----

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

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

| Embassy Bancorp, Inc.                                   |
|---------------------------------------------------------|
| (Exact name of registrant as specified in its charter)  |
|  Pennsylvania                                      |  26-3339011 |
| (State of incorporation)                                | (I.R.S. Employer Identification No.) |
|  One Hundred Gateway Drive, Suite 100Bethlehem, PA |  18017 |
| (Address of principal executive offices)                | (Zip Code) |
|                                                    |
| (610) 882-8800                                          |
| (Issuer’s Telephone Number)                       |

| None                  | None                                        |
|-----------------------|---------------------------------------------|
| (Title of each class) | (Name of each exchange on which registered) |

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

| Number of shares outstanding as of March 25, 2010 | ($1 Par Value) |   |  6,940,310      |   |
|---------------------------------------------------|----------------|--------|----------------------|--------|
|                                              | (Title Class)  |   | (Outstanding Shares) |   |

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Contents

| Part I                                       |                                            |                                                                                                                  |   | Page Number |
|----------------------------------------------|-------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|--------|-------------|
|                                         | Item 1                                          | Business                                                                                                              |   | 4           |
|                                         | Item 1A                                         | Risk Factors                                                                                                          |   | 17          |
|                                         | Item 1B                                         | Unresolved Staff Comments                                                                                             |   | 17          |
|                                         | Item 2                                          | Properties                                                                                                            |   | 17          |
|                                         | Item 3                                          | Legal Proceedings                                                                                                     |   | 17          |
|                                         | Item 4                                          | (Removed and Reserved)                                                                                                |   | 17          |
| Part II                                      |                                            |                                                                                                                  |   |        |
|                                         | Item 5                                          | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities |   | 18          |
|                                         | Item 6                                          | Selected Financial Data                                                                                               |   | 18          |
|                                         | Item 7                                          | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           |   | 19          |
|                                         | Item 7A                                         | Quantitative and Qualitative Disclosures About Market Risk                                                            |   | 33          |
|                                         | Item 8                                          | Consolidated Financial Statements and Supplementary Data                                                              |   | 33          |
|                                         |                                            | Report of Independent Registered Public Accounting Firm                                                               |   | 34          |
|                                         |                                            | Consolidated Balance Sheets                                                                                           |   | 35          |
|                                         |                                            | Consolidated Statements of Income                                                                                     |   | 36          |
|                                         |                                            | Consolidated Statements of Stockholders’ Equity                                                                 |   | 37          |
|                                         |                                            | Consolidated Statements of Cash Flows                                                                                 |   | 38          |
|                                         |                                            | Notes to Financial Statements                                                                                         |   | 39          |
|                                         | Item 9                                          | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure                                  |   | 66          |
|                                         | Item 9A (T)       | Controls and Procedures                                                                                               |   | 66          |
|                                         | Item 9B                                         | Other Information                                                                                                     |   | 66          |
| Part III       |                                            |                                                                                                                  |   |        |
|                                         | Item 10                                         | Directors, Executive Officers and Corporate Governance                                                                |   | 67          |
|                                         | Item 11                                         | Executive Compensation                                                                                                |   | 67          |
|                                         | Item 12                                         | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                        |   | 67          |
|                                         | Item 13                                         | Certain Relationships and Related Transactions, and Director Independence                                             |   | 67          |
|                                         | Item 14                                         | Principal Accountant Fees and Services                                                                                |   | 67          |
| Part IV                                      |                                            |                                                                                                                  |   |        |
|                                         | Item 15                                         | Exhibits and Financial Statement Schedules                                                                            |   | 68          |
|                                         |                                            |                                                                                                                  |   |        |
|                                         |                                            | Signatures                                                                                                            |   | 70          |

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| Treasurer Checks                       | Payroll Tax Deposits         |
|----------------------------------------|------------------------------|
| Certified Checks                       | Safe Deposit Boxes           |
| Gift Checks                            | Night Depository             |
| Wire Transfers                         | Bond Coupon Redemptions      |
| Savings Bonds Sales & Redemptions  | Bank by Mail                 |
| Credit/Debit Card, Merchant Processing | Automated Teller Machine     |
| Direct Deposit/ACH                     | On-Line Banking and Bill Pay |
| Cash Management Services               | Commercial Credit Cards      |
| Escrow Management Services             |                         |

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|   | • |   | Federal Truth-In-Lending Act, which governs disclosures of credit terms to consumer borrowers; |
|--------|---------|--------|------------------------------------------------------------------------------------------------|

|   | • |   | Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable public officials to determine whether a financial institution is fulfilling its obligations to meet the housing needs of the community it serves; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibitive factors in extending credit; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Real Estate Settlement Procedures Act, which requires lenders to disclose certain information regarding the nature and cost of real estate settlements, and prohibits certain lending practices, as well as limits escrow account amounts in real estate transactions; |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Fair Credit Reporting Act governing the manner in which consumer debts may be collected by collection agencies; and |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | • |   | Various rules and regulations of various federal agencies charged with the implementation of such federal laws. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------|

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|   | • |   | Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 

Item 

|   | · | Hanover Township, Northampton County (administrative offices) |
|--------|--------|---------------------------------------------------------------|

|   | · | City of Bethlehem, Lehigh County |
|--------|--------|----------------------------------|

|   | · | South Whitehall Township, Lehigh County |
|--------|--------|-----------------------------------------|

|   | · | Lower Macungie Township, Lehigh County |
|--------|--------|----------------------------------------|

|   | · | Salisbury Township, Lehigh County |
|--------|--------|-----------------------------------|

|   | · | Upper Saucon Township, Northampton County |
|--------|--------|-------------------------------------------|

|   | · | Executive offices; |
|--------|--------|--------------------|

|   | · | Commercial and consumer lending operations; |
|--------|--------|---------------------------------------------|

|   | · | Marketing; |
|--------|--------|------------|

|   | · | Human resources; |
|--------|--------|------------------|

|   | · | Deposit accounting; |
|--------|--------|---------------------|

|   | · | Data processing; |
|--------|--------|------------------|

|   | · | And corporate accounting. |
|--------|--------|---------------------------|

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

|   | (a) | Market Information. There is no public trading market for the Company’s securities. |
|--------|-----|-------------------------------------------------------------------------------------------|

|   | (b) | As of March 25, 2010, there are approximately 1,280 owners of record of the common stock of the Company. |
|--------|-----|----------------------------------------------------------------------------------------------------------|

|   | (c) | The Company has paid no cash dividends on its common stock and does not anticipate the payment of cash dividends in the near future. As a general matter, cash available for dividend distribution to shareholders of the Company must initially come from dividends paid to the Company by the Bank. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Additionally, the Federal Reserve has indicated that a “small bank holding company” such as the Company, is not expected to pay corporate dividends until such time as its debt to equity ratio is 1:1 or less and its bank subsidiaries are otherwise well-managed, well-capitalized, and not under any supervisory order. The Company’s debt to equity ratio currently exceeds the aforementioned 1:1 ratio. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | The following table sets forth information about options outstanding under the Company's Option Plan, as of December 31, 2009: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   | Number of Shares  |    |   | Weighted average    |   |   | Number of Shares    |   |
|----------------------------------------------------------------|--------|-------------------|---------|--------|---------------------|--------|--------|---------------------|--------|
|                                                           |   | to be issued upon |    |   | exercise price of   |   |   | remaining available |   |
|                                                           |   | exercise of out-  |    |   | outstanding options |   |   | for future issuance |   |
|                                                           |   | standing options  |    |   |                |   |   |                |   |
|                                                           |   |              |    |   |                |   |   |                |   |   |   |   |
| Equity Compensation Plans and Individual Employment Agreements |   |              | 859,153 |   |                | $      | 3.82   |                |   |   | 404,492 |   |

|   | (e) | Sales of Securities. |
|--------|-----|----------------------|

|   | (f)  | Repurchase of Equity Securities. |
|--------|-----------|----------------------------------|

|   | None. |
|--------|-------|

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| Item 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF EMBASSY BANCORP, INC. |
|---------|----------------------------------------------------------------------------------------------------------------------|

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|                                                                |   | Year Ended December 31, 2009 |    |   | Year Ended December 31, 2008 |   |   | Year Ended December 31, 2007 |   |
|---------------------------------------------------------------------|--------|------------------------------|---------|--------|------------------------------|--------|--------|------------------------------|--------|
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   | Average                      |    |   |                         |   |   |                         |   |   | Average |   |   |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |
| (dollars in thousands)                                              |   | Balance                      |    |   | Interest                     |   |   | Yield                        |   |   | Balance |   |   | Interest |   |   | Yield |   |   | Balance |   |   | Interest |   |   | Yield |   |
| ASSETS                                                              |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                         |   | $                            | 338,822 |   |                         | $      | 19,444 |                         |   |   | 5.74 | % |   | $ | 300,162 |   |   | $ | 18,272 |   |   |   | 6.09 | % |   | $ | 253,573 |   |   | $ | 16,350 |   |   |   | 6.45 | % |
| Investment securities - taxable                                     |   |                         | 59,044  |   |                         |   | 2,590  |                         |   |   | 4.39 | % |   |   | 48,763 |   |   |   | 2,346 |   |   |   | 4.81 | % |   |   | 47,514 |   |   |   | 2,305 |   |   |   | 4.85 | % |
| Investment securities - non-taxable (1)                             |   |                         | 11,303  |   |                         |   | 452    |                         |   |   | 6.03 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Federal funds sold                                                  |   |                         | 11,606  |   |                         |   | 30     |                         |   |   | 0.26 | % |   |   | 1,807 |   |   |   | 29 |   |   |   | 1.60 | % |   |   | 2,905 |   |   |   | 149 |   |   |   | 5.13 | % |
| Time deposits                                                       |   |                         | 10,002  |   |                         |   | 232    |                         |   |   | 2.32 | % |   |   | 311 |   |   |   | 12 |   |   |   | 3.86 | % |   |   | - |   |   |   | - |   |   |   | 0.00 | % |
| Interest bearing deposits with banks                                |   |                         | 4,713   |   |                         |   | 7      |                         |   |   | 0.15 | % |   |   | 502 |   |   |   | 5 |   |   |   | 1.00 | % |   |   | 105 |   |   |   | 5 |   |   |   | 4.76 | % |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST EARNING ASSETS                                       |   |                         | 435,490 |   |                         |   | 22,755 |                         |   |   | 5.23 | % |   |   | 351,545 |   |   |   | 20,664 |   |   |   | 5.88 | % |   |   | 304,097 |   |   |   | 18,809 |   |   |   | 6.19 | % |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less allowance for loan losses                                      |   |                         | (3,251  | )      |                         |   |   |                         |   |   |   |   |   |   | (2,706 | ) |   |   |   |   |   |   |   |   |   |   | (2,489 | ) |   |   |   |   |   |   |   |   |
| Other assets                                                        |   |                         | 12,871  |   |                         |   |   |                         |   |   |   |   |   |   | 8,921 |   |   |   |   |   |   |   |   |   |   |   | 7,719 |   |   |   |   |   |   |   |   |   |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                        |   | $                            | 445,110 |   |                         |   |   |                         |   |   |   |   |   | $ | 357,760 |   |   |   |   |   |   |   |   |   |   | $ | 309,327 |   |   |   |   |   |   |   |   |   |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand deposits, NOW and money market              |   | $                            | 34,229  |   |                         | $      | 349    |                         |   |   | 1.02 | % |   | $ | 36,299 |   |   | $ | 712 |   |   |   | 1.96 | % |   | $ | 55,596 |   |   | $ | 1,707 |   |   |   | 3.07 | % |
| Savings                                                             |   |                         | 159,544 |   |                         |   | 2,721  |                         |   |   | 1.71 | % |   |   | 73,833 |   |   |   | 2,229 |   |   |   | 3.02 | % |   |   | 18,146 |   |   |   | 639 |   |   |   | 3.52 | % |
| Certificates of deposit                                             |   |                         | 144,695 |   |                         |   | 4,549  |                         |   |   | 3.14 | % |   |   | 152,557 |   |   |   | 6,374 |   |   |   | 4.18 | % |   |   | 161,550 |   |   |   | 8,029 |   |   |   | 4.97 | % |
| Securities sold under agreements to repurchase and other borrowings |   |                         | 50,674  |   |                         |   | 1,609  |                         |   |   | 3.18 | % |   |   | 47,807 |   |   |   | 1,745 |   |   |   | 3.65 | % |   |   | 30,454 |   |   |   | 1,388 |   |   |   | 4.56 | % |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL INTEREST BEARING LIABILITIES                                  |   |                         | 389,142 |   |                         |   | 9,228  |                         |   |   | 2.37 | % |   |   | 310,496 |   |   |   | 11,060 |   |   |   | 3.56 | % |   |   | 265,746 |   |   |   | 11,763 |   |   |   | 4.43 | % |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing demand deposits                                |   |                         | 19,284  |   |                         |   |   |                         |   |   |   |   |   |   | 15,102 |   |   |   |   |   |   |   |   |   |   |   | 14,465 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                   |   |                         | 3,555   |   |                         |   |   |                         |   |   |   |   |   |   | 3,720 |   |   |   |   |   |   |   |   |   |   |   | 3,653 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                |   |                         | 33,129  |   |                         |   |   |                         |   |   |   |   |   |   | 28,442 |   |   |   |   |   |   |   |   |   |   |   | 25,463 |   |   |   |   |   |   |   |   |   |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          |   | $                            | 445,110 |   |                         |   |   |                         |   |   |   |   |   | $ | 357,760 |   |   |   |   |   |   |   |   |   |   | $ | 309,327 |   |   |   |   |   |   |   |   |   |
|                                                                |   |                         |    |   |                         |   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                 |   |                         |    |   |                         | $      | 13,527 |                         |   |   |   |   |   |   |   |   |   | $ | 9,604 |   |   |   |   |   |   |   |   |   |   | $ | 7,046 |   |   |   |   |   |
| Net interest spread                                                 |   |                         |    |   |                         |   |   |                         |   |   | 2.86 | % |   |   |   |   |   |   |   |   |   |   | 2.32 | % |   |   |   |   |   |   |   |   |   |   | 1.76 | % |
| Net interest margin                                                 |   |                         |    |   |                         |   |   |                         |   |   | 3.11 | % |   |   |   |   |   |   |   |   |   |   | 2.73 | % |   |   |   |   |   |   |   |   |   |   | 2.32 | % |

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|                                                                |   | 2009 vs. 2008                          |   |   | 2008 vs. 2007                          |   |
|---------------------------------------------------------------------|--------|----------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                |   | Increase (decrease) due to changes in: |   |   | Increase (decrease) due to changes in: |   |
|                                                                |   | (DollarsIn Thousands)                  |   |
|                                                                |   | Volume                                 |   |   | Rate                                   |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
| Interest-earning assets:                                            |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                                         |   | $                                      | 2,353  |   |                                   | $      | (1,181 | ) |   | $ | 1,172 |   |   | $ | 3,004 |   |   | $ | (1,082 | ) |   | $ | 1,922 |   |
| Investment securities - taxable                                     |   |                                   | 495    |   |                                   |   | (252 | ) |   |   | 243 |   |   |   | 61 |   |   |   | (20 | ) |   |   | 41 |   |
| Investment securities - non-taxable                                 |   |                                   | 452    |   |                                   |   | - |   |   |   | 452 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Federal funds sold                                                  |   |                                   | 157    |   |                                   |   | (156 | ) |   |   | 1 |   |   |   | (56 | ) |   |   | (64 | ) |   |   | (120 | ) |
| Time Deposits                                                       |   |                                   | 374    |   |                                   |   | (154 | ) |   |   | 220 |   |   |   | - |   |   |   | 12 |   |   |   | 12 |   |
| Interest bearing deposits with banks                                |   |                                   | 42     |   |                                   |   | (39 | ) |   |   | 3 |   |   |   | 19 |   |   |   | (19 | ) |   |   | - |   |
| Total net change in income on interest-earning assets               |   |                                   | 3,873  |   |                                   |   | (1,782 | ) |   |   | 2,091 |   |   |   | 3,028 |   |   |   | (1,173 | ) |   |   | 1,855 |   |
|                                                                |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                       |   |                                   |   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand deposits and money markets                  |   |                                   | (41    | )      |                                   |   | (322 | ) |   |   | (363 | ) |   |   | (592 | ) |   |   | (403 | ) |   |   | (995 | ) |
| Savings                                                             |   |                                   | 2,588  |   |                                   |   | (2,096 | ) |   |   | 492 |   |   |   | 1,961 |   |   |   | (371 | ) |   |   | 1,590 |   |
| Certificates of deposit                                             |   |                                   | (328   | )      |                                   |   | (1,497 | ) |   |   | (1,825 | ) |   |   | (447 | ) |   |   | (1,208 | ) |   |   | (1,655 | ) |
| Total deposits                                                      |   |                                   | 2,219  |   |                                   |   | (3,915 | ) |   |   | (1,696 | ) |   |   | 922 |   |   |   | (1,982 | ) |   |   | (1,060 | ) |
| Securities sold under agreements to repurchase and other borrowings |   |                                   | 105    |   |                                   |   | (241 | ) |   |   | (136 | ) |   |   | 791 |   |   |   | (434 | ) |   |   | 357 |   |
| Total net change in expense on interest-bearing liabilities         |   |                                   | 2,324  |   |                                   |   | (4,156 | ) |   |   | (1,832 | ) |   |   | 1,713 |   |   |   | (2,416 | ) |   |   | (703 | ) |
| Change in net interest income                                       |   | $                                      | 1,549  |   |                                   | $      | 2,374 |   |   | $ | 3,923 |   |   | $ | 1,315 |   |   | $ | 1,243 |   |   | $ | 2,558 |   |

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|                                     |   | 2009                   |   |   | 2008   |   |   | 2007   |   |   | 2006   |   |   | 2005   |   |
|------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                     |   | (Dollars In Thousands) |   |
| U.S. Treasury and agency obligations     |   | $                      | 17,083 |   |   | $      | 11,697 |   |   | $      | 11,146 |   |   | $      | 10,767 |   |   | $ | 10,766 |   |
| Mortgage-backed securities - residential |   |                   | 23,119 |   |   |   | 37,108 |   |   |   | 34,494 |   |   |   | 28,510 |   |   |   | 27,760 |   |
| Municipal securities                     |   |                   | 28,574 |   |   |   | 5,446  |   |   |   | 3,856  |   |   |   | 3,820  |   |   |   | 3,781 |   |
| Corporate bonds                          |   |                   | 4,019  |   |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Total Securities Available for Sale      |   | $                      | 72,795 |   |   | $      | 54,251 |   |   | $      | 49,496 |   |   | $      | 43,097 |   |   | $ | 42,307 |   |

| Securities by Maturities                 |   |
|------------------------------------------|--------|
| (Amortized Cost)                         |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   | 1 year or Less |   |   | 1-5 Years |   |   | 5-10 Years |   |   | Over 10 Years |   |   | Total |   |
|                                     |   |   |   |   | Average |   |   |   |   |   | Average |   |   |   |   |   | Average |   |   |   |   |   | Average |   |   |   |   |   | Average |   |
|                                     |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
|                                     |   | (Dollars In Thousands) |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agency obligations       |   | $ | 7,992 |   |   |   | 4.37 | % |   | $ | 6,015 |   |   |   | 2.79 | % |   | $ | 993 |   |   |   | 4.70 | % |   | $ | 1,583 |   |   |   | 3.40 | % |   | $ | 16,583 |   |   |   | 3.72 | % |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal securities                     |   | $ | 1,001 |   |   |   | 4.73 | % |   | $ | 4,690 |   |   |   | 4.53 | % |   | $ | 3,574 |   |   |   | 5.22 | % |   | $ | 18,892 |   |   |   | 6.06 | % |   | $ | 28,157 |   |   |   | 5.65 | % |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                          |   | $ | - |   |   |   | - |   |   | $ | 3,787 |   |   |   | 5.59 | % |   | $ | - |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | 3,787 |   |   |   | 5.59 | % |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities - residential |   | $ | 279 |   |   |   | 4.05 | % |   | $ | 21,392 |   |   |   | 4.86 | % |   | $ | 499 |   |   |   | 4.89 | % |   | $ | - |   |   |   | 0.00 | % |   | $ | 22,170 |   |   |   | 4.85 | % |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Debt Securities                    |   | $ | 9,272 |   |   |   | 4.40 | % |   | $ | 35,884 |   |   |   | 4.54 | % |   | $ | 5,066 |   |   |   | 5.08 | % |   | $ | 20,475 |   |   |   | 5.85 | % |   | $ | 70,697 |   |   |   | 4.94 | % |

----

Table of Contents 

|                       |   | December 31, 2009      |    |   | December 31, 2008 |   |   | December 31, 2007 |   |
|----------------------------|--------|------------------------|---------|--------|-------------------|--------|--------|-------------------|--------|
|                       |   |                   |    |   | Percentage of     |   |   |              |   |   | Percentage of |   |   |   |   |   | Percentage of |   |
|                       |   | Balance                |    |   | total Loans       |   |   | Balance           |   |   | total Loans |   |   | Balance |   |   | total Loans |   |
|                       |   | (Dollars In Thousands) |    |
| Commercial real estate     |   | $                      | 150,439 |   |              |   | 43.00  | %                 |   | $ | 148,881 |   |   |   | 46.62 | % |   | $ | 125,021 |   |   |   | 45.21 | % |
| Commercial construction    |   |                   | 12,292  |   |              |   | 3.51   | %                 |   |   | 6,886 |   |   |   | 2.16 | % |   |   | 2,969 |   |   |   | 1.07 | % |
| Commercial                 |   |                   | 25,796  |   |              |   | 7.37   | %                 |   |   | 24,096 |   |   |   | 7.55 | % |   |   | 22,583 |   |   |   | 8.17 | % |
| Home equity                |   |                   | 159,180 |   |              |   | 45.50  | %                 |   |   | 136,739 |   |   |   | 42.82 | % |   |   | 123,774 |   |   |   | 44.75 | % |
| Consumer                   |   |                   | 2,160   |   |              |   | 0.62   | %                 |   |   | 2,726 |   |   |   | 0.85 | % |   |   | 2,216 |   |   |   | 0.80 | % |
|                       |   |                   |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross loans                |   |                   | 349,867 |   |              |   | 100.00 | %                 |   |   | 319,328 |   |   |   | 100.00 | % |   |   | 276,563 |   |   |   | 100.00 | % |
| Unearned origination costs |   |                   | 51      |   |              |   |   |              |   |   | 252 |   |   |   |   |   |   |   | 253 |   |   |   |   |   |
|                       |   |                   |    |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   | $                      | 349,918 |   |              |   |   |              |   | $ | 319,580 |   |   |   |   |   |   | $ | 276,816 |   |   |   |   |   |

|                       |   | December 31, 2006      |    |   | December 31, 2005 |   |
|----------------------------|--------|------------------------|---------|--------|-------------------|--------|
|                       |   |                   |    |   | Percentage of     |   |   |   |   |   | Percentage of |   |
|                       |   | Balance                |    |   | total Loans       |   |   | Balance |   |   | total Loans |   |
|                       |   | (Dollars In Thousands) |    |
| Commercial real estate     |   | $                      | 101,737 |   |              |   | 43.21 | % |   | $ | 77,854 |   |   |   | 43.46 | % |
| Commercial construction    |   |                   | 6,183   |   |              |   | 2.63 | % |   |   | 2,626 |   |   |   | 1.47 | % |
| Commercial                 |   |                   | 21,578  |   |              |   | 9.17 | % |   |   | 16,906 |   |   |   | 9.44 | % |
| Home equity                |   |                   | 103,895 |   |              |   | 44.14 | % |   |   | 80,726 |   |   |   | 45.07 | % |
| Consumer                   |   |                   | 2,006   |   |              |   | 0.85 | % |   |   | 1,003 |   |   |   | 0.56 | % |
|                       |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Gross loans                |   |                   | 235,399 |   |              |   | 100.00 | % |   |   | 179,115 |   |   |   | 100.00 | % |
| Unearned origination costs |   |                   | 194     |   |              |   |   |   |   |   | 207 |   |   |   |   |   |
|                       |   |                   |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                       |   | $                      | 235,593 |   |              |   |   |   |   | $ | 179,322 |   |   |   |   |   |

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Table of Contents 

|                    |   | One year or            |   |   | After One Year     |   |   | After Five |   |   |   |   |
|-------------------------|--------|------------------------|--------|--------|--------------------|--------|--------|------------|--------|--------|--------|--------|
|                    |   | Less                   |   |   | Through Five Years |   |   | Years      |   |   | Total  |   |
|                    |   | (Dollars In Thousands) |   |
| Commercial real estate  |   | $                      | 35,340 |   |               | $      | 81,032 |       |   | $      | 34,067 |   |   | $ | 150,439 |   |
| Commercial construction |   |                   | 9,667  |   |               |   | 2,625  |       |   |   | -      |   |   |   | 12,292 |   |
| Commercial              |   |                   | 12,511 |   |               |   | 12,548 |       |   |   | 737    |   |   |   | 25,796 |   |
|                    |   |                   |   |   |               |   |   |       |   |   |   |   |   |   |   |   |
|                    |   | $                      | 57,518 |   |               | $      | 96,205 |       |   | $      | 34,804 |   |   | $ | 188,527 |   |
|                    |   |                   |   |   |               |   |   |       |   |   |   |   |   |   |   |   |
| Fixed Rates             |   | $                      | 16,448 |   |               | $      | 91,126 |       |   | $      | 34,723 |   |   | $ | 142,297 |   |
| Variable Rates          |   |                   | 41,070 |   |               |   | 5,079  |       |   |   | 81     |   |   |   | 46,230 |   |
|                    |   |                   |   |   |               |   |   |       |   |   |   |   |   |   |   |   |
|                    |   | $                      | 57,518 |   |               | $      | 96,205 |       |   | $      | 34,804 |   |   | $ | 188,527 |   |

----

Table of Contents 

|                                                         |   | December 31,           |    |
|--------------------------------------------------------------|--------|------------------------|---------|
|                                                         |   | 2009                   |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                         |   | (Dollars In Thousands) |    |
| Loans receivable at end of year                              |   | $                      | 349,918 |   |   | $ | 319,580 |   |   | $ | 276,816 |   |   | $ | 235,593 |   |   | $ | 179,322 |   |
|                                                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses:                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning                                           |   | $                      | 2,932   |   |   | $ | 2,503 |   |   | $ | 2,426 |   |   | $ | 1,782 |   |   | $ | 1,198 |   |
| Provision for loan losses                                    |   |                   | 702     |   |   |   | 429 |   |   |   | 390 |   |   |   | 644 |   |   |   | 584 |   |
| Commercial loans charged off                                 |   |                   | (36     | ) |   |   | - |   |   |   | (313 | ) |   |   | - |   |   |   | - |   |
| Recoveries                                                   |   |                   | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance at end of year                                       |   | $                      | 3,598   |   |   | $ | 2,932 |   |   | $ | 2,503 |   |   | $ | 2,426 |   |   | $ | 1,782 |   |
|                                                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses to loans receivable at end of year |   |                   | 1.03    | % |   |   | 0.92 | % |   |   | 0.90 | % |   |   | 1.03 | % |   |   | 0.99 | % |

| Allocation of the Allowance for Loan Losses |   |                   |   |   |       |   |   |     |   |   |       |   |   |     |   |   |       |   |   |     |   |   |
|---------------------------------------------|--------|------------------------|--------|--------|------------|--------|--------|----------|--------|--------|------------|--------|--------|----------|--------|--------|------------|--------|--------|----------|--------|--------|
|                                        |   |                   |   |   |       |   |   |     |   |   |       |   |   |     |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |
|                                        |   | December               |   |   | % of Gross |   |   | December |   |   | % of Gross |   |   | December |   |   | % of Gross |   |   | December |   |   | % of Gross |   |   | December |   |   | % of Gross |   |
|                                        |   | 2009                   |   |   | Loans      |   |   | 2008     |   |   | Loans      |   |   | 2007     |   |   | Loans      |   |   | 2006     |   |   | Loans |   |   | 2005 |   |   | Loans |   |
|                                        |   | (Dollars In Thousands) |   |
| Commercial real estate                      |   | $                      | 1,654  |   |       |   | 38.41  | %        |   | $      | 1,563      |   |   |     | 41.53  | %      |       | $      | 1,257  |     |   |   | 40.29 | % |   | $ | 1,041 |   |   |   | 38.35 | % |   | $ | 713 |   |   |   | 43.46 | % |
| Commercial construction                     |   |                   | 207    |   |       |   | 3.51   | %        |   |   | 101        |   |   |     | 2.15   | %      |       |   | 47     |     |   |   | 1.07 | % |   |   | 91 |   |   |   | 2.59 | % |   |   | 60 |   |   |   | 1.47 | % |
| Commercial                                  |   |                   | 679    |   |       |   | 11.96  | %        |   |   | 639        |   |   |     | 12.60  | %      |       |   | 623    |     |   |   | 13.03 | % |   |   | 806 |   |   |   | 14.04 | % |   |   | 611 |   |   |   | 9.44 | % |
| Home equity                                 |   |                   | 1,005  |   |       |   | 45.21  | %        |   |   | 595        |   |   |     | 42.79  | %      |       |   | 530    |     |   |   | 44.33 | % |   |   | 461 |   |   |   | 44.15 | % |   |   | 382 |   |   |   | 45.07 | % |
| Consumer                                    |   |                   | 53     |   |       |   | 0.91   | %        |   |   | 34         |   |   |     | 0.93   | %      |       |   | 46     |     |   |   | 1.28 | % |   |   | 27 |   |   |   | 0.85 | % |   |   | 16 |   |   |   | 0.56 | % |
|                                        |   |                   |   |   |       |   |   |     |   |   |       |   |   |     |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Allowance for Loan Losses             |   | $                      | 3,598  |   |       |   | 100.00 | %        |   | $      | 2,932      |   |   |     | 100.00 | %      |       | $      | 2,503  |     |   |   | 100.00 | % |   | $ | 2,426 |   |   |   | 100.00 | % |   | $ | 1,782 |   |   |   | 100.00 | % |

----

Table of Contents 

|                                      |   | December 31, 2009      |    |   | December 31, 2008 |   |    | December 31, 2007 |   |
|-------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|-------------------|--------|
|                                      |   | (Dollars In Thousands) |    |
| Demand, non-interest bearing              |   | $                      | 25,785  |   |              | $      | 16,194  |              |   | $ | 15,150 |   |
| Demand and money market, interest bearing |   |                   | 32,987  |   |              |   | 31,437  |              |   |   | 46,095 |   |
| Savings                                   |   |                   | 201,727 |   |              |   | 103,863 |              |   |   | 37,489 |   |
| Time, $100 and over                       |   |                   | 54,821  |   |              |   | 65,344  |              |   |   | 59,421 |   |
| Time, other                               |   |                   | 65,964  |   |              |   | 90,732  |              |   |   | 108,486 |   |
|                                      |   |                   |    |   |              |   |    |              |   |   |   |   |
| Total deposits                            |   | $                      | 381,284 |   |              | $      | 307,570 |              |   | $ | 266,641 |   |

|                                      |   | Years Ended December 31, |    |
|-------------------------------------------|--------|--------------------------|---------|
|                                      |   | 2009                     |    |   | 2008 |   |   | 2007 |   |
|                                      |   | Average                  |    |   | Average |   |   | Average |   |   | Average |   |   | Average |   |   | Average |   |
|                                      |   | Amount                   |    |   | Rate |   |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
|                                      |   | (Dollars In Thousands)   |    |
| Demand and money market, interest bearing |   | $                        | 34,229  |   |   |   | 1.02 | % |   | $ | 36,299 |   |   |   | 1.96 | % |   | $ | 55,596 |   |   |   | 3.07 | % |
| Savings                                   |   |                     | 159,544 |   |   |   | 1.71 | % |   |   | 73,833 |   |   |   | 3.02 | % |   |   | 18,146 |   |   |   | 3.52 | % |
| Certificates of deposit                   |   |                     | 144,695 |   |   |   | 3.14 | % |   |   | 152,557 |   |   |   | 4.18 | % |   |   | 161,550 |   |   |   | 4.97 | % |
| Total interest bearing deposits           |   |                     | 338,468 |   |   |   | 2.25 | % |   |   | 262,689 |   |   |   | 3.55 | % |   |   | 235,292 |   |   |   | 4.41 | % |
| Non-interest bearing demand deposits      |   |                     | 19,284  |   |   |   |   |   |   |   | 15,102 |   |   |   |   |   |   |   | 14,465 |   |   |   |   |   |
| Total                                     |   | $                        | 357,752 |   |   |   |   |   |   | $ | 277,791 |   |   |   |   |   |   | $ | 249,757 |   |   |   |   |   |

|                     |   | December 31, 2009 |   |
|--------------------------|--------|------------------------|--------|
|                     |   | (Dollars In Thousands) |   |
| 3 months or less         |   | $                      | 25,607 |   |
| Over 3 through 6 months  |   |                   | 7,640  |   |
| Over 6 through 12 months |   |                   | 11,787 |   |
| Over 12 months           |   |                   | 9,787  |   |
|                     |   |                   |   |   |
| Total                    |   | $                      | 54,821 |   |

----

Table of Contents 

|                 |   | Less Than      |   |   | 1-3    |   |   | 4-5    |   |   | Over 5 |   |   |   |   |
|----------------------|--------|----------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                 |   | 1 Year         |   |   | Years  |   |   | Years  |   |   | Years  |   |   | Total  |   |
|                 |   | (In Thousands) |   |
| Time deposits        |   | $              | 89,686 |   |   | $      | 27,821 |   |   | $      | 3,278  |   |   | $      | -      |   |   | $ | 120,785 |   |
| Long-term borrowings |   | $              | 2,000  |   |   | $      | 1,480  |   |   | $      | 7,886  |   |   | $      | 5,650  |   |   | $ | 17,016 |   |
| Operating Leases     |   |           | 884    |   |   |   | 1,934  |   |   |   | 1,534  |   |   |   | 3,875  |   |   |   | 8,227 |   |
|                 |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                |   | $              | 92,570 |   |   | $      | 31,235 |   |   | $      | 12,698 |   |   | $      | 9,525  |   |   | $ | 146,028 |   |

----

Table of Contents 

|                                                    |   | December 31, 2009      |   |   | December 31, 2008 |   |
|---------------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                                    |   | (Dollars In Thousands) |   |
| Tier I, common stockholders' equity                     |   | $                      | 37,464 |   |              | $      | 30,705 |   |
| Tier II, allowable portion of allowance for loan losses |   |                   | 3,598  |   |              |   | 2,932 |   |
|                                                    |   |                   |   |   |              |   |   |   |
| Total capital                                           |   | $                      | 41,062 |   |              | $      | 33,637 |   |
|                                                    |   |                   |   |   |              |   |   |   |
| Tier I risk based capital ratio                         |   |                   | 11.7   | %      |              |   | 10.7 | % |
|                                                    |   |                   |   |   |              |   |   |   |
| Total risk based capital ratio                          |   |                   | 12.8   | %      |              |   | 11.7 | % |
|                                                    |   |                   |   |   |              |   |   |   |
| Tier I leverage ratio                                   |   |                   | 8.1    | %      |              |   | 8.1 | % |

| Note: | Unrealized gains on securities available for sale are excluded from regulatory capital components of risk-based capital and leverage ratios. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents 

|                                              |   | 0-3            |     |   | 4-12   |   |     | 1-3    |   |   | 4-5     |   |   | Over 5 |    |   |   |   |
|---------------------------------------------------|--------|----------------|----------|--------|--------|--------|----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|
|                                              |   | Months         |     |   | Months |   |     | Years  |   |   | Years   |   |   | Years  |    |   | Total  |   |
|                                              |   | (In Thousands) |     |
| Interest-earning assets                           |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |
| Federal funds sold and interest-bearing deposits  |   | $              | 33,080   |   |   | $      | -        |   |   | $      | -       |   |   | $      | -       |   |   | $      | - |   |   | $ | 33,080 |   |
| Investment securities                             |   |           | 4,184    |   |   |   | 15,974   |   |   |   | 17,382  |   |   |   | 8,289   |   |   |   | 29,075 |   |   |   | 74,904 |   |
| Loans, gross                                      |   |           | 69,902   |   |   |   | 59,994   |   |   |   | 100,709 |   |   |   | 61,357  |   |   |   | 57,956 |   |   |   | 349,918 |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Total interest-earning assets                     |   |           | 107,166  |   |   |   | 75,968   |   |   |   | 118,091 |   |   |   | 69,646  |   |   |   | 87,031 |   |   |   | 457,902 |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities                      |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| NOW and money market accounts                     |   |           | 32,987   |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |   |   | - |   |   |   | 32,987 |   |
| Savings                                           |   |           | 201,727  |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |   |   | - |   |   |   | 201,727 |   |
| Certificates of deposit                           |   |           | 39,686   |   |   |   | 50,000   |   |   |   | 27,821  |   |   |   | 3,278   |   |   |   | - |   |   |   | 120,785 |   |
| Other Borrowed Funds                              |   |           | 2,000    |   |   |   | -        |   |   |   | 1,480   |   |   |   | 13,536  |   |   |   | - |   |   |   | 17,016 |   |
| Repurchase agreements and federal funds purchased |   |           | 30,964   |   |   |   | -        |   |   |   | -       |   |   |   | -       |   |   |   | - |   |   |   | 30,964 |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Total interest-bearing liabilities                |   |           | 307,364  |   |   |   | 50,000   |   |   |   | 29,301  |   |   |   | 16,814  |   |   |   | - |   |   |   | 403,479 |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| GAP                                               |   | $              | (200,198 | )      |   | $      | 25,968   |   |   | $      | 88,790  |   |   | $      | 52,832  |   |   | $      | 87,031 |   |   | $ | 54,423 |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| CUMULATIVE GAP                                    |   | $              | (200,198 | )      |   | $      | (174,230 | )      |   | $      | (85,440 | )      |   | $      | (32,608 | )      |   | $      | 54,423 |   |   |   |   |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| GAP TO INTEREST EARNING ASSETS                    |   |           | -43.72   | %      |   |   | 5.67     | %      |   |   | 19.39   | %      |   |   | 11.54   | %      |   |   | 19.01 | % |   |   |   |   |
|                                              |   |           |     |   |   |   |     |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| CUMULATIVE GAP TO INTEREST EARNING ASSETS         |   |           | -43.72   | %      |   |   | -38.05   | %      |   |   | -18.66  | %      |   |   | -7.12   | %      |   |   | 11.89 | % |   |   |   |   |

|                     |   | Percentage Change      |
|--------------------------|--------|------------------------|
| Change in Interest Rates |   | in Net Interest Income |
|                     |   |                   |
| Down 100 basis points    |   | -0.2%                  |
| Down 200 basis points    |   | -4.8%                  |
|                     |   |                   |
| Up 100 basis points      |   | -6.5%                  |
| Up 200 basis points      |   | -12.8%                 |

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Item 

Item 

|                                                    | Page Number |
|---------------------------------------------------------|-------------|
|                                                    |        |
| Report of Independent Registered Public Accounting Firm | 34          |
| Consolidated Balance Sheets                             | 35          |
| Consolidated Statements of Income                       | 36          |
| Consolidated Statements of Stockholders’ Equity   | 37          |
| Consolidated Statements of Cash Flows                   | 38          |
| Notes to Financial Statements                           | 39          |

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|                                                                                 |   | December 31,                                    |    |
|--------------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
| ASSETS                                                                               |   | 2009                                            |    |   | 2008 |   |
|                                                                                 |   | (In Thousands, Except Share and Per Share Data) |    |
| Cash and due from banks                                                              |   | $                                               | 4,108   |   |   | $ | 8,459 |   |
| Interest bearing demand deposit with banks                                           |   |                                            | 13,981  |   |   |   | 20 |   |
| Federal funds sold                                                                   |   |                                            | 8,375   |   |   |   | 3,575 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Cash and Cash Equivalents                                                            |   |                                            | 26,464  |   |   |   | 12,054 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Interest bearing time deposits                                                       |   |                                            | 10,724  |   |   |   | 1,694 |   |
| Securities available for sale                                                        |   |                                            | 72,795  |   |   |   | 54,251 |   |
| Restricted investment in bank stock                                                  |   |                                            | 2,109   |   |   |   | 2,075 |   |
| Loans receivable, net of allowance for loan losses of $3,598 in 2009; $2,932 in 2008 |   |                                            | 346,320 |   |   |   | 316,648 |   |
| Premises and equipment, net of depreciation                                          |   |                                            | 2,465   |   |   |   | 2,231 |   |
| Deferred income taxes                                                                |   |                                            | 199     |   |   |   | 335 |   |
| Accrued interest receivable                                                          |   |                                            | 1,615   |   |   |   | 1,197 |   |
| Other assets                                                                         |   |                                            | 2,498   |   |   |   | 598 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Total Assets                                                                         |   | $                                               | 465,189 |   |   | $ | 391,083 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                 |   |                                            |    |   |   |   |   |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Liabilities:                                                                         |   |                                            |    |   |   |   |   |   |
| Deposits:                                                                            |   |                                            |    |   |   |   |   |   |
| Non-interest bearing                                                                 |   | $                                               | 25,785  |   |   | $ | 16,194 |   |
| Interest bearing                                                                     |   |                                            | 355,499 |   |   |   | 291,376 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Total Deposits                                                                       |   |                                            | 381,284 |   |   |   | 307,570 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Securities sold under agreements to repurchase and federal funds purchased           |   |                                            | 30,964  |   |   |   | 26,019 |   |
| Long-term borrowings                                                                 |   |                                            | 17,016  |   |   |   | 23,162 |   |
| Accrued interest payable                                                             |   |                                            | 1,457   |   |   |   | 2,563 |   |
| Other liabilities                                                                    |   |                                            | 791     |   |   |   | 1,398 |   |
| Total Liabilities                                                                    |   |                                            | 431,512 |   |   |   | 360,712 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Stockholders' Equity:                                                                |   |                                            |    |   |   |   |   |   |
| Common stock, $1 par value; authorized 20,000,000 shares;                            |   |                                            |    |   |   |   |   |   |
| 2009 issued 6,940,663 shares; outstanding 6,940,310 shares;                          |   |                                            |    |   |   |   |   |   |
| 2008 issued 6,890,742 shares; outstanding 6,890,389 shares                           |   |                                            | 6,941   |   |   |   | 6,891 |   |
| Surplus                                                                              |   |                                            | 22,900  |   |   |   | 22,787 |   |
| Accumulated earnings (deficit)                                                       |   |                                            | 2,455   |   |   |   | (278 | ) |
| Accumulated other comprehensive income                                               |   |                                            | 1,384   |   |   |   | 974 |   |
| Treasury stock, at cost, 353 shares                                                  |   |                                            | (3      | ) |   |   | (3 | ) |
| Total Stockholders' Equity                                                           |   |                                            | 33,677  |   |   |   | 30,371 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                           |   | $                                               | 465,189 |   |   | $ | 391,083 |   |

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|                                                                       |   | Years Ended December 31,              |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                       |   | 2009                                  |   |   | 2008 |   |
|                                                                       |   | (In Thousands, Except per Share Data) |   |
| INTEREST INCOME                                                            |   |                                  |   |   |   |   |
|                                                                       |   |                                  |   |   |   |   |
| Loans receivable, including fees                                           |   | $                                     | 19,444 |   |   | $ | 18,272 |   |
| Securities                                                                 |   |                                  | 3,042  |   |   |   | 2,346 |   |
| Federal funds sold                                                         |   |                                  | 30     |   |   |   | 29 |   |
| Interest on time deposits                                                  |   |                                  | 232    |   |   |   | 12 |   |
| Other                                                                      |   |                                  | 7      |   |   |   | 5 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Total Interest Income                                                      |   |                                  | 22,755 |   |   |   | 20,664 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| INTEREST EXPENSE                                                           |   |                                  |   |   |   |   |   |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Deposits                                                                   |   |                                  | 7,619  |   |   |   | 9,315 |   |
| Securities sold under agreements to repurchase and federal funds purchased |   |                                  | 525    |   |   |   | 663 |   |
| Short-term borrowings                                                      |   |                                  | 17     |   |   |   | 410 |   |
| Long-term borrowings                                                       |   |                                  | 1,067  |   |   |   | 672 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Total Interest Expense                                                     |   |                                  | 9,228  |   |   |   | 11,060 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Net Interest Income                                                        |   |                                  | 13,527 |   |   |   | 9,604 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| PROVISION FOR LOAN LOSSES                                                  |   |                                  | 702    |   |   |   | 429 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Net Interest Income after Provision for Loan Losses                        |   |                                  | 12,825 |   |   |   | 9,175 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| OTHER INCOME                                                               |   |                                  |   |   |   |   |   |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Credit card processing fees                                                |   |                                  | 560    |   |   |   | 381 |   |
| Gain on sales of investment securities, net                                |   |                                  | 174    |   |   |   | - |   |
| Other service fees                                                         |   |                                  | 312    |   |   |   | 280 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Total Other Income                                                         |   |                                  | 1,046  |   |   |   | 661 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| OTHER EXPENSES                                                             |   |                                  |   |   |   |   |   |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Salaries and employee benefits                                             |   |                                  | 4,295  |   |   |   | 3,792 |   |
| Occupancy and equipment                                                    |   |                                  | 1,607  |   |   |   | 1,268 |   |
| Data processing                                                            |   |                                  | 711    |   |   |   | 642 |   |
| Credit card processing                                                     |   |                                  | 520    |   |   |   | 366 |   |
| Advertising and promotion                                                  |   |                                  | 512    |   |   |   | 501 |   |
| Professional fees                                                          |   |                                  | 372    |   |   |   | 315 |   |
| FDIC insurance                                                             |   |                                  | 690    |   |   |   | 159 |   |
| Insurance                                                                  |   |                                  | 83     |   |   |   | 66 |   |
| Loan department                                                            |   |                                  | 132    |   |   |   | 80 |   |
| Charitable contributions                                                   |   |                                  | 239    |   |   |   | 236 |   |
| Other                                                                      |   |                                  | 774    |   |   |   | 567 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Total Other Expenses                                                       |   |                                  | 9,935  |   |   |   | 7,992 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Income before Income Taxes                                                 |   |                                  | 3,936  |   |   |   | 1,844 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| INCOME TAX EXPENSE                                                         |   |                                  | 1,203  |   |   |   | 658 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| Net Income                                                                 |   | $                                     | 2,733  |   |   | $ | 1,186 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| BASIC EARNINGS PER SHARE                                                   |   | $                                     | 0.40   |   |   | $ | 0.17 |   |
|                                                                       |   |                                  |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE                                                 |   | $                                     | 0.38   |   |   | $ | 0.16 |   |

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|                                                                                      |   |                                            |   |   |    |   |   |        |   |   | Accumulated   |   |   |     |   |   |   |   |
|-------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|---------|--------|--------|-------------|--------|--------|---------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   | Other         |   |   |     |   |   |   |   |
|                                                                                      |   | Common                                          |   |   |    |   |   | Accumulated |   |   | Comprehensive |   |   | Treasury |   |   |   |   |
|                                                                                      |   | Stock                                           |   |   | Surplus |   |   | Deficit     |   |   | Loss          |   |   | Stock    |   |   | Total  |   |
|                                                                                      |   | (In Thousands, Except Share and Per Share Data) |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |
| BALANCE - DECEMBER 31, 2007                                                               |   | $                                               | 6,886  |   |    | $      | 22,775 |        |   | $      | (1,464        | )      |   | $        | 76     |   |   | $      | - |   |   | $ | 28,273 |   |
| Comprehensive income:                                                                     |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                |   |                                            | -      |   |    |   | -      |        |   |   | 1,186         |   |   |     | -      |   |   |   | - |   |   |   | 1,186 |   |
| Net change in unrealized gain on securities available for sale, net of income tax effects |   |                                            | -      |   |    |   | -      |        |   |   | -             |   |   |     | 898    |   |   |   | - |   |   |   | 898 |   |
| Total Comprehensive Income                                                                |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   | 2,084 |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Exercise of stock options, 4,827 shares                                                   |   |                                            | 5      |   |    |   | 12     |        |   |   | -             |   |   |     | -      |   |   |   | - |   |   |   | 17 |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Purchase treasury stock, 353 shares at $9.73 per share                                    |   |                                            |   |   |    |   |   |        |   |   | -             |   |   |     | -      |   |   |   | (3 | ) |   |   | (3 | ) |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| BALANCE - DECEMBER 31, 2008                                                               |   | $                                               | 6,891  |   |    | $      | 22,787 |        |   | $      | (278          | )      |   | $        | 974    |   |   | $      | (3 | ) |   | $ | 30,371 |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| BALANCE - DECEMBER 31, 2008                                                               |   | $                                               | 6,891  |   |    | $      | 22,787 |        |   | $      | (278          | )      |   | $        | 974    |   |   | $      | (3 | ) |   | $ | 30,371 |   |
| Comprehensive income:                                                                     |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                |   |                                            | -      |   |    |   | -      |        |   |   | 2,733         |   |   |     | -      |   |   |   | - |   |   |   | 2,733 |   |
| Net change in unrealized gain on securities available for sale, net of income tax effects |   |                                            | -      |   |    |   | -      |        |   |   | -             |   |   |     | 410    |   |   |   | - |   |   |   | 410 |   |
| Total Comprehensive Income                                                                |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   | 3,143 |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| Exercise of stock options, 49,921 shares                                                  |   |                                            | 50     |   |    |   | 113    |        |   |   | -             |   |   |     | -      |   |   |   | - |   |   |   | 163 |   |
|                                                                                      |   |                                            |   |   |    |   |   |        |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |
| BALANCE - DECEMBER 31, 2009                                                               |   | $                                               | 6,941  |   |    | $      | 22,900 |        |   | $      | 2,455         |   |   | $        | 1,384  |   |   | $      | (3 | ) |   | $ | 33,677 |   |

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|                                                                                        |   | Years Ended December 31, |    |
|---------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                        |   | 2009                     |    |   | 2008 |   |
|                                                                                        |   | (In Thousands)           |    |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                        |   |                     |    |   |   |   |
| Net income                                                                                  |   | $                        | 2,733   |   |   | $ | 1,186 |   |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |   |                     |    |   |   |   |   |   |
| Provision for loan losses                                                                   |   |                     | 702     |   |   |   | 429 |   |
| Amortization of deferred loan costs                                                         |   |                     | 138     |   |   |   | 171 |   |
| Depreciation and amortization                                                               |   |                     | 475     |   |   |   | 407 |   |
| Net amortization (accretion) of investment security premiums and discounts                  |   |                     | 55      |   |   |   | (42 | ) |
| Deferred income taxes                                                                       |   |                     | (75     | ) |   |   | 403 |   |
| Net realized gain on sale of securities available for sale                                  |   |                     | (174    | ) |   |   | - |   |
| Increase in accrued interest receivable                                                     |   |                     | (418    | ) |   |   | (59 | ) |
| Increase in other assets                                                                    |   |                     | (1,900  | ) |   |   | (62 | ) |
| Decrease in accrued interest payable                                                        |   |                     | (1,106  | ) |   |   | (1,554 | ) |
| (Decrease) increase in other liabilities                                                    |   |                     | (607    | ) |   |   | 865 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| Net Cash (Used in) Provided by Operating Activities                                         |   |                     | (177    | ) |   |   | 1,744 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                        |   |                     |    |   |   |   |   |   |
| Purchases of securities available for sale                                                  |   |                     | (32,634 | ) |   |   | (11,237 | ) |
| Maturities, calls and principal repayments of securities available for sale                 |   |                     | 11,582  |   |   |   | 7,886 |   |
| Proceeds from sales of securities available for sale                                        |   |                     | 3,248   |   |   |   | - |   |
| Net increase in loans                                                                       |   |                     | (30,512 | ) |   |   | (42,935 | ) |
| Increase in restricted investment in bank stock                                             |   |                     | (34     | ) |   |   | (566 | ) |
| Purchases of interest bearing time deposits                                                 |   |                     | (9,030  | ) |   |   | (1,694 | ) |
| Purchases of premises and equipment                                                         |   |                     | (709    | ) |   |   | (176 | ) |
|                                                                                        |   |                     |    |   |   |   |   |   |
| Net Cash Used in Investing Activities                                                       |   |                     | (58,089 | ) |   |   | (48,722 | ) |
|                                                                                        |   |                     |    |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                        |   |                     |    |   |   |   |   |   |
| Net increase in deposits                                                                    |   |                     | 73,714  |   |   |   | 40,929 |   |
| Net increase in securities sold under agreements to repurchase and federal funds purchased  |   |                     | 4,945   |   |   |   | 8,054 |   |
| Decrease in short-term borrowed funds                                                       |   |                     | -       |   |   |   | (6,093 | ) |
| Proceeds from long-term borrowed funds                                                      |   |                     | 4,250   |   |   |   | 12,766 |   |
| Repayment of long-term borrowed funds                                                       |   |                     | (10,396 | ) |   |   | - |   |
| Proceeds from the exercise of stock options                                                 |   |                     | 163     |   |   |   | 17 |   |
| Acquisition of treasury stock                                                               |   |                     | -       |   |   |   | (3 | ) |
|                                                                                        |   |                     |    |   |   |   |   |   |
| Net Cash Provided by Financing Activities                                                   |   |                     | 72,676  |   |   |   | 55,670 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                   |   |                     | 14,410  |   |   |   | 8,692 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - BEGINNING                                                       |   |                     | 12,054  |   |   |   | 3,362 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - ENDING                                                          |   | $                        | 26,464  |   |   | $ | 12,054 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| SUPPLEMENTARY CASH FLOWS INFORMATION                                                        |   |                     |    |   |   |   |   |   |
| Interest paid                                                                               |   | $                        | 10,334  |   |   | $ | 12,614 |   |
|                                                                                        |   |                     |    |   |   |   |   |   |
| Income taxes paid                                                                           |   | $                        | 1,533   |   |   | $ | 19 |   |

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|                                                      |   | 2009                                          |      |   | 2008   |   |
|-----------------------------------------------------------|--------|-----------------------------------------------|-----------|--------|--------|--------|
|                                                      |   | (Dollars In Thousands, Except Per Share Data) |      |
|                                                      |   |                                          |      |   |   |   |
|  Net income                                          |   | $                                             | 2,733     |   |   | $      | 1,186 |   |
|                                                      |   |                                          |      |   |   |   |   |   |
| Weighted average shares outstanding                       |   |                                          | 6,907,047 |   |   |   | 6,888,942 |   |
| Dilutive effect of potential common shares, stock options |   |                                          | 371,269   |   |   |   | 436,664 |   |
| Diluted weighted average common shares outstanding        |   |                                          | 7,278,316 |   |   |   | 7,325,606 |   |
| Basic earnings per share                                  |   | $                                             | 0.40      |   |   | $      | 0.17 |   |
| Diluted earnings per share                                |   | $                                             | 0.38      |   |   | $      | 0.16 |   |

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|                                                      |   | 2009           |   |   | 2008   |   |
|-----------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                      |   | (In Thousands) |   |
|                                                      |   |           |   |   |   |   |
| Unrealized holding gains on available for sale securities |   | $              | 447    |   |   | $      | 1,362 |   |
| Less: reclassification adjustment for realized gains      |   |           | 174    |   |   |   | - |   |
|                                                      |   |           | 621    |   |   |   | 1,362 |   |
| Tax effect                                                |   |           | (211   | )      |   |   | (464 | ) |
| Net unrealized gains                                      |   | $              | 410    |   |   | $      | 898 |   |

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|   | a. | The quoted price of the identical liability when traded as an asset. |
|--------|----|----------------------------------------------------------------------|

|   | b. | Quoted prices for similar liabilities or similar liabilities when traded as assets. |
|--------|----|-------------------------------------------------------------------------------------|

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|   | · | A reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | In the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | For purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents 

|                                     |   |           |   |   | Gross      |   |   | Gross      |   |   |   |   |
|------------------------------------------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                     |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                     |   | Cost           |   |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                     |   | (In Thousands) |   |
| December 31, 2009:                       |   |           |   |   |       |   |   |       |   |   |   |   |
| U.S. Government agencies                 |   | $              | 16,583 |   |       | $      | 500    |       |   | $      | -      |   |   | $ | 17,083 |   |
| Municipal bonds                          |   |           | 28,157 |   |       |   | 514    |       |   |   | (97    | )      |   |   | 28,574 |   |
| Mortgage-backed securities - residential |   |           | 22,170 |   |       |   | 949    |       |   |   | -      |   |   |   | 23,119 |   |
| Corporate bonds                          |   |           | 3,787  |   |       |   | 232    |       |   |   | -      |   |   |   | 4,019 |   |
| Total                                    |   | $              | 70,697 |   |       | $      | 2,195  |       |   | $      | (97    | )      |   | $ | 72,795 |   |
|                                     |   |           |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| December 31, 2008:                       |   |           |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| U.S. Government agencies                 |   | $              | 10,967 |   |       | $      | 730    |       |   | $      | -      |   |   | $ | 11,697 |   |
| Municipal bonds                          |   |           | 5,485  |   |       |   | 26     |       |   |   | (65    | )      |   |   | 5,446 |   |
| Mortgage-backed securities - residential |   |           | 36,322 |   |       |   | 800    |       |   |   | (14    | )      |   |   | 37,108 |   |
| Total                                    |   | $              | 52,774 |   |       | $      | 1,556  |       |   | $      | (79    | )      |   | $ | 54,251 |   |

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Table of Contents 

|                                   |   | Amortized      |   |   | Fair   |   |
|----------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                   |   | Cost           |   |   | Value  |   |
|                                   |   | (In Thousands) |   |
|                                   |   |           |   |   |   |   |
| Due in one year or less                |   | $              | 8,993  |   |   | $      | 9,246 |   |
| Due after one year through five years  |   |           | 14,492 |   |   |   | 14,930 |   |
|                                   |   |           |   |   |   |   |   |   |
| Due after five years through ten years |   |           | 4,567  |   |   |   | 4,678 |   |
| Due after ten years                    |   |           | 20,475 |   |   |   | 20,822 |   |
|                                   |   |           | 48,527 |   |   |   | 49,676 |   |
|                                   |   |           |   |   |   |   |   |   |
| Mortgage-backed securities             |   |           | 22,170 |   |   |   | 23,119 |   |
|                                   |   | $              | 70,697 |   |   | $      | 72,795 |   |

|                                  |   | Less Than 12 Months |   |   | 12 Months or More |   |   | Total      |   |
|---------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|------------|--------|
|                                  |   | Fair Value          |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |   | Fair Value |   |   | Unrealized Losses |   |
|                                  |   | (In Thousands)      |   |
| December 31, 2009:                    |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Municipal bonds                       |   | $                   | 2,860  |   |              | $      | (97    | )          |   | $ | - |   |   | $ | - |   |   | $ | 2,860 |   |   | $ | (97 | ) |
| Total Temporarily Impaired Securities |   | $                   | 2,860  |   |              | $      | (97    | )          |   | $ | - |   |   | $ | - |   |   | $ | 2,860 |   |   | $ | (97 | ) |
|                                  |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008:                    |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal bonds                       |   | $                   | 2,346  |   |              | $      | (65    | )          |   | $ | - |   |   | $ | - |   |   | $ | 2,346 |   |   | $ | (65 | ) |
| Mortgage-backed securities            |   |                | 3,719  |   |              |   | (14    | )          |   |   | - |   |   |   | - |   |   |   | 3,719 |   |   |   | (14 | ) |
| Total Temporarily Impaired Securities |   | $                   | 6,065  |   |              | $      | (79    | )          |   | $ | - |   |   | $ | - |   |   | $ | 6,065 |   |   | $ | (79 | ) |

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Table of Contents 

|                                |   | 2009           |    |   | 2008   |   |
|-------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                |   | (In Thousands) |    |
|                                |   |           |    |   |   |   |
| Commercial real estate              |   | $              | 150,439 |   |   | $      | 148,881 |   |
| Commercial construction             |   |           | 12,292  |   |   |   | 6,886 |   |
| Commercial                          |   |           | 25,796  |   |   |   | 24,096 |   |
| Home equity                         |   |           | 159,180 |   |   |   | 136,739 |   |
| Consumer                            |   |           | 2,160   |   |   |   | 2,726 |   |
|                                |   |           |    |   |   |   |   |   |
| Total Loans                         |   |           | 349,867 |   |   |   | 319,328 |   |
|                                |   |           |    |   |   |   |   |   |
| Unearned net loan origination costs |   |           | 51      |   |   |   | 252 |   |
| Allowance for Loan Losses           |   |           | (3,598  | )      |   |   | (2,932 | ) |
|                                |   |           |    |   |   |   |   |   |
|                                |   | $              | 346,320 |   |   | $      | 316,648 |   |

|                            |   | December 31,   |    |
|---------------------------------|--------|----------------|---------|
|                            |   | 2009           |    |   | 2008 |   |
|                            |   | (In Thousands) |    |
| Loans receivable at end of year |   | $              | 349,918 |   |   | $ | 319,580 |   |
|                            |   |           |    |   |   |   |   |   |
| Allowance for loan losses:      |   |           |    |   |   |   |   |   |
| Balance, beginning              |   | $              | 2,932   |   |   | $ | 2,503 |   |
| Provision for loan losses       |   |           | 702     |   |   |   | 429 |   |
| Loans charged off               |   |           | (36     | ) |   |   | - |   |
| Recoveries                      |   |           | -       |   |   |   | - |   |
| Balance at end of year          |   | $              | 3,598   |   |   | $ | 2,932 |   |

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Table of Contents 

|                                            |   | 2009           |   |   | 2008   |   |
|-------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                            |   | (In Thousands) |   |
|                                            |   |           |   |   |   |   |
| Furniture, fixtures and equipment               |   | $              | 1,769  |   |   | $      | 1,206 |   |
| Leasehold improvements                          |   |           | 1,788  |   |   |   | 1,528 |   |
| Computer equipment and data processing software |   |           | 841    |   |   |   | 640 |   |
| Automobiles                                     |   |           | 92     |   |   |   | 92 |   |
| Construction in progress                        |   |           | -      |   |   |   | 320 |   |
|                                            |   |           |   |   |   |   |   |   |
|                                            |   |           | 4,490  |   |   |   | 3,787 |   |
| Accumulated depreciation                        |   |           | (2,025 | )      |   |   | (1,556 | ) |
|                                            |   |           |   |   |   |   |   |   |
|                                            |   | $              | 2,465  |   |   | $      | 2,231 |   |

|                                           |   | December 31, 2009 |    |   | December 31, 2008 |   |
|------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                           |   | (In Thousands)    |    |
| Demand, non-interest bearing                   |   | $                 | 25,785  |   |              | $      | 16,194 |   |
| Demand, NOW and money market, interest bearing |   |              | 32,987  |   |              |   | 31,437 |   |
| Savings                                        |   |              | 201,727 |   |              |   | 103,863 |   |
| Time, $100 and over                            |   |              | 54,821  |   |              |   | 65,344 |   |
| Time, other                                    |   |              | 65,964  |   |              |   | 90,732 |   |
|                                           |   |              |    |   |              |   |   |   |
| Total deposits                                 |   | $                 | 381,284 |   |              | $      | 307,570 |   |

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Table of Contents 

| 2010   |   | $      | 89,686  |   |
|--------|--------|--------|---------|--------|
| 2011   |   |   | 15,396  |   |
| 2012   |   |   | 12,425  |   |
| 2013   |   |   | 1,026   |   |
| 2014   |   |   | 2,252   |   |
|   |   |   |    |   |
|   |   | $      | 120,785 |   |

|                                                  |   | 2009                   |   |   | 2008   |   |
|-------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|
|                                                  |   | (Dollars In Thousands) |   |
|                                                  |   |                   |   |   |   |   |
| Balance outstanding at December 31                    |   | $                      | 30,964 |   |   | $      | 26,019 |   |
| Weighted average interest rate at the end of the year |   |                   | 1.56   | %      |   |   | 2.68 | % |
| Average daily balance during the year                 |   | $                      | 27,866 |   |   | $      | 21,037 |   |
| Weighted average interest rate during the year        |   |                   | 1.89   | %      |   |   | 3.10 | % |
| Maximum month-end balance during the year             |   | $                      | 36,450 |   |   | $      | 26,019 |   |

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Table of Contents 

|          |   | 2009          |   |   | 2008        |   |
|---------------|--------|---------------|--------|--------|-------------|--------|
| Maturity Date |   | Interest Rate |   |   | Outstanding |   |   | Interest Rate |   |   | Outstanding |   |
| April 2009    |   |          | -      |   |        | $      | - |   |   |   | 4.27 | % |   | $ | 1,850 |   |
| April 2009    |   |          | -      |   |        | $      | - |   |   |   | 4.27 | % |   | $ | 1,850 |   |
| August 2009   |   |          | -      |   |        |   | - |   |   |   | 4.80 | % |   |   | 1,428 |   |
| January 2010  |   |          | 3.50   | %      |        |   | 2,000 |   |   |   | 3.50 | % |   |   | 2,000 |   |
| May 2010      |   |          | -      |   |        |   | - |   |   |   | 4.75 | % |   |   | 7,119 |   |
| January 2012  |   |          | 3.23   | %      |        |   | 1,480 |   |   |   | 3.23 | % |   |   | 1,479 |   |
| June 2013     |   |          | 3.86   | %      |        |   | 4,834 |   |   |   | 3.86 | % |   |   | 4,834 |   |
| August 2013   |   |          | 3.98   | %      |        |   | 3,052 |   |   |   | 3.98 | % |   |   | 3,052 |   |
|          |   |          |   |   |        | $      | 11,366 |   |   |   |   |   |   | $ | 21,762 |   |

|          |   | 2009          |   |   | 2008        |   |
|---------------|--------|---------------|--------|--------|-------------|--------|
| Maturity Date |   | Interest Rate |   |   | Outstanding |   |   | Interest Rate |   |   | Outstanding |   |
| November 2015 |   |          | 7.50   | %      |        | $      | 5,650 |   |   |   | 7.50 | % |   | $ | 1,400 |   |

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Table of Contents 

|       |   | Related Parties |   |   | Third Parties |   |   | Total  |   |
|------------|--------|-----------------|--------|--------|---------------|--------|--------|--------|--------|
| 2010       |   | $               | 317    |   |          | $      | 567    |   |   | $ | 884 |   |
| 2011       |   |            | 325    |   |          |   | 711    |   |   |   | 1,036 |   |
| 2012       |   |            | 168    |   |          |   | 730    |   |   |   | 898 |   |
| 2013       |   |            | 45     |   |          |   | 742    |   |   |   | 787 |   |
| 2014       |   |            | 45     |   |          |   | 702    |   |   |   | 747 |   |
| Thereafter |   |            | 75     |   |          |   | 3,800  |   |   |   | 3,875 |   |
|       |   |            |   |   |          |   |   |   |   |   |   |   |
|       |   | $               | 975    |   |          | $      | 7,252  |   |   | $ | 8,227 |   |

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Table of Contents 

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Table of Contents 

|                           |   | Number of Options |    |   | Weighted Average Exercise Price |   |
|--------------------------------|--------|-------------------|---------|--------|---------------------------------|--------|
|                           |   |              |    |   |                            |   |
|                           |   |              |    |   |                            |   |
| Outstanding, December 31, 2007 |   |              | 917,818 |   |                            | $      | 3.81 |   |
| Granted                        |   |              | -       |   |                            |   | - |   |
| Exercised                      |   |              | (4,827  | )      |                            |   | 3.29 |   |
| Forfeited                      |   |              | (3,317  | )      |                            |   | 8.27 |   |
|                           |   |              |    |   |                            |   |   |   |
| Outstanding, December 31, 2008 |   |              | 909,674 |   |                            | $      | 3.79 |   |
| Granted                        |   |              | -       |   |                            |   | - |   |
| Exercised                      |   |              | (49,921 | )      |                            |   | 3.26 |   |
| Forfeited                      |   |              | (600    | )      |                            |   | 10.00 |   |
|                           |   |              |    |   |                            |   |   |   |
| Outstanding, December 31, 2009 |   |              | 859,153 |   |                            | $      | 3.82 |   |
|                           |   |              |    |   |                            |   |   |   |
| Exercisable, December 31, 2009 |   |              | 859,153 |   |                            | $      | 3.82 |   |

| Range of Exercise Price |                       |   | Weighted Average Exercise Price |   |   | Number Outstanding |   |   | Weighted Average Remaining Contractual Life (Years) |   |   | Number Exercisable |       |
|-------------------------|----------------------------|--------|---------------------------------|--------|--------|--------------------|--------|--------|-----------------------------------------------------|--------|--------|--------------------|------------|
|                    |                       |   |                            |   |   |               |   |   |                                                |   |   |               |       |
|                    | $2.00 to $3.00   |   |                            | $      | 2.84   |               |   |   | 631,636                                             |   |   |               | 1.02       |   |   |   | 631,636 |   |
|                    | $3.00 to $4.00   |   |                            |   | 3.91   |               |   |   | 93,356                                              |   |   |               | 2.52       |   |   |   | 93,356 |   |
|                    | $6.00 to $7.00   |   |                            |   | 6.40   |               |   |   | 60,822                                              |   |   |               | 4.00       |   |   |   | 60,822 |   |
|                    | $9.00 to $10.00            |   |                            |   | 10.00  |               |   |   | 73,339                                              |   |   |               | 5.00       |   |   |   | 73,339 |   |
|                    |                       |   |                            |   |   |               |   |   |                                                |   |   |               |       |   |   |   |   |   |
|                    |                       |   |                            |   |   |               |   |   | 859,153                                             |   |   |               |  1.73 |   |   |   | 859,153 |   |

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Table of Contents 

|     |   | 2009           |   |   | 2008   |   |
|----------|--------|----------------|--------|--------|--------|--------|
|     |   | (In Thousands) |   |
|     |   |           |   |   |   |   |
| Current  |   | $              | 1,128  |   |   | $      | 1,061 |   |
| Deferred |   |           | 75     |   |   |   | (403 | )  |
|     |   |           |   |   |   |   |   |   |
|     |   | $              | 1,203  |   |   | $      | 658 |   |

|                                 |   | 2009                   |   |   | 2008   |   |
|--------------------------------------|--------|------------------------|--------|--------|--------|--------|
|                                 |   | (Dollars In Thousands) |   |
|                                 |   |                   |   |   |   |   |
| Federal income tax at statutory rate |   | $                      | 1,338  |   |   | $      | 627 |   |
| Tax free interest                    |   |                   | (164   | )      |   |   | - |   |
| Other                                |   |                   | 29     |   |   |   | 31 |   |
|                                 |   |                   |   |   |   |   |   |   |
|                                 |   | $                      | 1,203  |   |   | $      | 658 |   |

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Table of Contents 

|                                             |   | 2009           |   |   | 2008   |   |
|--------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                             |   | (In Thousands) |   |
|                                             |   |           |   |   |   |   |
| Deferred tax assets:                             |   |           |   |   |   |   |
| Allowance for loan losses                        |   | $              | 1,179  |   |   | $      | 963 |   |
| Contributions carryforward                       |   |           | 237    |   |   |   | 191 |   |
| Other                                            |   |           | 199    |   |   |   | 122 |   |
|                                             |   |           |   |   |   |   |   |   |
| Total Deferred Tax Assets                        |   |           | 1,615  |   |   |   | 1,276 |   |
|                                             |   |           |   |   |   |   |   |   |
| Deferred tax liabilities:                        |   |           |   |   |   |   |   |   |
| Premises and equipment                           |   |           | 169    |   |   |   | 48 |   |
| Prepaid assets                                   |   |           | 153    |   |   |   | 168 |   |
| Stock options                                    |   |           | 159    |   |   |   | 86 |   |
| Cash basis conversion                            |   |           | 68     |   |   |   | 136 |   |
| Deferred loan costs                              |   |           | 153    |   |   |   | - |   |
| Unrealized gain on securities available for sale |   |           | 714    |   |   |   | 503 |   |
|                                             |   |           |   |   |   |   |   |   |
| Total Deferred Tax Liabilities                   |   |           | 1,416  |   |   |   | 941 |   |

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Table of Contents 

|                                                 |   | 2009           |   |   | 2008   |   |
|------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                 |   | (In Thousands) |   |
|                                                 |   |           |   |   |   |   |
| Commitments to grant loans, fixed                    |   | $              | 7,537  |   |   | $      | 311 |   |
| Commitments to grant loans, variable                 |   |           | 2,125  |   |   |   | 300 |   |
| Unfunded commitments under lines of credit, fixed    |   |           | 3,519  |   |   |   | 886 |   |
| Unfunded commitments under lines of credit, variable |   |           | 48,602 |   |   |   | 43,000 |   |
| Standby letters of credit                            |   |           | 3,599  |   |   |   | 2,743 |   |
|                                                 |   |           |   |   |   |   |   |   |
|                                                 |   | $              | 65,382 |   |   | $      | 47,240 |   |

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Table of Contents 

|                                     |   | Actual                        |   |   | For Capital Adequacy Purposes |   |   | To be Well Capitalized under Prompt Corrective Action Provisions |   |
|------------------------------------------|--------|-------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------------------------------------------|--------|
|                                     |   | Amount                        |   |   | Ratio                         |   |   | Amount                                                           |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                     |   | (Dollar Amounts in Thousands) |   |
| December 31, 2009:                       |   |                          |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $                             | 41,062 |   |                          |   | 12.8   | %                                                                |   | $ | >   25,642 |   |   |   | >   8.0 | % |   | $ | >   32,052 |   |   |   | >   10.0 | % |
| Tier 1 capital (to risk-weighted assets) |   |                          | 37,464 |   |                          |   | 11.7   |                                                             |   |   | >   12,821 |   |   |   | >   4.0 |   |   |   | >   19,231 |   |   |   | >     6.0 |   |
| Tier 1 capital (to average assets)       |   |                          | 37,464 |   |                          |   | 8.1    |                                                             |   |   | >   18,604 |   |   |   | >   4.0 |   |   |   | >   23,255 |   |   |   | >     5.0 |   |
|                                     |   |                          |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2008:                       |   |                          |   |   |                          |   |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total capital (to risk-weighted assets)  |   | $                             | 33,637 |   |                          |   | 11.7   | %                                                                |   | $ | >   22,917 |   |   |   | >   8.0 | % |   | $ | >   28,646 |   |   |   | >   10.0 | % |
| Tier 1 capital (to risk-weighted assets) |   |                          | 30,705 |   |                          |   | 10.7   |                                                             |   |   | >   11,459 |   |   |   | >   4.0 |   |   |   | >   17,188 |   |   |   | >     6.0 |   |
| Tier 1 capital (to average assets)       |   |                          | 30,705 |   |                          |   | 8.1    |                                                             |   |   | >   15,260 |   |   |   | >   4.0 |   |   |   | >   19,075 |   |   |   | >     5.0 |   |

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Table of Contents 

|   | Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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Table of Contents 

| Description                                     |   | (Level 1) Quoted Prices in Active Markets for Identical Assets |   |   | (Level 2) Significant Other Observable Inputs |   |   | (Level 3) Significant Unobservable Inputs |   |   | Total  |   |
|-------------------------------------------------|--------|----------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|-------------------------------------------|--------|--------|--------|--------|
|                                            |   | (In Thousands)                                                 |   |
|                                            |   |                                                           |   |   |                                          |   |   |                                      |   |   |   |   |
| December 31, 2009 Securities available for sale |   | $                                                              | -      |   |                                          | $      | 72,795 |                                      |   | $      | -      |   |   | $ | 72,795 |   |
| December 31, 2008 Securities available for sale |   | $                                                              | -      |   |                                          | $      | 54,251 |                                      |   | $      | -      |   |   | $ | 54,251 |   |

| Description                      |   | (Level 1) Quoted Prices in Active Markets for Identical Assets |   |   | (Level 2) Significant Other Observable Inputs |   |   | (Level 3) Significant Unobservable Inputs |   |   | Total  |   |
|----------------------------------|--------|----------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|-------------------------------------------|--------|--------|--------|--------|
|                             |   | (In Thousands)                                                 |   |
|                             |   |                                                           |   |   |                                          |   |   |                                      |   |   |   |   |
| December 31, 2009 Impaired loans |   | $                                                              | -      |   |                                          | $      | -      |                                      |   | $      | 328    |   |   | $ | 328 |   |
| December 31, 2008 Impaired loans |   | $                                                              | -      |   |                                          | $      | -      |                                      |   | $      | -      |   |   | $ | - |   |

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|                                                                       |   | December 31, 2009 |    |   | December 31, 2008 |   |
|----------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                                                                       |   | Carrying          |    |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                                                       |   | Amount            |    |   | Value             |   |   | Amount |   |   | Value |   |
|                                                                       |   | (in Thousands)    |    |
| Financial assets:                                                          |   |              |    |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                  |   | $                 | 26,464  |   |              | $      | 26,464 |   |   | $ | 12,054 |   |   | $ | 12,054 |   |
| Interest bearing time deposits                                             |   |              | 10,724  |   |              |   | 10,857 |   |   |   | 1,694 |   |   |   | 1,694 |   |
| Securities available-for-sale                                              |   |              | 72,795  |   |              |   | 72,795 |   |   |   | 54,251 |   |   |   | 54,251 |   |
| Loans receivable, net of allowance                                         |   |              | 346,320 |   |              |   | 351,075 |   |   |   | 316,648 |   |   |   | 321,814 |   |
| Restricted investments in bank stock                                       |   |              | 2,109   |   |              |   | 2,109 |   |   |   | 2,075 |   |   |   | 2,075 |   |
| Accrued interest receivable                                                |   |              | 1,615   |   |              |   | 1,615 |   |   |   | 1,197 |   |   |   | 1,197 |   |
|                                                                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                                     |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                   |   |              | 381,284 |   |              |   | 373,087 |   |   |   | 307,570 |   |   |   | 316,726 |   |
| Securities sold under agreements to repurchase and federal funds purchased |   |              | 30,964  |   |              |   | 30,974 |   |   |   | 26,019 |   |   |   | 26,019 |   |
| Long-term borrowings                                                       |   |              | 17,016  |   |              |   | 17,197 |   |   |   | 23,162 |   |   |   | 24,203 |   |
| Accrued interest payable                                                   |   |              | 1,457   |   |              |   | 1,457 |   |   |   | 2,563 |   |   |   | 2,563 |   |
|                                                                       |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance sheet finanacial instruments:                                  |   |              |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to grant loans                                                 |   |              | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
| Unfunded commitments under lines of credit                                 |   |              | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
| Standby letters of credit                                                  |   |              | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |

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|                                             |   | Years Ending December 31, |   |
|--------------------------------------------------|--------|---------------------------|--------|
|                                             |   | 2009                      |   |   | 2008 |   |
|                                             |   | (In Thousands)            |   |
| ASSETS                                           |   |                      |   |   |   |   |
|                                             |   |                      |   |   |   |   |
| Cash                                             |   | $                         | 467    |   |   | $ | 100 |   |
| Other assets                                     |   |                      | 16     |   |   |   | 7 |   |
| Investment in subsidiary                         |   |                      | 38,849 |   |   |   | 31,679 |   |
| Total Assets                                     |   | $                         | 39,332 |   |   | $ | 31,786 |   |
|                                             |   |                      |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY       |   |                      |   |   |   |   |   |   |
|                                             |   |                      |   |   |   |   |   |   |
| Long-term borrowings                             |   | $                         | 5,650  |   |   | $ | 1,400 |   |
| Other liabilities                                |   |                      | 5      |   |   |   | 15 |   |
| Stockholders’ equity                       |   |                      | 33,677 |   |   |   | 30,371 |   |
| Total Liabilities and Stockholders’ Equity |   | $                         | 39,332 |   |   | $ | 31,786 |   |

|                                           |   | Years Ending December 31, |   |
|------------------------------------------------|--------|---------------------------|--------|
|                                           |   | 2009                      |   |   | 2008 |   |
|                                           |   | (In Thousands)            |   |
|                                           |   |                      |   |   |   |   |
| Interest income on interest bearing deposits   |   | $                         | 4      |   |   | $ | - |   |
| Interest expense on borrowings                 |   |                      | (282   | ) |   |   | (1 | ) |
| Other expenses                                 |   |                      | (99    | ) |   |   | (6 | ) |
| Undistributed net income of banking subsidiary |   |                      | 2,989  |   |   |   | 1,191 |   |
| Income before income taxes                     |   |                      | 2,612  |   |   |   | 1,844 |   |
| Income tax income (expense)                    |   |                      | 121    |   |   |   | (658 | ) |
| Net income                                     |   | $                         | 2,733  |   |   | $ | 1,186 |   |

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|                                                                              |   | Years Ending December 31, |   |
|-----------------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                              |   | 2009                      |   |   | 2008 |   |
|                                                                              |   | (in Thousands)            |   |
|                                                                              |   |                      |   |   |   |   |
| Cash Flows from Operating Activities:                                             |   |                      |   |   |   |   |
| Net income                                                                        |   | $                         | 2,733  |   |   | $ | 1,186 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                      |   |   |   |   |   |   |
| Net change in other assets and liabilities                                        |   |                      | (19    | ) |   |   | 8 |   |
| Equity in undistributed net income of banking subsidiary                          |   |                      | (2,989 | ) |   |   | (1,191 | ) |
| Net Cash (Used in) Provided by Operating Activities                               |   |                      | (275   | ) |   |   | 3 |   |
|                                                                              |   |                      |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                             |   |                      |   |   |   |   |   |   |
| Capital contribution to banking subsidiary                                        |   |                      | (3,771 | ) |   |   | (1,317 | ) |
| Net Cash Used in Investing Activities                                             |   |                      | (3,771 | ) |   |   | (1,317 | ) |
|                                                                              |   |                      |   |   |   |   |   |   |
| Cash Flows from Financing Activities:                                             |   |                      |   |   |   |   |   |   |
| Proceeds from long-term borrowings                                                |   |                      | 4,250  |   |   |   | 1,400 |   |
| Proceeds from exercise of stock options                                           |   |                      | 163    |   |   |   | 17 |   |
| Purchase of treasury stock                                                        |   |                      | -      |   |   |   | (3 | ) |
| Net Cash Provided by Financing Activities                                         |   |                      | 4,413  |   |   |   | 1,414 |   |
|                                                                              |   |                      |   |   |   |   |   |   |
| Net Increase in Cash                                                              |   |                      | 367    |   |   |   | 100 |   |
|                                                                              |   |                      |   |   |   |   |   |   |
| Cash – Beginning                                                            |   |                      | 100    |   |   |   | - |   |
|                                                                              |   |                      |   |   |   |   |   |   |
| Cash - Ending                                                                     |   | $                         | 467    |   |   | $ | 100 |   |

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

| Item 9A. (T) | CONTROLS AND PROCEDURES. |
|--------------|--------------------------|

|   | (a) | Evaluation of disclosure controls and procedures. |
|--------|-----|---------------------------------------------------|

|   | (b) | Management’s Report on Internal Control Over Financial Reporting. |
|--------|-----|-------------------------------------------------------------------------|

|   | (c) | Changes in Internal Controls Over Financial Reporting. |
|--------|-----|--------------------------------------------------------|

Item 

|   | None. |
|--------|-------|

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Item  

Item  

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

| Item  13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
|---------------------|----------------------------------------------------------------------------|

Item 

|                   |   | 2009   |   |   | 2008   |   |
|------------------------|--------|--------|--------|--------|--------|--------|
| Audit fees (1)         |   | $      | 73,549 |   |   | $      | 63,699 |   |
| Audit -related fees(2) |   |   | 3,452  |   |   |   | 1,500 |   |
| Tax fees(3)            |   |   | 8,384  |   |   |   | 6,561 |   |
| All other fees         |   |   | -      |   |   |   | - |   |
|                   |   |   |   |   |   |   |   |   |
|                   |   | $      | 85,385 |   |   | $      | 71,760 |   |

|   | (1) | Includes professional services rendered for the audit of the Company’s annual financial statements and review of financial statements included in Forms 10-Q, or services normally provided in connection with statutory and regulatory, including out-of-pocket expenses. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Assurance and related services reasonably related to the performance of the audit or review of financial statements include the following:  assistance with implications from stock option exercise and lease accounting analysis. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Tax fees include the following:  preparation of state and federal tax returns, assistance with calculating estimated tax payments, and assistance with tax exempt yield calculation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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PART 

| Exhibit                             |                                                                                                                                                                                                                                                                        |
|-------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Number                              | Description                                                                                                                                                                                                                                                                 |
|                                |                                                                                                                                                                                                                                                                        |
| 3.1                                 | Articles of Incorporation (Incorporated by reference to Exhibit 1 of Registrant’s Form 8-A filed on December 11, 2008).                                                                                                                                               |
| 3.2                                 | By-Laws (Incorporated by reference to Exhibit 2 of Registrant’s Form 8-A filed on December 11, 2008).                                                                                                                                                                 |
| 10.1                                | Embassy Bancorp, Inc. Option Plan (Incorporated by reference to Exhibit 10.1 of Registrant's Registration Statement on Form S-8 filed on February 22, 2010).                                                                                                           |
| 10.2                                | Lease Agreement for the Rte. 512 Bethlehem Office (Incorporated by reference to Exhibit 10.2 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                                      |
| 10.3                                | Lease Agreement dated October 21, 2005 for Hamilton Blvd. and Mill Creek Rd., Lower Macungie Township, Pennsylvania (Incorporated by reference to Exhibit 10.3 of Registrant’s Form 10-K filed on March 31, 2009).                                                    |
| 10.4                                | Lease Addendum for additional space in the Rte. 512, Bethlehem Office (Incorporated by reference to Exhibit 10.4 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                  |
| 10.5                                | Lease Agreement dated March 11, 2009 for Cedar Crest Blvd., Allentown, Pennsylvania (Incorporated by reference to Exhibit 10.5 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                    |
| 10.6                                | Lease Agreement for Tilghman Street location (Incorporated by reference to Exhibit 10.6 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                                           |
| 10.7                                | Lease Agreement dated March 17, 2006 for 925 West Broad St, Bethlehem PA (Incorporated by reference to Exhibit 10.7 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                               |
| 10.8                                | Lease Agreement dated June 17, 2008 for 5828 Old Bethlehem Pike, Center Valley, PA (Incorporated by reference to Exhibit 10.8 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                     |
| 10.9                                | Lease Agreement dated March 19, 2009 for Corriere Road and Route 248 in Lower Nazareth Township, PA (Incorporated by reference to Exhibit 10.9 of Registrant’s Form 10-K filed on March 31, 2009).                                                                    |
| 10.10                               | Employment Agreement – D. Lobach, dated January 1, 2006 (Incorporated by reference to Exhibit 10.10 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                         |
| 10.11                               | Employment Agreement – J. Hunsicker, dated January 1, 2006 (Incorporated by reference to Exhibit 10.11 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                      |
| 10.12                               | Employment Agreement – J. Bartholomew, dated February 20, 2009 (Incorporated by reference to Exhibit 10.12 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                                  |
| 10.13                               | Supplemental Executive Retirement Plan dated January 5, 2009, for David M. Lobach (Incorporated by reference to Exhibit 10.13 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                     |
| 10.14                               | Supplemental Executive Retirement Plan dated January 5, 2009, for Judith A. Hunsicker (Incorporated by reference to Exhibit 10.14 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                 |
| 10.15                               | Supplemental Executive Retirement Plan dated January 5, 2009 for James R. Bartholomew (Incorporated by reference to Exhibit 10.15 of Registrant’s Form 10-K filed on March 31, 2009).                                                                                 |
| 10.16      | Loan Agreement, dated as of December 22, 2009, by and between Embassy Bancorp, Inc. and Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed on December 24, 2009).                                      |
| 10.17                          | Subordinated Term Loan Note, date as of December 22, 2009, by Embassy Bancorp, Inc. in favor of Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.2 of Registrant Form 8-K filed on December 24, 2009).                           |
| 10.18                          | Stock Pledge Agreement, dated as of December 22, 2009, by and between Embassy Bancorp, Inc. and Univest National Bank and Trust Co.  (Incorporated by reference to Exhibit 10.3 of Registrant's Form 8-K filed on December 24, 2009.                              |
| 10.19                          | Loan Agreement, dated as of November 11, 2008, by and between Embassy Bancorp, Inc. and Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.4 of Registrant's Form 8-K filed on December 24, 2009).                                      |
| 10.20                          | Subordinated Term Loan Note, dated as of November 11, 2008, by Embassy Bancorp, Inc. in favor of Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.5 of Registrant's Form 8-K filed on December 24, 2009).                        |
| 10.21                          | Stock Pledge Agreement, dated as of November 11, 2008, by and between Embassy Bancorp, Inc. and Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.6 of Registrant's Form 8-K filed on December 24, 2009).                         |
| 10.22                          | First Allonge to Subordinated Term Note, dated as of December 22, 2009, by Embassy Bancorp, Inc. and Univest National Bank and Trust Co. (Incorporated by reference to Exhibit 10.7 of Registrant's Form 8-K filed on December 24, 2009).     |
| 11.1                                | The statement regarding computation of per share earnings required by this exhibit is contained in Note 5 to the financial statements captions “Basic and Diluted Earnings Per Share.”                                                                          |
| 14.1                                | Code of Conduct (Ethics).                                                                                                                                                                                                                                                   |
| 21.                                 | Subsidiaries of the Registrant.                                                                                                                                                                                                                                        |
| 23.                                 | Consent of ParenteBeard LLC.                                                                                                                                                                                                                                                |

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| 31.1 | Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                       |
|------|------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).                                                       |
| 32.  | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002. |
| 99.1 | Whistleblower Policy.                                                                                                                    |
| 99.2 | Audit Committee Charter.                                                                                                                 |

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SIGNATURES

|                  | EMBASSY BANCORP, INC. |                                             |
|-----------------------|-----------------------|--------------------------------------------------|
|                  |                  |                                             |   |
|                  | By                    | /s/ David M. Lobach Jr.                          |   |
|                  |                  | David M. Lobach, Jr.                             |   |
| Dated: March 31, 2010 |                  | Chairman, President and Chief Executive Officer  |   |
|                  |                  |                                             |   |
| Dated: March 31, 2010 | By                    | /s/ Judith A. Hunsicker                          |   |
|                  |                  | Judith A. Hunsicker                              |   |
|                  |                  | Senior Executive Vice President, Chief Operating |   |
|                  |                  | Officer, Secretary and Ch ief Financial Officer  |   |

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|   | Dated: March 31, 2010 | /s/ Geoffrey F. Boyer                                    |   |
|--------|-----------------------|----------------------------------------------------------|--------|
|   |                  | Geoffrey F. Boyer, Director                              |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ John B. Brew Jr.                                     |   |
|   |                  | John B. Brew, Jr., Director                              |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ Robert P. Daday                                      |   |
|   |                  | Robert P. Daday, Director                                |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ John G. Englesson                                    |   |
|   |                  | John G. Englesson, Director                              |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ Elmer D. Gates                                       |   |
|   |                  | Elmer D. Gates, Lead Director                            |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ M. Bernadette Holland                                |   |
|   |                  | M. Bernadette Holland, Director                          |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ Bernard M. Lesavoy                                   |   |
|   |                  | Bernard M. Lesavoy, Director                             |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ David M. Lobach Jr.                                  |   |
|   |                  | David M. Lobach, Jr., Director and Chairman of the Board |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ John C. Pittman                                      |   |
|   |                  | John C. Pittman, Director                                |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ Frank Banko                                          |   |
|   |                  | Frank Banko, Director                                    |   |
|   |                  |                                                     |   |
|   | Dated: March 31, 2010 | /s/ John T. Yurconic                                     |   |
|   |                  | John T. Yurconic, Director                               |   |

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