| x      | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  |
|--------|------------------------------------------------------------------------------------------|
|   | For the period ended March 31, 2011.                                                     |
|   |                                                                                     |
| o      | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|   | For theQuarterly Transition Period From ________________ to ______________               |

| NORTH VALLEY BANCORP                                   |
|--------------------------------------------------------|
| (Exact name of registrant as specified in its charter) |

| California                                                     |   | 94-2751350               |
|----------------------------------------------------------------|--------|--------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer ID Number) |

| 300 Park Marina Circle, Redding, CA      |   | 96001      |
|------------------------------------------|--------|------------|
| (Address of principal executive offices) |   | (Zip code) |

|   | Large accelerated filer o | Accelerated filer o         |
|--------|---------------------------|-----------------------------|
|   |                      |                        |
|   | Non-accelerated filer x   | Smaller reporting company o |

----

| PART I.  FINANCIAL INFORMATION |                                                                                                     |   |
|------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|
|                                     |                                                                                                     |   |   |   |
| Item 1.                                  | Financial Statements (Unaudited)                                                                         |   | 3 |   |
|                                     | Condensed Consolidated Balance Sheets—March 31, 2011 and December 31, 2010                         |   | 3 |   |
|                                     | Condensed Consolidated Statement of Operations—For the three months ended March 31, 2011 and 2010  |   | 4 |   |
|                                     | Condensed Consolidated Statements of Cash Flows—For the three months ended March 31, 2011 and 2010 |   | 5 |   |
|                                     | Notes to Condensed Consolidated Financial Statements                                                     |   | 6 |   |
|                                     |                                                                                                     |   |   |   |
| Item 2.                                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations              |   | 19 |   |
|                                     |                                                                                                     |   |   |   |
| Item 3.                                  | Quantitative and Qualitative Disclosures about Market Risk                                               |   | 35 |   |
|                                     |                                                                                                     |   |   |   |
| Item 4.                                  | Controls and Procedures                                                                                  |   | 35 |   |
|                                     |                                                                                                     |   |   |   |
| 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.                                  | (removed and reserved)                                                                                   |   | 35 |   |
|                                     |                                                                                                     |   |   |   |
| Item 5.                                  | Other Information                                                                                        |   | 36 |   |
|                                     |                                                                                                     |   |   |   |
| Item 6.                                  | Exhibits                                                                                                 |   | 36 |   |
|                                     |                                                                                                     |   |   |   |
| SIGNATURES                               |                                                                                                     | 36     |   |

----

PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                  |   | March 31, |    |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|---------|--------|--------------|--------|
|                                                                                                                                  |   | 2011      |    |   | 2010         |   |
| ASSETS                                                                                                                                |   |      |    |   |         |   |
| Cash and cash equivalents:                                                                                                            |   |      |    |   |         |   |
| Cash and due from banks                                                                                                               |   | $         | 23,934  |   |         | $      | 14,629 |   |
| Federal funds sold                                                                                                                    |   |      | 4,740   |   |         |   | 9,005 |   |
| Total cash and cash equivalents                                                                                                       |   |      | 28,674  |   |         |   | 23,634 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| Time deposits at other financial institutions                                                                                         |   |      | 459     |   |         |   | 459 |   |
| Investment securities available-for-sale, at fair value                                                                               |   |      | 289,914 |   |         |   | 265,644 |   |
| Investment securities held-to-maturity, at amortized cost                                                                             |   |      | 6       |   |         |   | 6 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| Loans                                                                                                                                 |   |      | 494,509 |   |         |   | 513,466 |   |
| Less: Allowance for loan losses                                                                                                       |   |      | (14,471 | )      |         |   | (14,993 | ) |
| Net loans                                                                                                                             |   |      | 480,038 |   |         |   | 498,473 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| Premises and equipment, net                                                                                                           |   |      | 8,552   |   |         |   | 8,799 |   |
| Accrued interest receivable                                                                                                           |   |      | 2,648   |   |         |   | 2,713 |   |
| Other real estate owned                                                                                                               |   |      | 23,319  |   |         |   | 25,784 |   |
| FHLB and FRB stock and other nonmarketable securities                                                                                 |   |      | 7,141   |   |         |   | 7,141 |   |
| Bank-owned life insurance policies                                                                                                    |   |      | 34,136  |   |         |   | 33,871 |   |
| Core deposit intangibles, net                                                                                                         |   |      | 510     |   |         |   | 546 |   |
| Other assets                                                                                                                          |   |      | 18,418  |   |         |   | 17,871 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| TOTAL ASSETS                                                                                                                          |   | $         | 893,815 |   |         | $      | 884,941 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                            |   |      |    |   |         |   |   |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| LIABILITIES:                                                                                                                          |   |      |    |   |         |   |   |   |
| Deposits:                                                                                                                             |   |      |    |   |         |   |   |   |
| Noninterest-bearing                                                                                                                   |   | $         | 153,062 |   |         | $      | 155,499 |   |
| Interest-bearing                                                                                                                      |   |      | 605,573 |   |         |   | 598,291 |   |
| Total deposits                                                                                                                        |   |      | 758,635 |   |         |   | 753,790 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| Accrued interest payable and other liabilities                                                                                        |   |      | 18,460  |   |         |   | 15,212 |   |
| Subordinated debentures                                                                                                               |   |      | 31,961  |   |         |   | 31,961 |   |
| Total liabilities                                                                                                                     |   |      | 809,056 |   |         |   | 800,963 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| Commitments and contingencies (Note J)                                                                                                |   |      | — |   |         |   | — |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| STOCKHOLDERS’ EQUITY:                                                                                                           |   |      |    |   |         |   |   |   |
| Preferred stock, no par value: authorized 5,000,000 shares; no shares outstanding at March 31, 2011 and December 31, 2010             |   |      | — |   |         |   | — |   |
| Common stock, no par value: authorized 60,000,000 shares; outstanding 6,832,492 at March 31, 2011 and December 31, 2010, respectively |   |      | 98,159  |   |         |   | 98,128 |   |
| Accumulated deficit                                                                                                                   |   |      | (12,938 | )      |         |   | (13,337 | ) |
| Accumulated other comprehensive loss, net of tax                                                                                      |   |      | (462    | )      |         |   | (813 | ) |
| Total stockholders’ equity                                                                                                      |   |      | 84,759  |   |         |   | 83,978 |   |
|                                                                                                                                  |   |      |    |   |         |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                      |   | $         | 893,815 |   |         | $      | 884,941 |   |

----

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

|                                                        |   | For the three months ended March 31, |   |
|-------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                        |   | 2011                                 |   |   | 2010 |   |
| INTEREST INCOME:                                            |   |                                 |   |   |   |   |
| Interest and fees on loans                                  |   | $                                    | 7,450  |   |   | $ | 8,616 |   |
| Interest on investments:                                    |   |                                 |   |   |   |   |   |   |
| Taxable interest income                                     |   |                                 | 1,795  |   |   |   | 1,049 |   |
| Nontaxable interest income                                  |   |                                 | 165    |   |   |   | 178 |   |
| Interest on federal funds sold and repurchase agreements    |   |                                 | 8      |   |   |   | 32 |   |
| Total interest income                                       |   |                                 | 9,418  |   |   |   | 9,875 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| INTEREST EXPENSE:                                           |   |                                 |   |   |   |   |   |   |
| Deposits                                                    |   |                                 | 1,082  |   |   |   | 2,019 |   |
| Subordinated debentures                                     |   |                                 | 530    |   |   |   | 514 |   |
| Total interest expense                                      |   |                                 | 1,612  |   |   |   | 2,533 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| NET INTEREST INCOME                                         |   |                                 | 7,806  |   |   |   | 7,342 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| PROVISION FOR LOAN LOSSES                                   |   |                                 | 1,000  |   |   |   | 782 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES         |   |                                 | 6,806  |   |   |   | 6,560 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| NONINTEREST INCOME:                                         |   |                                 |   |   |   |   |   |   |
| Service charges on deposit accounts                         |   |                                 | 1,166  |   |   |   | 1,481 |   |
| Other fees and charges                                      |   |                                 | 1,121  |   |   |   | 1,031 |   |
| Earnings on cash surrender value of life insurance policies |   |                                 | 330    |   |   |   | 346 |   |
| Gain on sale of loans, net                                  |   |                                 | 256    |   |   |   | 49 |   |
| Loss on sales or calls of securities, net                   |   |                                 | (10    | ) |   |   | — |   |
| Other                                                       |   |                                 | 290    |   |   |   | 105 |   |
| Total noninterest income                                    |   |                                 | 3,153  |   |   |   | 3,012 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| NONINTEREST EXPENSES:                                       |   |                                 |   |   |   |   |   |   |
| Salaries and employee benefits                              |   |                                 | 4,717  |   |   |   | 4,287 |   |
| Occupancy expense                                           |   |                                 | 692    |   |   |   | 734 |   |
| Furniture and equipment expense                             |   |                                 | 296    |   |   |   | 423 |   |
| FDIC and state assessments                                  |   |                                 | 443    |   |   |   | 706 |   |
| Other real estate owned expense                             |   |                                 | 452    |   |   |   | 850 |   |
| Other                                                       |   |                                 | 2,871  |   |   |   | 3,237 |   |
| Total noninterest expenses                                  |   |                                 | 9,471  |   |   |   | 10,237 |   |
|                                                        |   |                                 |   |   |   |   |   |   |
| INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES   |   |                                 | 488    |   |   |   | (665 | ) |
|                                                        |   |                                 |   |   |   |   |   |   |
| PROVISION (BENEFIT) FOR INCOME TAXES                        |   |                                 | 89     |   |   |   | (353 | ) |
|                                                        |   |                                 |   |   |   |   |   |   |
| NET INCOME (LOSS)                                           |   | $                                    | 399    |   |   | $ | (312 | ) |
|                                                        |   |                                 |   |   |   |   |   |   |
| Per Share Amounts                                           |   |                                 |   |   |   |   |   |   |
| Basic and Diluted Earnings (Loss) Per Share                 |   | $                                    | 0.06   |   |   | $ | (0.21 | ) |

----

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                     |   | For the three months ended March 31, |    |
|------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                     |   | 2011                                 |    |   | 2010 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                                 |    |   |   |   |
| Net income (loss)                                                                        |   | $                                    | 399     |   |   | $ | (312 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                                 |    |   |   |   |   |   |
| Depreciation and amortization                                                            |   |                                 | 319     |   |   |   | 443 |   |
| Amortization of premium on securities, net                                               |   |                                 | 459     |   |   |   | 202 |   |
| Amortization of core deposit intangible                                                  |   |                                 | 36      |   |   |   | 36 |   |
| Provision for loan losses                                                                |   |                                 | 1,000   |   |   |   | 782 |   |
| Net losses on sale and write-down of other real estate owned                             |   |                                 | 366     |   |   |   | 794 |   |
| Gain on sale of loans                                                                    |   |                                 | (256    | ) |   |   | (49 | ) |
| Loss on sales or calls of securities                                                     |   |                                 | 10      |   |   |   | — |   |
| Loss on sale of premises and equipment                                                   |   |                                 | 1       |   |   |   | 125 |   |
| Stock-based compensation expense                                                         |   |                                 | 31      |   |   |   | 48 |   |
| Effect of changes in:                                                                    |   |                                 |    |   |   |   |   |   |
| Accrued interest receivable                                                              |   |                                 | 65      |   |   |   | 115 |   |
| Other assets                                                                             |   |                                 | (1,055  | ) |   |   | (599 | ) |
| Accrued interest payable and other liabilities                                           |   |                                 | 3,248   |   |   |   | 1,337 |   |
| Net cash provided by operating activities                                                |   |                                 | 4,623   |   |   |   | 2,922 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                                 |    |   |   |   |   |   |
| Purchases of available-for-sale securities                                               |   |                                 | (40,077 | ) |   |   | — |   |
| Proceeds from maturities/calls of available-for-sale securities                          |   |                                 | 15,932  |   |   |   | 6,193 |   |
| Proceeds from maturities/calls of held-to-maturity securities                            |   |                                 | — |   |   |   | 1 |   |
| Net decrease in loans                                                                    |   |                                 | 16,875  |   |   |   | 16,859 |   |
| Proceeds from sales of other real estate owned                                           |   |                                 | 2,915   |   |   |   | 1,432 |   |
| Purchases of premises and equipment                                                      |   |                                 | (73     | ) |   |   | (147 | ) |
| Net cash (used in) provided by investing activities                                      |   |                                 | (4,428  | ) |   |   | 24,338 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                                 |    |   |   |   |   |   |
| Net increase in deposits                                                                 |   |                                 | 4,845   |   |   |   | 1,523 |   |
| Net cash provided by financing activities                                                |   |                                 | 4,845   |   |   |   | 1,523 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                                |   |                                 | 5,040   |   |   |   | 28,783 |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           |   |                                 | 23,634  |   |   |   | 67,628 |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                                 |   | $                                    | 28,674  |   |   | $ | 96,411 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information                                        |   |                                 |    |   |   |   |   |   |
| Cash paid during the year for:                                                           |   |                                 |    |   |   |   |   |   |
| Interest                                                                                 |   | $                                    | 1,069   |   |   | $ | 1,986 |   |
| Income taxes (refunded) paid                                                             |   |                                 | — |   |   |   | — |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| Noncash investing and financing activities:                                              |   |                                 |    |   |   |   |   |   |
| Net change in unrealized gain on available-for-sale investment securities                |   | $                                    | 351     |   |   | $ | 1,095 |   |
| Transfer from loans to other real estate owned                                           |   | $                                    | 816     |   |   | $ | 2,847 |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

----

|                                            |   |      |    |   | Gross      |   |    | Gross      |   |   | Estimated |   |
|-------------------------------------------------|--------|-----------|---------|--------|------------|--------|---------|------------|--------|--------|-----------|--------|
|                                            |   | Amortized |    |   | Unrealized |   |    | Unrealized |   |   | Fair      |   |
|                                            |   | Cost      |    |   | Gains      |   |    | Losses     |   |   | Value     |   |
| March 31, 2011                                  |   |      |    |   |       |   |    |       |   |   |      |   |
| Available-for-Sale:                             |   |      |    |   |       |   |    |       |   |   |      |   |
| Obligations of U.S. government agencies         |   | $         | 15,072  |   |       | $      | 144     |       |   | $      | —   |   |   | $ | 15,216 |   |
| Obligations of state and political subdivisions |   |      | 14,386  |   |       |   | 489     |       |   |   | (181      | )      |   |   | 14,694 |   |
| Government agency mortgage-backed securities    |   |      | 251,463 |   |       |   | 2,815   |       |   |   | (2,013    | )      |   |   | 252,265 |   |
| Corporate debt securities                       |   |      | 6,000   |   |       |   | — |       |   |   | (1,252    | )      |   |   | 4,748 |   |
| Equity securities                               |   |      | 3,000   |   |       |   | — |       |   |   | (9        | )      |   |   | 2,991 |   |
|                                            |   | $         | 289,921 |   |       | $      | 3,448   |       |   | $      | (3,455    | )      |   | $ | 289,914 |   |
| Held-to-Maturity:                               |   |      |    |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Government agency mortgage-backed securities    |   | $         | 6       |   |       | $      | — |       |   | $      | —   |   |   | $ | 6 |   |
|                                            |   |      |    |   |       |   |    |       |   |   |      |   |   |   |   |   |
| December 31, 2010                               |   |      |    |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Available-for-Sale:                             |   |      |    |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Obligations of U.S. government agencies         |   | $         | 21,096  |   |       | $      | 135     |       |   | $      | (10       | )      |   | $ | 21,221 |   |
| Obligations of state and political subdivisions |   |      | 14,342  |   |       |   | 435     |       |   |   | (226      | )      |   |   | 14,551 |   |
| Government agency mortgage-backed securities    |   |      | 221,807 |   |       |   | 2,729   |       |   |   | (1,967    | )      |   |   | 222,569 |   |
| Corporate debt securities                       |   |      | 6,000   |   |       |   | — |       |   |   | (1,697    | )      |   |   | 4,303 |   |
| Equity securities                               |   |      | 3,000   |   |       |   | — |       |   |   | —   |   |   |   | 3,000 |   |
|                                            |   | $         | 266,245 |   |       | $      | 3,299   |       |   | $      | (3,900    | )      |   | $ | 265,644 |   |
| Held-to-Maturity:                               |   |      |    |   |       |   |    |       |   |   |      |   |   |   |   |   |
| Government agency mortgage-backed securities    |   | $         | 6       |   |       | $      | — |       |   | $      | —   |   |   | $ | 6 |   |

----

----

|                                           |   |   |    |   |     |   | Weighted    |   |     |   |         |          |
|------------------------------------------------|--------|--------|---------|--------|----------|--------|-------------|--------|----------|--------|--------------|---------------|
|                                           |   |   |    |   | Weighted |   | Average     |   |     |   |         |          |
|                                           |   |   |    |   | Average  |   | Remaining   |   | Exercise |   | Aggregate    |          |
|                                           |   |   |    |   | Exercise |   | Contractual |   | Price    |   | Intrinsic    |          |
|                                           |   | Shares |    |   | Price    |   | Term        |   | Range    |   | Value ($000) |          |
|                                           |   |   |    |   |     |   |        |   |     |   |         |          |
| Outstanding at January 1, 2011                 |   |   | 152,095 |   |     | $      | 51.02       |   | 5 years  |   | $            | 15.75-$123.75 |   |   |   |
|                                           |   |   |    |   |     |   |        |   |     |   |         |          |   |   |   |
| Granted                                        |   |   | 1,000   |   |     | $      | 8.99        |   |     |   | $            | 8.99          |   |   |   |
| Exercised                                      |   |   | — |   |     |   | —     |   |     |   |         | —       |   |   |   |
| Expired or Forfeited                           |   |   | (19,598 | )      |     | $      | 36.85       |   |     |   | $            | 15.75-$65.05  |   |   |   |
|                                           |   |   |    |   |     |   |        |   |     |   |         |          |   |   |   |
| Outstanding at March 31, 2011                  |   |   | 133,497 |   |     | $      | 52.79       |   | 6 years  |   | $            | 8.99-$123.75  |   | $ | 2 |   |
| Fully vested and exercisable at March 31, 2011 |   |   | 96,406  |   |     | $      | 61.93       |   | 5 years  |   | $            | 15.75-$123.75 |   | $ | — |   |
| Options expected to vest                       |   |   | 37,091  |   |     | $      | 29.03       |   | 8 years  |   | $            | 8.99-$65.05   |   | $ | 2 |   |

|                                  |   | Three months ended March 31, |   |
|---------------------------------------|--------|------------------------------|--------|
|                                  |   | 2011                         |   |   | 2010 |   |
| Net income (loss)                     |   | $                            | 399    |   |   | $ | (312 | ) |
| Other comprehensive gain, net of tax: |   |                         |   |   |   |   |   |   |
| Holding gain arising during period    |   |                         | 351    |   |   |   | 646 |   |
| Total comprehensive income            |   | $                            | 750    |   |   | $ | 334 |   |

----

|                       |   | March 31, |    |   | December 31, |   |
|----------------------------|--------|-----------|---------|--------|--------------|--------|
|                       |   | 2011      |    |   | 2010         |   |
| Commercial                 |   | $         | 48,865  |   |         | $      | 54,639 |   |
| Real estate - commercial   |   |      | 297,184 |   |         |   | 291,514 |   |
| Real estate - construction |   |      | 39,346  |   |         |   | 55,181 |   |
| Real estate - mortgage     |   |      | 48,158  |   |         |   | 49,726 |   |
| Installment                |   |      | 13,210  |   |         |   | 14,690 |   |
| Other                      |   |      | 48,252  |   |         |   | 48,292 |   |
|                       |   |      | 495,015 |   |         |   | 514,042 |   |
| Deferred loan fees, net    |   |      | (506    | )      |         |   | (576 | ) |
| Allowance for loan losses  |   |      | (14,471 | )      |         |   | (14,993 | ) |
|                       |   | $         | 480,038 |   |         | $      | 498,473 |   |

|                                                  |   | Three months ended March 31, |   |
|-------------------------------------------------------|--------|------------------------------|--------|
|                                                  |   | 2011                         |   |   | 2010 |   |
| Allowance for loan losses at beginning of period      |   | $                            | 14,993 |   |   | $ | 18,539 |   |
| Loans charged-off                                     |   |                         | (1,605 | ) |   |   | (1,795 | ) |
| Recoveries on loans previously charged-off            |   |                         | 83     |   |   |   | 182 |   |
| Provisions for loan losses                            |   |                         | 1,000  |   |   |   | 782 |   |
| Balance of allowance for loan losses at end of period |   | $                            | 14,471 |   |   | $ | 17,708 |   |
|                                                  |   |                         |   |   |   |   |   |   |
| Components of allowance for credit losses             |   |                         |   |   |   |   |   |   |
| Allowance for loan losses                             |   | $                            | 14,471 |   |   | $ | 17,708 |   |
| Reserve for unfunded commitments                      |   |                         | 241    |   |   |   | 218 |   |
| Total allowance for credit losses                     |   | $                            | 14,712 |   |   | $ | 17,926 |   |

|                          |   | As of March 31, 2011 |   |
|-------------------------------|--------|----------------------|--------|
|                          |   |                 |   |   | Real Estate |   |   | Real Estate |   |   | Real Estate |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Commercial           |   |   | Commercial |   |   | Construction |   |   | Mortgage |   |   | Installment |   |   | Other |   |   | Unallocated |   |   | Total |   |
|                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses     |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                    | 1,517  |   |   | $ | 8,439 |   |   | $ | 1,936 |   |   | $ | 956 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 14,993 |   |
| Charge-offs                   |   |                 | (874   | ) |   |   | (62 | ) |   |   | — |   |   |   | (200 | ) |   |   | (168 | ) |   |   | (301 | ) |   |   | — |   |   |   | (1,605 | ) |
| Recoveries                    |   |                 | 10     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 73 |   |   |   | — |   |   |   | — |   |   |   | 83 |   |
| Provisions for loan losses    |   |                 | 615    |   |   |   | 610 |   |   |   | (370 | ) |   |   | 163 |   |   |   | 60 |   |   |   | 390 |   |   |   | (468 | ) |   |   | 1,000 |   |
| Balance March 31, 2011        |   | $                    | 1,268  |   |   | $ | 8,987 |   |   | $ | 1,566 |   |   | $ | 919 |   |   | $ | 304 |   |   | $ | 755 |   |   | $ | 672 |   |   | $ | 14,471 |   |
| Reserve to impaired loans     |   | $                    | 87     |   |   | $ | 784 |   |   | $ | — |   |   | $ | 54 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 925 |   |
| Reserve to non-impaired loans |   | $                    | 1,181  |   |   | $ | 8,203 |   |   | $ | 1,566 |   |   | $ | 865 |   |   | $ | 304 |   |   | $ | 755 |   |   | $ | 672 |   |   | $ | 13,546 |   |
|                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                         |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance March 31, 2011        |   | $                    | 48,865 |   |   | $ | 297,184 |   |   | $ | 39,346 |   |   | $ | 48,158 |   |   | $ | 13,210 |   |   | $ | 48,252 |   |   | $ | — |   |   | $ | 495,015 |   |
| Impaired Loans                |   | $                    | 545    |   |   | $ | 9,078 |   |   | $ | 3,188 |   |   | $ | 1,633 |   |   | $ | 40 |   |   | $ | — |   |   | $ | — |   |   | $ | 14,484 |   |
| Non-impaired loans            |   | $                    | 48,320 |   |   | $ | 288,106 |   |   | $ | 36,158 |   |   | $ | 46,525 |   |   | $ | 13,170 |   |   | $ | 48,252 |   |   | $ | — |   |   | $ | 480,531 |   |

|                          |   | As of December 31, 2010 |   |
|-------------------------------|--------|-------------------------|--------|
|                          |   |                    |   |   | Real Estate |   |   | Real Estate |   |   | Real Estate |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Commercial              |   |   | Commercial |   |   | Construction |   |   | Mortgage |   |   | Installment |   |   | Other |   |   | Unallocated |   |   | Total |   |
|                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                       | 1,517  |   |   | $ | 8,439 |   |   | $ | 1,936 |   |   | $ | 956 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 14,993 |   |
| Reserve to impaired loans     |   | $                       | 327    |   |   | $ | 563 |   |   | $ | — |   |   | $ | 153 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 1,043 |   |
| Reserve to non-impaired loans |   | $                       | 1,190  |   |   | $ | 7,876 |   |   | $ | 1,936 |   |   | $ | 803 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 13,950 |   |
|                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                         |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                       | 54,639 |   |   | $ | 291,514 |   |   | $ | 55,181 |   |   | $ | 49,726 |   |   | $ | 14,690 |   |   | $ | 48,292 |   |   | $ | — |   |   | $ | 514,042 |   |
| Impaired Loans                |   | $                       | 1,470  |   |   | $ | 6,692 |   |   | $ | 9,016 |   |   | $ | 2,820 |   |   | $ | 67 |   |   | $ | — |   |   | $ | — |   |   | $ | 20,065 |   |
| Non-impaired loans            |   | $                       | 53,169 |   |   | $ | 284,822 |   |   | $ | 46,165 |   |   | $ | 46,906 |   |   | $ | 14,623 |   |   | $ | 48,292 |   |   | $ | — |   |   | $ | 493,977 |   |

----

|                       |   | As of March 31, 2011 |    |
|----------------------------|--------|----------------------|---------|
|                       |   | Pass                 |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Commercial                 |   | $                    | 40,074  |   |   | $ | 3,131 |   |   | $ | 5,660 |   |   | $ | — |   |   | $ | 48,865 |   |
| Real estate - commercial   |   |                 | 262,497 |   |   |   | 2,103 |   |   |   | 32,584 |   |   |   | — |   |   |   | 297,184 |   |
| Real estate - construction |   |                 | 23,665  |   |   |   | 671 |   |   |   | 15,010 |   |   |   | — |   |   |   | 39,346 |   |
| Real estate - mortgage     |   |                 | 44,443  |   |   |   | 433 |   |   |   | 3,282 |   |   |   | — |   |   |   | 48,158 |   |
| Installment                |   |                 | 13,175  |   |   |   | — |   |   |   | 35 |   |   |   | — |   |   |   | 13,210 |   |
| Other                      |   |                 | 47,963  |   |   |   | — |   |   |   | 289 |   |   |   | — |   |   |   | 48,252 |   |
| Total                      |   | $                    | 431,817 |   |   | $ | 6,338 |   |   | $ | 56,860 |   |   | $ | — |   |   | $ | 495,015 |   |

|                       |   | As of December 31, 2010 |    |
|----------------------------|--------|-------------------------|---------|
|                       |   | Pass                    |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Commercial                 |   | $                       | 43,773  |   |   | $ | 3,531 |   |   | $ | 7,203 |   |   | $ | 132 |   |   | $ | 54,639 |   |
| Real estate - commercial   |   |                    | 259,929 |   |   |   | 2,214 |   |   |   | 29,371 |   |   |   | — |   |   |   | 291,514 |   |
| Real estate - construction |   |                    | 23,542  |   |   |   | 10,171 |   |   |   | 21,468 |   |   |   | — |   |   |   | 55,181 |   |
| Real estate - mortgage     |   |                    | 43,655  |   |   |   | 482 |   |   |   | 5,589 |   |   |   | — |   |   |   | 49,726 |   |
| Installment                |   |                    | 14,499  |   |   |   | — |   |   |   | 191 |   |   |   | — |   |   |   | 14,690 |   |
| Other                      |   |                    | 47,790  |   |   |   | — |   |   |   | 502 |   |   |   | — |   |   |   | 48,292 |   |
| Total                      |   | $                       | 433,188 |   |   | $ | 16,398 |   |   | $ | 64,324 |   |   | $ | 132 |   |   | $ | 514,042 |   |

|                       |   | As of March 31, 2011 |    |
|----------------------------|--------|----------------------|---------|
|                       |   | Accruing Interest    |    |   |   |   |   |   |   |
|                       |   |                 |    |   |   |   |   | Greater than |   |   |   |   |   |   |   |
|                       |   |                 |    |   | 30-89 Days |   |   | 90 Days |   |   |   |   |   |   |   |
|                       |   | Current              |    |   | Past Due |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
|                       |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                 |   | $                    | 48,320  |   |   | $ | — |   |   | $ | — |   |   | $ | 545 |   |   | $ | 48,865 |   |
| Real estate - commercial   |   |                 | 288,073 |   |   |   | 33 |   |   |   | — |   |   |   | 9,078 |   |   |   | 297,184 |   |
| Real estate - construction |   |                 | 36,158  |   |   |   | — |   |   |   | — |   |   |   | 3,188 |   |   |   | 39,346 |   |
| Real estate - mortgage     |   |                 | 46,062  |   |   |   | 463 |   |   |   | — |   |   |   | 1,633 |   |   |   | 48,158 |   |
| Installment                |   |                 | 12,900  |   |   |   | 260 |   |   |   | 10 |   |   |   | 40 |   |   |   | 13,210 |   |
| Other                      |   |                 | 48,020  |   |   |   | 232 |   |   |   | — |   |   |   | — |   |   |   | 48,252 |   |
| Total                      |   | $                    | 479,533 |   |   | $ | 988 |   |   | $ | 10 |   |   | $ | 14,484 |   |   | $ | 495,015 |   |

|                       |   | As of December 31, 2010 |    |
|----------------------------|--------|-------------------------|---------|
|                       |   | Accruing Interest       |    |   |   |   |   |   |   |
|                       |   |                    |    |   |   |   |   | Greater than |   |   |   |   |   |   |   |
|                       |   |                    |    |   | 30-89 Days |   |   | 90 Days |   |   |   |   |   |   |   |
|                       |   | Current                 |    |   | Past Due |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
|                       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                 |   | $                       | 53,010  |   |   | $ | 159 |   |   | $ | — |   |   | $ | 1,470 |   |   | $ | 54,639 |   |
| Real estate - commercial   |   |                    | 284,788 |   |   |   | 34 |   |   |   | — |   |   |   | 6,692 |   |   |   | 291,514 |   |
| Real estate - construction |   |                    | 46,165  |   |   |   | — |   |   |   | — |   |   |   | 9,016 |   |   |   | 55,181 |   |
| Real estate - mortgage     |   |                    | 46,068  |   |   |   | 838 |   |   |   | — |   |   |   | 2,820 |   |   |   | 49,726 |   |
| Installment                |   |                    | 14,450  |   |   |   | 173 |   |   |   | — |   |   |   | 67 |   |   |   | 14,690 |   |
| Other                      |   |                    | 48,258  |   |   |   | 34 |   |   |   | — |   |   |   | — |   |   |   | 48,292 |   |
| Total                      |   | $                       | 492,739 |   |   | $ | 1,238 |   |   | $ | — |   |   | $ | 20,065 |   |   | $ | 514,042 |   |

----

|                        |   | As of March 31, 2011 |   |
|-----------------------------|--------|----------------------|--------|
|                        |   |                 |   |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                        |   | Recorded             |   |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                        |   | Investment           |   |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| With no allocated allowance |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   | $                    | 402    |   |   | $ | 375 |   |   | $ | — |   |   | $ | 380 |   |   | $ | — |   |
| Real estate - commercial    |   |                 | 4,131  |   |   |   | 4,387 |   |   |   | — |   |   |   | 4,179 |   |   |   | — |   |
| Real estate - construction  |   |                 | 3,188  |   |   |   | 7,586 |   |   |   | — |   |   |   | 3,207 |   |   |   | — |   |
| Real estate - mortgage      |   |                 | 1,273  |   |   |   | 1,496 |   |   |   | — |   |   |   | 1,365 |   |   |   | — |   |
| Installment                 |   |                 | 40     |   |   |   | 40 |   |   |   | — |   |   |   | 53 |   |   |   | — |   |
| Subtotal                    |   |                 | 9,034  |   |   |   | 13,884 |   |   |   | — |   |   |   | 9,184 |   |   |   | — |   |
|                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With allocated allowance    |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   |                 | 143    |   |   |   | 146 |   |   |   | 87 |   |   |   | 146 |   |   |   | — |   |
| Real estate - commercial    |   |                 | 4,947  |   |   |   | 5,063 |   |   |   | 784 |   |   |   | 5,259 |   |   |   | — |   |
| Real estate - mortgage      |   |                 | 360    |   |   |   | 367 |   |   |   | 54 |   |   |   | 364 |   |   |   | — |   |
| Subtotal                    |   |                 | 5,450  |   |   |   | 5,576 |   |   |   | 925 |   |   |   | 5,769 |   |   |   | — |   |
| Total Impaired Loans        |   | $                    | 14,484 |   |   | $ | 19,460 |   |   | $ | 925 |   |   | $ | 14,953 |   |   | $ | — |   |

|                        |   | As of December 31, 2010 |   |
|-----------------------------|--------|-------------------------|--------|
|                        |   |                    |   |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                        |   | Recorded                |   |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                        |   | Investment              |   |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| With no allocated allowance |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   | $                       | 1,121  |   |   | $ | 1,466 |   |   | $ | — |   |   | $ | 1,531 |   |   | $ | — |   |
| Real estate - commercial    |   |                    | 2,602  |   |   |   | 2,794 |   |   |   | — |   |   |   | 2,793 |   |   |   | — |   |
| Real estate - construction  |   |                    | 9,016  |   |   |   | 13,599 |   |   |   | — |   |   |   | 13,572 |   |   |   | — |   |
| Real estate - mortgage      |   |                    | 1,557  |   |   |   | 1,611 |   |   |   | — |   |   |   | 1,679 |   |   |   | — |   |
| Installment                 |   |                    | 67     |   |   |   | 67 |   |   |   | — |   |   |   | 68 |   |   |   | — |   |
| Subtotal                    |   |                    | 14,363 |   |   |   | 19,537 |   |   |   | — |   |   |   | 19,643 |   |   |   | — |   |
|                        |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With allocated allowance    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   |                    | 349    |   |   |   | 363 |   |   |   | 327 |   |   |   | 370 |   |   |   | — |   |
| Real estate - commercial    |   |                    | 4,090  |   |   |   | 4,178 |   |   |   | 563 |   |   |   | 4,252 |   |   |   | — |   |
| Real estate - mortgage      |   |                    | 1,263  |   |   |   | 1,265 |   |   |   | 153 |   |   |   | 1,563 |   |   |   | — |   |
| Subtotal                    |   |                    | 5,702  |   |   |   | 5,806 |   |   |   | 1,043 |   |   |   | 6,185 |   |   |   | — |   |
| Total Impaired Loans        |   | $                       | 20,065 |   |   | $ | 25,343 |   |   | $ | 1,043 |   |   | $ | 25,828 |   |   | $ | — |   |

|                     |   |      |   |   | Pre-Modification |   |   | Post-Modification |   |
|--------------------------|--------|-----------|--------|--------|------------------|--------|--------|-------------------|--------|
|                     |   | Number    |   |   | Outstanding      |   |   | Outstanding       |   |
|                     |   | of        |   |   | Recorded         |   |   | Recorded          |   |
|                     |   | Contracts |   |   | Investment       |   |   | Investment        |   |
| Real estate - commercial |   | 4         |   |   | $                | 3,377  |   |              | $      | 3,377 |   |
| Real estate - mortgage   |   | 2         |   |   |             | 441    |   |              |   | 441 |   |

----

|   | ● | Specific Allowances. A specific allowance is established when management has identified unique or particular risks that were related to a specific loan that demonstrated risk characteristics consistent with impairment. Specific allowances are established when management can estimate the amount of an impairment of a loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | ● | Formula Allowance. The formula allowance is calculated by applying loss factors through the assignment of loss factors to homogenous pools of loans. Changes in risk grades of both performing and nonperforming loans affect the amount of the formula allowance. Loss factors are based on our historical loss experience and such other data as management believes to be pertinent. Management, also, considers a variety of subjective factors, including regional economic and business conditions that impact important segments of our portfolio, loan growth rates, the depth and skill of lending staff, the interest rate environment, and the results of bank regulatory examinations and findings of our internal credit examiners to establish the formula allowance. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | ● | Unallocated Allowance. The unallocated loan loss allowance represents an amount for imprecision or uncertainty that is inherent in estimates used to determine the allowance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                                  |   |   |   |
|---------------------------------------|--------|--------|--------|
|                                  |   | OREO   |   |
| Balance, December 31, 2010            |   | $      | 25,784 |   |
| Properties transferred in             |   |   | 816    |   |
| Sales of property                     |   |   | (2,915 | ) |
| Loss on sale or writedown of property |   |   | (366   | ) |
| Balance at March 31, 2011             |   | $      | 23,319 |   |

|                                  |   | March 31, |   |
|---------------------------------------|--------|-----------|--------|
|                                  |   | 2011      |   |   | 2010 |   |
| Operating expenses                    |   | $         | 86     |   |   | $ | 78 |   |
| Provision for losses                  |   |      | 511    |   |   |   | 516 |   |
| Net, (gain)/loss on disposal          |   |      | (145   | ) |   |   | 256 |   |
| Total other real estate owned expense |   | $         | 452    |   |   | $ | 850 |   |

----

|                                      |   | Three months ended March 31, |    |
|-------------------------------------------|--------|------------------------------|---------|
| Components of net periodic benefits cost: |   | 2011                         |    |   | 2010 |   |
| Service cost                              |   | $                            | — |   |   | $ | — |   |
| Interest cost                             |   |                         | 76      |   |   |   | 85 |   |
| Prior service amortization                |   |                         | 8       |   |   |   | 8 |   |
| Recognized net actuarial loss             |   |                         | 4       |   |   |   | 4 |   |
| Total components of net periodic cost     |   | $                            | 88      |   |   | $ | 97 |   |

----

|   | ● | Quoted prices in active markets for identical assets (Level 1): Inputs that are quoted unadjusted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An active market for the asset is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.                                                         |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | Significant other observable inputs (Level 2): Inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity including quoted prices for similar assets or liabilities, quoted prices for securities in inactive markets and inputs derived principally from, or corroborated by, observable market data by correlation or other means. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | ● | Significant unobservable inputs (Level 3): Inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.                                                                                                                                                                                              |

----

|                                            |   | At March 31, 2011 |    |
|-------------------------------------------------|--------|-------------------|---------|
|                                            |   | Fair Value        |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Available-for-sale securities:                  |   |              |    |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. government agencies         |   | $                 | 15,216  |   |   | $ | — |   |   | $ | 15,216 |   |   | $ | — |   |
| Obligations of state and political subdivisions |   |              | 14,694  |   |   |   | — |   |   |   | 14,694 |   |   |   | — |   |
| Government agency mortgage-backed securities    |   |              | 252,265 |   |   |   | — |   |   |   | 252,265 |   |   |   | — |   |
| Corporate debt securities                       |   |              | 4,748   |   |   |   | — |   |   |   | 4,748 |   |   |   | — |   |
| Equity securities                               |   |              | 2,991   |   |   |   | — |   |   |   | 2,991 |   |   |   | — |   |
|                                            |   | $                 | 289,914 |   |   | $ | — |   |   | $ | 289,914 |   |   | $ | — |   |

|                                            |   | At December 31, 2010 |    |
|-------------------------------------------------|--------|----------------------|---------|
|                                            |   | Fair Value           |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Available-for-sale securities:                  |   |                 |    |   |   |   |   |   |   |   |   |   |   |
| Obligations of U.S. government agencies         |   | $                    | 21,221  |   |   | $ | — |   |   | $ | 21,221 |   |   | $ | — |   |
| Obligations of state and political subdivisions |   |                 | 14,551  |   |   |   | — |   |   |   | 14,551 |   |   |   | — |   |
| Government agency mortgage-backed securities    |   |                 | 222,569 |   |   |   | — |   |   |   | 222,569 |   |   |   | — |   |
| Corporate debt securities                       |   |                 | 4,303   |   |   |   | — |   |   |   | 4,303 |   |   |   | — |   |
| Equity securities                               |   |                 | 3,000   |   |   |   | — |   |   |   | 3,000 |   |   |   | — |   |
|                                            |   | $                    | 265,644 |   |   | $ | — |   |   | $ | 265,644 |   |   | $ | — |   |

|                                                        |   | At March 31, 2011 |    |
|-------------------------------------------------------------|--------|-------------------|---------|
|                                                        |   | Fair Value        |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Impaired loans                                              |   |              |    |   |   |   |   |   |   |   |   |   |
| Commercial                                                  |   | $                 | 91      |   |   | $ | — |   |   | $ | 91 |   |   | $ | — |   |
| Real estate - commercial                                    |   |              | 4,893   |   |   |   | — |   |   |   | 4,893 |   |   |   | — |   |
| Real estate - construction                                  |   |              | 3,149   |   |   |   | — |   |   |   | 2,864 |   |   |   | 285 |   |
| Real estate - mortgage                                      |   |              | 1,311   |   |   |   | — |   |   |   | 1,311 |   |   |   | — |   |
| Installment                                                 |   |              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Other                                                       |   |              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Other real estate owned                                     |   |              | 23,319  |   |   |   | — |   |   |   | 23,319 |   |   |   | — |   |
| Total assets measured at fair value on a nonrecurring basis |   | $                 | 32,763  |   |   | $ | — |   |   | $ | 32,478 |   |   | $ | 285 |   |

|                                                        |   | At December 31, 2010 |    |
|-------------------------------------------------------------|--------|----------------------|---------|
|                                                        |   | Fair Value           |    |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                                                        |   |                 |    |   |   |   |   |   |   |   |   |   |
| Impaired loans                                              |   |                 |    |   |   |   |   |   |   |   |   |   |
| Commercial                                                  |   | $                    | 1,097   |   |   | $ | — |   |   | $ | 1,097 |   |   | $ | — |   |
| Real estate - commercial                                    |   |                 | 3,527   |   |   |   | — |   |   |   | 3,527 |   |   |   | — |   |
| Real estate - construction                                  |   |                 | 4,114   |   |   |   | — |   |   |   | 3,829 |   |   |   | 285 |   |
| Real estate - mortgage                                      |   |                 | 1,507   |   |   |   | — |   |   |   | 1,507 |   |   |   | — |   |
| Installment                                                 |   |                 | 16      |   |   |   | — |   |   |   | 16 |   |   |   | — |   |
| Other                                                       |   |                 | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Other real estate owned                                     |   |                 | 25,784  |   |   |   | — |   |   |   | 25,784 |   |   |   | — |   |
| Total assets measured at fair value on a nonrecurring basis |   | $                    | 36,045  |   |   | $ | — |   |   | $ | 35,760 |   |   | $ | 285 |   |

----

|   | a)     | Cash and Due From Banks - The carrying amount represents a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | b)     | Federal Funds Sold - The carrying amount represents a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | c)     | Time Deposits at Other Financial Institutions - The carrying amount represents a reasonable estimate of fair value due to the short-term nature of such deposits.                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | d)     | FHLB, FRB Stock and Other Securities - The carrying amount represents a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | e)     | Investment Securities – The fair value of investment securities are based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Available for sale securities are carried at fair value.                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | f)     | Loans - Commercial loans, residential mortgages, construction loans and direct financing leases are segmented by fixed and adjustable rate interest terms, by maturity, and by performing and nonperforming categories.                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   | The fair value of performing loans is estimated by discounting contractual cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Assumptions regarding credit risk, cash flow, and discount rates are determined using available market information.                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   | The fair value of nonperforming loans is estimated by discounting estimated future cash flows using current interest rates with an additional risk adjustment reflecting the individual characteristics of the loans, or using the fair value of underlying collateral for collateral dependent loans as a practical expedient.                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | g)     | Bank-owned Life Insurance - The carrying amount and estimated fair values are based on current cash surrender values at each reporting date provided by the insurers.                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | h)     | Mortgage Servicing Assets – The fair value of mortgage servicing assets is estimated using projected cash flows adjusted for the effects of anticipated prepayments, using a market discount rate.                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | i)     | Deposits – Noninterest-bearing and interest-bearing demand deposits and savings accounts are payable on demand and their carrying values are assumed to be at fair value. The fair value of the core deposit intangible has not been included as a component of the fair value estimate. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is based on rates currently offered for deposits of similar size and remaining maturities. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | j)     | Subordinated Debentures - The fair value of the subordinated debentures is estimated by discounting the contractual cash flows using the current interest rate at which similar securities with the same remaining expected life could be made.                                                                                                                                                                                                                                                         |

----

|   | k)     | Commitments to Fund Loans/Standby Letters of Credit - The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The differences between the carrying value of commitments to fund loans or standby letters of credit and their fair value are not significant and therefore not included in the following table. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | l)     | Accrued Interest Receivable/Payable – The carrying amount of accrued interest receivable and accrued interest payable represents a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                              |

|                                          |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-----------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                          |   | Carrying       |    |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                          |   | Amount         |    |   | Value             |   |   | Amount |   |   | Value |   |
| FINANCIAL ASSETS                              |   |           |    |   |              |   |   |   |   |   |   |   |
| Cash and due from banks                       |   | $              | 23,934  |   |              | $      | 23,934 |   |   | $ | 14,629 |   |   | $ | 14,629 |   |
| Federal funds sold                            |   |           | 4,740   |   |              |   | 4,740 |   |   |   | 9,005 |   |   |   | 9,005 |   |
| Time deposits at other financial institutions |   |           | 459     |   |              |   | 459 |   |   |   | 459 |   |   |   | 459 |   |
| FHLB, FRB and other securities                |   |           | 7,141   |   |              |   | 7,141 |   |   |   | 7,141 |   |   |   | 7,141 |   |
| Securities:                                   |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale                            |   |           | 289,914 |   |              |   | 289,914 |   |   |   | 265,644 |   |   |   | 265,644 |   |
| Held-to-maturity                              |   |           | 6       |   |              |   | 6 |   |   |   | 6 |   |   |   | 6 |   |
| Loans                                         |   |           | 480,038 |   |              |   | 494,083 |   |   |   | 498,473 |   |   |   | 514,284 |   |
| Bank owned life insurance                     |   |           | 34,136  |   |              |   | 34,136 |   |   |   | 33,871 |   |   |   | 33,871 |   |
| Mortgage and SBA servicing assets             |   |           | 743     |   |              |   | 743 |   |   |   | 708 |   |   |   | 694 |   |
| Accrued interest receivable                   |   |           | 2,648   |   |              |   | 2,648 |   |   |   | 2,713 |   |   |   | 2,713 |   |
|                                          |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| FINANCIAL LIABILITIES                         |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   | $              | 758,635 |   |              | $      | 760,249 |   |   | $ | 753,790 |   |   | $ | 755,514 |   |
| Subordinated debentures                       |   |           | 31,961  |   |              |   | 18,496 |   |   |   | 31,961 |   |   |   | 18,178 |   |
| Accrued interest payable                      |   |           | 3,595   |   |              |   | 3,595 |   |   |   | 3,052 |   |   |   | 3,052 |   |

----

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

----

----

| (in thousands except per share amounts)     |   | Three months ended March 31, |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | 2011                         |   |   | 2010 |   |
| Net interest income                         |   | $                            | 7,806  |   |   | $ | 7,342 |   |
| Provision for loan losses                   |   |                         | 1,000  |   |   |   | 782 |   |
| Noninterest income                          |   |                         | 3,153  |   |   |   | 3,012 |   |
| Noninterest expense                         |   |                         | 9,471  |   |   |   | 10,237 |   |
| Provision (benefit) for income taxes        |   |                         | 89     |   |   |   | (353 | ) |
| Net income (loss)                           |   | $                            | 399    |   |   | $ | (312 | ) |
|                                        |   |                         |   |   |   |   |   |   |
| Per Share Amounts                           |   |                         |   |   |   |   |   |   |
| Basic and Diluted Earnings (Loss) Per Share |   | $                            | 0.06   |   |   | $ | (0.21 | ) |
|                                        |   |                         |   |   |   |   |   |   |
| Annualized Return (Loss) on Average Assets  |   |                         | 0.18   | % |   |   | (0.14 | %) |
| Annualized Return (Loss) on Average Equity  |   |                         | 1.92   | % |   |   | (2.39 | %) |

----

----

----

| Schedule of Average Daily Balance and Average Yields and Rates |   |
|----------------------------------------------------------------|--------|
| (Dollars in thousands)                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | Three months ended March 31, 2011 |   |   | Three months ended March 31, 2010 |   |
|                                                           |   | Average |   |   | Yield/ |   |   | Interest |   |   | Average |   |   | Yield/ |   |   | Interest |   |
|                                                           |   | Balance |   |   | Rate |   |   | Amount |   |   | Balance |   |   | Rate |   |   | Amount |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earning assets:                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal funds sold                                             |   | $ | 14,210 |   |   | 0.23 | % |   | $ | 8 |   |   | $ | 55,970 |   |   | 0.23 | % |   | $ | 32 |   |
| Investment securities:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                        |   |   | 271,224 |   |   | 2.68 | % |   |   | 1,795 |   |   |   | 134,457 |   |   | 3.16 | % |   |   | 1,049 |   |
| Non-taxable (1)                                                |   |   | 14,357 |   |   | 7.03 | % |   |   | 249 |   |   |   | 15,570 |   |   | 6.85 | % |   |   | 263 |   |
| Total investments                                              |   |   | 285,581 |   |   | 2.90 | % |   |   | 2,044 |   |   |   | 150,027 |   |   | 3.55 | % |   |   | 1,312 |   |
| Loans (2)(3)                                                   |   |   | 502,431 |   |   | 6.01 | % |   |   | 7,450 |   |   |   | 591,511 |   |   | 5.91 | % |   |   | 8,616 |   |
| Total earning assets                                           |   |   | 802,222 |   |   | 4.80 | % |   |   | 9,502 |   |   |   | 797,508 |   |   | 5.06 | % |   |   | 9,960 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non earning assets                                             |   |   | 106,715 |   |   |   |   |   |   |   |   |   |   | 97,037 |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                      |   |   | (14,635 | ) |   |   |   |   |   |   |   |   |   | (18,789 | ) |   |   |   |   |   |   |   |
| Total non-earning assets                                       |   |   | 92,080 |   |   |   |   |   |   |   |   |   |   | 78,248 |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                   |   | $ | 894,302 |   |   |   |   |   |   |   |   |   | $ | 875,756 |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Shareholders’ Equity                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transaction accounts                                           |   | $ | 161,324 |   |   | 0.20 | % |   | $ | 78 |   |   | $ | 157,314 |   |   | 0.27 | % |   | $ | 104 |   |
| Savings and money market                                       |   |   | 217,535 |   |   | 0.48 | % |   |   | 259 |   |   |   | 196,775 |   |   | 0.73 | % |   |   | 354 |   |
| Time certificates                                              |   |   | 224,219 |   |   | 1.35 | % |   |   | 745 |   |   |   | 277,276 |   |   | 2.28 | % |   |   | 1,561 |   |
| Other borrowed funds                                           |   |   | 31,961 |   |   | 6.73 | % |   |   | 530 |   |   |   | 31,961 |   |   | 6.52 | % |   |   | 514 |   |
| Total interest bearing liabilities                             |   |   | 635,039 |   |   | 1.03 | % |   |   | 1,612 |   |   |   | 663,326 |   |   | 1.55 | % |   |   | 2,533 |   |
| Demand deposits                                                |   |   | 155,494 |   |   |   |   |   |   |   |   |   |   | 146,988 |   |   |   |   |   |   |   |   |
| Other liabilities                                              |   |   | 19,605 |   |   |   |   |   |   |   |   |   |   | 12,561 |   |   |   |   |   |   |   |   |
| Total liabilities                                              |   |   | 810,138 |   |   |   |   |   |   |   |   |   |   | 822,875 |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                     |   |   | 84,164 |   |   |   |   |   |   |   |   |   |   | 52,881 |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity               |   | $ | 894,302 |   |   |   |   |   |   |   |   |   | $ | 875,756 |   |   |   |   |   |   |   |   |
| Net interest income                                            |   |   |   |   |   |   |   |   | $ | 7,890 |   |   |   |   |   |   |   |   |   | $ | 7,427 |   |
| Net interest spread                                            |   |   |   |   |   | 3.77 | % |   |   |   |   |   |   |   |   |   | 3.51 | % |   |   |   |   |
| Net interest margin                                            |   |   |   |   |   | 3.99 | % |   |   |   |   |   |   |   |   |   | 3.78 | % |   |   |   |   |

----

----

| Changes in Volume/Rate              |   |                              |    |   |       |   |    |       |   |
|-------------------------------------|--------|-----------------------------------|---------|--------|------------|--------|---------|------------|--------|
| (Dollars in thousands)              |   | Three months ended March 31, 2011 |    |
|                                |   | compared with                     |    |
|                                |   | Three months ended March 31, 2010 |    |
|                                |   |                              |    |   |       |   |    | Total      |   |
|                                |   | Average                           |    |   | Average    |   |    | Increase   |   |
|                                |   | Volume                            |    |   | Yield/Rate |   |    | (Decrease) |   |
| Interest Income                     |   |                              |    |   |       |   |    |       |   |
| Interest on Federal funds sold      |   | $                                 | (24     | )      |       | $      | — |       |   | $ | (24 | ) |
| Interest on investments:            |   |                              |    |   |       |   |    |       |   |   |   |   |
| Taxable securities                  |   |                              | 1,079   |   |       |   | (333    | )          |   |   | 746 |   |
| Nontaxable securities (1)           |   |                              | (20     | )      |       |   | 6       |       |   |   | (14 | ) |
| Total investments                   |   |                              | 1,059   |   |       |   | (327    | )          |   |   | 732 |   |
| Interest on loans                   |   |                              | (1,316  | )      |       |   | 150     |       |   |   | (1,166 | ) |
| Total interest income               |   |                              | (281    | )      |       |   | (177    | )          |   |   | (458 | ) |
|                                |   |                              |    |   |       |   |    |       |   |   |   |   |
| Interest Expense                    |   |                              |    |   |       |   |    |       |   |   |   |   |
| Transaction accounts                |   | $                                 | 3       |   |       | $      | (29     | )          |   | $ | (26 | ) |
| Savings and money market            |   |                              | 38      |   |       |   | (133    | )          |   |   | (95 | ) |
| Time deposits                       |   |                              | (302    | )      |       |   | (514    | )          |   |   | (816 | ) |
| Other borrowed funds                |   |                              | — |   |       |   | 16      |       |   |   | 16 |   |
| Total interest expense              |   |                              | (261    | )      |       |   | (660    | )          |   |   | (921 | ) |
|                                |   |                              |    |   |       |   |    |       |   |   |   |   |
| Total change in net interest income |   | $                                 | (20     | )      |       | $      | 483     |       |   | $ | 463 |   |
|                                |   |                              |    |   |       |   |    |       |   |   |   |   |
| (1) Taxable equivalent              |   |                              |    |   |       |   |    |       |   |   |   |   |

----

|                                      |   | Three months ended March 31, |   |
|-------------------------------------------|--------|------------------------------|--------|
|                                      |   | 2011                         |   |   | 2010 |   |
| Service charges on deposit accounts       |   | $                            | 1,166  |   |   | $ | 1,481 |   |
| Other fees and charges                    |   |                         | 1,121  |   |   |   | 1,031 |   |
| Increase in cash value of life insurance  |   |                         | 330    |   |   |   | 346 |   |
| Gain on sale of loans                     |   |                         | 256    |   |   |   | 49 |   |
| Loss on sales or calls of securities, net |   |                         | (10    | ) |   |   | — |   |
| Other                                     |   |                         | 290    |   |   |   | 105 |   |
| Total                                     |   | $                            | 3,153  |   |   | $ | 3,012 |   |

|                            |   | Three months ended March 31, |   |
|---------------------------------|--------|------------------------------|--------|
|                            |   | 2011                         |   |   | 2010 |   |
| Salaries and employee benefits  |   | $                            | 4,717  |   |   | $ | 4,287 |   |
| Occupancy expense               |   |                         | 692    |   |   |   | 734 |   |
| Data processing                 |   |                         | 675    |   |   |   | 521 |   |
| Other real estate owned expense |   |                         | 452    |   |   |   | 850 |   |
| FDIC and state assessments      |   |                         | 443    |   |   |   | 706 |   |
| Professional services           |   |                         | 325    |   |   |   | 692 |   |
| Furniture and equipment expense |   |                         | 296    |   |   |   | 423 |   |
| ATM and on-line banking         |   |                         | 288    |   |   |   | 259 |   |
| Postage                         |   |                         | 158    |   |   |   | 150 |   |
| Messenger                       |   |                         | 145    |   |   |   | 143 |   |
| Operations expense              |   |                         | 142    |   |   |   | 132 |   |
| Loan expense                    |   |                         | 125    |   |   |   | 120 |   |
| Printing and supplies           |   |                         | 123    |   |   |   | 104 |   |
| Marketing expense               |   |                         | 119    |   |   |   | 168 |   |
| Director expense                |   |                         | 102    |   |   |   | 105 |   |
| Amortization of intangibles     |   |                         | 36     |   |   |   | 36 |   |
| Other                           |   |                         | 633    |   |   |   | 807 |   |
|                            |   | $                            | 9,471  |   |   | $ | 10,237 |   |

----

|                       |   | March 31, |    |   | December 31, |   |
|----------------------------|--------|-----------|---------|--------|--------------|--------|
|                       |   | 2011      |    |   | 2010         |   |
| Commercial                 |   | $         | 48,865  |   |         | $      | 54,639 |   |
| Real estate - commercial   |   |      | 297,184 |   |         |   | 291,514 |   |
| Real estate - construction |   |      | 39,346  |   |         |   | 55,181 |   |
| Real estate - mortgage     |   |      | 48,158  |   |         |   | 49,726 |   |
| Installment                |   |      | 13,210  |   |         |   | 14,690 |   |
| Other                      |   |      | 48,252  |   |         |   | 48,292 |   |
|                       |   |      | 495,015 |   |         |   | 514,042 |   |
| Deferred loan fees, net    |   |      | (506    | )      |         |   | (576 | ) |
| Allowance for loan losses  |   |      | (14,471 | )      |         |   | (14,993 | ) |
|                       |   | $         | 480,038 |   |         | $      | 498,473 |   |

----

|                                                       |   | March 31, |   |   | December 31, |   |
|------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|
|                                                       |   | 2011      |   |   | 2010         |   |
| Nonaccrual loans                                           |   | $         | 14,484 |   |         | $      | 20,065 |   |
| Loans 90 days past due or more but still accruing interest |   |      | 10     |   |         |   | — |   |
| Total nonperforming loans                                  |   |      | 14,494 |   |         |   | 20,065 |   |
| Other real estate owned                                    |   |      | 23,319 |   |         |   | 25,784 |   |
| Total nonperforming assets                                 |   | $         | 37,813 |   |         | $      | 45,849 |   |
|                                                       |   |      |   |   |         |   |   |   |
| Nonaccrual loans to total gross loans                      |   |      | 2.93   | %      |         |   | 3.91 | % |
| Nonperforming loans to total gross loans                   |   |      | 2.93   | %      |         |   | 3.91 | % |
| Total nonperforming assets to total assets                 |   |      | 4.23   | %      |         |   |  5.18 | % |

|                       |   | March  |    |   | December |    |   | September |   |    | June   |   |
|----------------------------|--------|--------|---------|--------|----------|---------|--------|-----------|--------|---------|--------|--------|
|                       |   | 2011   |    |   | 2010     |    |   | 2010      |   |    | 2010   |   |
|                       |   |   |    |   | % of     |    |   |      |   |    | % of   |   |   |   |   |   | % of |   |   |   |   |   | % of |   |
|                       |   | Amount |    |   | total    |    |   | Amount    |   |    | total  |   |   | Amount |   |   | total |   |   | Amount |   |   | total |   |
| Commercial                 |   | $      | 544     |   |     | 3.8     | %      |      | $      | 1,470   |   |   | 7.3 | % |   | $ | 1,106 |   |   | 3.7 | % |   | $ | 1,008 |   |   | 2.6 | % |
| Real estate - commercial   |   |   | 9,078   |   |     | 62.7    | %      |      |   | 6,692   |   |   | 33.4 | % |   |   | 4,031 |   |   | 13.6 | % |   |   | 9,597 |   |   | 25.0 | % |
| Real estate - construction |   |   | 3,189   |   |     | 22.0    | %      |      |   | 9,016   |   |   | 44.9 | % |   |   | 22,044 |   |   | 74.4 | % |   |   | 24,463 |   |   | 63.7 | % |
| Real estate - mortgage     |   |   | 1,633   |   |     | 11.3    | %      |      |   | 2,820   |   |   | 14.1 | % |   |   | 1,882 |   |   | 6.3 | % |   |   | 2,784 |   |   | 7.3 | % |
| Installment                |   |   | 40      |   |     | 0.3     | %      |      |   | 67      |   |   | 0.3 | % |   |   | 90 |   |   | 0.3 | % |   |   | 56 |   |   | 0.1 | % |
| Other                      |   |   | — |   |     | — |   |      |   | — |   |   | — |   |   |   | 490 |   |   | 1.7 | % |   |   | 491 |   |   | 1.3 | % |
| Total nonaccrual loans     |   | $      | 14,484  |   |     | 100.0   | %      |      | $      | 20,065  |   |   | 100.0 | % |   | $ | 29,643 |   |   | 100.0 | % |   | $ | 38,399 |   |   | 100.0 | % |

----

|                                                  |   | Three months ended March 31, |   |
|-------------------------------------------------------|--------|------------------------------|--------|
|                                                  |   | 2011                         |   |   | 2010 |   |
| Allowance for loan losses at beginning of period      |   | $                            | 14,993 |   |   | $ | 18,539 |   |
| Loans charged-off                                     |   |                         | (1,605 | ) |   |   | (1,795 | ) |
| Recoveries on loans previously charged-off            |   |                         | 83     |   |   |   | 182 |   |
| Provisions for loan losses                            |   |                         | 1,000  |   |   |   | 782 |   |
| Balance of allowance for loan losses at end of period |   | $                            | 14,471 |   |   | $ | 17,708 |   |
|                                                  |   |                         |   |   |   |   |   |   |
| Components of allowance for credit losses             |   |                         |   |   |   |   |   |   |
| Allowance for loan losses                             |   | $                            | 14,471 |   |   | $ | 17,708 |   |
| Reserve for unfunded commitments                      |   |                         | 241    |   |   |   | 218 |   |
| Total allowance for credit losses                     |   | $                            | 14,712 |   |   | $ | 17,926 |   |

|                          |   | As of March 31, 2011 |   |
|-------------------------------|--------|----------------------|--------|
|                          |   |                 |   |   | Real Estate |   |   | Real Estate |   |   | Real Estate |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Commercial           |   |   | Commercial |   |   | Construction |   |   | Mortgage |   |   | Installment |   |   | Other |   |   | Unallocated |   |   | Total |   |
|                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses     |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                    | 1,517  |   |   | $ | 8,439 |   |   | $ | 1,936 |   |   | $ | 956 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 14,993 |   |
| Charge-offs                   |   |                 | (874   | ) |   |   | (62 | ) |   |   | — |   |   |   | (200 | ) |   |   | (168 | ) |   |   | (301 | ) |   |   | — |   |   |   | (1,605 | )  |
| Recoveries                    |   |                 | 10     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 73 |   |   |   | — |   |   |   | — |   |   |   | 83 |   |
| Provisions for loan losses    |   |                 | 615    |   |   |   | 610 |   |   |   | (370 | ) |   |   | 163 |   |   |   | 60 |   |   |   | 390 |   |   |   | (468 | ) |   |   | 1,000 |   |
| Balance March 31, 2011        |   | $                    | 1,268  |   |   | $ | 8,987 |   |   | $ | 1,566 |   |   | $ | 919 |   |   | $ | 304 |   |   | $ | 755 |   |   | $ | 672 |   |   | $ | 14,471 |   |
| Reserve to impaired loans     |   | $                    | 87     |   |   | $ | 784 |   |   | $ | — |   |   | $ | 54 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 925 |   |
| Reserve to non-impaired loans |   | $                    | 1,181  |   |   | $ | 8,203 |   |   | $ | 1,566 |   |   | $ | 865 |   |   | $ | 304 |   |   | $ | 755 |   |   | $ | 672 |   |   | $ | 13,546 |   |
|                          |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                         |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance March 31, 2011        |   | $                    | 48,865 |   |   | $ | 297,184 |   |   | $ | 39,346 |   |   | $ | 48,158 |   |   | $ | 13,210 |   |   | $ | 48,252 |   |   | $ | — |   |   | $ | 495,015 |   |
| Impaired Loans                |   | $                    | 545    |   |   | $ | 9,078 |   |   | $ | 3,188 |   |   | $ | 1,633 |   |   | $ | 40 |   |   | $ | — |   |   | $ | — |   |   | $ | 14,484 |   |
| Non-impaired loans            |   | $                    | 48,320 |   |   | $ | 288,106 |   |   | $ | 36,158 |   |   | $ | 46,525 |   |   | $ | 13,170 |   |   | $ | 48,252 |   |   | $ | — |   |   | $ | 480,531 |   |

|                          |   | As of December 31, 2010 |   |
|-------------------------------|--------|-------------------------|--------|
|                          |   |                    |   |   | Real Estate |   |   | Real Estate |   |   | Real Estate |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | Commercial              |   |   | Commercial |   |   | Construction |   |   | Mortgage |   |   | Installment |   |   | Other |   |   | Unallocated |   |   | Total |   |
|                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses     |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                       | 1,517  |   |   | $ | 8,439 |   |   | $ | 1,936 |   |   | $ | 956 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 14,993 |   |
| Reserve to impaired loans     |   | $                       | 327    |   |   | $ | 563 |   |   | $ | — |   |   | $ | 153 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 1,043 |   |
| Reserve to non-impaired loans |   | $                       | 1,190  |   |   | $ | 7,876 |   |   | $ | 1,936 |   |   | $ | 803 |   |   | $ | 339 |   |   | $ | 666 |   |   | $ | 1,140 |   |   | $ | 13,950 |   |
|                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                         |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2010     |   | $                       | 54,639 |   |   | $ | 291,514 |   |   | $ | 55,181 |   |   | $ | 49,726 |   |   | $ | 14,690 |   |   | $ | 48,292 |   |   | $ | — |   |   | $ | 514,042 |   |
| Impaired Loans                |   | $                       | 1,470  |   |   | $ | 6,692 |   |   | $ | 9,016 |   |   | $ | 2,820 |   |   | $ | 67 |   |   | $ | — |   |   | $ | — |   |   | $ | 20,065 |   |
| Non-impaired loans            |   | $                       | 53,169 |   |   | $ | 284,822 |   |   | $ | 46,165 |   |   | $ | 46,906 |   |   | $ | 14,623 |   |   | $ | 48,292 |   |   | $ | — |   |   | $ | 493,977 |   |

----

|                       |   | As of March 31, 2011 |    |
|----------------------------|--------|----------------------|---------|
|                       |   | Pass                 |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Commercial                 |   | $                    | 40,074  |   |   | $ | 3,131 |   |   | $ | 5,660 |   |   | $ | — |   |   | $ | 48,865 |   |
| Real estate - commercial   |   |                 | 262,497 |   |   |   | 2,103 |   |   |   | 32,584 |   |   |   | — |   |   |   | 297,184 |   |
| Real estate - construction |   |                 | 23,665  |   |   |   | 671 |   |   |   | 15,010 |   |   |   | — |   |   |   | 39,346 |   |
| Real estate - mortgage     |   |                 | 44,443  |   |   |   | 433 |   |   |   | 3,282 |   |   |   | — |   |   |   | 48,158 |   |
| Installment                |   |                 | 13,175  |   |   |   | — |   |   |   | 35 |   |   |   | — |   |   |   | 13,210 |   |
| Other                      |   |                 | 47,963  |   |   |   | — |   |   |   | 289 |   |   |   | — |   |   |   | 48,252 |   |
| Total                      |   | $                    | 431,817 |   |   | $ | 6,338 |   |   | $ | 56,860 |   |   | $ | — |   |   | $ | 495,015 |   |

|                       |   | As of December 31, 2010 |    |
|----------------------------|--------|-------------------------|---------|
|                       |   | Pass                    |    |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Total |   |
| Commercial                 |   | $                       | 43,773  |   |   | $ | 3,531 |   |   | $ | 7,203 |   |   | $ | 132 |   |   | $ | 54,639 |   |
| Real estate - commercial   |   |                    | 259,929 |   |   |   | 2,214 |   |   |   | 29,371 |   |   |   | — |   |   |   | 291,514 |   |
| Real estate - construction |   |                    | 23,542  |   |   |   | 10,171 |   |   |   | 21,468 |   |   |   | — |   |   |   | 55,181 |   |
| Real estate - mortgage     |   |                    | 43,655  |   |   |   | 482 |   |   |   | 5,589 |   |   |   | — |   |   |   | 49,726 |   |
| Installment                |   |                    | 14,499  |   |   |   | — |   |   |   | 191 |   |   |   | — |   |   |   | 14,690 |   |
| Other                      |   |                    | 47,790  |   |   |   | — |   |   |   | 502 |   |   |   | — |   |   |   | 48,292 |   |
| Total                      |   | $                       | 433,188 |   |   | $ | 16,398 |   |   | $ | 64,324 |   |   | $ | 132 |   |   | $ | 514,042 |   |

|                       |   | As of March 31, 2011 |    |
|----------------------------|--------|----------------------|---------|
|                       |   | Accruing Interest    |    |   |   |   |   |   |   |
|                       |   |                 |    |   |   |   |   | Greater than |   |   |   |   |   |   |   |
|                       |   |                 |    |   | 30-89 Days |   |   | 90 Days |   |   |   |   |   |   |   |
|                       |   | Current              |    |   | Past Due |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
|                       |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                 |   | $                    | 48,320  |   |   | $ | — |   |   | $ | — |   |   | $ | 545 |   |   | $ | 48,865 |   |
| Real estate - commercial   |   |                 | 288,073 |   |   |   | 33 |   |   |   | — |   |   |   | 9,078 |   |   |   | 297,184 |   |
| Real estate - construction |   |                 | 36,158  |   |   |   | — |   |   |   | — |   |   |   | 3,188 |   |   |   | 39,346 |   |
| Real estate - mortgage     |   |                 | 46,062  |   |   |   | 463 |   |   |   | — |   |   |   | 1,633 |   |   |   | 48,158 |   |
| Installment                |   |                 | 12,900  |   |   |   | 260 |   |   |   | 10 |   |   |   | 40 |   |   |   | 13,210 |   |
| Other                      |   |                 | 48,020  |   |   |   | 232 |   |   |   | — |   |   |   | — |   |   |   | 48,252 |   |
| Total                      |   | $                    | 479,533 |   |   | $ | 988 |   |   | $ | 10 |   |   | $ | 14,484 |   |   | $ | 495,015 |   |

|                       |   | As of December 31, 2010 |    |
|----------------------------|--------|-------------------------|---------|
|                       |   | Accruing Interest       |    |   |   |   |   |   |   |
|                       |   |                    |    |   |   |   |   | Greater than |   |   |   |   |   |   |   |
|                       |   |                    |    |   | 30-89 Days |   |   | 90 Days |   |   |   |   |   |   |   |
|                       |   | Current                 |    |   | Past Due |   |   | Past Due |   |   | Nonaccrual |   |   | Total |   |
|                       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                 |   | $                       | 53,010  |   |   | $ | 159 |   |   | $ | — |   |   | $ | 1,470 |   |   | $ | 54,639 |   |
| Real estate - commercial   |   |                    | 284,788 |   |   |   | 34 |   |   |   | — |   |   |   | 6,692 |   |   |   | 291,514 |   |
| Real estate - construction |   |                    | 46,165  |   |   |   | — |   |   |   | — |   |   |   | 9,016 |   |   |   | 55,181 |   |
| Real estate - mortgage     |   |                    | 46,068  |   |   |   | 838 |   |   |   | — |   |   |   | 2,820 |   |   |   | 49,726 |   |
| Installment                |   |                    | 14,450  |   |   |   | 173 |   |   |   | — |   |   |   | 67 |   |   |   | 14,690 |   |
| Other                      |   |                    | 48,258  |   |   |   | 34 |   |   |   | — |   |   |   | — |   |   |   | 48,292 |   |
| Total                      |   | $                       | 492,739 |   |   | $ | 1,238 |   |   | $ | — |   |   | $ | 20,065 |   |   | $ | 514,042 |   |

----

|                        |   | As of March 31, 2011 |   |
|-----------------------------|--------|----------------------|--------|
|                        |   |                 |   |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                        |   | Recorded             |   |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                        |   | Investment           |   |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| With no allocated allowance |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   | $                    | 402    |   |   | $ | 375 |   |   | $ | — |   |   | $ | 380 |   |   | $ | — |   |
| Real estate - commercial    |   |                 | 4,131  |   |   |   | 4,387 |   |   |   | — |   |   |   | 4,179 |   |   |   | — |   |
| Real estate - construction  |   |                 | 3,188  |   |   |   | 7,586 |   |   |   | — |   |   |   | 3,207 |   |   |   | — |   |
| Real estate - mortgage      |   |                 | 1,273  |   |   |   | 1,496 |   |   |   | — |   |   |   | 1,365 |   |   |   | — |   |
| Installment                 |   |                 | 40     |   |   |   | 40 |   |   |   | — |   |   |   | 53 |   |   |   | — |   |
| Subtotal                    |   |                 | 9,034  |   |   |   | 13,884 |   |   |   | — |   |   |   | 9,184 |   |   |   | — |   |
|                        |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With allocated allowance    |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   |                 | 143    |   |   |   | 146 |   |   |   | 87 |   |   |   | 146 |   |   |   | — |   |
| Real estate - commercial    |   |                 | 4,947  |   |   |   | 5,063 |   |   |   | 784 |   |   |   | 5,259 |   |   |   | — |   |
| Real estate - mortgage      |   |                 | 360    |   |   |   | 367 |   |   |   | 54 |   |   |   | 364 |   |   |   | — |   |
| Subtotal                    |   |                 | 5,450  |   |   |   | 5,576 |   |   |   | 925 |   |   |   | 5,769 |   |   |   | — |   |
| Total Impaired Loans        |   | $                    | 14,484 |   |   | $ | 19,460 |   |   | $ | 925 |   |   | $ | 14,953 |   |   | $ | — |   |

|                        |   | As of December 31, 2010 |   |
|-----------------------------|--------|-------------------------|--------|
|                        |   |                    |   |   | Unpaid |   |   |   |   |   | Average |   |   | Interest |   |
|                        |   | Recorded                |   |   | Principal |   |   | Related |   |   | Recorded |   |   | Income |   |
|                        |   | Investment              |   |   | Balance |   |   | Allowance |   |   | Investment |   |   | Recognized |   |
| With no allocated allowance |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   | $                       | 1,121  |   |   | $ | 1,466 |   |   | $ | — |   |   | $ | 1,531 |   |   | $ | — |   |
| Real estate - commercial    |   |                    | 2,602  |   |   |   | 2,794 |   |   |   | — |   |   |   | 2,793 |   |   |   | — |   |
| Real estate - construction  |   |                    | 9,016  |   |   |   | 13,599 |   |   |   | — |   |   |   | 13,572 |   |   |   | — |   |
| Real estate - mortgage      |   |                    | 1,557  |   |   |   | 1,611 |   |   |   | — |   |   |   | 1,679 |   |   |   | — |   |
| Installment                 |   |                    | 67     |   |   |   | 67 |   |   |   | — |   |   |   | 68 |   |   |   | — |   |
| Subtotal                    |   |                    | 14,363 |   |   |   | 19,537 |   |   |   | — |   |   |   | 19,643 |   |   |   | — |   |
|                        |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With allocated allowance    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                  |   |                    | 349    |   |   |   | 363 |   |   |   | 327 |   |   |   | 370 |   |   |   | — |   |
| Real estate - commercial    |   |                    | 4,090  |   |   |   | 4,178 |   |   |   | 563 |   |   |   | 4,252 |   |   |   | — |   |
| Real estate - mortgage      |   |                    | 1,263  |   |   |   | 1,265 |   |   |   | 153 |   |   |   | 1,563 |   |   |   | — |   |
| Subtotal                    |   |                    | 5,702  |   |   |   | 5,806 |   |   |   | 1,043 |   |   |   | 6,185 |   |   |   | — |   |
| Total Impaired Loans        |   | $                       | 20,065 |   |   | $ | 25,343 |   |   | $ | 1,043 |   |   | $ | 25,828 |   |   | $ | — |   |

|                     |   |      |   |   | Pre-Modification |   |   | Post-Modification |   |
|--------------------------|--------|-----------|--------|--------|------------------|--------|--------|-------------------|--------|
|                     |   | Number    |   |   | Outstanding      |   |   | Outstanding       |   |
|                     |   | of        |   |   | Recorded         |   |   | Recorded          |   |
|                     |   | Contracts |   |   | Investment       |   |   | Investment        |   |
| Real estate - commercial |   | 4         |   |   | $                | 3,377  |   |              | $      | 3,377 |   |
| Real estate - mortgage   |   | 2         |   |   |             | 441    |   |              |   | 441 |   |

----

|   | ● | Specific Allowances. A specific allowance is established when management has identified unique or particular risks that were related to a specific loan that demonstrated risk characteristics consistent with impairment. Specific allowances are established when management can estimate the amount of an impairment of a loan.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | ● | Formula Allowance. The formula allowance is calculated by applying loss factors through the assignment of loss factors to homogenous pools of loans. Changes in risk grades of both performing and nonperforming loans affect the amount of the formula allowance. Loss factors are based on our historical loss experience and such other data as management believes to be pertinent.  Management, also, considers a variety of subjective factors, including regional economic and business conditions that impact important segments of our portfolio, loan growth rates, the depth and skill of lending staff, the interest rate environment, and the results of bank regulatory examinations and findings of our internal credit examiners to establish the formula allowance. |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | ● | Unallocated Allowance. The unallocated loan loss allowance represents an amount for imprecision or uncertainty that is inherent in estimates used to determine the allowance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|                       |   | March 31, |    |   | December 31, |   |
|----------------------------|--------|-----------|---------|--------|--------------|--------|
|                       |   | 2011      |    |   | 2010         |   |
| Noninterest-bearing demand |   | $         | 153,062 |   |         | $      | 155,499 |   |
| Interest-bearing demand    |   |      | 161,807 |   |         |   | 161,241 |   |
| Savings and money market   |   |      | 224,426 |   |         |   | 208,476 |   |
| Time certificates          |   |      | 219,340 |   |         |   | 228,574 |   |
| Total deposits             |   | $         | 758,635 |   |         | $      | 753,790 |   |

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|                                     |   |   |    |   |    |   |   |              |   |   |                    |   |   | To be Well Capitalized |   |
|------------------------------------------|--------|--------|---------|--------|---------|--------|--------|-------------------|--------|--------|-------------------------|--------|--------|------------------------|--------|
|                                     |   |   |    |   |    |   |   | For Capital       |   |   | Under Prompt Corrective |   |
|                                     |   |   |    |   |    |   |   | Adequacy Purposes |   |   | Action Provisions       |   |
|                                     |   | Actual |    |   | Minimum |   |   | Minimum           |   |   | Minimum                 |   |   | Minimum                |   |
|                                     |   | Amount |    |   | Ratio   |   |   | Amount            |   |   | Ratio                   |   |   | Amount                 |   |   | Ratio |   |
| Company                                  |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |
| As of March 31, 2011:                    |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |
| Total capital (to risk weighted assets)  |   | $      | 114,344 |   |    | 18.17  | %      |              | $      | 50,344 |                    |   | 8.00   | %                      |   |   | N/A |   |   | N/A |   |
| Tier 1 capital (to risk weighted assets) |   | $      | 103,799 |   |    | 16.49  | %      |              | $      | 25,179 |                    |   | 4.00   | %                      |   |   | N/A |   |   | N/A |   |
| Tier 1 capital (to average assets)       |   | $      | 103,799 |   |    | 11.74  | %      |              | $      | 35,366 |                    |   | 4.00   | %                      |   |   | N/A |   |   | N/A |   |
|                                     |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| As of December 31, 2010:                 |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   | $      | 113,279 |   |    | 17.63  | %      |              | $      | 51,403 |                    |   | 8.00   | %                      |   |   | N/A |   |   | N/A |   |
| Tier 1 capital (to risk weighted assets) |   | $      | 102,422 |   |    | 15.94  | %      |              | $      | 25,702 |                    |   | 4.00   | %                      |   |   | N/A |   |   | N/A |   |
| Tier 1 capital (to average assets)       |   | $      | 102,422 |   |    | 11.48  | %      |              | $      | 35,687 |                    |   | 4.00   | %                      |   |   | N/A |   |   | N/A |   |
|                                     |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| North Valley Bank                        |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| As of March 31, 2011:                    |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   | $      | 117,922 |   |    | 18.74  | %      |              | $      | 50,340 |                    |   | 8.00   | %                      |   | $ | 62,925 |   |   | 10.00 | % |
| Tier 1 capital (to risk weighted assets) |   | $      | 109,973 |   |    | 17.48  | %      |              | $      | 25,165 |                    |   | 4.00   | %                      |   | $ | 37,748 |   |   | 6.00 | % |
| Tier 1 capital (to average assets)       |   | $      | 109,973 |   |    | 12.43  | %      |              | $      | 35,390 |                    |   | 4.00   | %                      |   | $ | 44,237 |   |   | 5.00 | % |
|                                     |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| As of December 31, 2010:                 |   |   |    |   |    |   |   |              |   |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Total capital (to risk weighted assets)  |   | $      | 116,217 |   |    | 18.08  | %      |              | $      | 51,423 |                    |   | 8.00   | %                      |   | $ | 64,279 |   |   | 10.00 | % |
| Tier 1 capital (to risk weighted assets) |   | $      | 108,092 |   |    | 16.82  | %      |              | $      | 25,706 |                    |   | 4.00   | %                      |   | $ | 38,558 |   |   | 6.00 | % |
| Tier 1 capital (to average assets)       |   | $      | 108,092 |   |    | 12.11  | %      |              | $      | 35,703 |                    |   | 4.00   | %                      |   | $ | 44,629 |   |   | 5.00 | % |

----

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

PART II - OTHER INFORMATION

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

ITEM 4.  (removed and reserved)

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ITEM 5.  OTHER INFORMATION

ITEM 6.  EXHIBITS

|   | 31 | Rule 13a-14(a) / 15d-14(a) Certifications |
|--------|----|-------------------------------------------|
|   | 32 | Section 1350 Certifications               |

SIGNATURES

| NORTH VALLEY BANCORP                                             |   |
|------------------------------------------------------------------|--------|
| (Registrant)                                                     |   |
|                                                             |   |
| Date May 12, 2011                                                |   |
|                                                             |   |
| By:                                                              |   |
|                                                             |   |
| /s/ Michael J. Cushman                                           |   |
| Michael J. Cushman                                               |   |
| President & Chief Executive Officer                          |   |
| (Principal Executive Officer)                                    |   |
|                                                             |   |
| /s/ Kevin R. Watson                                              |   |
| Kevin R. Watson                                                  |   |
| Executive Vice President & Chief Financial Officer           |   |
| (Principal Financial Officer & Principal Accounting Officer) |   |

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