|     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 |
|-----|-----------------------------------------------------------------------------------------------------|

|   Delaware                                                      |   | 57-1001177                                   |
|---------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State or other Jurisdiction of Incorporation or Organization)  |   |    (I.R.S. Employer Identification No.) |

----

| Part I. | Financial Information |   | Page |
|---------|-----------------------|--------|------|

|   | Item 1.  Financial Statements (unaudited)                                                                                         |   |        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|
|   | Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008                                                             |   | 3      |
|   | Consolidated Statements of Income (Loss) for the three and nine months ended September 30, 2009 and 2008                               |   | 4      |
|   | Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008                                                 |   | 5      |
|   | Consolidated Statements of Shareholders’ Equity andComprehensive Income (Loss) for the nine months ended September 30, 2009 and 2008  |   | 6      |
|   | Notes to Consolidated Financial Statements                                                                                                  |   | 7-15   |
|   | Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations                         |   | 15-34  |
|   | Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                                               |   | 34     |
|   | Item 4T.Controls and Procedures                                                                                                             |   | 34     |

| Part II.   | Other Information |   |   |
|----------------------|-------------------|--------|--------|

|   | Item 1.        | Legal Proceedings                                                  |  35  |
|--------|---------------------|-------------------------------------------------------------------------|----------------|
|   | Item 1A.       | Risk Factors                                                       |  35  |
|   | Item 2.   | Unregistered Sales of Equity Securities and Use of Proceeds   |  35  |
|   | Item 3.        | Defaults Upon Senior Securities                               |  35  |
|   | Item 4.   | Submission of Matters to a Vote of Security Holders           |  35  |
|   | Item 5.        | Other Information                                                  |  35  |
|   | Item 6.   | Exhibits                                                           |  35  |
|   | Signatures     |                                                                    |  36  |

----

Part 

PROVIDENT 

|                                                                                                                 |   | September 30,          |    |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
| ASSETS                                                                                                               |   | 2009                   |    |   | 2008         |   |
|                                                                                                                 |   | (Unaudited)            |    |   | (Audited)    |   |
|                                                                                                                 |   | (DOLLARS IN THOUSANDS) |    |
| Cash and due from banks                                                                                              |   | $                      | 10,759  |   |         |   | 8,424 |   |
| Federal funds sold                                                                                                   |   |                   | 9,523   |   |         |   | 12,946 |   |
| Cash and cash equivalents                                                                                            |   |                   | 20,282  |   |         |   | 21,370 |   |
| Investment and mortgage-backed securities                                                                            |   |                   |    |   |         |   |   |   |
|   Held to maturity (market value of $3,984,000 and $2,310,000 at September 30, 2009 and December 31, 2008) |   |                   | 3,934   |   |         |   | 2,430 |   |
|   Available for sale                                                                                       |   |                   | 140,713 |   |         |   | 100,418 |   |
| Total investment and mortgage-backed securities                                                                      |   |                   | 144,647 |   |         |   | 102,848 |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| Loans, net of unearned fees                                                                                          |   |                   | 272,292 |   |         |   | 285,443 |   |
|    Allowance for loan losses (ALL)                                                                    |   |                   | (9,063  | )      |         |   | (6,778 | ) |
| Loans, net of ALL                                                                                                    |   |                   | 263,229 |   |         |   | 278,665 |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| Real estate acquired through foreclosure                                                                             |   |                   | 6,129   |   |         |   | 667 |   |
| Office properties and equipment, net                                                                                 |   |                   | 5,522   |   |         |   | 5,837 |   |
| Federal Home Loan Bank stock, at cost                                                                                |   |                   | 3,947   |   |         |   | 3,929 |   |
| Federal Reserve Bank stock, at cost                                                                                  |   |                   | 832     |   |         |   | 599 |   |
| Accrued interest receivable                                                                                          |   |                   | 2,233   |   |         |   | 2,087 |   |
| Intangible assets                                                                                                    |   |                   | 1,426   |   |         |   | 2,845 |   |
| Cash surrender value of life insurance                                                                               |   |                   | 9,232   |   |         |   | 9,577 |   |
| Other assets                                                                                                         |   |                   | 7,797   |   |         |   | 5,794 |   |
| TOTAL ASSETS                                                                                                         |   | $                      | 465,276 |   |         | $      | 434,218 |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| LIABILITIES                                                                                                          |   |                   |    |   |         |   |   |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| Demand and savings deposits                                                                                          |   | $                      | 154,235 |   |         | $      | 119,755 |   |
| Time deposits                                                                                                        |   |                   | 182,445 |   |         |   | 187,066 |   |
|   Total deposits                                                                                           |   |                   | 336,680 |   |         |   | 306,821 |   |
| Advances from the Federal Home Loan Bank                                                                             |   |                   | 64,500  |   |         |   | 69,500 |   |
| Securities sold under agreements to repurchase                                                                       |   |                   | 17,365  |   |         |   | 19,005 |   |
| Floating rate junior subordinated deferrable interest debentures                                                     |   |                   | 12,372  |   |         |   | 12,372 |   |
| Accrued interest payable                                                                                             |   |                   | 667     |   |         |   | 701 |   |
| Other liabilities                                                                                                    |   |                   | 2,579   |   |         |   | 1,895 |   |
| TOTAL LIABILITIES                                                                                                    |   |                   | 434,163 |   |         |   | 410,294 |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| Commitments and contingencies-Note 5                                                                                 |   |                   |    |   |         |   |   |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| SHAREHOLDERS' EQUITY                                                                                                 |   |                   |    |   |         |   |   |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| Serial preferred stock - $0.01 par value                                                                             |   |                   |    |   |         |   |   |   |
|   authorized - 500, 000 shares                                                                             |   |                   |    |   |         |   |   |   |
|    issued and outstanding - 9,266  and 0 shares                                             |   |                   | 9,244   |   |         |   | -- |   |
|   at September 30, 2009 and December 31, 2008, respectively                                                |   |                   |    |   |         |   |   |   |
| Common stock - $0.01 par value,                                                                                      |   |                   |    |   |         |   |   |   |
|   authorized - 5,000,000 shares,                                                                           |   |                   |    |   |         |   |   |   |
|    issued and outstanding - 1,790,599 shares at September 30, 2009                                    |   |                   | 20      |   |         |   | 20 |   |
|    and 1,787,092 at December 31, 2008, respectively                                                   |   |                   |    |   |         |   |   |   |
| Common stock warrants                                                                                                |   |                   | 25      |   |         |   | -- |   |
| Additional paid-in capital                                                                                           |   |                   | 12,919  |   |         |   | 12,903 |   |
| Accumulated other comprehensive income (loss)                                                                        |   |                   | (589    | )      |         |   | (1,696 | ) |
| Retained earnings, substantially restricted                                                                          |   |                   | 15,794  |   |         |   | 18,997 |   |
| Treasury stock, at cost                                                                                              |   |                   | (6,300  | )      |         |   | (6,300 | ) |
| TOTAL SHAREHOLDERS' EQUITY                                                                                           |   |                   | 31,113  |   |         |   | 23,924 |   |
|                                                                                                                 |   |                   |    |   |         |   |   |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                           |   | $                      | 465,276 |   |         | $      | 434,218 |   |

----

PROVIDENT 

|                                                                             |   |  Three Months Ended                     |      | Nine Months Ended                            |
|----------------------------------------------------------------------------------|--------|----------------------------------------------|-----------|----------------------------------------------|
|                                                                             |   | September 30,                                |      |                                         | September 30, |   |   | September 30, |   |   | September 30, |   |
|                                                                             |   | 2009                                         |      |                                         | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                                             |   |  (DOLLARS IN THOUSANDSEXCEPT PER SHARE) |      |  (DOLLARS IN THOUSANDSEXCEPT PER SHARE) |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |
| Interest Income:                                                                 |   |                                         |      |                                         |   |   |   |   |   |   |   |   |
|   Loans                                                                |   | $                                            | 3,640     |                                         |   | $ | 4,240 |   |   | $ | 10,881 |   |   | $ | 13,240 |   |
|   Deposits and federal funds sold                                      |   |                                         | 5         |                                         |   |   | 23 |   |   |   | 18 |   |   |   | 45 |   |
|   Interest and dividends on mortgage-backed securities                 |   |                                         | 897       |                                         |   |   | 618 |   |   |   | 2,929 |   |   |   | 1,981 |   |
|   Interest and dividends on investment securities                      |   |                                         | 810       |                                         |   |   | 652 |   |   |   | 2,006 |   |   |   | 2,142 |   |
| Total interest income                                                            |   |                                         | 5,352     |                                         |   |   | 5,533 |   |   |   | 15,834 |   |   |   | 17,408 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense:                                                                |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Deposit accounts                                                     |   |                                         | 2,010     |                                         |   |   | 2,104 |   |   |   | 6,214 |   |   |   | 6,784 |   |
|   Floating rate junior subordinated deferrable interest debentures     |   |                                         | 125       |                                         |   |   | 169 |   |   |   | 410 |   |   |   | 554 |   |
|   Advances from the FHLB and other borrowings                          |   |                                         | 763       |                                         |   |   | 864 |   |   |   | 2,304 |   |   |   | 2,708 |   |
| Total interest expense                                                           |   |                                         | 2,898     |                                         |   |   | 3,137 |   |   |   | 8,928 |   |   |   | 10,046 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                                              |   |                                         | 2,454     |                                         |   |   | 2,396 |   |   |   | 6,906 |   |   |   | 7,362 |   |
|   Provision for loan losses                                            |   |                                         | 1,425     |                                         |   |   | 615 |   |   |   | 5,050 |   |   |   | 1,290 |   |
| Net interest income after                                                        |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|    provision for loan losses                                      |   |                                         | 1,029     |                                         |   |   | 1,781 |   |   |   | 1,856 |   |   |   | 6,072 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest Income:                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Fees for financial services                                          |   |                                         | 757       |                                         |   |   | 823 |   |   |   | 2,166 |   |   |   | 2,330 |   |
|   Other fees, net                                                      |   |                                         | 14        |                                         |   |   | 21 |   |   |   | 68 |   |   |   | 70 |   |
|   Other-than-temporary-impairment write-down on securities             |   |                                         | (739      | )                                            |   |   | -- |   |   |   | (1,830 | ) |   |   | -- |   |
|   Net gain on sale of investments                                      |   |                                         | 381       |                                         |   |   | 218 |   |   |   | 760 |   |   |   | 396 |   |
| Total non-interest income                                                        |   |                                         | 413       |                                         |   |   | 1,062 |   |   |   | 1,164 |   |   |   | 2,796 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest Expense:                                                            |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|   Compensation and employee benefits                                   |   |                                         | 1,090     |                                         |   |   | 1,127 |   |   |   | 3,424 |   |   |   | 3,728 |   |
|   Occupancy and equipment                                              |   |                                         | 729       |                                         |   |   | 618 |   |   |   | 1,953 |   |   |   | 1,875 |   |
|   Deposit insurance premiums                                           |   |                                         | 127       |                                         |   |   | 30 |   |   |   | 457 |   |   |   | 45 |   |
|   Professional services                                                |   |                                         | 95        |                                         |   |   | 79 |   |   |   | 272 |   |   |   | 282 |   |
|   Advertising and public relations                                     |   |                                         | 8         |                                         |   |   | 44 |   |   |   | 65 |   |   |   | 186 |   |
|   Loan operations                                                      |   |                                         | 38        |                                         |   |   | 38 |   |   |   | 216 |   |   |   | 104 |   |
|   Intangible amortization                                              |   |                                         | 76        |                                         |   |   | 104 |   |   |   | 247 |   |   |   | 312 |   |
|   Items processing                                                     |   |                                         | 93        |                                         |   |   | 71 |   |   |   | 260 |   |   |   | 187 |   |
|   Telephone                                                            |   |                                         | 46        |                                         |   |   | 56 |   |   |   | 147 |   |   |   | 151 |   |
|   Other                                                                |   |                                         | 178       |                                         |   |   | 289 |   |   |   | 572 |   |   |   | 658 |   |
| Total non-interest expense                                                       |   |                                         | 2,480     |                                         |   |   | 2,456 |   |   |   | 7,613 |   |   |   | 7,528 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes                                                |   |                                         | (1,038    | )                                            |   |   | 387 |   |   |   | (4,593 | ) |   |   | 1,340 |   |
| Provision (benefit) for income taxes                                             |   |                                         | (402      | )                                            |   |   | 81 |   |   |   | (1,696 | ) |   |   | 298 |   |
| Net income (loss)                                                                |   | $                                            | (636      | )                                            |   | $ | 306 |   |   | $ | (2,897 | ) |   | $ | 1,042 |   |
| Accretion of preferred stock to redemption value and preferred dividends accrued |   |                                         | 118       |                                         |   |   | -- |   |   |   | 263 |   |   |   | -- |   |
| Net income (loss) to common shareholders                                         |   | $                                            | (754      | )                                            |   | $ | 306 |   |   | $ | (3,160 | ) |   | $ | 1,042 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share (basic)                                       |   | $                                            | (0.42     | )                                            |   | $ | 0.17 |   |   | $ | (1.77 | ) |   | $ | 0.58 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per common share (diluted)                                     |   | $                                            | (0.42     | )                                            |   | $ | 0.17 |   |   | $ | (1.77 | ) |   | $ | 0.58 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividend per common share                                                   |   | $                                            | --        |                                         |   | $ | 0.115 |   |   | $ | 0.060 |   |   | $ | 0.345 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                            |   |                                         | 1,790,599 |                                         |   |   | 1,784,549 |   |   |   | 1,789,455 |   |   |   | 1,783,810 |   |
|                                                                             |   |                                         |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                                          |   |                                         | 1,790,599 |                                         |   |   | 1,786,274 |   |   |   | 1,789,455 |   |   |   | 1,791,424 |   |

----

PROVIDENT 

|                                                                              |   | Nine Months Ended |     |
|-----------------------------------------------------------------------------------|--------|-------------------|----------|
|                                                                              |   | September 30,     |     |   | September 30, |   |
|                                                                              |   | 2009              |     |   | 2008 |   |
|                                                                              |   | (IN THOUSANDS)    |     |
|                                                                              |   |              |     |   |   |   |
| OPERATING ACTIVITIES:                                                             |   |              |     |   |   |   |
|                                                                              |   |              |     |   |   |   |
| Net income (loss)                                                                 |   | $                 | (2,897   | ) |   | $ | 1,042 |   |
| Adjustments to reconcile net income (loss) to                                     |   |              |     |   |   |   |   |   |
|   net cash provided (used) by operating activities:                     |   |              |     |   |   |   |   |   |
|   Provision for loan losses                                             |   |              | 5,050    |   |   |   | 1,290 |   |
|   Amortization of intangibles                                           |   |              | 247      |   |   |   | 312 |   |
|   Depreciation expense                                                  |   |              | 404      |   |   |   | 501 |   |
|   Recognition of deferred income, net of costs                          |   |              | (271     | ) |   |   | (366 | ) |
|   Deferral of fee income, net of costs                                  |   |              | 218      |   |   |   | 303 |   |
|   Other than temporary impairment charge on  AFS securities   |   |              | 1,830    |   |   |   | -- |   |
| Adjustment to goodwill                                                            |   |              | 1,172    |   |   |   | -- |   |
|   Gain on investment transactions                                       |   |              | (760     | ) |   |   | (396 | ) |
|   Gain on sale of assets acquired from foreclosed loans                 |   |              | (2       | ) |   |   | -- |   |
|   Changes in operating assets and liabilities:                          |   |              |     |   |   |   |   |   |
|    (Increase) decrease in accrued interest receivable              |   |              | (146     | ) |   |   | 847 |   |
|    Increase in cash surrender value of life insurance              |   |              | (300     | ) |   |   | (300 | ) |
|    (Increase) decrease in real estate acquired through foreclosure |   |              | (5,460   | ) |   |   | 768 |   |
|    Increase in other assets                                        |   |              | (2,003   | ) |   |   | (1,107 | ) |
|    Increase (decrease) in other liabilities                        |   |              | 685      |   |   |   | (1,220 | ) |
|    Decrease in accrued interest payable                            |   |              | (34      | ) |   |   | (89 | ) |
|                                                                              |   |              |     |   |   |   |   |   |
| Net cash (used) provided by operating activities                                  |   |              | (2,267   | ) |   |   | 1,585 |   |
|                                                                              |   |              |     |   |   |   |   |   |
| INVESTING ACTIVITIES:                                                             |   |              |     |   |   |   |   |   |
|                                                                              |   |              |     |   |   |   |   |   |
| Purchase of investment and mortgage-backed securities:                            |   |              |     |   |   |   |   |   |
|    Available for sale                                              |   |              | (119,123 | ) |   |   | (44,702 | ) |
|    Held to maturity                                                |   |              | (1,504   | ) |   |   | -- |   |
| Proceeds from sale of investment and mortgage-                                    |   |              |     |   |   |   |   |   |
|     backed securities available for sale                      |   |              | 35,747   |   |   |   | 22,676 |   |
| Proceeds from maturity of investment and mortgage-                                |   |              |     |   |   |   |   |   |
|     backed securities:                                        |   |              |     |   |   |   |   |   |
|    Available for sale                                              |   |              | 24,477   |   |   |   | 35,328 |   |
|    Held to maturity                                                |   |              | 250      |   |   |   | 696 |   |
| Principal repayments on mortgage-backed securities:                               |   |              |     |   |   |   | -- |   |
|    Available for sale                                              |   |              | 18,391   |   |   |   | 6,546 |   |
| Net decrease (increase) in loans                                                  |   |              | 10,370   |   |   |   | (24,296 | ) |
| Purchase of FHLB/FRB stock                                                        |   |              | (251     | ) |   |   | (103 | ) |
| Proceeds from sales of foreclosed assets, net of costs and improvements           |   |              | 69       |   |   |   | -- |   |
| Purchase of office properties and equipment                                       |   |              | (89      | ) |   |   | (366 | ) |
|                                                                              |   |              |     |   |   |   |   |   |
| Net cash used by investing activities                                             |   |              | (31,663  | ) |   |   | (4,221 | ) |
|                                                                              |   |              |     |   |   |   |   |   |
| FINANCING ACTIVITIES:                                                             |   |              |     |   |   |   |   |   |
|                                                                              |   |              |     |   |   |   |   |   |
| Proceeds from the dividend reinvestment plan                                      |   |              | 16       |   |   |   | 90 |   |
| Proceeds from issuance of preferred stock                                         |   |              | 9,240    |   |   |   | -- |   |
| Proceeds from issuance of warrants                                                |   |              | 25       |   |   |   | -- |   |
| Proceeds from redemption of life insurance                                        |   |              | 645      |   |   |   | -- |   |
| Dividends paid in cash                                                            |   |              | (107     | ) |   |   | (616 | ) |
| Dividends paid on preferred stock                                                 |   |              | (196     | ) |   |   | -- |   |
| Proceeds from the exercise of stock options                                       |   |              | --       |   |   |   | 2 |   |
| Split dollar post retirement liability recapitalization                           |   |              | --       |   |   |   | (60 | ) |
| Share repurchase program                                                          |   |              | --       |   |   |   | (335 | ) |
| Increase in  term borrowings                                            |   |              | --       |   |   |   | 1,000 |   |
| Decrease in other borrowings                                                      |   |              | (6,640   | ) |   |   | (3,360 | ) |
| Increase in deposit accounts                                                      |   |              | 29,859   |   |   |   | 3,148 |   |
|                                                                              |   |              |     |   |   |   |   |   |
| Net cash (used) provided by financing activities                                  |   |              | 32,842   |   |   |   | (131 | ) |
|                                                                              |   |              |     |   |   |   |   |   |
| NET DECREASE IN CASH                                                              |   |              |     |   |   |   |   |   |
|    AND CASH EQUIVALENTS                                            |   |              | (1,088   | ) |   |   | (2,767 | ) |
|                                                                              |   |              |     |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                         |   |              |     |   |   |   |   |   |
|    AT BEGINNING OF PERIOD                                          |   |              | 21,370   |   |   |   | 11,890 |   |
|                                                                              |   |              |     |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                         |   |              |     |   |   |   |   |   |
|    AT END OF PERIOD                                                |   | $                 | 20,282   |   |   | $ | 9,123 |   |
|                                                                              |   |              |     |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES:                                                         |   |              |     |   |   |   |   |   |
|                                                                              |   |              |     |   |   |   |   |   |
| Cash paid for:                                                                    |   |              |     |   |   |   |   |   |
|   Income taxes                                                          |   | $                 | 510      |   |   | $ | 331 |   |
|   Interest                                                              |   |              | 8,962    |   |   |   | 10,135 |   |
|                                                                              |   |              |     |   |   |   |   |   |
| Non-cash transactions:                                                            |   |              |     |   |   |   |   |   |
|   Loans foreclosed                                                      |   | $                 | 5,868    |   |   | $ | 50 |   |

----

PROVIDENT 

|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   | Retained             |   |   | Accumulated         |   |   |    |   |   |   |   |
|------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|--------------------|--------|--------|--------|---------------|--------|-----------|---------------------|----------|--------|---------------------|--------|--------|----------------------|--------|--------|---------------------|--------|--------|---------|--------|--------|--------|--------|
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   | Additional          |   |   | Earnings,            |   |   | Other               |   |   |    |   |   | Total  |   |
|                                                                                     |   |  Preferred Stock                     |   |   |  Common Stock |   |   |   |  Paid-in |   |      |  Substantially |     |   |  Comprehensive |   |   |  Treasury Stock |   |   |  Shareholders' |   |
|                                                                                     |   | Shares                                    |   |   | Amount             |   |   | Shares |          |   | Amount    |                | Warrants |   | Capital             |   |   | Restricted           |   |   | Income (loss)       |   |   | at Cost |   |   | Equity |   |
|                                                                                     |   | (Dollars in Thousands, Except Share Data) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |
| BALANCE AT DECEMBER 31, 2007                                                             |   |                                      |   |   |               |   |   |   | 1,794,866     |   |      | $                   | 20       |   |                |   | $      | 12,781               |   |   | $                   | 20,276 |   |    | $      | 191    |   |   | $ | (5,955 | ) |   | $ | 27,313 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                | 1,042  |   |    |   |   |   |   |   |   |   |   |   | 1,042 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   Other comprehensive loss, net of tax on                                      |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|      unrealized holding losses on securities available for sale |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|      arising during period                                      |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   | (1,269 | )      |   |   |   |   |   |   | (1,269 | ) |
|   Less reclassification adjustment for gains included                          |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   | 308    |   |   |   |   |   |   |   | 308 |   |
|      in net income                                              |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive income                                                         |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   | 81 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Stock option activity, net                                                               |   |                                      |   |   |               |   |   |   | 1,424         |   |      |                |     |   |                |   |   | 2                    |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   | 2 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Dividend  reinvestment plan contributions                                      |   |                                      |   |   |               |   |   |   | 6,784         |   |      |                |     |   |                |   |   | 90                   |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   | 90 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative effect of change in accounting principal                                      |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                | (60    | )      |    |   |   |   |   |   |   |   |   |   | (60 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Share repurchase program                                                                 |   |                                      |   |   |               |   |   |   | (18,620       | )      |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   | (335 | ) |   |   | (335 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividend ($.345 per share)                                                          |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                | (616   | )      |    |   |   |   |   |   |   |   |   |   | (616 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE AT SEPTEMBER 30, 2008                                                            |   |                                      |   |   |               |   |   |   | 1,784,454     |   |      | $                   | 20       |   |                |   | $      | 12,873               |   |   | $                   | 20,642 |   |    | $      | (770   | )      |   | $ | (6,290 | ) |   | $ | 26,475 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE AT DECEMBER 31, 2008                                                             |   |                                      |   |   |               |   |   |   | 1,787,092     |   |      | $                   | 20       |   |                |   | $      | 12,903               |   |   | $                   | 18,997 |   |    | $      | (1,696 | )      |   | $ | (6,300 | ) |   | $ | 23,924 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                        |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                | (2,897 | )      |    |   |   |   |   |   |   |   |   |   | (2,897 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   Other comprehensive loss, net of tax on                                      |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|      unrealized holding losses on securities available for sale |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|      arising during period                                      |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   | 1,774  |   |   |   |   |   |   |   | 1,774 |   |
|   Less reclassification adjustment for gains and other than                    |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   | (667   | )      |   |   |   |   |   |   | (667 | ) |
|      temporary investment charge in net loss                    |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive loss                                                           |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   | (1,790 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Dividend  reinvestment plan contributions                                      |   |                                      |   |   |               |   |   |   | 3,507         |   |      |                |     |   |                |   |   | 16                   |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   | 16 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of preferred stock                                                              |   |                                      | 9,266  |   |               |   | 9,240  |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   | 9,240 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock warrants                                                        |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   | 25     |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   | 25 |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accretion of Preferred Stock to redemption value                                         |   |                                      |   |   |               |   | 4      |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   | (4      | )      |   |   |   |   |   |   |   |   |   |   | -- |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred stock dividend                                                                 |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   | (195    | )      |   |   |   |   |   |   |   |   |   |   | (195 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividend ($.06 per share)                                                           |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   | (107    | )      |   |   |   |   |   |   |   |   |   |   | (107 | ) |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                      |   |   |               |   |   |   |          |   |      |                |     |   |                |   |   |                 |   |   |                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE AT SEPTEMBER 30, 2009                                                            |   |                                      | 9,266  |   |               | $      | 9,244  |   |          |   | 1,790,599 |                |     | $      | 20                  |   | $25    |                 | $      | 12,919 |                |   | $      | 15,794  |   |   | $      | (589   | ) |   | $ | (6,300 | ) |   | $ | 31,113 |   |

----

PROVIDENT 

----

----

----

|                                                       |   |   | Amount Outstanding atSeptember 30, |             |   |   |    |             |   |   |   |                        |   |
|------------------------------------------------------------|--------|--------|------------------------------------|------------------|--------|--------|---------|------------------|--------|--------|--------|-----------------------------|--------|
| Name                                                       |   |   | 2009                               |             |   | 2008   |    |             | Rate   |   |   |  PrepaymentOption Date |   |  Maturity |   | DistributionPaymentFrequency |
| Provident Community  Bancshares Capital Trust I  |   |   |                               | 4,000,000        |   |   |    | 4,000,000        |   |   |   | 7.39                        | %      |   |  October 1, 2011 |   |  October 1, 2036 |   |  Quarterly |
| Provident Community  Bancshares Capital Trust II |   |   |                               |  8,000,000  |   |   |    |  8,000,000  |   |   |   | 2.09                        | %      |   | March 1, 2012 |   |  March 1, 2037 |   |  Quarterly |
|     Total                    |   |   |  $                            | 12,000,000  |   |   |  $ | 12,000,000  |   |   |   |                        |   |   |   |   |   |   |   |

----

|   Loan Commitments:                                                       |   | Contract Amount |
|-------------------------------------------------------------------------------------|--------|-----------------|
|                                                                                |   |            |
|  Approved loan commitments                                                     |   | $               | 1,050,000 |   |
|  Commitments of fund commercial and construction loans     |   |            | 504,000 |   |
|  Unused portions of loans and credit lines                                |   |            | 37,017,000 |   |
|     Total loan commitments                                      |   | $               | 38,571,000 |   |

| Level 1 | Valuation is based upon quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                               |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Level 2 | Valuation is based upon quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.  |
| Level 3 | Valuation is based upon quoted prices for similar assets or liabilities; quoted prices in markets that are not active; and model-based techniques whose value is determined using pricing models, discounted cash flow methodologies and similar techniques.               |

----

----

|                                |   | Total |        |   | (Level 1) |   |       | (Level 2) |   |   | (Level 3)  |   |
|-------------------------------------|--------|-------|-------------|--------|-----------|--------|------------|-----------|--------|--------|------------|--------|
|  Available for Sale Securities |   | $     | 140,713,000 |   |      | $      | 63,235,000 |      |   | $      | 73,339,000 |   |   | $ | 4,139,000 |   |

|                                |   | Total |        |   | (Level 1) |   |       | (Level 2) |   |   | (Level 3)  |   |
|-------------------------------------|--------|-------|-------------|--------|-----------|--------|------------|-----------|--------|--------|------------|--------|
|  Available for Sale Securities |   | $     | 100,418,000 |   |      | $      | 28,236,000 |      |   | $      | 67,337,000 |   |   | $ | 4,845,000 |   |

|                                                             |   | Fair Value Measurements Using SignificantUnobservable Inputs (Level 3) |      |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------|-----------|
|                                                             |   | Investment SecuritiesAvailable-for-Sale                                |      |
| Beginning balance at December 31, 2008                      |   | $                                                                      | 4,845,000 |   |
| Transfers in and/or out of Level 3      |   |                                                                   | (706,000  | ) |
| Ending balance at September 30, 2009                             |   | $                                                                      | 4,139,000 |   |

|                           |   | Total  |            |   | (Level 1) |   |     | (Level 2) |   |   | (Level 3) |   |
|--------------------------------|--------|--------|-----------------|--------|-----------|--------|----------|-----------|--------|--------|-----------|--------|
|  Loans                    |   | $      | 20,662,000      |   |      | $      | --       |      |   | $      | --        |   |   | $ | 20,662,000 |   |
| Other real estate owned        |   |   | 6,129,000       |   |      |   | --       |      |   |   | --        |   |   |   | 6,129,000 |   |
| Goodwill and intangible assets |   |   |  1,426,000 |   |      |   |  -- |      |   |   |  --  |   |   |   |  1,426,000 |   |
| Total assets at fair value     |   | $      | 28,217,000      |   |      | $      | --       |      |   | $      | --        |   |   | $ | 28,217,000 |   |

|                           |   | Total  |            |   | (Level 1) |   |     | (Level 2) |   |   | (Level 3) |   |
|--------------------------------|--------|--------|-----------------|--------|-----------|--------|----------|-----------|--------|--------|-----------|--------|
|  Loans                    |   | $      | 16,001,000      |   |      | $      | --       |      |   | $      | --        |   |   | $ | 16,001,000 |   |
| Other real estate owned        |   |   | 667,000         |   |      |   | --       |      |   |   | --        |   |   |   | 667,000 |   |
| Goodwill and intangible assets |   |   |  2,845,000 |   |      |   |  -- |      |   |   |  --  |   |   |   | 2,845,000 |   |
| Total assets at fair value     |   | $      | 19,513,000      |   |      | $      | --       |      |   | $      | --        |   |   | $ | 19,513,000 |   |

----

|                                                             |   | September 30, 2009 |    |
|------------------------------------------------------------------|--------|--------------------|---------|
|                                                             |   | Carrying Amount    |    |   | Fair Value |   |
| Financial assets                                                 |   |               |    |   |   |   |
| Cash and due from banks                                          |   | $                  | 20,282  |   |   | $ | 20,282 |   |
| Securities available for sale                                    |   |               | 140,713 |   |   |   | 140,713 |   |
| Securities held to maturity                                      |   |               | 3,934   |   |   |   | 3,984 |   |
| Federal Home Loan Bank stock, at cost                            |   |               | 3,947   |   |   |   | 3,947 |   |
| Federal Reserve Bank stock, at cost                              |   |               | 832     |   |   |   | 832 |   |
| Loans, net                                                       |   |               | 263,229 |   |   |   | 268,903 |   |
| Accrued interest receivable                                      |   |               | 2,233   |   |   |   | 2,233 |   |
| Cash surrender value of life insurance                           |   |               | 9,232   |   |   |   | 9,232 |   |
|                                                             |   |               |    |   |   |   |   |   |
| Financial liabilities                                            |   |               |    |   |   |   |   |   |
| Deposits                                                         |   | $                  | 336,680 |   |   | $ | 340,468 |   |
| Advances from FHLB and other borrowings                          |   |               | 64,500  |   |   |   | 65,661 |   |
| Securities sold under agreement to repurchase                    |   |               | 17,365  |   |   |   | 17,485 |   |
| Floating rate junior subordinated deferrable interest debentures |   |               | 12,372  |   |   |   | 11,910 |   |
| Accrued interest payable                                         |   |               | 667     |   |   |   | 667 |   |
|                                                             |   |               |    |   |   |   |   |   |
| Off-balance-sheet assets (liabilities)                           |   |               |    |   |   |   |   |   |
| Commitments to extend credit                                     |   | $                  | (38,571 | ) |   | $ | (38,571 | ) |

|                                                             |   | December 31, 2008 |    |
|------------------------------------------------------------------|--------|-------------------|---------|
|                                                             |   | Carrying Amount   |    |   | FairValue |   |
| Financial assets                                                 |   |              |    |   |   |   |
| Cash and due from banks                                          |   | $                 | 21,370  |   |   | $ | 21,370 |   |
| Securities available for sale                                    |   |              | 100,418 |   |   |   | 100,418 |   |
| Securities held to maturity                                      |   |              | 2,430   |   |   |   | 2,310 |   |
| Federal Home Loan Bank stock, at cost                            |   |              | 3,929   |   |   |   | 3,929 |   |
| Federal Reserve Bank stock, at cost                              |   |              | 599     |   |   |   | 599 |   |
| Loans, net                                                       |   |              | 278,665 |   |   |   | 286,004 |   |
| Accrued interest receivable                                      |   |              | 2,087   |   |   |   | 2,087 |   |
| Cash surrender value of life insurance                           |   |              | 9,577   |   |   |   | 9,577 |   |
|                                                             |   |              |    |   |   |   |   |   |
| Financial liabilities                                            |   |              |    |   |   |   |   |   |
| Deposits                                                         |   | $                 | 306,821 |   |   | $ | 315,542 |   |
| Advances from FHLB and other borrowings                          |   |              | 69,500  |   |   |   | 70,394 |   |
| Securities sold under agreement to repurchase                    |   |              | 19,005  |   |   |   | 19,232 |   |
| Floating rate junior subordinated deferrable interest debentures |   |              | 12,372  |   |   |   | 11,636 |   |
| Accrued interest payable                                         |   |              | 701     |   |   |   | 701 |   |
|                                                             |   |              |    |   |   |   |   |   |
| Off-balance-sheet assets (liabilities)                           |   |              |    |   |   |   |   |   |
| Commitments to extend credit                                     |   | $                 | (55,845 | ) |   | $ | (55,845 | ) |

----

Item 

----

----

|                       |   | September 30, 2009  |   |   | December 31, 2008 |   |
|----------------------------|--------|---------------------|--------|--------|-------------------|--------|
|                       |   | Amortized Cost |   |   |  Fair Value  |   |   | Amortized Cost |   |   | Fair Value |   |
|  Municipal Securities |   | $                   | 3,934  |   |              | $      | 3,984 |   |   | $ | 2,430 |   |   | $ | 2,310 |   |

|                                       |   | September 30, 2009 |         |   | December 31, 2008 |   |
|--------------------------------------------|--------|--------------------|--------------|--------|-------------------|--------|
|                                       |   | AmortizedCost      |         |   | FairValue         |   |   | AmortizedCost |   |   |  FairValue |   |
| Investment Securities:                     |   |               |         |   |              |   |   |   |   |   |   |   |
|   U.S. Agency Obligations             |   | $                  | 4            |   |              | $      | 4 |   |   | $ | 6 |   |   | $ | 6 |   |
|   Government Sponsored Enterprises    |   |               | 62,719       |   |              |   | 63,231 |   |   |   | 27,901 |   |   |   | 28,230 |   |
|   Municipal Securities                |   |               |  5,782  |   |              |   | 6,083 |   |   |   | 6,135 |   |   |   | 6,358 |   |
|   Trust Preferred Securities          |   |               | 10,477       |   |              |   |   6,998 |   |   |   |  12,325 |   |   |   |  8,392 |   |
| Total Investment Securities                |   |               | 78,982       |   |              |   | 76,316 |   |   |   | 46,367 |   |   |   | 42,986 |   |
| Mortgage-backed Securities:                |   |               |         |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Fannie Mae                          |   |               |  37,457 |   |              |   | 38,597 |   |   |   | 31,989 |   |   |   | 32,385 |   |
|   Ginnie Mae                          |   |               | 21,366       |   |              |   | 22,003 |   |   |   | 21,311 |   |   |   | 21,878 |   |
|   Freddie Mac                         |   |               | 3,175        |   |              |   | 3,283 |   |   |   | 2,551 |   |   |   | 2,574 |   |
|   Collateralized Mortgage Obligations |   |               |  638    |   |              |   |  514 |   |   |   |  809 |   |   |   |  595 |   |
| Total Mortgage-backed Securities           |   |               | 62,636       |   |              |   | 64,397 |   |   |   | 56,660 |   |   |   | 57,432 |   |
| Total Available for Sale                   |   | $                  | 141,618      |   |              | $      | 140,713 |   |   | $ | 103,027 |   |   | $ | 100,418 |   |

----

|                                                                                                                                                                                                                                                                                                                          |   | September 30, 2009 |         |   | September 30, 2008  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------------|--------|---------------------|--------|
| Available for sale:                                                                                                                                                                                                                                                                                                           |   | CarryingValue      |         |   | Percent ofPortfolio |   |   | CarryingValue |   |   | Percent ofPortfolio |   |
|                                                                                                                                                                                                                                                                                                                          |   |               |         |   |                |   |   |   |   |   |   |   |
|    Investment securities:                                                                                                                                                                                                                                                                                      |   |               |         |   |                |   |   |   |   |   |   |   |
|       U.S. Agency obligations                                                                                                                                                                                                                                                                   |   | $                  | 4            |   |                |   | 0.00 | % |   | $ | 12,307 |   |   |   | 14.04 | % |
|       Government Sponsored Enterprises                                                                                                                                                                                                                                                     |   |               | 63,231       |   |                |   | 44.94 |   |   |   | 4,952 |   |   |   | 5.65 |   |
|       Municipal securities                                               |   |               | 6,083        |   |                |   | 4.32 |   |   |   | 6,311 |   |   |   | 7.20 |   |
|       Trust Preferred securities                                                                                                                                                                                                                                                                |   |               |  6,998  |   |                |   |  4.97 |   |   |   | 11,273 |   |   |   | 12.86 |   |
|          Total investment securities                                                                                                                                                                                                                                             |   |               |  76,316 |   |                |   | 54.23 |   |   |   | 34,843 |   |   |   | 39.75 |   |
|    Mortgage-backed and related securities                                               |   |               |  64,397 |   |                |   |  45.77 |   |   |   | 52,811 |   |   |   | 60.25 |   |
|          Total                                            |   | $                  | 140,713      |   |                |   | 100.00 | % |   | $ | 87,654 |   |   |   | 100.00 | % |

|                                                                                                                                                                                                                                                                                                                       |   | September 30, 2009 |   |   | September 30, 2008  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|---------------------|--------|
| Held to maturity:                                                                                                                                                                                                                                                                                                          |   | CarryingValue      |   |   | Percent ofPortfolio |   |   | CarryingValue |   |   | Percent ofPortfolio |   |
|       Municipal securities                                            |   | $                  | 3,934  |   |                |   | 100.00 | % |   | $ | 2,430 |   |   |   | 100.00 | % |

|                                                                                                                                                                                                                                                                 |   | As of September 30, 2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                                                                                                                                                 |   | AmortizedCost            |   |   | Gross Unrealized |   |   | Fair Value |   |
|                                                                                                                                                                                                                                                                 | Gains  |                     |   | Losses |   |
| Municipal Securities                                         |   | $                        | 3,934  |   |   | $ | 61 |   |   | $ | (11 | ) |   | $ | 3,984 |   |

----

|                                                                                                                                                                                                                                                                                                                        |   | As of September 30, 2009 |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                                                                                                                                                                                                                        |   | AmortizedCost            |    |   | Gross Unrealized |   |   | Fair Value |   |
|                                                                                                                                                                                                                                                                                                                        | Gains  |                     |    | Losses |   |
| Investment Securities:                                                                                                                                                                                                                                                                                                      |   |                     |    |   |   |   |   |   |   |   |   |   |
| U.S. Agency Obligations                                                               |   | $                        | 4       |   |   | $ | – |   |   | $ | -- |   |   | $ | 4 |   |
|    Government Sponsored Enterprises                                                                                                                                                                                                                                                                          |   |                     | 62,719  |   |   |   | 530 |   |   |   | (18 | ) |   |   | 63,231 |   |
| Municipal Securities                                                                  |   |                     | 5,782   |   |   |   | 301 |   |   |   | – |   |   |   | 6,083 |   |
| Trust Preferred Securities                                                            |   |                     | 10,477  |   |   |   | – |   |   |   | (3,479 | ) |   |   | 6,998 |   |
| Total Investment Securities                                                 |   |                     | 78,982  |   |   |   | 831 |   |   |   | (3,497 | ) |   |   | 76,316 |   |
| Mortgage-backed Securities:                                                                                                                                                                                                                                                                                                 |   |                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fannie Mae                                                                            |   |                     | 37,457  |   |   |   | 1,140 |   |   |   | – |   |   |   | 38,597 |   |
| Ginnie Mae                                                                            |   |                     | 21,366  |   |   |   | 637 |   |   |   | – |   |   |   | 22,003 |   |
| Freddie Mac                                                                           |   |                     | 3,175   |   |   |   | 108 |   |   |   | – |   |   |   | 3,283 |   |
| Collateralized Mortgage Obligations                                                                                                                                                                                                                                                                                         |   |                     | 638     |   |   |   | – |   |   |   | (124 | ) |   |   | 514 |   |
| Total Mortgage-backed Securities                                                                                                                                                                                                                                                                                            |   |                     | 62,636  |   |   |   | 1,885 |   |   |   | (124 | ) |   |   | 64,397 |   |
| Total available for sale                                                    |   | $                        | 141,618 |   |   | $ | 2,716 |   |   | $ | (3,621 | ) |   | $ | 140,713 |   |

|                                                                                                                                                                                                                                                                                                                                            |   | Held to Maturity |   |   | Available for Sale |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|--------------------|--------|
|                                                                                                                                                                                                                                                                                                                                            |   | AmortizedCost    |   |   | FairValue          |   |   | Amortized Cost |   |   | FairValue |   |
|                                                                                                                                                                                                                                                                                                                                            |   |             |   |   |               |   |   |   |   |   |   |   |
| Due in one year or less                                                     |   | $                | --     |   |               | $      | -- |   |   | $ | 627 |   |   | $ | 634 |   |
| Due after one year through five years                                                                                                                                                                                                                                                                                                           |   |             | --     |   |               |   | -- |   |   |   | 431 |   |   |   | 437 |   |
| Due after five years through ten years                                                                                                                                                                                                                                                                                                          |   |             | --     |   |               |   | -- |   |   |   | 21,838 |   |   |   | 21,956 |   |
| Due after ten years                                                         |   |             | 3,934  |   |               |   | 3,984 |   |   |   | 118,722 |   |   |   | 117,686 |   |
| Total investment and mortgage-backed securitiesbacked securities                                                                                                                                                                                                                                                                                |   | $                | 3,934  |   |               | $      | 3,984 |   |   | $ | 141,618 |   |   | $ | 140,713 |   |

|                             |   | Less than 12 Months |            |   | 12 Months or More      |   |                      | Total      |   |
|----------------------------------|--------|---------------------|-----------------|--------|------------------------|--------|---------------------------|------------|--------|
|                             |   | Fair Value          |            |   | Unrealized Losses |   |                      | Fair Value |   |   | Unrealized Losses |   |   | FairValue |   |   | Unrealized Losses |   |
| Securities Available for Sale    |   |                |            |   |                   |   |                      |       |   |   |   |   |   |   |   |   |   |   |
|                             |   |                |            |   |                   |   |                      |       |   |   |   |   |   |   |   |   |   |   |
| U.S. Agency Obligations          |   | $                   | –         |   |                   | $      | –                   |       |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
| Government Sponsored Enterprises |   |                |   14,987   |   |                   |   |   18                 |       |   |   |    – |   |   |   |    – |   |   |   |   14,987 |   |   |   |   18 |   |
| Municipal Securities             |   |                |  –   |   |                   |   |  –             |       |   |   |  – |   |   |   |  – |   |   |   |  – |   |   |   |  – |   |
| Trust Preferred Securities       |   |                | –         |   |                   |   |  –             |       |   |   | 6,998 |   |   |   |  3,479 |   |   |   | 6,998 |   |   |   | 3,479 |   |
| Mortgage-backed Securities       |   |                |    20 |   |                   |   |    – |       |   |   |    551 |   |   |   |     125 |   |   |   |   571 |   |   |   |    125 |   |
| Total                            |   | $                   | 15,007          |   |                   | $      | 18                        |       |   | $ | 7,549 |   |   | $ | 3,604 |   |   | $ | 22,556 |   |   | $ | 3,622 |   |

----

|                             |   | Less than 12 Months |             |   | 12 Months or More      |   |                | Total      |   |
|----------------------------------|--------|---------------------|------------------|--------|------------------------|--------|---------------------|------------|--------|
|                             |   | Fair Value          |             |   | Unrealized Losses |   |                | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
| Securities Available for Sale    |   |                |             |   |                   |   |                |       |   |   |   |   |   |   |   |   |   |   |
|                             |   |                |             |   |                   |   |                |       |   |   |   |   |   |   |   |   |   |   |
| U.S. Agency Obligations          |   | $                   | –          |   |                   | $      | –             |       |   | $ | – |   |   | $ | – |   |   | $ | – |   |   | $ | – |   |
| Government Sponsored Enterprises |   |                | 3,000            |   |                   |   | 2                   |       |   |   |  – |   |   |   |  – |   |   |   | 3,000 |   |   |   | 2 |   |
| Municipal Securities             |   |                | –          |   |                   |   | –             |       |   |   | – |   |   |   | – |   |   |   | -– |   |   |   | – |   |
| Trust Preferred Securities       |   |                | –          |   |                   |   | –             |       |   |   | 8,392 |   |   |   | 3,933 |   |   |   | 8,392 |   |   |   | 3,933 |   |
| Mortgage-backed Securities       |   |                |    126 |   |                   |   |    3 |       |   |   |    8,629 |   |   |   |     277 |   |   |   |    8,755 |   |   |   |    280 |   |
| Total                            |   | $                   | 3,126            |   |                   | $      | 5                   |       |   | $ | 17,021 |   |   | $ | 4,210 |   |   | $ | 20,147 |   |   | $ | 4,215 |   |

----

|                                            |   | September 30, 2009 |          |   | December 31,2008 |   |
|-------------------------------------------------|--------|--------------------|---------------|--------|------------------|--------|
| Mortgage loans:                                 |   |               |          |   |             |   |
|   Fixed-rate residential              |   | $                  | 10,561        |   |             | $      | 12,847 |   |
|   Adjustable-rate residential         |   |               | 6,344         |   |             |   | 7,388 |   |
|   Commercial real estate              |   |               | 115,767       |   |             |   | 110,589 |   |
|   Construction                        |   |               |  3,541   |   |             |   |  5,867 |   |
| Total mortgage loans                            |   |               |  136,213 |   |             |   |  136,691 |   |
| Commercial loans:                               |   |               |          |   |             |   |   |   |
|   Commercial non-real estate          |   |               | 33,688        |   |             |   | 27,946 |   |
|   Commercial lines of credit          |   |               |  49,515  |   |             |   |  66,066 |   |
| Total commercial loans                          |   |               | 83,203        |   |             |   | 94,012 |   |
| Consumer loans:                                 |   |               |          |   |             |   |   |   |
|   Home equity                         |   |               | 17,473        |   |             |   | 17,371 |   |
|   Consumer and installment            |   |               | 35,798        |   |             |   | 39,301 |   |
|   Consumer lines of credit            |   |               |  323     |   |             |   |  330 |   |
| Total consumer loans                            |   |               |  53,594  |   |             |   |  57,002 |   |
| Total loans                                     |   |               | 273,010       |   |             |   | 287,705 |   |
| Less:                                           |   |               |          |   |             |   |   |   |
|   Undisbursed portion of interim      |   |               |          |   |             |   |   |   |
|    construction loans            |   |               | (504          | )      |             |   | (1,926 | ) |
|    Unamortized loan discount     |   |               | (318          | )      |             |   | (383 | ) |
|   Allowance for loan losses           |   |               | (9,063        | )      |             |   | (6,778 | ) |
|   Net deferred loan origination costs |   |               |  104     |   |             |   |  47 |   |
| Total, net                                      |   | $                  | 263,229       |   |             | $      | 278,665 |   |
|                                            |   |               |          |   |             |   |   |   |
| Weighted-average interest rate of loans         |   |               | 5.25          | %      |             |   | 5.47 | % |

----

|                                                                                  |   | September 30, 2009 |              |    | December 31, 2008 |   |
|---------------------------------------------------------------------------------------|--------|--------------------|-------------------|---------|-------------------|--------|
|  Non-accruing loans which arecontractually past due 90 days  or more:  |   |               |              |    |              |   |
|  Residential real estate                                                         |   | $                  | 595               |    |              | $      | 389 |   |
|  Commercial                                                                      |   |               | 19,017            |    |              |   | 13,345 |   |
|  Consumer                                                                        |   |               |   1,050 |    |              |   |   2,267 |   |
|  Total nonperforming loans                                                       |   |               |  20,662      |    |              |   |  16,001 |   |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Real estate acquired through   foreclosure and repossessed assets     |   |               |   6,129 |    |              |   |   667 |   |
|  Total nonperforming assets                                                      |   | $                  | 26,791            |    |              | $      | 16,668 |   |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Nonperforming loans to total loans                                              |   |               |  7.59        | %       |              |   | 5.61 | % |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Nonperforming assets to total assets                                            |   |               |  5.76        | %       |              |   | 3.84 | % |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Allowance for loan losses to total  loans outstanding                      |   |               |  3.33        | %       |              |   |  2.37 | % |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Allowance for loan losses to Nonperforming loans                      |   |               | 43.86             | %  |              |   | 42.36 | % |
|                                                                                  |   |               |              |    |              |   |   |   |
|  Allowance for loan losses                                                       |   | $                  | 9,063             |    |              | $      | 6,778 |   |

----

----

|                                  |          |   | September 30, 2009 |   |   | December 31, 2008 |   |
|---------------------------------------|---------------|--------|--------------------|--------|--------|-------------------|--------|
|                                  |          |   | Rate               |   |   | Balance           |   |   | % |   |   | Rate |   |   | Balance |   |   | % |   |
|                                  |          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Account Type                          |          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts:                         |          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Commercial non-interest-bearing |          |   |               | --     |   |              | $      | 18,793 |   |   |   | 5.58 | % |   |   | -- |   |   | $ | 17,002 |   |   |   | 5.54 | % |
|  Non-commercial                  |          |   |               | 2.48   | %      |              |   | 91,661 |   |   |   | 27.22 | % |   |   | 2.06 | % |   |   | 68,033 |   |   |   | 22.18 | % |
| Money market checking accounts        |          |   |               | 1.55   | %      |              |   | 30,134 |   |   |   | 8.95 | % |   |   | 2.17 | % |   |   | 22,313 |   |   |   | 7.27 | % |
| Regular savings                       |          |   |               | 0.48   | %      |              |   | 13,647 |   |   |   | 4.06 | % |   |   | 0.57 | % |   |   | 12,407 |   |   |   | 4.04 | % |
| Total demand and savings deposits     |          |   |               | 1.81   | %      |              |   | 154,235 |   |   |   | 45.81 | % |   |   | 1.92 | % |   |   | 119,755 |   |   |   | 39.03 | % |
| Time deposits:                        |          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  | Up to 3.00%   |   |               |   |   |              |   |   | 105,382  |   |   |   | 31.30  |  % |   |   |   |   |   |   | 41,720  |   |   |   | 13.60  |  % |
|                                  | 3.01 %- 4.00% |   |               |   |   |              |   |   | 33,268 |   |   |   | 9.88 | % |   |   |   |   |   |   | 79,176 |   |   |   | 25.80 | % |
|                                  | 4.01 %- 5.00% |   |               |   |   |              |   |   | 42,794 |   |   |   | 12.71 | % |   |   |   |   |   |   | 58,962 |   |   |   | 19.22 | % |
|                                  | 5.01 %- 6.00% |   |               |   |   |              |   |   | 973 |   |   |   | 0.29 | % |   |   |   |   |   |   | 7,180 |   |   |   | 2.34 | % |
|                                  | 6.01 %- 7.00% |   |               |   |   |              |   |   |  28 |   |   |   | 0.01 | % |   |   |   |   |   |   |  28 |   |   |   | 0.01 | % |
| Total time deposits                   |          |   |               | 2.73   | %      |              |   | 182,445 |   |   |   | 54.19 | % |   |   | 3.56 | % |   |   | 187,066 |   |   |   | 60.97 | % |
| Total deposit accounts                |          |   |               | 2.32   | %      |              | $      | 336,680 |   |   |   | 100.00 | % |   |   | 2.91 | % |   | $ | 306,821 |   |   |   | 100.00 | % |

|                                               |   | September 30, 2009 |     |   | December 31, 2008 |   |
|----------------------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
|                                               |   | Balance            |     |   | Wtd Avg Rate      |   |   | Balance |   |   | Wtd Avg Rate |   |
|                                               |   |               |     |   |              |   |   |   |   |   |   |   |
| Contractual Maturity:                              |   |               |     |   |              |   |   |   |   |   |   |   |
| Within one year - fixed rate                       |   | $                  | 5,000    |   |              |   | 4.93 | % |   | $ | 5,000 |   |   |   | 2.93 | % |
| After one but within three years - fixed rate      |   |               |  -- |   |              |   | -- | % |   |   | 5,000 |   |   |   | 4.93 | % |
| After one but within three years - adjustable rate |   |               | 22,000   |   |              |   | 4.58 | % |   |   | 22,000 |   |   |   | 4.58 | % |
| Greater than five years - adjustable rate          |   |               | 37,500   |   |              |   | 3.89 | % |   |   | 37,500 |   |   |   | 3.89 | % |
| Total advances                                     |   | $                  | 64,500   |   |              |   | 4.20 | % |   | $ | 69,500 |   |   |   | 4.11 | % |

----

----

|                           | September 30, 2009 |
|--------------------------------|--------------------|
|                           |               |
|                           | Actual             |   | Regulatory Minimum |   | “Well Capitalized” |
|                           |               |   |   |   |   |   |   |   |
|                           | Amount             | Ratio |   | Amount | Ratio |   | Amount | Ratio |
|                           | $                  | % |   | $ | % |   | $ | % |
| Leverage ratio                 |               |   |   |   |   |   |   |   |
| Corporation                    | 40,843             | 8.80% |   | 18,568 | 4.00% |   | n/a | n/a |
| Bank                           | 40,470             | 8.73% |   | 18,553 | 4.00% |   | 23,191 | 5.00% |
|                           |               |   |   |   |   |   |   |   |
| Tier 1 capital ratio           |               |   |   |   |   |   |   |   |
| Corporation                    | 40,843             | 13.23% |   | 12,352 | 4.00% |   | n/a | n/a |
| Bank                           | 40,470             | 13.12% |   | 12,338 | 4.00% |   | 18,507 | 6.00% |
|                           |               |   |   |   |   |   |   |   |
| Total risk-based capital ratio |               |   |   |   |   |   |   |   |
| Corporation                    | 46,196             | 14.96% |   | 24,704 | 8.00% |   | n/a | n/a |
| Bank                           | 44,390             | 14.39% |   | 24,676 | 8.00% |   | 30,844 | 10.00% |

----

----

|                                                             |   |  Three Months Ended September 30, |
|------------------------------------------------------------------|--------|----------------------------------------|
|                                                             |   | 2009                                   |   |   | 2008 |   |
|                                                             |   | AverageBalance                         |   |   | Interest |   |   | AverageYield/Cost |   |   | AverageBalance |   |   |  Interest |   |   | AverageYield/Cost |   |
| Interest-earning assets:                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)                                                        |   | $                                      | 269,458 |   |   | $ | 3,640 |   |   |   | 5.40 | % |   | $ | 276,410 |   |   | $ | 4,240 |   |   |   | 6.14 | % |
| Mortgage-backed securities                                       |   |                                   | 78,434 |   |   |   | 897 |   |   |   | 4.57 | % |   |   | 45,984 |   |   |   | 618 |   |   |   | 5.38 | % |
| Investment securities                                            |   |                                   | 66,755 |   |   |   | 789 |   |   |   | 4.73 | % |   |   | 42,431 |   |   |   | 609 |   |   |   | 5.73 | % |
| Other interest-earning assets                                    |   |                                   |  15,190 |   |   |   |  26 |   |   |   | 0.70 | % |   |   |  9,642 |   |   |   |  66 |   |   |   | 2.75 | % |
| Total interest-earning assets                                    |   |                                   | 429,837 |   |   |   | 5,352 |   |   |   | 4.98 | % |   |   | 374,467 |   |   |   | 5,533 |   |   |   | 5.91 | % |
| Non-interest-earning assets                                      |   |                                   |  35,509 |   |   |   |   |   |   |   |   |   |   |   |  33,975 |   |   |   |   |   |   |   |   |   |
| Total assets                                                     |   | $                                      | 465,346 |   |   |   |   |   |   |   |   |   |   | $ | 408,442 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                         |   |                                   | 317,559 |   |   |   | 2,010 |   |   |   | 2.53 | % |   |   | 257,862 |   |   |   | 2,104 |   |   |   | 3.26 | % |
| Floating rate junior subordinated deferrable interest debentures |   |                                   |   12,372 |   |   |   |   125 |   |   |   | 4.03 | % |   |   |   12,372 |   |   |   |   169 |   |   |   | 5.48 | % |
| FHLB advances and other borrowings                               |   |                                   |  81,899 |   |   |   |   763 |   |   |   | 3.73 | % |   |   |  91,577 |   |   |   |   864 |   |   |   | 3.77 | % |
| Total interest-bearing liabilities                               |   |                                   | 411,830 |   |   |   | 2,898 |   |   |   | 2.81 | % |   |   | 361,811 |   |   |   | 3,137 |   |   |   | 3.47 | % |
|                                                             |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing sources:                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                                    |   |                                   |  18,275 |   |   |   |   |   |   |   |   |   |   |   | 16,514 |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing liabilities                                 |   |                                   |  3,926 |   |   |   |   |   |   |   |   |   |   |   | 3,098 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                |   |                                   | 434,031 |   |   |   |   |   |   |   |   |   |   |   | 381,423 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                       |   |                                   |   31,315 |   |   |   |   |   |   |   |   |   |   |   | 27,019 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity                 |   | $                                      | 465,346 |   |   |   |   |   |   |   |   |   |   | $ | 408,442 |   |   |   |   |   |   |   |   |   |
| Net interest income                                              |   |                                   |   |   |   | $ | 2,454 |   |   |   |   |   |   |   |   |   |   | $ | 2,396 |   |   |   |   |   |
| Interest rate spread                                        |   |                                   |   |   |   |   |   |   |   |   | 2.17 | %  |   |   |   |   |   |   |   |   |   |   | 2.44 | %  |
| Impact of non-interest-bearing deposits                          |   |                                   |   |   |   |   |   |   |   |   | 0.12 |   |   |   |   |   |   |   |   |   |   |   | 0.12 |   |
|  Net interest margin                                        |   |                                   |   |   |   |   |   |   |   |   | 2.28  | % |   |   |   |   |   |   |   |   |   |   | 2.56 | % |

----

----

|                                 |   | (in thousands) |   |
|--------------------------------------|--------|----------------|--------|
|                                 |   |           |   |
|  Balance at beginning of period |   | $              | 7,842  |   |
|                                 |   |           |   |   |
|  Provision for loan losses      |   |           | 1,425  |   |
|                                 |   |           |   |   |
|  Charge-offs, net               |   |           | (204   | ) |
|                                 |   |           |   |   |
|  Balance at end of period       |   | $              | 9,063  |   |

----

----

|                                                            |   | Nine Months Ended September 30, |
|-----------------------------------------------------------------|--------|---------------------------------|
|                                                            |   | 2009                            |   | 2008 |
|                                                            |   | AverageBalance                  |   |   |  Interest |   |   | AverageYield/Cost |   |   | AverageBalance |   |   |   Interest |   |   | AverageYield/Cost |   |
| Interest-earning assets:                                        |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)                                                       |   | $                               | 277,990 |   |   | $ | 10,881 |   |   |   | 5.22 | % |   | $ | 272,961 |   |   | $ | 13,240 |   |   |   | 6.47 | % |
| Mortgage-backed securities                                      |   |                            | 78,340 |   |   |   | 2,929 |   |   |   | 4.98 | % |   |   | 49,629 |   |   |   | 1,981 |   |   |   | 5.32 | % |
| Investment securities                                           |   |                            | 53,065 |   |   |   | 1,955 |   |   |   | 4.91 | % |   |   | 46,880 |   |   |   | 1,943 |   |   |   | 5.53 | % |
| Other interest-earning assets                                   |   |                            |  17,353 |   |   |   |  69 |   |   |   | 0.53 | % |   |   |  7,282 |   |   |   |  244 |   |   |   | 4.45 | % |
| Total interest-earning assets                                   |   |                            | 426,748 |   |   |   | 15,834 |   |   |   | 4.95 | % |   |   | 376,752 |   |   |   | 17,408 |   |   |   | 6.16 | % |
| Non-interest-earning assets                                     |   |                            |  32,237 |   |   |   |   |   |   |   |   |   |   |   |  32,502 |   |   |   |   |   |   |   |   |   |
| Total assets                                                    |   | $                               | 458,985 |   |   |   |   |   |   |   |   |   |   | $ | 409,254 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                        |   |                            | 311,337 |   |   |   | 6,214 |   |   |   | 2.73 | % |   |   | 256,347 |   |   |   | 6,784 |   |   |   | 3.53 | % |
| Floating rate junior subordinateddeferrable interest debentures |   |                            |   12,372 |   |   |   |   410 |   |   |   | 4.42 | % |   |   |   12,372 |   |   |   |   554 |   |   |   | 5.96 | % |
| FHLB advances and other borrowings                              |   |                            |  84,355 |   |   |   |  2,304 |   |   |   | 3.64 | % |   |   |  93,348 |   |   |   |  2,708 |   |   |   | 3.87 | % |
|                                                            |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                              |   |                            | 408,064 |   |   |   | 8,928 |   |   |   | 2.92 | % |   |   | 362,067 |   |   |   | 10,046 |   |   |   | 3.70 | % |
| Non-interest-bearing sources:                                   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing deposits                                   |   |                            |  18,690 |   |   |   |   |   |   |   |   |   |   |   | 16,846 |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing liabilities                                |   |                            |  4,712 |   |   |   |   |   |   |   |   |   |   |   | 3,000 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                               |   |                            | 431,466 |   |   |   |   |   |   |   |   |   |   |   | 381,913 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                      |   |                            |   27,519 |   |   |   |   |   |   |   |   |   |   |   | 27,341 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’equity                 |   | $                               | 458,985 |   |   |   |   |   |   |   |   |   |   | $ | 409,254 |   |   |   |   |   |   |   |   |   |
| Net interest income                                             |   |                            |   |   |   | $ | 6,906 |   |   |   |   |   |   |   |   |   |   | $ | 7,362 |   |   |   |   |   |
| Interest rate spread                                            |   |                            |   |   |   |   |   |   |   |   | 2.03 | % |   |   |   |   |   |   |   |   |   |   | 2.46 | % |
| Impact of non-interest-bearingdeposits                          |   |                            |   |   |   |   |   |   |   |   | 0.13 |   |   |   |   |   |   |   |   |   |   |   | 0.14 |   |
| Net interest margin                                             |   |                            |   |   |   |   |   |   |   |   | 2.16 | % |   |   |   |   |   |   |   |   |   |   |  2.61 | % |

----

|                                 |   | (in thousands) |   |
|--------------------------------------|--------|----------------|--------|
|                                 |   |           |   |
|  Balance at beginning of period |   | $              | 6,778  |   |
|                                 |   |           |   |   |
|  Provision for loan losses      |   |           | 5,050  |   |
|                                 |   |           |   |   |
|  Charge-offs, net               |   |           | (2,765 | ) |
|                                 |   |           |   |   |
|  Balance at end of period       |   | $              | 9,063  |   |

----

Item 

Item 

----

PART 

| Item 1. | Legal Proceedings |
|--------------|-------------------|

| Item 1A. | Risk Factors |
|---------------|--------------|

| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds |
|--------------------|-------------------------------------------------------------|

| Item 3. | Defaults upon Senior Securities |
|--------------|---------------------------------|

|   | Not applicable. |
|--------|-----------------|

| Item 4. | Submission of Matters to a Vote of Security Holders |
|--------------|-----------------------------------------------------|

|   | None |
|--------|------|

| Item 5. | Other Information |
|---------|-------------------|

|   | None |
|--------|------|

| Item 6. | Exhibits |
|--------------|----------|

|   | 31(a)  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
|--------|-------------|-------------------------------------------------------------------|

|   | 31(b)  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
|--------|-------------|-------------------------------------------------------------------|

----

|   | 32(a)  | Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|--------|-------------|-------------------------------------------------------------------------------------------------|

|   | 32(b) | Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|--------|-------|-------------------------------------------------------------------------------------------------|

SIGNATURES

|  Date: November 10, 2009 |  By: /s/ Dwight V. Neese                                               |
|-------------------------------|-----------------------------------------------------------------------------|
|                          |  Dwight V. Neese, President and Chief Executive Officer           |
|                          |                                                                        |
|  Date: November 10, 2009 |  By:  /s/ Richard H. Flake                                   |
|                          |  Richard H. Flake, Executive Vice Presidentand Chief Financial Officer |

----