %(1) |   |   | Amount |   |   |   | %(1) |   |
| Tax at statutory rate                               |   | $      | 1,160  |   |   |   | 34     | %      |   | $ | 1,281 |   |   |   | 34 | % |   | $ | 626 |   |   |   | 34 | % |
| State taxes, net of Federal tax benefit             |   |   | 32     |   |   |   | 1      |   |   |   | 192 |   |   |   | 5 |   |   |   | (211 | ) |   |   | (11 | ) |
| Tax-exempt interest and dividends                   |   |   | (780   | )      |   |   | (23    | )      |   |   | (670 | ) |   |   | (18 | ) |   |   | (570 | ) |   |   | (31 | ) |
| Interest expense allocated to tax-exempt securities |   |   | 42     |   |   |   | 1      |   |   |   | 44 |   |   |   | 1 |   |   |   | 53 |   |   |   | 3 |   |
| Bank-owned life insurance                           |   |   | (160   | )      |   |   | (5     | )      |   |   | (168 | ) |   |   | (4 | ) |   |   | (697 | ) |   |   | (38 | ) |
| Other adjustments                                   |   |   | (12    | )      |   |   | (0     | )      |   |   | 4 |   |   |   | (0 | ) |   |   | (62 | ) |   |   | (4 | ) |
| Income tax expense (benefit)                        |   | $      | 282    |   |   |   | 8      | %      |   | $ | 683 |   |   |   | 18 | % |   | $ | (861 | ) |   |   | (47 | )% |

| Deferred Tax Asset, Net                                     |   | 2010   |    |   | 2009   |   |
|-------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Deferred tax assets:                                        |   |   |    |   |   |   |
| Allowance for loan losses in excess of tax bad debt reserve |   | $      | 1,442   |   |   | $      | 1,395 |   |
| Impairment charge on securities                             |   |   | — |   |   |   | 51 |   |
| Retirement benefits                                         |   |   | 2,140   |   |   |   | 1,907 |   |
| Deferred compensation                                       |   |   | — |   |   |   | 58 |   |
| NOL and tax credit carryover                                |   |   | 620     |   |   |   | 353 |   |
| Depreciation                                                |   |   | 370     |   |   |   | 444 |   |
| Other                                                       |   |   | — |   |   |   | 9 |   |
| Total deferred tax assets                                   |   |   | 4,572   |   |   |   | 4,217 |   |
|                                                        |   |   |    |   |   |   |   |   |
| Deferred tax liabilities:                                   |   |   |    |   |   |   |   |   |
| Prepaid expenses                                            |   |   | (185    | )      |   |   | (187 | ) |
| Other                                                       |   |   | (20     | )      |   |   | — |   |
| Total deferred tax liabilities                              |   |   | (205    | )      |   |   | (187 | ) |
| Net deferred tax asset (included in other assets)           |   | $      | 4,367   |   |   | $      | 4,030 |   |

| Deferred Tax Asset, Net                          |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| In Accumulated Other Comprehensive Income (Loss) |   | 2010   |   |   | 2009   |   |
| Deferred tax assets:                             |   |   |   |   |   |   |
| Pension benefits                                 |   | $      | 1,151  |   |   | $      | 1,573 |   |
| Other retirement benefits                        |   |   | 306    |   |   |   | 334 |   |
| Total deferred tax assets                        |   |   | 1,457  |   |   |   | 1,907 |   |
|                                             |   |   |   |   |   |   |   |   |
| Deferred tax liabilities:                        |   |   |   |   |   |   |   |   |
| Post retirement benefits                         |   |   | (946   | )      |   |   | (51 | ) |
| Unrealized gain on securities available for sale |   |   | (802   | )      |   |   | (877 | ) |
| Total deferred tax liabilities                   |   |   | (1,748 | )      |   |   | (928 | ) |
| Net deferred tax asset (liability)               |   | $      | (291   | )      |   | $      | 979 |   |

----

| Other Non-Interest Expense        |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Stationery and supplies           |   | $      | 301    |   |   | $      | 235    |   |   | $ | 285 |   |
| Advertising expense               |   |   | 268    |   |   |   | 251    |   |   |   | 247 |   |
| Director expenses                 |   |   | 228    |   |   |   | 239    |   |   |   | 239 |   |
| Merchant ATM and interchange fees |   |   | 438    |   |   |   | 436    |   |   |   | 532 |   |
| Professional services             |   |   | 520    |   |   |   | 561    |   |   |   | 824 |   |
| FDIC assessments                  |   |   | 682    |   |   |   | 800    |   |   |   | 179 |   |
| Pre-foreclosure expense           |   |   | 347    |   |   |   | 76     |   |   |   | 28 |   |
| Other expenses                    |   |   | 1,337  |   |   |   | 1,298  |   |   |   | 1,195 |   |
|                              |   | $      | 4,121  |   |   | $      | 3,896  |   |   | $ | 3,529 |   |

----

|                      |   | Actual |   |   | Required Ratios |   |
|---------------------------|--------|--------|--------|--------|-----------------|--------|
|                      |   |   |   |   |            |   |   | Minimum |   |   | Well |   |
| Regulatory                |   |   |   |   |            |   |   | capital |   |   | Capit- |   |
| Capital                   |   | Amount |   |   | Ratio           |   |   | adequacy |   |   | alized |   |
| December 31, 2010:        |   |   |   |   |            |   |   |   |   |   |   |   |
| Leverage (Tier I) capital |   | $      | 44,786 |   |            |   | 10.4 | % |   |   | 4.0 | % |   |   | 5.0 | % |
| Risk-based capital:       |   |   |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Tier I                    |   |   | 44,786 |   |            |   | 15.7 |   |   |   | 4.0 |   |   |   | 6.0 |   |
| Total                     |   |   | 48,356 |   |            |   | 17.0 |   |   |   | 8.0 |   |   |   | 10.0 |   |
|                      |   |   |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2009:        |   |   |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Leverage (Tier I) capital |   | $      | 43,986 |   |            |   | 10.5 | % |   |   | 4.0 | % |   |   | 5.0 | % |
| Risk-based capital:       |   |   |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Tier I                    |   |   | 43,986 |   |            |   | 15.4 |   |   |   | 4.0 |   |   |   | 6.0 |   |
| Total                     |   |   | 47,566 |   |            |   | 16.6 |   |   |   | 8.0 |   |   |   | 10.0 |   |

| Other Comprehensive Income (Loss), Net of Tax                                   |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|---------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Securities available for sale:                                                  |   |   |    |   |   |   |    |   |   |
| Net unrealized holding gains (losses) arising during the year                   |   | $      | (91     | )      |   | $      | 1,396   |   |   | $ | (4,515 | ) |
| Reclassification adjustment for net realized gains included in income           |   |   | (98     | )      |   |   | (544    | )      |   |   | (64 | ) |
| Reclassification adjustment for impairment charges included in income           |   |   | — |   |   |   | — |   |   |   | 5,162 |   |
| Amortization of pension and post retirement liabilities’ gains and losses |   |   | 3,365   |   |   |   | 1,012   |   |   |   | (3,152 | ) |
| Other comprehensive income (loss), before tax                                   |   |   | 3,176   |   |   |   | 1,864   |   |   |   | (2,569 | ) |
| Income tax benefit (expense) related to other comprehensive income (loss)       |   |   | (1,270  | )      |   |   | (745    | )      |   |   | 1,028 |   |
|                                                                            |   | $      | 1,906   |   |   | $      | 1,119   |   |   | $ | (1,541 | ) |

----

| Accumulated Other Comprehensive Income (Loss), Net of Tax                    |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Supplemental executive retirement plan                                       |   | $      | (765   | )      |   | $      | (834 | ) |
| Postretirement benefits                                                      |   |   | 2,365  |   |   |   | 126 |   |
| Defined benefit pension liability                                            |   |   | (2,876 | )      |   |   | (3,933 | ) |
| Net unrealized holding gains (losses) on securities available for sale       |   |   | 2,005  |   |   |   | 2,194 |   |
| Accumulated other comprehensive income (loss), before tax                    |   |   | 729    |   |   |   | (2,447 | ) |
| Income tax benefit (expense) related to accumulated other comprehensive loss |   |   | (291   | )      |   |   | 979 |   |
|                                                                         |   | $      | 438    |   |   | $      | (1,468 | ) |

| Related Party Transactions         |   | 2010   |   |   | 2009   |   |
|------------------------------------|--------|--------|--------|--------|--------|--------|
| Directors                          |   | $      | 2,854  |   |   | $      | 2,820 |   |
| Executive officers (non-directors) |   |   | 398    |   |   |   | 416 |   |
|                               |   | $      | 3,251  |   |   | $      | 3,236 |   |

----

|                      |   | Pension |   |   | Postretirement |   |
|---------------------------|--------|---------|--------|--------|----------------|--------|
| Estimated Future Benefits |   | benefit |   |   | benefit        |   |
| 2011                      |   | $       | 596    |   |           | $      | 175 |   |
| 2012                      |   |    | 628    |   |           |   | 187 |   |
| 2013                      |   |    | 651    |   |           |   | 192 |   |
| 2014                      |   |    | 660    |   |           |   | 212 |   |
| 2015                      |   |    | 671    |   |           |   | 214 |   |
| Years 2016-2020           |   |    | 3,426  |   |           |   | 1,110 |   |

| Changes in Benefit Obligations, Plan Assets and Funded Status |   | Pension benefit |    |   | Postretirement benefit |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------|---------|--------|-----------------------------|--------|
| As of the Measurement Date, December 31,                                |   | 2010                 |    |   | 2009                        |   |   | 2010 |   |   | 2009 |   |
| Change in benefit obligation:                                                                         |   |                 |    |   |                        |   |   |   |   |   |   |   |
| Beginning of year                                                                                     |   | $                    | 10,288  |   |                        | $      | 10,410 |   |   | $ | 3,706 |   |   | $ | 3,656 |   |
| Service cost                                                                                          |   |                 | 435     |   |                        |   | 454 |   |   |   | 148 |   |   |   | 162 |   |
| Interest cost                                                                                         |   |                 | 587     |   |                        |   | 568 |   |   |   | 209 |   |   |   | 207 |   |
| Actuarial (gain) loss                                                                                 |   |                 | 1,169   |   |                        |   | (586 | ) |   |   | (361 | ) |   |   | (254 | ) |
| Benefits paid                                                                                         |   |                 | (628    | )      |                        |   | (558 | ) |   |   | (103 | ) |   |   | (96 | ) |
| Adjustment for plan amendments                                                                        |   |                 | (1,639  | )      |                        |   | — |   |   |   | (1,920 | ) |   |   | — |   |
| Contributions by plan participants                                                                    |   |                 | — |   |                        |   | — |   |   |   | 33 |   |   |   | 31 |   |
| End of year                                                                                           |   |                 | 10,212  |   |                        |   | 10,288 |   |   |   | 1,712 |   |   |   | 3,706 |   |
| Changes in fair value of plan assets:                                                                 |   |                 |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Beginning of year                                                                                     |   |                 | 7,439   |   |                        |   | 5,285 |   |   |   | — |   |   |   | — |   |
| Actual return on plan assets                                                                          |   |                 | 812     |   |                        |   | 672 |   |   |   | — |   |   |   | — |   |
| Employer contributions                                                                                |   |                 | 750     |   |                        |   | 2,096 |   |   |   | 69 |   |   |   | 65 |   |
| Contributions by plan participants                                                                    |   |                 | — |   |                        |   | — |   |   |   | 33 |   |   |   | 31 |   |
| Benefits paid                                                                                         |   |                 | (617    | )      |                        |   | (614 | ) |   |   | (102 | ) |   |   | (96 | ) |
| End of year                                                                                           |   |                 | 8,384   |   |                        |   | 7,439 |   |   |   | — |   |   |   | — |   |
| Unfunded status at end of year, recognized in Other liabilities on the balance sheet                  |   | $                    | (1,828  | )      |                        | $      | (2,849 | ) |   | $ | (1,712 | ) |   | $ | (3,706 | ) |
| Amounts recognized in accumulated other comprehensive income (loss) consists of:                      |   |                 |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Unrecognized actuarial gain (loss)                                                                    |   | $                    | (2,876  | )      |                        | $      | (3,826 | ) |   | $ | (46 | ) |   | $ | (410 |   |
| Unrecognized prior service (cost) credit                                                              |   |                 | — |   |                        |   | (107 | ) |   |   | 2,411 |   |   |   | 536 |   |
| Net amount recognized                                                                                 |   | $                    | (2,876  | )      |                        | $      | (3,933 | ) |   | $ | 2,365 |   |   | $ | 126 |   |

----

| Net Periodic Benefit Cost                 |   | Pension benefit |   |   | Postretirement benefit |   |
|----------------------------------------------------------|--------|----------------------|--------|--------|-----------------------------|--------|
| For the year ended December 31, |   | 2010                 |   |   | 2009                        |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net periodic benefit cost:                               |   |                 |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                                             |   | $                    | 435    |   |                        | $      | 454 |   |   | $ | 372 |   |   | $ | 148 |   |   | $ | 162 |   |   | $ | 147 |   |
| Interest cost                                            |   |                 | 587    |   |                        |   | 568 |   |   |   | 557 |   |   |   | 209 |   |   |   | 207 |   |   |   | 183 |   |
| Expected return on plan assets                           |   |                 | (536   | )      |                        |   | (406 | ) |   |   | (511 | ) |   |   | — |   |   |   | — |   |   |   | — |   |
| Amortization of prior service cost                       |   |                 | 25     |   |                        |   | 24 |   |   |   | 25 |   |   |   | (45 | ) |   |   | (45 | ) |   |   | (45 | ) |
| Curtailment gain                                         |   |                 | 83     |   |                        |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Recognized net actuarial loss                            |   |                 | 192    |   |                        |   | 232 |   |   |   | 80 |   |   |   | 2 |   |   |   | 15 |   |   |   | 12 |   |
| Net amount recognized                                    |   | $                    | 786    |   |                        | $      | 872 |   |   | $ | 523 |   |   | $ | 314 |   |   | $ | 339 |   |   | $ | 297 |   |

|                          |   | Pension  |   |   | Postretirement |   |
|-------------------------------|--------|----------|--------|--------|----------------|--------|
| Benefit Obligation            |   | benefits |   |   | benefits       |   |
| Assumptions                   |   | 2010     |   |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Discount rate                 |   |     | 5.68   | %      |           |   | 5.87 | % |   |   | 5.68 | % |   |   | 5.75 | % |
| Rate of compensation increase |   |     | 3.00   |   |           |   | 3.00 |   |   |   | — |   |   |   | — |   |

|                                             |   | Pension  |   |   | Postretirement |   |
|--------------------------------------------------|--------|----------|--------|--------|----------------|--------|
| Net Periodic Benefit                             |   | benefits |   |   | benefits       |   |
| Cost Assumptions                                 |   | 2010     |   |   | 2009           |   |   | 2010 |   |   | 2009 |   |
| Discount rate                                    |   |     | 5.87   | %      |           |   | 5.75 | % |   |   | 5.75 | % |   |   | 5.75 | % |
| Expected long-term rate of return on plan assets |   |     | 7.50   |   |           |   | 7.50 |   |   |   | — |   |   |   | — |   |
| Rate of compensation increase                    |   |     | 3.00   |   |           |   | 5.00 |   |   |   | — |   |   |   | — |   |

| Pension Plan Asset Allocation |   | 2010   |   |   | 2009   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|
| Asset category:               |   |   |   |   |   |   |
| Equity securities             |   |   | 55     | %      |   |   | 47 | % |
| Debt securities               |   |   | 40     |   |   |   | 27 |   |
| Other                         |   |   | 5      |   |   |   | 26 |   |

----

|                                    |   |   |   |   | (Level 1)        |   |    |        |   |   |         |   |
|-----------------------------------------|--------|--------|--------|--------|------------------|--------|---------|-------------|--------|--------|--------------|--------|
|                                    |   |   |   |   | Quoted           |   |    |        |   |   |         |   |
|                                    |   |   |   |   | Prices in        |   |    | (Level 2)   |   |   |         |   |
|                                    |   |   |   |   | Active           |   |    | Significant |   |   | (Level 3)    |   |
|                                    |   |   |   |   | Markets for |   |    | Other       |   |   | Significant  |   |
| Fair Value Hierarchy                    |   |   |   |   | Identical        |   |    | Observable  |   |   | Unobservable |   |
| For Pension Plan Assets                 |   | Total  |   |   | Assets           |   |    | Inputs      |   |   | Inputs       |   |
| Asset category as of December 31, 2010: |   |   |   |   |             |   |    |        |   |   |         |   |
| Cash and cash equivalents               |   | $      | 405    |   |             | $      | 405     |        |   | $      | —      |   |   | $ | — |   |
| Bonds:                                  |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| U.S. Government Agency                  |   |   | 806    |   |             |   | — |        |   |   | 806          |   |   |   | — |   |
| Municipal                               |   |   | 683    |   |             |   | — |        |   |   | 683          |   |   |   | — |   |
| U.S. corporate                          |   |   | 301    |   |             |   | — |        |   |   | 301          |   |   |   | — |   |
| Foreign corporate                       |   |   | 202    |   |             |   | — |        |   |   | 202          |   |   |   | — |   |
| Equity securities:                      |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| U.S. companies                          |   |   | 3,168  |   |             |   | 3,168   |        |   |   | —      |   |   |   | — |   |
| International companies                 |   |   | 27     |   |             |   | 27      |        |   |   | —      |   |   |   | — |   |
| Real Estate Investment Trusts           |   |   | 41     |   |             |   | 41      |        |   |   | —      |   |   |   | — |   |
| Mutual funds:                           |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| U.S. companies                          |   |   | 916    |   |             |   | 916     |        |   |   | —      |   |   |   | — |   |
| International companies                 |   |   | 470    |   |             |   | 470     |        |   |   | —      |   |   |   | — |   |
| Fixed income                            |   |   | 1,365  |   |             |   | 1,365   |        |   |   | —      |   |   |   | — |   |
|                               |   | $      | 8,384  |   |             | $      | 6,392   |        |   | $      | 1,992        |   |   | $ | — |   |
|                                    |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| Asset category as of December 31, 2009: |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| Cash and cash equivalents               |   | $      | 1,937  |   |             | $      | 1,937   |        |   | $      | —      |   |   | $ | — |   |
| Municipal bonds                         |   |   | 292    |   |             |   | — |        |   |   | 292          |   |   |   | — |   |
| Equity securities:                      |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| U.S. companies                          |   |   | 1,232  |   |             |   | 1,232   |        |   |   | —      |   |   |   | — |   |
| International companies                 |   |   | 14     |   |             |   | 14      |        |   |   | —      |   |   |   | — |   |
| Mutual funds:                           |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| U.S. companies                          |   |   | 377    |   |             |   | 377     |        |   |   | —      |   |   |   | — |   |
| International companies                 |   |   | 536    |   |             |   | 536     |        |   |   | —      |   |   |   | — |   |
| Common funds:                           |   |   |   |   |             |   |    |        |   |   |         |   |   |   |   |   |
| Equity (a)                              |   |   | 1,366  |   |             |   | — |        |   |   | 1,366        |   |   |   | — |   |
| Fixed income (b)                        |   |   | 1,685  |   |             |   | — |        |   |   | 1,685        |   |   |   | — |   |
|                                    |   | $      | 7,439  |   |             | $      | 4,096   |        |   | $      | 3,343        |   |   | $ | — |   |

| (a) | This class comprises low-cost equity index funds not actively managed that track the S&P 500 Index, the S&P Midcap Index, the Russell 2000 Index and the Morgan Stanley Capital International EAFE Index. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | This class comprises low-cost fixed income index funds not actively managed that track the Barclays Capital Mortgage-Backed Securities Index, the Barclays Capital Intermediate Government Credit Bond Index and the Barclays Capital U.S. Treasury Inflation Protected Securities (TIPS) Index. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Asset Allocation Targets    |   | Allocation Range |     |
|-----------------------------|--------|-----------------------|----------|
| Large Cap Domestic Equity   |   |                  | 30% - 40 | % |
| Mid Cap Domestic Equity     |   |                  | 5% - 15  | % |
| Small Cap Domestic Equity   |   |                  | 0% - 10  | % |
| International Equity        |   |                  | 5% - 20  | % |
| Real Estate                 |   |                  | 0% - 10  | % |
| Core Investment Grade Bonds |   |                  | 15% - 30 | % |
| Mortgages                   |   |                  | 0% - 15  | % |
| Money Market                |   |                  | 0% - 10  | % |

----

| Off-Balance Sheet                                        |   |   |   |   |   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Financial Instruments                                    |   | 2010   |   |   | 2009   |   |
| Loan origination commitments and unused lines of credit: |   |   |   |   |   |   |
| Commercial and residential mortgages                     |   | $      | 3,247  |   |   | $      | 6,197 |   |
| Commercial loans                                         |   |   | 21,486 |   |   |   | 21,422 |   |
| Home equity lines                                        |   |   | 13,219 |   |   |   | 13,606 |   |
|                                                     |   |   | 37,952 |   |   |   | 41,225 |   |
| Standby letters of credit                                |   |   | 570    |   |   |   | 858 |   |
|                                                     |   | $      | 38,522 |   |   | $      | 42,083 |   |

----

| Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                           |   |   |    |   | (Level 1)   |   |    |           |   |   |           |   |
|------------------------------------------------------------------------------------------------|--------|--------|---------|--------|------------------|--------|---------|----------------|--------|--------|----------------|--------|
|                                                                                           |   |   |    |   | Quoted           |   |    |           |   |   |           |   |
|                                                                                           |   |   |    |   | Prices in   |   |    | (Level 2) |   |   |           |   |
|                                                                                           |   |   |    |   | Active           |   |    | Significant    |   |   | (Level 3) |   |
| Fair Value Hierarchy                                                            |   |   |    |   | Markets for |   |    | Other          |   |   | Significant    |   |
| For Assets Valued on a                                                |   |   |    |   | Identical        |   |    | Observable     |   |   | Unobservable   |   |
| Recurring and Non-recurring Basis                                               |   | Total  |    |   | Assets           |   |    | Inputs         |   |   | Inputs         |   |
| December 31, 2010:                                                                             |   |   |    |   |             |   |    |           |   |   |           |   |
| Recurring:                                                                                     |   |   |    |   |             |   |    |           |   |   |           |   |
| Available for sale securities                                                                  |   |   |    |   |             |   |    |           |   |   |           |   |
| Government sponsored enterprises (GSE) (a)                                                     |   | $      | 8,587   |   |             | $      | — |           |   | $      | 8,587          |   |   | $ | — |   |
| Obligations of state and political subdivisions – New York state (a)                     |   |   | 57,663  |   |             |   | — |           |   |   | 57,663         |   |   |   | — |   |
| Mortgage backed securities and collateralized mortgage obligations – GSE residential (a) |   |   | 33,211  |   |             |   | — |           |   |   | 33,211         |   |   |   | — |   |
| Corporate Debt – financial services industry                                             |   |   | 4,567   |   |             |   | — |           |   |   | 4,567          |   |   |   | — |   |
| Certificates of deposit – financial services industry                                    |   |   | 98      |   |             |   | 98      |           |   |   | —        |   |   |   | — |   |
| Equity securities – financial services industry                                          |   |   | 542     |   |             |   | 542     |           |   |   | —        |   |   |   | — |   |
|                                                                                           |   | $      | 104,668 |   |             | $      | 640     |           |   | $      | 104,028        |   |   | $ | — |   |
| Non-recurring:                                                                                 |   |   |    |   |             |   |    |           |   |   |           |   |   |   |   |   |
| Foreclosed real estate                                                                         |   | $      | 40      |   |             | $      | — |           |   | $      | —        |   |   | $ | 40 |   |
| Impaired loans                                                                                 |   |   | 2,978   |   |             |   | — |           |   |   | —        |   |   |   | 2,978 |   |
|                                                                                           |   | $      | 3,018   |   |             | $      | — |           |   | $      | —        |   |   | $ | 3,018 |   |

----

|                                                                                           |   |   |   |   | (Level 1)   |   |    |           |   |   |           |   |
|------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------------|--------|---------|----------------|--------|--------|----------------|--------|
|                                                                                           |   |   |   |   | Quoted           |   |    |           |   |   |           |   |
|                                                                                           |   |   |   |   | Prices in   |   |    | (Level 2) |   |   |           |   |
|                                                                                           |   |   |   |   | Active           |   |    | Significant    |   |   | (Level 3) |   |
| Fair Value Hierarchy                                                                 |   |   |   |   | Markets for |   |    | Other          |   |   | Significant    |   |
| For Assets Valued on a                                                     |   |   |   |   | Identical        |   |    | Observable     |   |   | Unobservable   |   |
| Recurring and Non-recurring Basis (Continued)                              |   | Total  |   |   | Assets           |   |    | Inputs         |   |   | Inputs         |   |
| December 31, 2009:                                                                   |   |   |   |   |             |   |    |           |   |   |           |   |
| Recurring:                                                                                     |   |   |   |   |             |   |    |           |   |   |           |   |
| Available for sale securities                                                                  |   |   |   |   |             |   |    |           |   |   |           |   |
| Government sponsored enterprises (GSE) (a)                                                     |   | $      | 9,471  |   |             | $      | — |           |   | $      | 9,471          |   |   | $ | — |   |
| Obligations of state and political subdivisions – New York state (a)                |   |   | 50,180 |   |             |   | — |           |   |   | 50,180         |   |   |   | — |   |
| Mortgage backed securities and collateralized mortgage obligations – GSE residential (a) |   |   | 29,510 |   |             |   | — |           |   |   | 29,510         |   |   |   | — |   |
| Corporate Debt – financial services industry                                             |   |   | 1,450  |   |             |   | — |           |   |   | 1,450          |   |   |   | — |   |
| Certificates of deposit – financial services industry                                    |   |   | 98     |   |             |   | 98      |           |   |   | —        |   |   |   | — |   |
| Equity securities – financial services industry                                          |   |   | 611    |   |             |   | 570     |           |   |   | 41             |   |   |   | — |   |
|                                                                                           |   | $      | 91,320 |   |             | $      | 668     |           |   | $      | 90,652         |   |   | $ | — |   |
| Non-recurring:                                                                                 |   |   |   |   |             |   |    |           |   |   |           |   |   |   |   |   |
| Impaired loans                                                                                 |   | $      | 2,728  |   |             | $      | — |           |   | $      | —        |   |   | $ | 2,728 |   |

----

----

|                                     |   | 2010         |    |   | 2009       |   |
|------------------------------------------|--------|--------------|---------|--------|------------|--------|
|                                     |   | Net carrying |    |   | Estimated  |   |   | Net carrying |   |   | Estimated |   |
| Financial Assets and Liabilities         |   | amount       |    |   | fair value |   |   | amount |   |   | fair value |   |
| Financial assets:                        |   |         |    |   |       |   |   |   |   |   |   |   |
| Cash and cash equivalents                |   | $            | 7,518   |   |       | $      | 7,518 |   |   | $ | 13,336 |   |   | $ | 13,336 |   |
| Securities available for sale            |   |         | 104,668 |   |       |   | 104,668 |   |   |   | 91,320 |   |   |   | 91,320 |   |
| Securities held to maturity              |   |         | 6,021   |   |       |   | 6,261 |   |   |   | 8,218 |   |   |   | 8,578 |   |
| Loans, net                               |   |         | 277,812 |   |       |   | 277,134 |   |   |   | 275,419 |   |   |   | 274,618 |   |
| Accrued interest receivable              |   |         | 2,034   |   |       |   | 2,034 |   |   |   | 1,954 |   |   |   | 1,954 |   |
| Restricted investments                   |   |         | 2,806   |   |       |   | 2,806 |   |   |   | 2,341 |   |   |   | 2,341 |   |
| Financial liabilities:                   |   |         |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits (non-interest-bearing)   |   |         | 62,864  |   |       |   | 62,864 |   |   |   | 64,266 |   |   |   | 64,266 |   |
| Interest-bearing deposits                |   |         | 288,042 |   |       |   | 277,764 |   |   |   | 287,939 |   |   |   | 276,429 |   |
| Accrued interest payable                 |   |         | 273     |   |       |   | 273 |   |   |   | 378 |   |   |   | 378 |   |
| Short-term debt                          |   |         | 9,500   |   |       |   | 9,500 |   |   |   | 212 |   |   |   | 212 |   |
| Federal Home Loan Bank borrowings        |   |         | 15,000  |   |       |   | 15,857 |   |   |   | 15,000 |   |   |   | 15,951 |   |
|                                     |   |         |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Off balance sheet financial instruments: |   |         |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Lending commitments                      |   |         | — |   |       |   | — |   |   |   | — |   |   |   | — |   |
| Letters of credit                        |   |         | — |   |       |   | — |   |   |   | — |   |   |   | — |   |

| Balance Sheets                                   |   |   |   |   |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| As of December 31,                               |   | 2010   |   |   | 2009   |   |
| Assets                                           |   |   |   |   |   |   |
| Cash                                             |   | $      | 118    |   |   | $      | 33 |   |
| Securities available for sale                    |   |   | 542    |   |   |   | 611 |   |
| Investment in subsidiary                         |   |   | 45,223 |   |   |   | 42,481 |   |
| Premises and equipment, net                      |   |   | 974    |   |   |   | 1,017 |   |
| Other assets                                     |   |   | 642    |   |   |   | 546 |   |
| Total Assets                                     |   | $      | 47,499 |   |   | $      | 44,688 |   |
| Liabilities and Stockholders’ Equity       |   |   |   |   |   |   |   |   |
| Liabilities                                      |   | $      | 1      |   |   | $      | 25 |   |
| Stockholders’ equity                       |   |   | 47,498 |   |   |   | 44,663 |   |
| Total Liabilities and Stockholders’ Equity |   | $      | 47,499 |   |   | $      | 44,688 |   |

----

| Statements of Income                                              |   |   |    |   |   |   |    |   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| For the Year Ended December 31,                                   |   | 2010   |    |   | 2009   |   |    | 2008   |   |
| Dividend income from subsidiary                                   |   | $      | 2,450   |   |   | $      | 2,400   |   |   | $ | 2,475 |   |
| Dividend income on securities available for sale                  |   |   | 39      |   |   |   | 47      |   |   |   | 43 |   |
| Gain on sale of securities                                        |   |   | 89      |   |   |   | — |   |   |   | 63 |   |
| Impairment charge on securities                                   |   |   | — |   |   |   | — |   |   |   | (101 | ) |
| Other non-interest income                                         |   |   | 6       |   |   |   | 17      |   |   |   | — |   |
|                                                              |   |   | 2,584   |   |   |   | 2,464   |   |   |   | 2,480 |   |
| Occupancy and equipment expenses                                  |   |   | 116     |   |   |   | 118     |   |   |   | 116 |   |
| Other non-interest expenses                                       |   |   | 139     |   |   |   | 167     |   |   |   | 146 |   |
|                                                              |   |   | 255     |   |   |   | 285     |   |   |   | 262 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Income before income taxes and undistributed income of subsidiary |   |   | 2,329   |   |   |   | 2,179   |   |   |   | 2,218 |   |
| Income tax expense                                                |   |   | — |   |   |   | — |   |   |   | — |   |
| Income before undistributed income of subsidiary                  |   |   | 2,329   |   |   |   | 2,179   |   |   |   | 2,218 |   |
| Equity in undistributed income of subsidiary                      |   |   | 800     |   |   |   | 905     |   |   |   | 484 |   |
| Net Income                                                        |   | $      | 3,129   |   |   | $      | 3,084   |   |   | $ | 2,702 |   |

| Statements of Cash Flows                            |   |   |    |   |   |   |    |   |   |
|-----------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| For the Year Ended December 31,                     |   | 2010   |    |   | 2009   |   |    | 2008   |   |
| Operating activities:                               |   |   |    |   |   |   |    |   |   |
| Net income                                          |   | $      | 3,129   |   |   | $      | 3,084   |   |   | $ | 2,702 |   |
| Equity in undistributed income of subsidiary        |   |   | (800    | )      |   |   | (905    | )      |   |   | (484 | ) |
| Depreciation and amortization                       |   |   | 43      |   |   |   | 51      |   |   |   | 62 |   |
| Gain on sale of securities                          |   |   | (89     | )      |   |   | — |   |   |   | (63 | ) |
| Impairment charge on securities                     |   |   | — |   |   |   | — |   |   |   | 101 |   |
| Other adjustments, net                              |   |   | (76     | )      |   |   | (99     | )      |   |   | (66 | ) |
| Net Cash Provided by Operating Activities           |   |   | 2,207   |   |   |   | 2,131   |   |   |   | 2,252 |   |
|                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Investing activities:                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Proceeds from sale of securities available for sale |   |   | 787     |   |   |   | 130     |   |   |   | 334 |   |
| Purchase of securities available for sale           |   |   | (709    | )      |   |   | (131    | )      |   |   | (332 | ) |
| Purchases of premises and equipment                 |   |   | — |   |   |   | (3      | )      |   |   | — |   |
| Net Cash Provided by (Used in) Investing Activities |   |   | 78      |   |   |   | (4      | )      |   |   | 2 |   |
|                                                |   |   |    |   |   |   |    |   |   |   |   |   |
| Financing activities:                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Issuance of treasury stock                          |   |   | 2       |   |   |   | — |   |   |   | — |   |
| Cash dividends paid                                 |   |   | (2,202  | )      |   |   | (2,202  | )      |   |   | (2,202 | ) |
| Net Cash Used in Financing Activities               |   |   | (2,200  | )      |   |   | (2,202  | )      |   |   | (2,202 | ) |
| Net Increase (Decrease) in Cash                     |   |   | 85      |   |   |   | (75     | )      |   |   | 52 |   |
| Cash at Beginning of Year                           |   |   | 33      |   |   |   | 108     |   |   |   | 56 |   |
| Cash at End of Year                                 |   | $      | 118     |   |   | $      | 33      |   |   | $ | 108 |   |

----

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

| ITEM 9A. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

| ITEM 9B. | OTHER INFORMATION |
|----------|-------------------|

----

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------|--------------------------------------------------------|

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
|----------|--------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------|----------------------------------------|

----

| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
|----------|-----------------------------------------|

| (a) 1. | The consolidated financial statements and schedules of the Company and Bank are included in item 8 of Part II. |
|--------|----------------------------------------------------------------------------------------------------------------|

| (a) 2. | All schedules are omitted since the required information is not applicable, not required or contained in the respective consolidated financial statements or in the notes thereto. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a) 3. | Exhibits (numbered in accordance with Item 601 of Regulation S-K). |
|--------|--------------------------------------------------------------------|

|   | 3.1 | Certificate of Incorporation of the Company (Incorporation by Reference to Exhibit 3.1, 3.2, 3.3 and 3.4 to Form 8 Registration Statement, effective June 29, 1991) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | The Amended and Restated Bylaws of the Company (Incorporated by Reference to Exhibit 3.1 to Form 8-K filed on December 31, 2007) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | Instruments defining the Rights of Security Holders. (Incorporated by Reference to Exhibit 4 to Form 8 Registration Statement, effective June 29, 1991) |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21.1 | Subsidiaries of the Company |
|--------|------|-----------------------------|

|   | 31.1 | Section 302 Certification of Chief Executive Officer |
|--------|------|------------------------------------------------------|

|   | 31.2 | Section 302 Certification of Chief Financial Officer |
|--------|------|------------------------------------------------------|

|   | 32.1 | 906 certification of Chief Executive Officer |
|--------|------|----------------------------------------------|

|   | 32.2 | 906 certification of Chief Financial Officer |
|--------|------|----------------------------------------------|

| (b) | Exhibits to this Form 10-K are attached or incorporated herein by reference. |
|-----|------------------------------------------------------------------------------|

----

| Dated: March 24, 2011 | By:    | /s/ Wayne V. Zanetti    | By:    | /s/ John A. Russell     |
|-----------------------|--------|-------------------------|--------|-------------------------|
|                  |   | Wayne V. Zanetti        |   | John A. Russell         |
|                  |   | Chief Executive Officer |   | Chief Financial Officer |

| SIGNATURE             |   | TITLE                        |   | DATE           |
|-----------------------|--------|------------------------------|--------|----------------|
|                  |   |                         |   |           |
| /s/ Kenneth C. Klein  |   | Chairman–Director      |   | March 24, 2011 |
| Kenneth C. Klein      |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ Raymond Walter    |   | Vice Chairman–Director |   | March 24, 2011 |
| Raymond Walter        |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ Wayne V. Zanetti  |   | Chief Executive Officer      |   | March 24, 2011 |
| Wayne V. Zanetti      |   | President–Director     |   |           |
|                  |   |                         |   |           |
| /s/ John K. Gempler   |   | Secretary–Director     |   | March 24, 2011 |
| John K. Gempler       |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ John W. Galligan  |   | Director                     |   | March 24, 2011 |
| John W. Galligan      |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ Douglas A. Heinle |   | Director                     |   | March 24, 2011 |
| Douglas A. Heinle     |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ Donald L. Knack   |   | Director                     |   | March 24, 2011 |
| Donald L. Knack       |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ James F. Roche    |   | Director                     |   | March 24, 2011 |
| James F. Roche        |   |                         |   |           |
|                  |   |                         |   |           |
| /s/ Edward T. Sykes   |   | Director                     |   | March 24, 2011 |
| Edward T. Sykes       |   |                         |   |           |

----