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

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

| Pennsylvania                                                                                |   | 26-0261305                                 |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------|
| (State or other jurisdiction ofIncorporation or organization) |   | (IRS EmployerIdentification No.) |

| Large accelerated filer  ̈              | Accelerated filer  ̈    |
|---------------------------------------------|-----------------------------|
| Non-accelerated filer    ̈    | Smaller reporting company x |
| (Do not check if smaller reporting company) |

----

|                                                                                                 | Page   |
|------------------------------------------------------------------------------------------------------|--------|
| PART I - FINANCIAL INFORMATION                                                                       |   |
|                                                                                                 |   |
| Item 1. Financial Statements.                                                                        |   |
|                                                                                                 |   |
| Consolidated Balance Sheets at March 31, 2011 (Unaudited) and December 31, 2010                      | 3      |
|                                                                                                 |   |
| Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31, 2011 and 2010     | 4      |
|                                                                                                 |   |
| Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2011 and 2010 | 5      |
|                                                                                                 |   |
| Notes to Unaudited Consolidated Financial Statements                                                 | 6      |
|                                                                                                 |   |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  | 25     |
|                                                                                                 |   |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk.                                  | 30     |
|                                                                                                 |   |
| Item 4. Controls and Procedures.                                                                     | 30     |
|                                                                                                 |   |
| PART II - OTHER INFORMATION                                                                          |   |
|                                                                                                 |   |
| Item 1. Legal Proceedings                                                                            | 30     |
|                                                                                                 |   |
| Item 1A. Risk Factors                                                                                | 31     |
|                                                                                                 |   |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                  | 31     |
|                                                                                                 |   |
| Item 3. Defaults Upon Senior Securities.                                                             | 31     |
|                                                                                                 |   |
| Item 4. (Removed and Reserved)                                                                       | 31     |
|                                                                                                 |   |
| Item 5. Other Information.                                                                           | 31     |
|                                                                                                 |   |
| Item 6. Exhibits.                                                                                    | 31     |

----

|                                                                                                                                                                                                                                             |   | March 31,2011  |    |   | December 31,2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                                                                             |   | (Unaudited)         |    |   | (Audited)             |   |
|                                                                                                                                                                                                                                             |   | (In thousands) |    |
| ASSETS:                                                                                                                                                                                                                                          |   |                |    |
| Cash and due from banks                                                                                                                                                                                                                          |   | $                   | 1,931   |   |                  | $      | 1,778 |   |
| Interest bearing deposits                                                                                                                                                                                                                        |   |                | 233     |   |                  |   | 345 |   |
| Federal funds sold                                                                                                                                                                                                                               |   |                | 18,221  |   |                  |   | 16,072 |   |
| Total cash and cash equivalents                                                                                                                                                                                                                  |   |                | 20,385  |   |                  |   | 18,195 |   |
| Investment securities, available for sale                                                                                                                                                                                                        |   |                | 13,938  |   |                  |   | 14,580 |   |
| Equity securities at cost, substantially restricted                                                                                                                                                                                              |   |                | 1,035   |   |                  |   | 1,087 |   |
| Loans, net of allowance for loan losses of $1,574 in 2011 and $1,531 in 2010                                                                                                                                                                     |   |                | 120,578 |   |                  |   | 120,280 |   |
| Bank premises and equipment – net                                                                                                                                                                                                          |   |                | 3,767   |   |                  |   | 3,811 |   |
| Accrued interest receivable                                                                                                                                                                                                                      |   |                | 609     |   |                  |   | 580 |   |
| Cash surrender value of bank-owned life insurance                                                                                                                                                                                                |   |                | 3,195   |   |                  |   | 3,160 |   |
| Deferred income taxes                                                                                                                                                                                                                            |   |                | 624     |   |                  |   | 705 |   |
| Prepaid FDIC insurance                                                                                                                                                                                                                           |   |                | 384     |   |                  |   | 432 |   |
| Other real estate owned                                                                                                                                                                                                                          |   |                | 929     |   |                  |   | 929 |   |
| Other assets                                                                                                                                                                                                                                     |   |                | 232     |   |                  |   | 174 |   |
| TOTAL ASSETS                                                                                                                                                                                                                                     |   | $                   | 165,676 |   |                  | $      | 163,933 |   |
|                                                                                                                                                                                                                                             |   |                |    |   |                  |   |   |   |
| LIABILITIES:                                                                                                                                                                                                                                     |   |                |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                                                                                        |   |                |    |   |                  |   |   |   |
| Non-interest bearing                                                                                                                                                                                                                             |   | $                   | 7,165   |   |                  | $      | 6,832 |   |
| Interest bearing                                                                                                                                                                                                                                 |   |                | 130,588 |   |                  |   | 129,479 |   |
| Total deposits                                                                                                                                                                                                                                   |   |                | 137,753 |   |                  |   | 136,311 |   |
| Other borrowed funds                                                                                                                                                                                                                             |   |                | 7,000   |   |                  |   | 7,000 |   |
| Accrued interest and other liabilities                                                                                                                                                                                                           |   |                | 1,047   |   |                  |   | 1,050 |   |
| TOTAL LIABILITIES                                                                                                                                                                                                                                |   |                | 145,800 |   |                  |   | 144,361 |   |
|                                                                                                                                                                                                                                             |   |                |    |   |                  |   |   |   |
| STOCKHOLDERS’ EQUITY:                                                                                                                                                                                                                      |   |                |    |   |                  |   |   |   |
| Preferred stock, no par; 20,000,000 authorized; issued and outstanding, none                                                                                                                                                                     |   |                | -       |   |                  |   | - |   |
| Common stock, par value $0.10; 80,000,000 authorized; 1,581,571shares issued in 2011 and 2010; outstanding: 1,335,524 in 2011(includes 47,366 of unvested restricted stock) and 1,334,844 in 2010 (includes 47,516 of unvested restricted stock) |   |                | 158     |   |                  |   | 158 |   |
| Additional paid-in capital                                                                                                                                                                                                                       |   |                | 13,764  |   |                  |   | 13,698 |   |
| Retained earnings                                                                                                                                                                                                                                |   |                | 9,069   |   |                  |   | 8,995 |   |
| Unearned ESOP shares                                                                                                                                                                                                                             |   |                | (818    | )      |                  |   | (836 | ) |
| Accumulated other comprehensive income                                                                                                                                                                                                           |   |                | 265     |   |                  |   | 119 |   |
| Treasury stock at cost, shares: 294,293 in 2011 an in 2010                                                                                                                                                                                       |   |                | (2,562  | )      |                  |   | (2,562 | ) |
| TOTAL STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                 |   |                | 19,876  |   |                  |   | 19,572 |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                 |   | $                   | 165,676 |   |                  | $      | 163,933 |   |

----

|                                                             |   | 2011   |      |   | 2010   |   |
|------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| INTEREST INCOME                                                  |   |   |      |   |   |   |
| Interest on loans                                                |   | $      | 1,729     |   |   | $      | 1,737 |   |
| Interest on tax exempt loans                                     |   |   | 12        |   |   |   | 14 |   |
| Interest on federal funds sold                                   |   |   | 9         |   |   |   | 4 |   |
| Interest on tax exempt investments                               |   |   | 67        |   |   |   | 81 |   |
| Interest and dividends on investments                            |   |   | 64        |   |   |   | 125 |   |
|      Total interest income              |   |   | 1,881     |   |   |   | 1,961 |   |
| INTEREST EXPENSE                                                 |   |   |      |   |   |   |   |   |
| Interest on deposits                                             |   |   | 441       |   |   |   | 557 |   |
| Interest on long-term borrowings                                 |   |   | 81        |   |   |   | 158 |   |
|      Total interest expense             |   |   | 522       |   |   |   | 715 |   |
|                                                             |   |   |      |   |   |   |   |   |
| NET INTEREST INCOME                                              |   |   | 1,359     |   |   |   | 1,246 |   |
|                                                             |   |   |      |   |   |   |   |   |
| PROVISION FOR LOAN LOSSES                                        |   |   | 45        |   |   |   | 39 |   |
|                                                             |   |   |      |   |   |   |   |   |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES              |   |   | 1,314     |   |   |   | 1,207 |   |
|                                                             |   |   |      |   |   |   |   |   |
| OTHER INCOME                                                     |   |   |      |   |   |   |   |   |
| Service charges and fees                                         |   |   | 31        |   |   |   | 34 |   |
| Bank-owned life insurance income                                 |   |   | 35        |   |   |   | 37 |   |
| Other operating income                                           |   |   | 19        |   |   |   | 25 |   |
| Loss on sale of investment securities                            |   |   | (8        | )      |   |   | - |   |
| Impairment losses on investment securities                       |   |   |      |   |   |   | (24 | ) |
| TOTAL OTHER INCOME                                               |   |   | 77        |   |   |   | 72 |   |
|                                                             |   |   |      |   |   |   |   |   |
| OTHER EXPENSE                                                    |   |   |      |   |   |   |   |   |
| Salaries and employee benefits                                   |   |   | 603       |   |   |   | 583 |   |
| Occupancy and equipment expense                                  |   |   | 167       |   |   |   | 132 |   |
| FDIC insurance expense                                           |   |   | 51        |   |   |   | 54 |   |
| Professional services expense                                    |   |   | 154       |   |   |   | 69 |   |
| Other operating expenses                                         |   |   | 187       |   |   |   | 163 |   |
| TOTAL OTHER EXPENSE                                              |   |   | 1,162     |   |   |   | 1,001 |   |
|                                                             |   |   |      |   |   |   |   |   |
| INCOME BEFORE INCOME TAXES                                       |   |   | 229       |   |   |   | 278 |   |
|                                                             |   |   |      |   |   |   |   |   |
| INCOME TAX EXPENSE                                               |   |   | 102       |   |   |   | 56 |   |
|                                                             |   |   |      |   |   |   |   |   |
| NET INCOME                                                       |   |   | 127       |   |   |   | 222 |   |
|                                                             |   |   |      |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME:                                      |   |   |      |   |   |   |   |   |
| Unrealized holding gain arising during period, net of income tax |   |   | 146       |   |   |   | 131 |   |
| COMPREHENSIVE INCOME                                             |   | $      | 273       |   |   | $      | 353 |   |
|                                                             |   |   |      |   |   |   |   |   |
| Weighted average number of shares outstanding                    |   |   | 1,287,375 |   |   |   | 1,342,477 |   |
| Earnings per share, basic                                        |   | $      | 0.10      |   |   | $      | 0.17 |   |
| Earnings per share, diluted                                      |   | $      | 0.09      |   |   | $      | 0.17 |   |
| Dividends per share                                              |   | $      | 0.04      |   |   | $      | 0.09 |   |

----

| (in thousands) | Unaudited |
|----------------|-----------|

|                                                                      |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Operating Activities:                                                     |   |   |   |   |   |   |
| Net income                                                                |   | $      | 127    |   |   | $      | 222 |   |
| Items not requiring (providing) cash                                      |   |   |   |   |   |   |   |   |
| Depreciation                                                              |   |   | 44     |   |   |   | 42 |   |
| Provision for loan losses                                                 |   |   | 45     |   |   |   | 39 |   |
| Amortization of securities (net of accretion)                             |   |   | (1     | )      |   |   | 15 |   |
| ESOP expense                                                              |   |   | 33     |   |   |   | 17 |   |
| Stock compensation expense                                                |   |   | 51     |   |   |   | 36 |   |
| Increase in cash surrender value of life insurance                        |   |   | (35    | )      |   |   | (37 | ) |
| Loss on sale of investment securities                                     |   |   | 8      |   |   |   |   |   |
| Impairment loss on investment securities                                  |   |   | -      |   |   |   | 24 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Changes in:                                                               |   |   |   |   |   |   |   |   |
| Prepaid FDIC insurance                                                    |   |   | 48     |   |   |   | 53 |   |
| Accrued interest income and other assets                                  |   |   | (80    | )      |   |   | (88 | ) |
| Accrued interest expense and other liabilities                            |   |   | (3     | )      |   |   | 117 |   |
| Net Cash Provided By Operating Activities                                 |   |   | 237    |   |   |   | 440 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Investing Activities:                                                     |   |   |   |   |   |   |   |   |
| Purchase of bank premises and equipment                                   |   |   | (2     | )      |   |   | (25 | ) |
| Purchase of securities “available for sale”                   |   |   | -      |   |   |   | (6 | ) |
| Proceeds from sale of securities “available for sale”         |   |   | 763    |   |   |   | - |   |
| Redemptions of mortgage-backed securities “available forsale” |   |   | 92     |   |   |   | 415 |   |
| Redemption of restricted stock                                            |   |   | 52     |   |   |   | - |   |
| Net (increase) in loans to customers                                      |   |   | (341   | )      |   |   | (4,304 | ) |
| Net Cash Provided by (Used In) Investing Activities                       |   |   | 564    |   |   |   | (3,920 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Financing Activities:                                                     |   |   |   |   |   |   |   |   |
| Increase(decrease) in deposits                                            |   |   | 1,442  |   |   |   | (1,307 | ) |
| Treasury stock purchased                                                  |   |   | -      |   |   |   | (26 | ) |
| Cash dividends paid                                                       |   |   | (53    | )      |   |   | (121 | ) |
| Net Cash Provided By (Used In) Financing Activities                       |   |   | 1,389  |   |   |   | (1,454 | ) |
| Net Increase (Decrease) In Cash and Cash Equivalents                      |   |   | 2,190  |   |   |   | (4,934 | ) |
|                                                                      |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents, January 1                                      |   |   | 18,195 |   |   |   | 11,912 |   |
| Cash and Cash Equivalents, March 31                                       |   | $      | 20,385 |   |   | $      | 6,978 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Supplementary Schedule of Cash Flow Information:                          |   |   |   |   |   |   |   |   |
| Cash paid during the period for:                                          |   |   |   |   |   |   |   |   |
| Interest                                                                  |   | $      | 731    |   |   | $      | 761 |   |
| Income taxes                                                              |   |   | 32     |   |   |   | 149 |   |

----

| 1.  | Nature Of Operations And Summary Of Significant Accounting Policies |
|----------|---------------------------------------------------------------------|

----

----

| 2.  | Investment Securities |
|----------|-----------------------|

----

|                               |   | AmortizedCost |   |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|------------------------------------|--------|---------------|--------|--------|----------------------|--------|--------|-----------------------|--------|--------|-----------|--------|
| Mortgage-backed securities         |   | $             | 802    |   |                 | $      | 45     |                  |   | $      | -         |   |   | $ | 847 |   |
| State & political subdivisions |   |          | 6,952  |   |                 |   | 206    |                  |   |   | -         |   |   |   | 7,158 |   |
| Other bonds                        |   |          | 4,495  |   |                 |   | 230    |                  |   |   | -         |   |   |   | 4,725 |   |
| Total debt securities              |   |          | 12,249 |   |                 |   | 481    |                  |   |   | -         |   |   |   | 12,730 |   |
| Equity securities                  |   |          | 1,295  |   |                 |   | 70     |                  |   |   | 157       |   |   |   | 1,208 |   |
|  Total Available-for-Sale     |   | $             | 13,544 |   |                 | $      | 550    |                  |   | $      | 157       |   |   | $ | 13,938 |   |

|                               |   | AmortizedCost |   |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|------------------------------------|--------|---------------|--------|--------|----------------------|--------|--------|-----------------------|--------|--------|-----------|--------|
| Mortgage-backed securities         |   | $             | 1,056  |   |                 | $      | 60     |                  |   | $      | -         |   |   | $ | 1,116 |   |
| State & political subdivisions |   |          | 7,559  |   |                 |   | 65     |                  |   |   | 66        |   |   |   | 7,558 |   |
| Other bonds                        |   |          | 4,495  |   |                 |   | 238    |                  |   |   | -         |   |   |   | 4,733 |   |
| Total debt securities              |   |          | 13,110 |   |                 |   | 363    |                  |   |   | 66        |   |   |   | 13,407 |   |
| Equity securities                  |   |          | 1,303  |   |                 |   | 46     |                  |   |   | 176       |   |   |   | 1,173 |   |
|  Total Available-for-Sale     |   | $             | 14,413 |   |                 | $      | 409    |                  |   | $      | 242       |   |   | $ | 14,580 |   |

|         |   | Less than 12 months |    |   | 12 months or longer |   |   | Total     |   |
|-------------------|--------|------------------------------------|---------|--------|------------------------------------|--------|--------|-----------|--------|
|              |   | FairValue                          |    |   | UnrealizedLosses                   |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
| U.S. Agencies     |   | $                                  | -       |   |                               | $      | -      |      |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Mortgage-backed   |   |                               |  - |   |                               |   | -      |      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Municipal         |   |                               | -       |   |                               |   | -      |      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other securities  |   |                               | -       |   |                               |   | -      |      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Equity securities |   |                               | 132     |   |                               |   | 12     |      |   |   | 595 |   |   |   | 140 |   |   |   | 727 |   |   |   | 152 |   |
| Total             |   | $                                  | 132     |   |                               | $      | 12     |      |   | $ | 595 |   |   | $ | 140 |   |   | $ | 727 |   |   | $ | 152 |   |

----

----

|   | 3. | Loans Receivable |
|--------|----|------------------|

| (in thousands):              |   | March 31,2011 |    |   | December 31, 2010 |   |
|-----------------------------------|--------|--------------------|---------|--------|-----------------------------|--------|
|                              |   | (In thousands)     |    |
| Real estate mortgages:            |   |               |    |   |                        |   |
| Construction and land development |   | $                  | 239     |   |                        | $      | 338 |   |
| Residential, 1 – 4 family   |   |               | 42,173  |   |                        |   | 42,785 |   |
| Residential, multi-family         |   |               | 843     |   |                        |   | 857 |   |
| Commercial                        |   |               | 73,779  |   |                        |   | 72,448 |   |
| Total real estate mortgages       |   |               | 117,034 |   |                        |   | 116,428 |   |
| Commercial                        |   |               | 3,087   |   |                        |   | 3,149 |   |
| Consumer                          |   |               | 1,985   |   |                        |   | 2,185 |   |
| Total loans                       |   |               | 122,106 |   |                        |   | 121,762 |   |
| Add: deferred loan costs and fees |   |               | 46      |   |                        |   | 49 |   |
| Less: allowance for loan losses   |   |               | 1,574   |   |                        |   | 1,531 |   |
| Total loans, net                  |   | $                  | 120,578 |   |                        | $      | 120,280 |   |

----

|                         |   |   |   |   | Special |   |   |        |   |   |     |   |   |   |   |   |   |   |
|------------------------------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| March 31, 2011               |   | Pass   |   |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Loss   |   |   | Total  |   |
|                         |   |   |   |   |    |   |   |        |   |   |     |   |   |   |   |   |   |   |
| Commercial Real Estate Loans |   | $      | 67,336 |   |    | $      | 2,874  |        |   | $      | 4,412    |   |   | $      | -      |   |   |   | - |   |   | $ | 74,622 |   |
| Commercial Loans             |   |   | 3,087  |   |    |   | -      |        |   |   | -        |   |   |   | -      |   |   |   | - |   |   |   | 3,087 |   |
| Total                        |   | $      | 70,423 |   |    | $      | 2,874  |        |   | $      | 4,412    |   |   | $      | -      |   |   | $      | - |   |   | $ | 77,709 |   |

|                         |   |   |   |   | Special |   |   |        |   |   |     |   |   |   |   |   |   |   |
|------------------------------|--------|--------|--------|--------|---------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| December 31, 2010            |   | Pass   |   |   | Mention |   |   | Substandard |   |   | Doubtful |   |   | Loss   |   |   | Total  |   |
|                         |   |   |   |   |    |   |   |        |   |   |     |   |   |   |   |   |   |   |
| Commercial Real Estate Loans |   | $      | 66,648 |   |    | $      | 2,236  |        |   | $      | 4,421    |   |   | $      | -      |   |   | $      | - |   |   | $ | 73,305 |   |
| Commercial Loans             |   |   | 3,149  |   |    |   | -      |        |   |   | -        |   |   |   | -      |   |   |   | - |   |   |   | 3,149 |   |
| Total                        |   | $      | 69,797 |   |    | $      | 2,236  |        |   | $      | 4,421    |   |   | $      | -      |   |   | $      | - |   |   | $ | 76,454 |   |

| March  31, 2011     |   | Performing |   |   | Nonperforming |   |   | Total  |   |
|-------------------------------|--------|------------|--------|--------|---------------|--------|--------|--------|--------|
|                          |   |       |   |   |          |   |   |   |   |
| Residential real estate loans |   | $          | 41,334 |   |          | $      | 839    |   |   | $ | 42,173 |   |
| Construction loans            |   |       | 239    |   |          |   | -      |   |   |   | 239 |   |
| Consumer loans                |   |       | 1,953  |   |          |   | 32     |   |   |   | 1,985 |   |
| Total                         |   | $          | 43,526 |   |          | $      | 871    |   |   | $ | 44,397 |   |

| December 31, 2010             |   | Performing |   |   | Nonperforming |   |   | Total  |   |
|-------------------------------|--------|------------|--------|--------|---------------|--------|--------|--------|--------|
|                          |   |       |   |   |          |   |   |   |   |
| Residential real estate loans |   | $          | 41,832 |   |          | $      | 953    |   |   | $ | 42,785 |   |
| Construction loans            |   |       | 338    |   |          |   | -      |   |   |   | 338 |   |
| Consumer loans                |   |       | 2,167  |   |          |   | 18     |   |   |   | 2,185 |   |
| Total                         |   | $          | 44,337 |   |          | $      | 971    |   |   | $ | 45,308 |   |

----

|          |   |    |    |   |       |   |   |       |   |   | Greater than  |   |   |    |   |   | Total Past |   |   |   |   |
|--------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------|--------|--------|------------|--------|--------|--------|--------|
|               |   |    |    |   |       |   |   |       |   |   | 90 Days Past  |   |   |    |   |   | Due and    |   |   |   |   |
|               |   |    |    |   | 31-60 Days |   |   | 61-90 Days |   |   | Due and still |   |   | Non-    |   |   | Non-       |   |   | Total  |   |
|               |   | Current |    |   | Past Due   |   |   | Past Due   |   |   | accruing      |   |   | Accrual |   |   | Accrual    |   |   | Loans  |   |
| March 31, 2011     |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
|               |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
| Real Estate Loans: |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
| Residential        |   | $       | 39,881  |   |       | $      | 1,441  |       |   | $      | 11            |   |   | $       | -      |   |       | $      | 840    |   |   | $ | 2,292 |   |   | $ | 42,173 |   |
| Construction       |   |    | 239     |   |       |   | -      |       |   |   | -             |   |   |    | -      |   |       |   | -      |   |   |   | - |   |   |   | 239 |   |
| Commercial         |   |    | 72,842  |   |       |   | 606    |       |   |   | 179           |   |   |    | -      |   |       |   | 995    |   |   |   | 1,780 |   |   |   | 74,622 |   |
|               |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Commercial Loans   |   |    | 3,087   |   |       |   | -      |       |   |   | -             |   |   |    | -      |   |       |   | -      |   |   |   | - |   |   |   | 3,087 |   |
| Consumer Loans     |   |    | 1,835   |   |       |   | 63     |       |   |   | 48            |   |   |    | -      |   |       |   | 39     |   |   |   | 150 |   |   |   | 1,985 |   |
| Total              |   | $       | 117,884 |   |       | $      | 2,110  |       |   | $      | 238           |   |   | $       | -      |   |       | $      | 1,874  |   |   | $ | 4,222 |   |   | $ | 122,106 |   |

|          |   |    |    |   |       |   |   |       |   |   | Greater than  |   |   |    |   |   | Total Past |   |   |   |   |
|--------------------|--------|---------|---------|--------|------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------|--------|--------|------------|--------|--------|--------|--------|
|               |   |    |    |   |       |   |   |       |   |   | 90 Days Past  |   |   |    |   |   | Due and    |   |   |   |   |
|               |   |    |    |   | 31-60 Days |   |   | 61-90 Days |   |   | Due and still |   |   | Non-    |   |   | Non-       |   |   | Total  |   |
|               |   | Current |    |   | Past Due   |   |   | Past Due   |   |   | accruing      |   |   | Accrual |   |   | Accrual    |   |   | Loans  |   |
| December 31, 2010  |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
|               |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
| Real Estate Loans: |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |
| Residential        |   | $       | 40,519  |   |       | $      | 493    |       |   | $      | 820           |   |   | $       | -      |   |       | $      | 953    |   |   | $ | 2,266 |   |   | $ | 42,785 |   |
| Construction       |   |    | 338     |   |       |   | -      |       |   |   | -             |   |   |    | -      |   |       |   | -      |   |   |   | - |   |   |   | 338 |   |
| Commercial         |   |    | 72,689  |   |       |   | 296    |       |   |   | 27            |   |   |    | -      |   |       |   | 293    |   |   |   | 616 |   |   |   | 73,305 |   |
|               |   |    |    |   |       |   |   |       |   |   |          |   |   |    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Commercial Loans   |   |    | 3,149   |   |       |   | -      |       |   |   | -             |   |   |    | -      |   |       |   | -      |   |   |   | - |   |   |   | 3,149 |   |
| Consumer Loans     |   |    | 2,010   |   |       |   | 86     |       |   |   | 71            |   |   |    | -      |   |       |   | 18     |   |   |   | 175 |   |   |   | 2,185 |   |
| Total              |   | $       | 118,705 |   |       | $      | 875    |       |   | $      | 918           |   |   | $       | -      |   |       | $      | 1,264  |   |   | $ | 3,057 |   |   | $ | 121,762 |   |

----

|                            |   | March 31, |   |   | December 31, |   |
|---------------------------------|--------|-----------|--------|--------|--------------|--------|
| (Dollars in thousands)          |   | 2011      |   |   | 2010         |   |
| Balance at beginning of period  |   | $         | 1,531  |   |         | $      | 1,484 |   |
| Charge-offs:                    |   |      |   |   |         |   |   |   |
| Commercial                      |   |      | -      |   |         |   | 203 |   |
| Real estate mortgages           |   |      | 2      |   |         |   | 169 |   |
| Consumer                        |   |      | -      |   |         |   | 2 |   |
| Total                           |   |      | -      |   |         |   | 374 |   |
| Recoveries:                     |   |      |   |   |         |   |   |   |
| Commercial                      |   |      | -      |   |         |   | - |   |
| Real estate mortgages           |   |      | -      |   |         |   | 36 |   |
| Consumer                        |   |      | -      |   |         |   | 1 |   |
| Total                           |   |      | -      |   |         |   | 37 |   |
| Net charge-offs                 |   |      | 2      |   |         |   | 337 |   |
| Provision charged to operations |   |      | 45     |   |         |   | 384 |   |
| Balance at end of period        |   | $         | 1,574  |   |         | $      | 1,531 |   |

| Loan reserve ratios:                     |   |   |   |   |   |   |   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net loan charge-offs to average loans    |   |   | -      |   |   |   | 0.28   | %      |
| Allowance as a percentage of total loans |   |   | 1.29   | %      |   |   | 1.26   | %      |

----

|                                  |   | Real Estate Loans |   |   |       |   |   |         |   |   |       |   |
|---------------------------------------|--------|-------------------|--------|--------|------------|--------|--------|--------------|--------|--------|------------|--------|
| March 31, 2011                        |   |              |   |   |       |   |   |         |   |   | Commercial |   |   | Consumer |   |   |   |   |
|                                  |   | Residential       |   |   | Commercial |   |   | Construction |   |   | Loans      |   |   | Loans |   |   | Total |   |
|                                  |   |              |   |   |       |   |   |         |   |   |       |   |   |   |   |   |   |   |
| Total Loans                           |   | $                 | 42,173 |   |       | $      | 74,622 |         |   | $      | 239        |   |   | $ | 3,087 |   |   | $ | 1,985 |   |   | $ | 122,106 |   |
|                                  |   |              |   |   |       |   |   |         |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   |              | 1,300  |   |       |   | 7,360  |         |   |   | -          |   |   |   | - |   |   |   | 10 |   |   |   | 8,670 |   |
| Collectively evaluated for impairment |   | $                 | 40,873 |   |       | $      | 67,262 |         |   | $      | 239        |   |   | $ | 3,087 |   |   | $ | 1,975 |   |   | $ | 113,436 |   |

|                                  |   | Real Estate Loans |   |   |       |   |   |         |   |   |       |   |
|---------------------------------------|--------|-------------------|--------|--------|------------|--------|--------|--------------|--------|--------|------------|--------|
| December 31, 2010                     |   |              |   |   |       |   |   |         |   |   | Commercial |   |   | Consumer |   |   |   |   |
|                                  |   | Residential       |   |   | Commercial |   |   | Construction |   |   | Loans      |   |   | Loans |   |   | Total |   |
|                                  |   |              |   |   |       |   |   |         |   |   |       |   |   |   |   |   |   |   |
| Total Loans                           |   | $                 | 42,785 |   |       | $      | 73,305 |         |   | $      | 338        |   |   | $ | 3,149 |   |   | $ | 2,185 |   |   | $ | 121,762 |   |
|                                  |   |              |   |   |       |   |   |         |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment |   |              | 1,012  |   |       |   | 6,860  |         |   |   | -          |   |   |   | - |   |   |   | 12 |   |   |   | 7,884 |   |
| Collectively evaluated for impairment |   | $                 | 41,773 |   |       | $      | 66,445 |         |   | $      | 338        |   |   | $ | 3,149 |   |   | $ | 2,173 |   |   | $ | 113,878 |   |

----

|                              |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-----------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)  |   | Amount                   |   |   | % ofTotalLoans         |   |   | Amount |   |   | % ofTotalLoans |   |
| Construction and land development |   | $                        | 6      |   |                        |   | 0.2 | % |   | $ | - |   |   |   | 0.3 | % |
| Residential, 1-4 family           |   |                     | 527    |   |                        |   | 34.5 | % |   |   | 330 |   |   |   | 35.1 | % |
| Residential, multi-family         |   |                     | 11     |   |                        |   | 0.7 | % |   |   | - |   |   |   | 0.7 | % |
| Commercial real estate            |   |                     | 867    |   |                        |   | 60.4 | % |   |   | 1,002 |   |   |   | 59.5 | % |
| Commercial                        |   |                     | 39     |   |                        |   | 2.6 | % |   |   | 55 |   |   |   | 2.6 | % |
| Consumer                          |   |                     | 25     |   |                        |   | 1.6 | % |   |   | 34 |   |   |   | 1.8 | % |
| Unallocated                       |   |                     | 99     |   |                        |   | 0.0 | % |   |   | 110 |   |   |   | 0.0 | % |
| Total                             |   | $                        | 1,574  |   |                        |   | 100.0 | % |   | $ | 1,531 |   |   |   | 100.0 | % |

|                                       |   | March 31, |   |   | December 31, |   |
|--------------------------------------------|--------|-----------|--------|--------|--------------|--------|
| Dollars in thousands                       |   | 2011      |   |   | 2010         |   |
| Nonaccrual loans                           |   | $         | 1,873  |   |         | $      | 1,264 |   |
| Other real estate owned                    |   |      | 929    |   |         |   | 929 |   |
| Total nonperforming assets                 |   | $         | 2,793  |   |         | $      | 2,193 |   |
| Total nonperforming loans to total loans   |   |      | 1.53   | %      |         |   | 1.04 | % |
| Total nonperforming loans to total assets  |   |      | 1.13   | %      |         |   | 0.77 | % |
| Total nonperforming assets to total assets |   |      | 1.68   | %      |         |   | 1.34 | % |

----

|                                 |   |       |   |   | Unpaid    |   |   |       |   |   | Average    |   |   | Interest   |   |
|--------------------------------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| March 31, 2011                       |   | Recorded   |   |   | Principal |   |   | Associated |   |   | Recorded   |   |   | Income     |   |
|                                 |   | Investment |   |   | Balance   |   |   | Allowance  |   |   | Investment |   |   | Recognized |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| With no specific allowance recorded: |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| Residential                          |   | $          | 449    |   |      | $      | 449    |       |   | $      | -          |   |   | $          | 449    |   |   | $ | 13 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Commercial                           |   |       | 6,419  |   |      |   | 6,419  |       |   |   | -          |   |   |       | 6,328  |   |   |   | 137 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Consumer Loans                       |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Total                                |   |       | 6,868  |   |      |   | 6,868  |       |   |   | -          |   |   |       | 6,777  |   |   |   | 150 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| With an allowance recorded:          |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Residential                          |   |       | 852    |   |      |   | 852    |       |   |   | 123        |   |   |       | 852    |   |   |   | 20 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Commercial                           |   |       | 776    |   |      |   | 776    |       |   |   | 130        |   |   |       | 776    |   |   |   | 9 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Consumer Loans                       |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Total                                |   |       | 1,628  |   |      |   | 1,628  |       |   |   | 253        |   |   |       | 1,628  |   |   |   | 29 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Total:                               |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Residential                          |   |       | 1,301  |   |      |   | 1,301  |       |   |   | 123        |   |   |       | 1,301  |   |   |   | 33 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial                           |   |       | 7,195  |   |      |   | 7,195  |       |   |   | 130        |   |   |       | 7,104  |   |   |   | 146 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Consumer Loans                       |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Total Impaired Loans                 |   | $          | 8,496  |   |      | $      | 8,496  |       |   | $      | 253        |   |   | $          | 8,405  |   |   | $ | 179 |   |

|                                 |   |       |   |   | Unpaid    |   |   |       |   |   | Average    |   |   | Interest   |   |
|--------------------------------------|--------|------------|--------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| December 31, 2010                    |   | Recorded   |   |   | Principal |   |   | Associated |   |   | Recorded   |   |   | Income     |   |
|                                 |   | Investment |   |   | Balance   |   |   | Allowance  |   |   | Investment |   |   | Recognized |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| With no specific allowance recorded: |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |
| Residential                          |   | $          | 160    |   |      | $      | 160    |       |   | $      | -          |   |   | $          | 427    |   |   | $ | 2 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Commercial                           |   |       | 6,080  |   |      |   | 6,080  |       |   |   | -          |   |   |       | 5,503  |   |   |   | 98 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | -      |   |   |   | - |   |
| Consumer Loans                       |   |       | 12     |   |      |   | 12     |       |   |   | -          |   |   |       | 45     |   |   |   | - |   |
| Total                                |   |       | 6,252  |   |      |   | 6,252  |       |   |   | -          |   |   |       | 5,975  |   |   |   | 100 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| With an allowance recorded:          |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Residential                          |   |       | 852    |   |      |   | 852    |       |   |   | 123        |   |   |       | 647    |   |   |   | 6 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       |   |   |   |   | - |   |
| Commercial                           |   |       | 780    |   |      |   | 780    |       |   |   | 130        |   |   |       | 1,055  |   |   |   | 8 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | 8      |   |   |   | - |   |
| Consumer Loans                       |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | 12     |   |   |   | - |   |
| Total                                |   |       | 1,632  |   |      |   | 1,632  |       |   |   | 253        |   |   |       | 1,722  |   |   |   | 14 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Total:                               |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Real Estate Loans:                   |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Residential                          |   |       | 1,012  |   |      |   | 1,012  |       |   |   | 123        |   |   |       | 1,074  |   |   |   | 8 |   |
| Construction                         |   |       | -      |   |      |   | -      |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial                           |   |       | 6,860  |   |      |   | 6,860  |       |   |   | 130        |   |   |       | 6,558  |   |   |   | 106 |   |
|                                 |   |       |   |   |      |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |
| Commercial Loans                     |   |       | -      |   |      |   | -      |       |   |   | -          |   |   |       | 8      |   |   |   | - |   |
| Consumer Loans                       |   |       | 12     |   |      |   | 12     |       |   |   | -          |   |   |       | 57     |   |   |   | - |   |
| Total Impaired Loans                 |   | $          | 7,884  |   |      | $      | 7,884  |       |   | $      | 253        |   |   | $          | 7,697  |   |   | $ | 114 |   |

----

| 5.  | Other Borrowings |
|----------|------------------|

| 6.  | Earnings Per Share |
|----------|--------------------|

| March 31, 2011 |   | Income(Numerator) |    |   | Shares(Denominator) |   |      | Per-ShareAmount |   |
|--------------------------|--------|-------------------|---------|--------|---------------------|--------|-----------|-----------------|--------|
| Basic EPS                |   |              |    |   |                |   |      |            |   |
| Income available         |   | $                 | 127,000 |   |                |   | 1,287,375 |            |   | $ | 0.10 |   |
| Options includable       |   |              | -       |   |                |   | 100,987   |            |   |   | (0.01 | ) |
| Diluted  EPS   |   | $                 | 127,000 |   |                |   | 1,388,362 |            |   | $ | 0.09 |   |

| March 31, 2010 |   | Income(Numerator) |    |   | Shares(Denominator) |   |      | Per-ShareAmount |   |
|--------------------------|--------|-------------------|---------|--------|---------------------|--------|-----------|-----------------|--------|
| Basic EPS                |   |              |    |   |                |   |      |            |   |
| Income available         |   | $                 | 222,000 |   |                |   | 1,329,542 |            |   | $ | 0.17 |   |
| Options includable       |   |              | -       |   |                |   | 12,935    |            |   |   | - |   |
| Diluted  EPS   |   | $                 | 222,000 |   |                |   | 1,342,477 |            |   | $ | 0.17 |   |

| 7. | Stock-Based Compensation |
|----|--------------------------|

----

|                      |   | Three Months Ended March 31, |   |
|---------------------------|--------|--------------------------------------------------|--------|
|                      |   | 2011                                             |   |   | 2010 |   |
| Stock Grants              |   | NumberofShares                                   |   |   | WeightedAvg FairValue atGrantDate |   |   | NumberofShares |   |   | WeightedAvg FairValue atGrantDate |   |
| Balance, January 1,       |   |                                             | 63,051 |   |   | $ | 8.33 |   |   |   | 42,337 |   |   | $ | 8.94 |   |
| Granted                   |   |                                             | -      |   |   |   | - |   |   |   | 750 |   |   |   | 9.50 |   |
| Vested                    |   |                                             | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited and surrendered |   |                                             | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding, March 31,    |   |                                             | 63,051 |   |   | $ | 8.33 |   |   |   | 43,087 |   |   | $ | 8.95 |   |
| Exercisable, March 31,    |   |                                             | 15,692 |   |   | $ | 8.89 |   |   |   | 6,931 |   |   | $ | 9.56 |   |

----

| Dividend Yield (per share)  |   |    | 1.60  | %  |
|-----------------------------|--------|---------|-------|---------|
| Volatility (%)              |   |    | 29.24 | %       |
| Risk-free Interest Rate (%) |   |    | 2.84  | %       |
| Expected Life               |   | 6.5 yea | rs    |

|                   |   | Three Months Ended March 31, |    |
|------------------------|--------|--------------------------------------------------|---------|
|                   |   | 2011                                             |    |   | 2010 |   |
| Stock Options     |   | Number ofOptions                            |    |   | WeightedAvg ExercisePrice |   |   | Number ofOptions |   |   | WeightedAvg ExercisePrice |   |
| Balance, January 1,    |   |                                             | 157,246 |   |   | $ | 9.29 |   |   |   | 104,637 |   |   | $ | 9.44 |   |
| Granted                |   |                                             | -       |   |   |   |   |   |   |   | 1,500 |   |   |   | 9.50 |   |
| Exercised              |   |                                             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited              |   |                                             | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Outstanding, March 31, |   |                                             | 157,246 |   |   | $ | 9.29 |   |   |   | 106,137 |   |   | $ | 9.44 |   |
| Exercisable, March 31, |   |                                             | 44,226  |   |   | $ | 9.45 |   |   |   | 23,761 |   |   | $ | 10.37 |   |

| 8.  | Guarantees |
|----------|------------|

----

| 9.  | Related-Party Transactions |
|----------|----------------------------|

|              |   | March 31, |   |   | December 31, |   |
|-------------------|--------|-----------|--------|--------|--------------|--------|
|              |   | 2011      |   |   | 2010         |   |
| Beginning balance |   | $         | 977    |   |         | $      | 1,067 |   |
| Additions         |   |      |   |   |         |   |   |   |
| Collections       |   |      | (23    | )      |         |   | (90 | ) |
| Ending balance    |   | $         | 954    |   |         | $      | 977 |   |

| 10.  | Retirement Plans |
|-----------|------------------|

| 10.  | Fair Value Measurements |
|-----------|-------------------------|

----

----

|                      |   | March 31, 2011 |    |   | December 31, 2010   |   |
|--------------------------------|--------|----------------|---------|--------|---------------------|--------|
|                           |   | CarryingAmount |    |   | EstimatedFair Value |   |   | CarryingAmount |   |   | EstimatedFair Value |   |
| Financial Assets:              |   |           |    |   |                |   |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $              | 20,385  |   |                | $      | 20,385 |   |   | $ | 18,195 |   |   | $ | 18,195 |   |
| Investments available for sale |   |           | 13,938  |   |                |   | 13,938 |   |   |   | 14,580 |   |   |   | 14,580 |   |
| Restricted equity securities   |   |           | 1,035   |   |                |   | 1,035 |   |   |   | 1,087 |   |   |   | 1,087 |   |
| Loans                          |   |           | 122,106 |   |                |   | 122,924 |   |   |   | 121,762 |   |   |   | 122,594 |   |
| Accrued interest receivable    |   |           | 609     |   |                |   | 609 |   |   |   | 580 |   |   |   | 580 |   |
| Total financial assets         |   |           | 158,073 |   |                |   | 158,891 |   |   |   | 156,204 |   |   |   | 157,036 |   |
|                           |   |           |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:         |   |           |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                       |   |           | 137,753 |   |                |   | 135,516 |   |   |   | 136,311 |   |   |   | 134,148 |   |
| Other borrowings               |   |           | 7,000   |   |                |   | 7,650 |   |   |   | 7,000 |   |   |   | 7,638 |   |
| Accrued interest payable       |   |           | 218     |   |                |   | 218 |   |   |   | 226 |   |   |   | 226 |   |
| Total financial liabilities    |   |           | 144,971 |   |                |   | 143,384 |   |   |   | 143,537 |   |   |   | 142,012 |   |
| Off-balance sheet liabilities: |   |           |    |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit   |   | $              | 7,417   |   |                | $      | 7,417 |   |   | $ | 5,251 |   |   | $ | 5,251 |   |

----

| 11.  | Stockholder’s Equity |
|-----------|----------------------------|

| (In thousands, except per share amounts)             |   | CommonStock |   |   | AdditionalPaid-inCapital |    |   | RetainedEarnings |   |    | UnearnedESOPShares |   |   | AccumulatedOtherComprehensiveIncome (Loss) |   |   | TreasuryStock |    |   | Total  |   |
|------------------------------------------------------|--------|-------------|--------|--------|--------------------------|---------|--------|------------------|--------|---------|--------------------|--------|--------|-------------------------------------------------|--------|--------|---------------|---------|--------|--------|--------|
| Balance, January 1, 2010                             |   | $           | 158    |   |                     | $       | 13,580 |             |   | $       | 8,541              |   |   | $                                               | (907   | )      |          | $       | (2     | )      |   | $ | (2,100 | )  |   | $ | 19,270 |   |
| Comprehensive (loss):                                |   |        |   |   |                     |    |   |             |   |    |               |   |   |                                            |   |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Net income                                           |   |        | -      |   |                     |    | -      |             |   |    | 222                |   |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | 222 |   |
| Unrealized losses on securities, net of income taxes |   |        | -      |   |                     |    | -      |             |   |    | -                  |   |   |                                            | -      |   |          |    | 131    |   |   |   | - |   |   |   |   | ) |
| Comprehensive income                                 |   |        |   |   |                     |    |   |             |   |    |               |   |   |                                            |   |   |          |    |   |   |   |   |   |   |   |   | 353 |   |
| ESOP shares released                                 |   |        | -      |   |                     |    |   |             |   |    | -                  |   |   |                                            | 18     |   |          |    | -      |   |   |   | - |   |   |   | 18 |   |
| Restricted Stock Awards                              |   |        | -      |   |                     |    | 36     |             |   |    | -                  |   |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | 36 |   |
| Purchase of Treasury Stock                           |   |        |   |   |                     |    |   |             |   |    |               |   |   |                                            |   |   |          |    |   |   |   |   | (26 | ) |   |   | (26 | ) |
| Cash dividend - $0.09 per share                      |   |        | -      |   |                     |    | -      |             |   |    | (121               | )      |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | (121 | ) |
| Balance,March 31, 2010                               |   |  $     | 158    |   |                     |  $ | 13,616 |             |   |  $ | 8,642              |   |   |  $                                         | (889   | )      |          |  $ | 129    |   |   |  $ | (2,126 | ) |   |  $ | 19,530 |   |

| (In thousands, except per share amounts)            |   | CommonStock |   |   | AdditionalPaid-inCapital |    |   | RetainedEarnings |   |    | UnearnedESOPShares |   |   | AccumulatedOtherComprehensiveIncome (Loss) |   |   | TreasuryStock |    |   | Total  |   |
|-----------------------------------------------------|--------|-------------|--------|--------|--------------------------|---------|--------|------------------|--------|---------|--------------------|--------|--------|-------------------------------------------------|--------|--------|---------------|---------|--------|--------|--------|
| Balance, January 1, 2011                            |   | $           | 158    |   |                     | $       | 13,698 |             |   | $       | 8,995              |   |   | $                                               | (836)  |   |          | $       | 119    |   |   | $ | (2,562) |   |   | $ | 19,572 |   |
| Comprehensive income:                               |   |        |   |   |                     |    |   |             |   |    |               |   |   |                                            |   |   |          |    |   |   |   |   |   |   |   |   |   |   |
| Net income                                          |   |        | -      |   |                     |    | -      |             |   |    | 127                |   |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | 127 |   |
| Unrealized gains on securities, net of income taxes |   |        | -      |   |                     |    | -      |             |   |    | -                  |   |   |                                            | -      |   |          |    | 146    |   |   |   | - |   |   |   | 146 |   |
| Comprehensive income                                |   |        |   |   |                     |    |   |             |   |    |               |   |   |                                            |   |   |          |    |   |   |   |   |   |   |   |   | 273 |   |
| ESOP shares released                                |   |        | -      |   |                     |    | 15     |             |   |    | -                  |   |   |                                            | 18     |   |          |    | -      |   |   |   | - |   |   |   | 33 |   |
| Restricted Stock Awards                             |   |        | -      |   |                     |    | 51     |             |   |    | -                  |   |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | 51 |   |
| Cash dividend - $0.04 per share                     |   |        | -      |   |                     |    | -      |             |   |    | (53                | )      |   |                                            | -      |   |          |    | -      |   |   |   | - |   |   |   | (53 | ) |
| Balance, March 31, 2011                             |   |  $     | 158    |   |                     |  $ | 13,764 |             |   |  $ | 9,069              |   |   |  $                                         | (818   | )      |          |  $ | 265    |   |   |  $ | (2,562 | ) |   |  $ | 19,876 |   |

| 12.  | Pending Acquisition |
|-----------|---------------------|

----

|   | · | Our business and operating results are affected by business and economic conditions generally or specifically in the principal markets in which we do business. We are affected by changes in our customers’ and counterparties’ financial performance, customer preferences and behavior, values of real estate and other collateral, and levels of economic and business activity, among other things. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The values of our assets and liabilities, as well as our overall financial performance, are also affected by changes in interest rates or in valuations in the debt and equity markets. Actions by the Federal Reserve and other government agencies, including those that impact money supply and market interest rates, can affect our activities and financial results. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Competition can have an impact on customer acquisition, growth and retention, as well as on our credit spreads and product pricing, which can affect market share, deposits and revenues. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Legal and regulatory developments could have an impact on our ability to operate our businesses or our financial condition or results of operations or our competitive position or reputation.  Reputational impacts, in turn, could affect matters such as business generation and retention, our ability to attract and retain management, liquidity and funding. These legal and regulatory developments could include: (a) the unfavorable resolution of legal proceedings or regulatory and other governmental inquiries; (b) increased litigation risk from recent regulatory and other governmental developments; (c) the results of the regulatory examination process, our failure to satisfy the requirements of agreements with governmental agencies, and regulators’ future use of supervisory and enforcement tools; (d) legislative and regulatory reforms, including changes to laws and regulations involving  financial institutions, tax, pension, and the protection of confidential customer information; and (e) changes in accounting policies and principles. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through the effective use of third-party insurance and capital management and asset/liability techniques. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Our ability to anticipate and respond to technological changes can have an impact on our ability to respond to customer needs and to meet competitive demands. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our business and operating results can be affected by widespread natural disasters, terrorist activities or international hostilities, either as a result of the impact on the economy and financial and capital markets generally or on us or on our customers, suppliers or other counterparties specifically. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Recent and future legislation and regulatory actions responding to instability and volatility in the credit market may significantly affect our operations, financial condition and earnings.  Future legislative or regulatory actions could impair our rights against borrowers, result in increased credit losses, and significantly increase our operating expenses. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | While the degree of volatility in the financial markets has abated from the levels experienced in 2008 – 2009 uncertainty persists that may adversely affect us and the financial services industry as a whole.   A sluggish economy and high unemployment continue to impact commercial and consumer delinquencies dampening consumer confidence while the high level of mortgage foreclosures continue to press on the real estate markets.  The continued economic pressure on businesses and consumers has affected and will likely further affect our business, financial condition and results of operations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                                            |   |   |    |   |     |   |   |                 |   |   |              |   |   | To be well capitalized |    |
|------------------------------------------------------|--------|--------|---------|--------|----------|--------|--------|----------------------|--------|--------|-------------------|--------|--------|------------------------|---------|
|                                                 |   |   |    |   |     |   |   |                 |   |   |              |   |   | under prompt           |    |
|                                                 |   |   |    |   |     |   |   | For capital adequacy |   |   | corrective action |   |
|                                                 |   | Actual |    |   | purposes |   |   | provisions           |   |
|                                                 |   | Amount |    |   | Ratio    |   |   | Amount               |   |   | Ratio             |   |   | Amount                 |    |   | Ratio |   |
| At March 31, 2011:                                   |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |
| Total Capital (to Risk-Weighted Assets):             |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |
| North Penn Bank                                      |   | $      | 19,297  |   |     |   | 14.89  | %                    |   | >$  | 10,366            |   |   | >8.0                | %  |   | >$ | 12,958 |   |   | >10.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets):            |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| North Penn Bank                                      |   | $      | 17,723  |   |     |   | 13.68  | %                    |   | >$  | 5,183             |   |   | >4.0                | %  |   | >$ | 7,775 |   |   | >6.0 | % |
| Tier 1 Capital (to Average Assets):                  |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| North Penn Bank                                      |   | $      | 17,723  |   |     |   | 10.81  | %                    |   | >$  | 6,561             |   |   | >4.0                | %  |   | >$ | 8,201 |   |   | >5.0 | % |
| Risk-Weighted Assets:                                |   | $      | 123,905 |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Average Assets:                                      |   | $      | 151,314 |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Reconciliation of GAAP Capital to Regulatory Capital |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Equity Capital March 31, 2011                  |   |   |    |   |     | $      | 18,079 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Plus: Unrealized Gain/Loss on Investments            |   |   |    |   |     |   | (352   | )                    |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Less: Disallowed Servicing Rights                    |   |   |    |   |     |   | (4     | )                    |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Tier 1 Capital March 31, 2011                  |   |   |    |   |     | $      | 17,723 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Plus: Allowance for loan losses                      |   |   |    |   |     |   | 1,574  |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Risk-based Capital March 31, 2011              |   |   |    |   |     | $      | 19,297 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
|                                                 |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| At December 31, 2010:                                |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Capital (to Risk-Weighted Assets):             |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| North Penn Bank                                      |   | $      | 18,982  |   |     |   | 14.75  | %                    |   | >$  | 10,298            |   |   | >8.0                | %  |   | >$ | 12,873 |   |   | >10.0 | % |
| Tier 1 Capital (to Risk-Weighted Assets):            |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| North Penn Bank                                      |   | $      | 17,450  |   |     |   | 13.56  | %                    |   | >$  | 5,149             |   |   | >4.0                | %  |   | >$ | 7,724 |   |   | >6.0 | % |
| Tier 1 Capital (to Average Assets):                  |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| North Penn Bank                                      |   | $      | 17,450  |   |     |   | 11.68  | %                    |   | >$  | 5,370             |   |   | >4.0                | %  |   | >$ | 6,713 |   |   | >5.0 | % |
| Risk-Weighted Assets:                                |   | $      | 128,725 |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Average Assets:                                      |   | $      | 163,322 |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Reconciliation of GAAP Capital to Regulatory Capital |   |   |    |   |     |   |   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Equity Capital December 31, 2010               |   |   |    |   |     | $      | 17,704 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Plus: Unrealized Gain/Loss on Investments            |   |   |    |   |     |   | (249   |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Less: Disallowed Servicing Rights                    |   |   |    |   |     |   | (5     | )                    |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Tier 1 Capital December 31, 2010               |   |   |    |   |     | $      | 17,450 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Plus: Allowance for loan losses                      |   |   |    |   |     |   | 1,532  |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |
| Total Risk-based Capital December 31, 2010           |   |   |    |   |     | $      | 18,982 |                 |   |   |              |   |   |                   |    |   |   |   |   |   |   |   |

----

----

| 3.1  |         | Articles of Incorporation of North Penn Bancorp, Inc. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 (File No. 333-143601)) |
|------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.2  |         | Bylaws of North Penn Bancorp, Inc. (Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form SB-2 (File No. 333-143601))                    |
| 4    |         | Specimen Stock Certificate(Incorporated herein by reference to Exhibit 4 to the Company’s Registration Statement on Form SB-2 (File No. 333-143601))                               |
| 31.1 |         | Rule 13a-14(a) /15d-14(a) Chief Executive Officer Certification                                                                                                                          |
| 31.2 |         | Rule 13a-14(a) /15d-14(a) Chief Financial Officer Certification                                                                                                                          |
| 32.1 |         | Section 1350 Certification of Chief Executive Officer                                                                                                                                    |
| 32.2 |    | Section 1350 Certification of Chief Financial Officer                                                                                                                                    |

----

|   |         |   | North Penn Bancorp, Inc.                                  |
|--------|--------------|--------|-----------------------------------------------------------|
|   |         |   |                                                      |
| Dated: | May 13, 2011 |   | /s/ Frederick L. Hickman                                  |
|   |         |   | Frederick L. HickmanPresident and Chief Executive Officer |
|   |         |   |                                                      |
| Dated: | May 13, 2011 |   | /s Joseph F. McDonald                                     |
|   |         |   | Joseph F. McDonaldChief Financial Officer                 |

----