|  New York State                                            | 11-2708279                            |
|----------------------------------------------------------------------|--------------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization)  | (I.R.S. Employer Identification No.)  |
|                                                                 |                                       |
| 4 West Second Street, Riverhead, New York                       | 11901                                 |
| (Address of Principal Executive Offices)                        | (Zip Code)                            |

| Large accelerated filer [   ]                                                         | Accelerated filer [X]                           |
|-----------------------------------------------------------------------------------------------------------|------------------------------------------------------|
|                                                                                                      |                                                 |
| Non-accelerated filer [   ]  (Do not check if a smaller reporting company)  | Smaller reporting company [   ]  |

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|    |                                                                                                                                   | Page   |
|---------|----------------------------------------------------------------------------------------------------------------------------------------|--------|
|    | PART I                                                                                                                                 |   |
|    |                                                                                                                                   |   |
| Item 1  | Financial Statements                                                                                                                   |   |
|    |                                                                                                                                   |   |
|    | Condensed Consolidated Statements of Condition as of June 30, 2012 (unaudited) and December 31, 2011                                   | 2      |
|    |                                                                                                                                   |   |
|    | Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)                      | 3      |
|    |                                                                                                                                   |   |
|    | Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011 (unaudited)        | 4      |
|    |                                                                                                                                   |   |
|    | Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2012 and 2011 (unaudited) | 5      |
|    |                                                                                                                                   |   |
|    | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011 (unaudited)                            | 6      |
|    |                                                                                                                                   |   |
|    | Notes to the Unaudited Condensed Consolidated Financial Statements                                                                     | 7      |
|    |                                                                                                                                   |   |
| Item 2  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                            | 31     |
|    |                                                                                                                                   |   |
| Item 3  | Quantitative and Qualitative Disclosures About Market Risk                                                                             | 41     |
|    |                                                                                                                                   |   |
| Item 4  | Controls and Procedures                                                                                                                | 41     |
|    |                                                                                                                                   |   |
|    | PART II                                                                                                                                |   |
|    |                                                                                                                                   |   |
| Item 1  | Legal Proceedings                                                                                                                      | 44     |
|    |                                                                                                                                   |   |
| Item 1A | Risk Factors                                                                                                                           | 44     |
|    |                                                                                                                                   |   |
| Item 2  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                            | 45     |
|    |                                                                                                                                   |   |
| Item 3  | Defaults upon Senior Securities                                                                                                        | 45     |
|    |                                                                                                                                   |   |
| Item 4  | Mine Safety Disclosures                                                                                                                | 46     |
|    |                                                                                                                                   |   |
| Item 5  | Other Information                                                                                                                      | 46     |
|    |                                                                                                                                   |   |
| Item 6  | Exhibits                                                                                                                               | 46     |
|    |                                                                                                                                   |   |
|    | Signatures                                                                                                                             | 47     |

----

|                                                                                  |   | June 30, 2012 |      |   | December 31, 2011 |   |
|---------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| ASSETS                                                                                |   |          |      |   |              |   |
| Cash and Cash Equivalents:                                                            |   |          |      |   |              |   |
|    Cash and Non-interest Bearing Deposits Due From Banks               |   | $             | 65,407    |   |              | $      | 73,651 |   |
|    Interest Bearing Deposits Due From Banks                            |   |          | 278,531   |   |              |   | 98,908 |   |
|    Federal Funds Sold                                                  |   |          | 1,150     |   |              |   | - |   |
| Total Cash and Cash Equivalents                                                       |   |          | 345,088   |   |              |   | 172,559 |   |
| Federal Reserve Bank, Federal Home Loan Bank and Other Stock                          |   |          | 2,376     |   |              |   | 2,536 |   |
| Investment Securities:                                                                |   |          |      |   |              |   |   |   |
|    Available for Sale, at Fair Value                                   |   |          | 307,719   |   |              |   | 299,204 |   |
|    Held to Maturity (Fair Value of $8,920 and $10,161, respectively)   |   |          | 8,095     |   |              |   | 9,315 |   |
| Total Investment Securities                                                           |   |          | 315,814   |   |              |   | 308,519 |   |
| Loans, Net of Unearned Discount                                                       |   |          | 848,225   |   |              |   | 969,654 |   |
|           Allowance for Loan Losses |   |          | 29,227    |   |              |   | 39,958 |   |
| Net Loans                                                                             |   |          | 818,998   |   |              |   | 929,696 |   |
| Loans Held-for-Sale                                                                   |   |          | 7,500     |   |              |   | - |   |
| Premises and Equipment, Net                                                           |   |          | 27,743    |   |              |   | 27,984 |   |
| Deferred Taxes                                                                        |   |          | 16,916    |   |              |   | 18,465 |   |
| Income Tax Receivable                                                                 |   |          | 6,760     |   |              |   | 5,421 |   |
| Other Real Estate Owned                                                               |   |          | 2,172     |   |              |   | 1,800 |   |
| Accrued Interest and Loan Fees Receivable                                             |   |          | 5,256     |   |              |   | 6,885 |   |
| Prepaid FDIC Assessment                                                               |   |          | 1,046     |   |              |   | 1,843 |   |
| Goodwill and Other Intangibles                                                        |   |          | 2,437     |   |              |   | 2,437 |   |
| Other Assets                                                                          |   |          | 6,296     |   |              |   | 6,082 |   |
|     TOTAL ASSETS                                                  |   | $             | 1,558,402 |   |              | $      | 1,484,227 |   |
|                                                                                  |   |          |      |   |              |   |   |   |
| LIABILITIES & STOCKHOLDERS' EQUITY                                                |   |          |      |   |              |   |   |   |
| Demand Deposits                                                                       |   | $             | 569,742   |   |              | $      | 525,379 |   |
| Saving, N.O.W. & Money Market Deposits                                            |   |          | 551,822   |   |              |   | 531,544 |   |
| Time Certificates of $100,000 or More                                                 |   |          | 176,253   |   |              |   | 168,140 |   |
| Other Time Deposits                                                                   |   |          | 83,949    |   |              |   | 86,809 |   |
|      Total Deposits                                          |   |          | 1,381,766 |   |              |   | 1,311,872 |   |
| Unfunded Pension Liability                                                            |   |          | 20,286    |   |              |   | 18,212 |   |
| Capital Leases                                                                        |   |          | 4,726     |   |              |   | 4,737 |   |
| Accrued Interest Payable                                                              |   |          | 325       |   |              |   | 348 |   |
| Other Liabilities                                                                     |   |          | 12,195    |   |              |   | 12,498 |   |
|     TOTAL LIABILITIES                                             |   |          | 1,419,298 |   |              |   | 1,347,667 |   |
|                                                                                  |   |          |      |   |              |   |   |   |
| Commitments and Contingent Liabilities                                                |   |          |      |   |              |   |   |   |
|                                                                                  |   |          |      |   |              |   |   |   |
| STOCKHOLDERS' EQUITY                                                                  |   |          |      |   |              |   |   |   |
| Common Stock (par value $2.50; 15,000,000 shares authorized;                          |   |          |      |   |              |   |   |   |
|    13,732,084 shares issued; 9,726,814 shares outstanding)             |   |          | 34,330    |   |              |   | 34,330 |   |
| Surplus                                                                               |   |          | 24,101    |   |              |   | 24,010 |   |
| Retained Earnings                                                                     |   |          | 96,671    |   |              |   | 91,303 |   |
| Treasury Stock at Par (4,005,270 shares)                                              |   |          | (10,013   | )      |              |   | (10,013 | ) |
| Accumulated Other Comprehensive Loss, Net of Tax                                      |   |          | (5,985    | )      |              |   | (3,070 | ) |
|     TOTAL STOCKHOLDERS' EQUITY                                    |   |          | 139,104   |   |              |   | 136,560 |   |
|     TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                  |   | $             | 1,558,402 |   |              | $      | 1,484,227 |   |
| See accompanying notes to condensed consolidated financial statements.                |   |

----

|                                                                                                                                                                                           |   | Three Months Ended |      |   | Six Months Ended |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|------------------|--------|
|                                                                                                                                                                                           |   | June 30,           |      |   | June 30,         |   |
|                                                                                                                                                                                           |   | 2012               |      |   | 2011             |   |   | 2012 |   |   | 2011 |   |
| INTEREST INCOME                                                                                                                                                                                |   |               |      |   |             |   |   |   |   |   |   |   |
| Loans and Loan Fees                                                                                                                                                                            |   | $                  | 12,927    |   |             | $      | 15,940 |   |   | $ | 25,321 |   |   | $ | 32,388 |   |
| United States Treasury Securities                                                                                                                                                              |   |               | -         |   |             |   | 25 |   |   |   | - |   |   |   | 95 |   |
| U.S. Government Agency Obligations                                                                                                                                                             |   |               | 4         |   |             |   | 139 |   |   |   | 4 |   |   |   | 293 |   |
| Obligations of States & Political Subdivisions                                                                                                                                             |   |               | 1,526     |   |             |   | 1,877 |   |   |   | 3,052 |   |   |   | 3,788 |   |
| Collateralized Mortgage Obligations                                                                                                                                                            |   |               | 1,199     |   |             |   | 1,502 |   |   |   | 2,393 |   |   |   | 3,130 |   |
| Mortgage-Backed Securities                                                                                                                                                                     |   |               | 19        |   |             |   | 8 |   |   |   | 26 |   |   |   | 16 |   |
| Corporate Bonds                                                                                                                                                                                |   |               | 16        |   |             |   | - |   |   |   | 16 |   |   |   | - |   |
| Federal Funds Sold & Due from Banks                                                                                                                                                        |   |               | 137       |   |             |   | 45 |   |   |   | 214 |   |   |   | 61 |   |
| Dividends                                                                                                                                                                                      |   |               | 17        |   |             |   | 60 |   |   |   | 63 |   |   |   | 144 |   |
|     Total Interest Income                                                                                                                                                  |   |               | 15,845    |   |             |   | 19,596 |   |   |   | 31,089 |   |   |   | 39,915 |   |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE                                                                                                                                                                               |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Saving, N.O.W. & Money Market Deposits                                                                                                                                                     |   |               | 303       |   |             |   | 549 |   |   |   | 620 |   |   |   | 1,183 |   |
| Time Certificates of $100,000 or more                                                                                                                                                          |   |               | 406       |   |             |   | 523 |   |   |   | 845 |   |   |   | 1,105 |   |
| Other Time Deposits                                                                                                                                                                            |   |               | 258       |   |             |   | 321 |   |   |   | 538 |   |   |   | 678 |   |
| Interest on Borrowings                                                                                                                                                                         |   |               | -         |   |             |   | 315 |   |   |   | - |   |   |   | 654 |   |
|    Total Interest Expense                                                                                                                                                       |   |               | 967       |   |             |   | 1,708 |   |   |   | 2,003 |   |   |   | 3,620 |   |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
|    Net Interest Income                                                                                                                                                          |   |               | 14,878    |   |             |   | 17,888 |   |   |   | 29,086 |   |   |   | 36,295 |   |
|   (Credit) Provision for Loan Losses                                                                                                                                                 |   |               | (2,400    | )      |             |   | 3,217 |   |   |   | (2,400 | ) |   |   | 23,188 |   |
|    Net Interest Income After (Credit) Provision for Loan Losses                                                                                                                 |   |               | 17,278    |   |             |   | 14,671 |   |   |   | 31,486 |   |   |   | 13,107 |   |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST INCOME                                                                                                                                                                            |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Service Charges on Deposit Accounts                                                                                                                                                            |   |               | 1,000     |   |             |   | 1,006 |   |   |   | 1,950 |   |   |   | 2,011 |   |
| Other Service Charges, Commissions & Fees                                                                                                                                                  |   |               | 846       |   |             |   | 976 |   |   |   | 1,596 |   |   |   | 1,643 |   |
| Fiduciary Fees                                                                                                                                                                                 |   |               | 208       |   |             |   | 206 |   |   |   | 409 |   |   |   | 431 |   |
| Net Gain on Sale of Securities Available for Sale                                                                                                                                              |   |               | 4         |   |             |   | 1,645 |   |   |   | - |   |   |   | 1,645 |   |
| Other Operating Income                                                                                                                                                                         |   |               | 343       |   |             |   | 270 |   |   |   | 701 |   |   |   | 594 |   |
|     Total Non-Interest Income                                                                                                                                              |   |               | 2,401     |   |             |   | 4,103 |   |   |   | 4,656 |   |   |   | 6,324 |   |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING EXPENSES                                                                                                                                                                             |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Total Employee Compensation                                                                                                                                                                    |   |               | 8,875     |   |             |   | 7,772 |   |   |   | 17,459 |   |   |   | 15,317 |   |
| Net Occupancy Expense                                                                                                                                                                          |   |               | 1,276     |   |             |   | 1,422 |   |   |   | 2,730 |   |   |   | 2,956 |   |
| Equipment Expense                                                                                                                                                                              |   |               | 491       |   |             |   | 463 |   |   |   | 1,003 |   |   |   | 945 |   |
| Outside Services                                                                                                                                                                               |   |               | 1,047     |   |             |   | 1,400 |   |   |   | 2,193 |   |   |   | 2,288 |   |
| FDIC Assessments                                                                                                                                                                               |   |               | 478       |   |             |   | 855 |   |   |   | 548 |   |   |   | 1,986 |   |
| OREO Expense (Income)                                                                                                                                                                          |   |               | 12        |   |             |   | (29 | ) |   |   | 59 |   |   |   | 111 |   |
| Prepayment Fee on Borrowing                                                                                                                                                                    |   |               | -         |   |             |   | 1,028 |   |   |   | - |   |   |   | 1,028 |   |
| Other Operating Expense                                                                                                                                                                        |   |               | 1,960     |   |             |   | 2,119 |   |   |   | 4,752 |   |   |   | 4,172 |   |
|     Total Operating Expenses                                                                                                                                               |   |               | 14,139    |   |             |   | 15,030 |   |   |   | 28,744 |   |   |   | 28,803 |   |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) Before Income Tax Expense (Benefit)                                                                                                                                              |   |               | 5,540     |   |             |   | 3,744 |   |   |   | 7,398 |   |   |   | (9,372 | ) |
| Income Tax Expense (Benefit)                                                                                                                                                                   |   |               | 1,340     |   |             |   | 474 |   |   |   | 2,030 |   |   |   | (5,068 | ) |
| NET INCOME (LOSS)                                                                                                                                                                              |   | $                  | 4,200     |   |             | $      | 3,270 |   |   | $ | 5,368 |   |   | $ | (4,304 | ) |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Average:     Common Shares Outstanding                                                                                                                                |   |               | 9,726,814 |   |             |   | 9,723,360 |   |   |   | 9,726,814 |   |   |   | 9,714,672 |   |
|                             Dilutive Stock Options |   |               | -         |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Average Total                                                                                                                                                                                  |   |               | 9,726,814 |   |             |   | 9,723,360 |   |   |   | 9,726,814 |   |   |   | 9,714,672 |   |
| EARNINGS (LOSS) PER COMMON SHARE    Basic                                                                                                                                  |   | $                  | 0.43      |   |             | $      | 0.34 |   |   | $ | 0.55 |   |   | $ | (0.44 | ) |
| Diluted                                                                                                                                                                                        |   | $                  | 0.43      |   |             | $      | 0.34 |   |   | $ | 0.55 |   |   | $ | (0.44 | ) |
|                                                                                                                                                                                           |   |               |      |   |             |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to condensed consolidated financial statements.                                                                                                                         |

----

|                                                                                                            |   | Three Months |   |   | Six Months |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------|--------|
|                                                                                                            |   | 2012         |   |   | 2011       |   |   | 2012 |   |   | 2011 |   |
| Net Income (Loss)                                                                                               |   | $            | 4,200  |   |       | $      | 3,270 |   |   | $ | 5,368 |   |   | $ | (4,304 | ) |
| Other Comprehensive Income (Loss), Net of Taxes and Reclassification Adjustments:                          |   |         |   |   |       |   |   |   |
| (Decrease) Increase in Unrealized Gain on Securities Available for Sale Arising During the Period, Net of Taxes |   |         | (1,087 | )      |       |   | 927 |   |   |   | (2,660 | ) |   |   | 2,026 |   |
| Post-Retirement Plan Benefit Obligation, Net of Taxes                                                           |   |         | -      |   |       |   | - |   |   |   | (255 | ) |   |   | (89 | ) |
| Total Other Comprehensive Income (Loss), Net of Taxes                                                      |   |         | (1,087 | )      |       |   | 927 |   |   |   | (2,915 | ) |   |   | 1,937 |   |
| Total Comprehensive Income (Loss)                                                                               |   | $            | 3,113  |   |       | $      | 4,197 |   |   | $ | 2,453 |   |   | $ | (2,367 | ) |
|                                                                                                            |   |         |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| See accompanying notes to condensed consolidated financial statements.                                     |   |

----

|                                                                   |   | Six Months Ended June 30, |    |
|------------------------------------------------------------------------|--------|---------------------------|---------|
|                                                                   |   | 2012                      |    |   | 2011 |   |
| Common Stock                                                           |   |                      |    |   |   |   |
| Balance, January 1                                                     |   | $                         | 34,330  |   |   | $ | 34,236 |   |
| Stock appreciation rights and stock options exercised                  |   |                      | -       |   |   |   | 12 |   |
| Stock dividend reinvestment                                            |   |                      | -       |   |   |   | 83 |   |
| Ending Balance                                                         |   |                      | 34,330  |   |   |   | 34,331 |   |
| Surplus                                                                |   |                      |    |   |   |   |   |   |
| Balance, January 1                                                     |   |                      | 24,010  |   |   |   | 23,368 |   |
| Stock-based compensation                                               |   |                      | 91      |   |   |   | - |   |
| Stock appreciation rights and stock options exercised                  |   |                      | -       |   |   |   | 65 |   |
| Stock dividend reinvestment                                            |   |                      | -       |   |   |   | 580 |   |
| Ending Balance                                                         |   |                      | 24,101  |   |   |   | 24,013 |   |
| Retained Earnings                                                      |   |                      |    |   |   |   |   |   |
| Balance, January 1                                                     |   |                      | 91,303  |   |   |   | 91,450 |   |
| Net income (loss)                                                      |   |                      | 5,368   |   |   |   | (4,304 | ) |
| Stock appreciation rights and stock options exercised                  |   |                      | -       |   |   |   | (69 | ) |
| Ending Balance                                                         |   |                      | 96,671  |   |   |   | 87,077 |   |
| Treasury Stock                                                         |   |                      |    |   |   |   |   |   |
| Balance, January 1                                                     |   |                      | (10,013 | ) |   |   | (10,005 | ) |
| Stock appreciation rights and stock options exercised                  |   |                      | -       |   |   |   | (8 | ) |
| Ending Balance                                                         |   |                      | (10,013 | ) |   |   | (10,013 | ) |
| Accumulated Other Comprehensive Loss, Net of Tax                       |   |                      |    |   |   |   |   |   |
| Balance, January 1                                                     |   |                      | (3,070  | ) |   |   | (2,229 | ) |
| Other comprehensive (loss) income                                      |   |                      | (2,915  | ) |   |   | 1,937 |   |
| Ending Balance                                                         |   |                      | (5,985  | ) |   |   | (292 | ) |
| Total Stockholders' Equity                                             |   | $                         | 139,104 |   |   | $ | 135,116 |   |
|                                                                   |   |                      |    |   |   |   |   |   |
| See accompanying notes to condensed consolidated financial statements. |   |

----

|                                                                                                                   |   | For the Six Months ended June 30, |    |
|------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                   |   | 2012                              |    |   | 2011 |   |
| NET INCOME (LOSS)                                                                                                      |   | $                                 | 5,368   |   |   | $ | (4,304 | ) |
| ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)                                                                             |   |                              |    |   |   |   |   |   |
|       TO NET CASH PROVIDED BY OPERATING ACTIVITIES                                       |   |                              |    |   |   |   |   |   |
|       (Credit) Provision for Loan Losses                                                 |   |                              | (2,400  | ) |   |   | 23,188 |   |
|       Depreciation and Amortization                                                      |   |                              | 1,296   |   |   |   | 1,310 |   |
|       Stock Based Compensation                                                           |   |                              | 91      |   |   |   | - |   |
|       Net Amortization of Premiums                                                       |   |                              | 896     |   |   |   | 1,277 |   |
|       Deferred Tax Expense                                                               |   |                              | 3,368   |   |   |   | - |   |
|       (Increase) Decrease in Income Tax Receivable                                       |   |                              | (1,339  | ) |   |   | 4,078 |   |
|       Decrease in Accrued Interest and Loan Fees Receivable                              |   |                              | 1,629   |   |   |   | 329 |   |
|       Increase in Other Assets                                                           |   |                              | (213    | ) |   |   | (9,281 | ) |
|       Decrease in Prepaid FDIC Assessment                                                |   |                              | 797     |   |   |   | 2,213 |   |
|       Increase in Unfunded Pension Liability                                             |   |                              | 2,074   |   |   |   | 1,583 |   |
|       Decrease in Accrued Interest Payable                                               |   |                              | (23     | ) |   |   | (181 | ) |
|       Decrease in Other Liabilities                                                      |   |                              | (560    | ) |   |   | (1,350 | ) |
|       Gain on Sale of Securities Available for Sale - Net                                |   |                              | -       |   |   |   | (1,645 | ) |
|         Net Cash Provided by Operating Activities                              |   |                              | 10,984  |   |   |   | 17,217 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                                   |   |                              |    |   |   |   |   |   |
|       Principal Payments on Investment Securities                                        |   |                              | 14,867  |   |   |   | 17,071 |   |
|       Proceeds from Sale of Investment Securities; Available for Sale                    |   |                              | -       |   |   |   | 42,527 |   |
|       Maturities of Investment Securities - Available for Sale                           |   |                              | 32,123  |   |   |   | 20,605 |   |
|       Purchases of Investment Securities - Available for Sale                            |   |                              | (60,879 | ) |   |   | (3,287 | ) |
|       Maturities of Investment Securities - Held to Maturity                             |   |                              | 1,957   |   |   |   | 3,772 |   |
|       Purchases of Investment Securities -  Held to Maturity                   |   |                              | (740    | ) |   |   | (1,715 | ) |
|       Decrease in Federal Reserve Bank, Federal Home Loan Bank and Other Stock           |   |                              | 160     |   |   |   | 1,647 |   |
|       Loan Repayments - Net                                                              |   |                              | 105,227 |   |   |   | 51,380 |   |
|       Purchases of Premises and Equipment - Net                                          |   |                              | (1,053  | ) |   |   | (743 | ) |
|       Proceeds from Sale of Other Real Estate Owned                                      |   |                              | -       |   |   |   | 3,919 |   |
|         Net Cash Provided by Investing Activities                              |   |                              | 91,662  |   |   |   | 135,176 |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                   |   |                              |    |   |   |   |   |   |
|       Net Increase in Deposit Accounts                                                   |   |                              | 69,894  |   |   |   | 12,455 |   |
|       Decrease in Short-Term Borrowings - Net                                            |   |                              | -       |   |   |   | (40,000 | ) |
|       Decrease  in Capital Lease Payable                                       |   |                              | (11     | ) |   |   |   |   |
|       Dividends Paid to Stockholders                                                     |   |                              | -       |   |   |   | (1,454 | ) |
|       Proceeds from Stock Dividend Reinvestment                                          |   |                              | -       |   |   |   | 663 |   |
|          Net Cash Provided by (Used in) Financing Activities              |   |                              | 69,883  |   |   |   | (28,336 | ) |
|                                                                                                                   |   |                              |    |   |   |   |   |   |
|            Net Increase in Cash and  Cash Equivalents |   |                              | 172,529 |   |   |   | 124,057 |   |
|                                                                                                                   |   |                              |    |   |   |   |   |   |
|            Cash and Cash Equivalents Beginning of Year          |   |                              | 172,559 |   |   |   | 41,149 |   |
|            Cash and Cash Equivalents End of Year                |   | $                                 | 345,088 |   |   | $ | 165,206 |   |
| Supplemental Disclosures                                                                                               |   |                              |    |   |   |   |   |   |
|       Cash Paid During the Year for:                                                     |   |                              |    |   |   |   |   |   |
|         Interest                                                               |   | $                                 | 2,026   |   |   | $ | 3,801 |   |
|         Income Taxes                                                           |   | $                                 | -       |   |   | $ | 197 |   |
| Loans Transferred to Held For Sale                                                                                     |   | $                                 | 22,757  |   |   | $ | - |   |
| Loans Transferred to Other Real Estate Owned                                                                           |   | $                                 | 372     |   |   | $ | - |   |
|                                                                                                                   |   |                              |    |   |   |   |   |   |
| See accompanying notes to condensed consolidated financial statements.                                                 |   |

----

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

----

| (2)   | Recent Accounting Pronouncements |
|-----------------|----------------------------------|

----

| (3)   | Fair Value |
|-----------------|------------|

----

|                                                         |   | Level in      |   |   | June 30, 2012 |      |   | December 31, 2011 |   |
|--------------------------------------------------------------|--------|---------------|--------|--------|---------------|-----------|--------|-------------------|--------|
|                                                         |   | Fair Value    |   |   | Carrying      |      |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                                         |   | Heirarchy     |   |   | Amount        |      |   | Value             |   |   | Amount |   |   | Value |   |
| Cash and due from banks                                      |   | Level 1       |   |   | $             | 343,938   |   |              | $      | 343,938 |   |   | $ | 172,559 |   |   | $ | 172,559 |   |
| Cash equivalents                                             |   | Level 2       |   |   |          | 1,150     |   |              |   | 1,150 |   |   |   | - |   |   |   | - |   |
| Federal Reserve Bank, Federal Home Loan Bank and Other Stock |   |          | N/A    |   |          |      | 2,376  |              |   |   | N/A |   |   |   | 2,536 |   |   |   | N/A |   |
| Investment securities held to maturity                       |   | Level 2       |   |   |          | 8,095     |   |              |   | 8,920 |   |   |   | 9,315 |   |   |   | 10,161 |   |
| Investment  securities available for sale          |   | Level 2/3 (1) |   |   |          | 307,719   |   |              |   | 307,719 |   |   |   | 299,204 |   |   |   | 299,204 |   |
| Loans Held for Sale                                          |   | Level 2       |   |   |          | 7,500     |   |              |   | 7,500 |   |   |   | - |   |   |   | - |   |
| Loans, net of allowance                                      |   | Level 2       |   |   |          | 818,998   |   |              |   | 847,550 |   |   |   | 929,696 |   |   |   | 960,070 |   |
| Accrued interest and loan fees receivable                    |   | Level 2       |   |   |          | 5,256     |   |              |   | 5,256 |   |   |   | 6,885 |   |   |   | 6,885 |   |
| Non-maturity Deposits                                        |   | Level 2       |   |   |          | 1,121,564 |   |              |   | 1,121,564 |   |   |   | 1,056,923 |   |   |   | 1,056,923 |   |
| Time Deposits                                                |   | Level 2       |   |   |          | 260,202   |   |              |   | 262,336 |   |   |   | 254,949 |   |   |   | 257,267 |   |
| Accrued interest payable                                     |   | Level 2       |   |   |          | 325       |   |              |   | 325 |   |   |   | 348 |   |   |   | 348 |   |
|                                                         |   |          |   |   |          |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| (1) See table that follows for Level 2 and 3 components.     |   |          |   |   |          |      |   |              |   |   |   |   |   |   |   |   |   |   |   |

| Fair Value Measurements Using |   |
|-------------------------------|--------|
|                          |   |   |   |   | Significant |   |
|                          |   |   |   |   | Unobservable |   |
|                          |   |   |   |   | Inputs |   |
| Description                   |   | June 30, 2012 |   |   | (Level 3) |   |
|                          |   |   |   |   |   |   |
| Impaired loans                |   | $ | 84,688 |   |   | $ | 84,688 |   |
| Other real estate owned       |   |   | 2,172 |   |   |   | 2,172 |   |
| Mortgage servicing rights     |   |   | 1,623 |   |   |   | 1,623 |   |
|  Total                   |   | $ | 88,483 |   |   | $ | 88,483 |   |
|                          |   |   |   |   |   |   |   |   |

----

| Fair Value Measurements Using |   |
|-------------------------------|--------|
|                          |   |   |   |   | Significant |   |
|                          |   |   |   |   | Unobservable |   |
|                          |   |   |   |   | Inputs |   |
| Description                   |   | December 31, 2011 |   |   | (Level 3) |   |
|                          |   |   |   |   |   |   |
| Impaired loans                |   | $ | 118,613 |   |   | $ | 118,613 |   |
| Other real estate owned       |   |   | 1,800 |   |   |   | 1,800 |   |
| Mortgage servicing rights     |   |   | 1,623 |   |   |   | 1,623 |   |
|  Total                   |   | $ | 122,036 |   |   | $ | 122,036 |   |
|                          |   |   |   |   |   |   |   |   |

| Fair Value Measurements Using                    |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   | Significant Other |   |   | Significant |   |
|                                             |   |   |   |   | Observable Inputs |   |   | Observable Inputs |   |
| Description                                      |   | June 30, 2012 |   |   | (Level 2) |   |   | (Level 3) |   |
| U.S. Government Agency Securities                |   | $ | 5,034 |   |   | $ | 5,034 |   |   | $ | - |   |
| Obligations of states and political subdivisions |   |   | 167,589 |   |   |   | 167,589 |   |   |   | - |   |
| Collateralized mortgage obligations              |   |   | 110,814 |   |   |   | 103,389 |   |   |   | 7,425 |   |
| Mortgage-backed securities                       |   |   | 16,927 |   |   |   | 16,927 |   |   |   | - |   |
| Corporate Bonds                                  |   |   | 7,355 |   |   |   | 7,355 |   |   |   | - |   |
| Total                                            |   | $ | 307,719 |   |   | $ | 300,294 |   |   | $ | 7,425 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |

| Fair Value Measurements Using                    |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   | Significant Other |   |   | Significant |   |
|                                             |   |   |   |   | Observable Inputs |   |   | Observable Inputs |   |
| Description                                      |   | December 31, 2011 |   |   | (Level 2) |   |   | (Level 3) |   |
| Obligations of states and political subdivisions |   | $ | 171,992 |   |   | $ | 171,992 |   |   | $ | - |   |
| Collateralized mortgage obligations              |   |   | 126,770 |   |   |   | 118,776 |   |   |   | 7,994 |   |
| Mortgage-backed securities                       |   |   | 442 |   |   |   | 442 |   |   |   | - |   |
| Total                                            |   | $ | 299,204 |   |   | $ | 291,210 |   |   | $ | 7,994 |   |
|                                             |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (4)   | Investment Securities |
|-----------------|-----------------------|

|                                             |   | June 30, 2012 |    |   | December 31, 2011 |   |
|--------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                             |   |          |    |   | Gross             |   |   | Gross |   |   | Estimated |   |   |   |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                             |   | Amortized     |    |   | Unrealized        |   |   | Unrealized |   |   | Fair |   |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                             |   | Cost          |    |   | Gains             |   |   | Losses |   |   | Value |   |   | Cost |   |   | Gains |   |   | Losses |   |   | Value |   |
| Available for sale:                              |   |          |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. government agency securities                |   | $             | 5,043   |   |              | $      | - |   |   | $ | (9 | ) |   | $ | 5,034 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Obligations of states and political subdivisions |   |          | 156,216 |   |              |   | 11,376 |   |   |   | (3 | ) |   |   | 167,589 |   |   |   | 156,663 |   |   |   | 15,329 |   |   |   | - |   |   |   | 171,992 |   |
| Collateralized mortgage obligations              |   |          | 106,730 |   |              |   | 4,749 |   |   |   | (665 | ) |   |   | 110,814 |   |   |   | 122,155 |   |   |   | 5,768 |   |   |   | (1,153 | ) |   |   | 126,770 |   |
| Mortgage-backed securities                       |   |          | 16,908  |   |              |   | 21 |   |   |   | (2 | ) |   |   | 16,927 |   |   |   | 391 |   |   |   | 51 |   |   |   | - |   |   |   | 442 |   |
| Corporate Bonds                                  |   |          | 7,308   |   |              |   | 49 |   |   |   | (2 | ) |   |   | 7,355 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance at end of period                         |   |          | 292,205 |   |              |   | 16,195 |   |   |   | (681 | ) |   |   | 307,719 |   |   |   | 279,209 |   |   |   | 21,148 |   |   |   | (1,153 | ) |   |   | 299,204 |   |
| Held to maturity:                                |   |          |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of states and political subdivisions |   |          | 8,095   |   |              |   | 825 |   |   |   | - |   |   |   | 8,920 |   |   |   | 9,315 |   |   |   | 846 |   |   |   | - |   |   |   | 10,161 |   |
| Total investment securities                      |   | $             | 300,300 |   |              | $      | 17,020 |   |   | $ | (681 | ) |   | $ | 316,639 |   |   | $ | 288,524 |   |   | $ | 21,994 |   |   | $ | (1,153 | ) |   | $ | 309,365 |   |
|                                             |   |          |    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                            |   | June 30, 2012 |    |
|-------------------------------------------------|--------|---------------|---------|
|                                            |   | Amortized     |    |   | Fair |   |
|                                            |   | Cost          |    |   | Value |   |
| Securities Available for sale:                  |   |          |    |   |   |   |
|   Due in one year or less             |   | $             | 2,581   |   |   | $ | 2,603 |   |
|   Due from one to five years          |   |          | 74,728  |   |   |   | 79,288 |   |
|   Due from five to ten years          |   |          | 90,611  |   |   |   | 97,388 |   |
|   Due after ten years                 |   |          | 647     |   |   |   | 699 |   |
|   Subtotal                            |   |          | 168,567 |   |   |   | 179,978 |   |
|   Collateralized mortgage obligations |   |          | 106,730 |   |   |   | 110,814 |   |
|   Mortgage-backed securities          |   |          | 16,908  |   |   |   | 16,927 |   |
| Total securities available for sale             |   |          | 292,205 |   |   |   | 307,719 |   |
| Securities Held to maturity:                    |   |          |    |   |   |   |   |   |
|   Due in one year or less             |   |          | 1,576   |   |   |   | 1,592 |   |
|   Due from one to five years          |   |          | 5,981   |   |   |   | 6,742 |   |
|   Due from five to ten years          |   |          | 538     |   |   |   | 586 |   |
|   Subtotal                            |   |          | 8,095   |   |   |   | 8,920 |   |
| Total investment securities                     |   | $             | 300,300 |   |   | $ | 316,639 |   |
|                                            |   |          |    |   |   |   |   |   |

|                                             |   |       |   |   | Less than 12 months |                |   | 12 months or longer |                |   | Total      |   |
|--------------------------------------------------|--------|------------|--------|--------|---------------------|---------------------|--------|---------------------|---------------------|--------|------------|--------|
| As of June 30, 2012                              |   | Number of  |   |   |                |                |   | Unrealized          |                |   |       |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| Type of securities                               |   | Securities |   |   | Fair value          |                |   | Losses              |                |   | Fair value |   |   | Losses |   |   | Fair value |   |   | Losses |   |
| U.S. government agency securities                |   |       | 1      |   |                | $                   | 5,034  |                |                | $      | 9          |   |   | $ | - |   |   | $ | - |   |   | $ | 5,034 |   |   | $ | 9 |   |
| Obligations of states and political subdivisions |   |       | 4      |   |                |                | 652    |                |                |   | 3          |   |   |   | - |   |   |   | - |   |   |   | 652 |   |   |   | 3 |   |
| Collateralized mortgage obligations              |   |       | 2      |   |                |                | -      |                |                |   | -          |   |   |   | 7,425 |   |   |   | 665 |   |   |   | 7,425 |   |   |   | 665 |   |
| Mortgage-backed securities                       |   |       | 1      |   |                |                | 5,186  |                |                |   | 2          |   |   |   | - |   |   |   | - |   |   |   | 5,186 |   |   |   | 2 |   |
| Corporate Bonds                                  |   |       | 1      |   |                |                | 1,835  |                |                |   | 2          |   |   |   | - |   |   |   | - |   |   |   | 1,835 |   |   |   | 2 |   |
| Total                                            |   |       | 9      |   |                | $                   | 12,707 |                |                | $      | 16         |   |   | $ | 7,425 |   |   | $ | 665 |   |   | $ | 20,132 |   |   | $ | 681 |   |
|                                             |   |       |   |   |                |                |   |                |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |       |   |   |                | Less than 12 months |   |                | 12 months or longer |   |       | Total  |   |
| As of December 31, 2011                          |   | Number of  |   |   |                |                |   |                | Unrealized          |   |       |   |   |   |   | Unrealized |   |   |   |   |   |   | Unrealized |   |
| Type of securities                               |   | Securities |   |   | Fair value          |                |   | Losses              |                |   | Fair value |   |   | Losses |   |   | Fair value |   |   | Losses |   |
| Collateralized mortgage obligations              |   |       | 2      |   |                | $                   | -      |                |                | $      | -          |   |   | $ | 7,994 |   |   | $ | 1,153 |   |   | $ | 7,994 |   |   | $ | 1,153 |   |
| Total                                            |   |       | 2      |   |                | $                   | -      |                |                | $      | -          |   |   | $ | 7,994 |   |   | $ | 1,153 |   |   | $ | 7,994 |   |   | $ | 1,153 |   |
|                                             |   |       |   |   |                |                |   |                |                |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| •   | The time value of money (risk-free rate) |
|---------------------|------------------------------------------|

| •   | Price for bearing the uncertainty in the cash flows (risk premium) |
|---------------------|--------------------------------------------------------------------|

| •   | Other case-specific factors that would be considered by market participants, including a liquidity adjustment. |
|---------------------|----------------------------------------------------------------------------------------------------------------|

| •   | Discount Rate – 10% |
|---------------------|---------------------------|

| •   | Voluntary Prepayments – 14.2% |
|---------------------|-------------------------------------|

| •   | Conditional Default Rates – 9.2% for the first 24 months, then trending downward in a linear fashion for the following 12 months, then to zero through approximately 17 years. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Loss Severity – 55.1% trending downward to terminal loss severities of 23%, in a linear fashion, at 2.5% per year. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------|

|                            |   |    |   |   |   |   |   |      |   |   | Total OTTI        |   |   | Additional OTTI      |   |   | Total OTTI     |   |
|---------------------------------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|----------------|--------|
|                            |   | Year of |   |   | Total  |   |   | Total     |   |   | Related to        |   |   | During the Six Month |   |   | Related to     |   |
|                            |   | Vintage |   |   | Fair   |   |   | Amortized |   |   | Credit Loss at    |   |   | Period Ended         |   |   | Credit Loss at |   |
| (in thousands)                  |   | 2006    |   |   | Value  |   |   | Cost      |   |   | December 31, 2011 |   |   | June 30, 2012        |   |   | June 30, 2012  |   |
| Rating:                         |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |           |   |
| Total Non-Agency                |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |
|    CMOs          |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |           |   |
|    CCC and Below |   | $       | 7,425  |   |   | $      | 7,425  |      |   | $      | 8,090             |   |   | $                    | 1,052  |   |           | $      | - |   |   | $ | 1,052 |   |
|                            |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |           |   |   |   |   |   |   |   |
| Total Non-Agency                |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |           |   |   |   |   |
|    CMO's         |   | $       | 7,425  |   |   | $      | 7,425  |      |   | $      | 8,090             |   |   | $                    | 1,052  |   |           | $      | - |   |   | $ | 1,052 |   |
|                            |   |    |   |   |   |   |   |      |   |   |              |   |   |                 |   |   |           |   |   |   |   |   |   |   |

----

| •   | Discount Rate – 11% |
|---------------------|---------------------------|

| •   | Voluntary Prepayments – 16.2% |
|---------------------|-------------------------------------|

| •   | Conditional Default Rates – 16.2% for the first 24 months, then trending downward in a linear fashion to 9.3% for the following 12 months, then to zero through approximately 17 years. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Loss Severity – 55.5% trending downward to terminal loss severities of 23%, in a linear fashion, at 2.5% per year. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------|

|                            |   |    |   |   |   |   |   | Total  |   |   | Total OTTI        |   |
|---------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|-------------------|--------|
|                            |   | Year of |   |   | Total  |   |   | Amort- |   |   | Related to        |   |
|                            |   | Vintage |   |   | Fair   |   |   | ized   |   |   | Credit Loss at    |   |
| (in thousands)                  |   | 2006    |   |   | Value  |   |   | Cost   |   |   | December 31, 2011 |   |
| Rating:                         |   |    |   |   |   |   |   |   |   |   |              |   |
| Total Non-Agency                |   |    |   |   |   |   |   |   |   |   |
|    CMOs          |   |    |   |   |   |   |   |   |   |   |              |   |
|    CCC and Below |   | $       | 7,994  |   |   | $      | 7,994  |   |   | $      | 9,147             |   |   | $ | 1,052 |   |
|                            |   |    |   |   |   |   |   |   |   |   |              |   |   |   |   |   |
| Total Non-Agency                |   |    |   |   |   |   |   |   |   |   |              |   |   |
|    CMO's         |   | $       | 7,994  |   |   | $      | 7,994  |   |   | $      | 9,147             |   |   | $ | 1,052 |   |
|                            |   |    |   |   |   |   |   |   |   |   |              |   |   |   |   |   |

| (5)   | Loans |
|-----------------|-------|

|                                      |   | June 30, 2012 |    |   | December 31, 2011 |   |
|-------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
| Commercial, financial, and agricultural   |   | $                  | 200,093 |   |              | $      | 206,652 |   |
| Commercial real estate                    |   |               | 364,317 |   |              |   | 428,646 |   |
| Real estate construction loans            |   |               | 43,632  |   |              |   | 49,704 |   |
| Residential mortgages (1st and 2nd liens) |   |               | 146,642 |   |              |   | 160,619 |   |
| Home equity loans                         |   |               | 75,223  |   |              |   | 79,684 |   |
| Consumer loans                            |   |               | 17,915  |   |              |   | 43,831 |   |
| Other loans                               |   |               | 428     |   |              |   | 543 |   |
| Gross Loans                               |   |               | 848,250 |   |              |   | 969,679 |   |
| Unearned discounts                        |   |               | (25     | )      |              |   | (25 | ) |
| Allowance for loan losses                 |   |               | (29,227 | )      |              |   | (39,958 | ) |
| Balance at end of year                    |   | $                  | 818,998 |   |              | $      | 929,696 |   |
|                                      |   |               |    |   |              |   |   |   |

| (6)   | Allowance for Loan Losses |
|-----------------|---------------------------|

----

| ·   | Commercial, financial & agricultural loans |
|--------------------|------------------------------------------------|

| ·   | Commercial real estate mortgages |
|--------------------|----------------------------------|

| ·   | Real estate -- construction loans |
|--------------------|-----------------------------------|

| ·   | Residential mortgages (1st and 2nd liens) |
|--------------------|-------------------------------------------|

| ·   | Home equity loans |
|--------------------|-------------------|

| ·   | Consumer loans |
|--------------------|----------------|

----

|                                                                                             |   | Commercial, financial, and agricultural |    |   | Commercial real estate mortgages |   |    | Real estate construction loans |   |   | Residential mortgages (1st and 2nd liens) |   |   | Home equity loans |    |   | Consumer loans |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|--------|----------------------------------|--------|---------|--------------------------------|--------|--------|-------------------------------------------|--------|--------|-------------------|---------|--------|----------------|--------|--------|--------|--------|
| Allowance for loan losses:                                                                       |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |
| Ending balance (total allowance)                                                                 |   | $                                            | 16,319  |   |                             | $      | 8,851   |                           |   | $      | 176                                       |   |   | $                 | 2,286   |   |           | $      | 1,406  |   |   | $ | 189 |   |   | $ | 29,227 |   |
| Ending balance: individually                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |
|     evaluated for impairment                                                 |   |                                         | 3,336   |   |                             |   | 281     |                           |   |   | -                                         |   |   |              | 930     |   |           |   | 468    |   |   |   | 4 |   |   |   | 5,019 |   |
| Ending balance: collectively                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    evaluated for impairment                                                  |   |                                         | 12,983  |   |                             |   | 8,570   |                           |   |   | 176                                       |   |   |              | 1,356   |   |           |   | 938    |   |   |   | 185 |   |   |   | 24,208 |   |
| Loan balances:                                                                                   |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance (loan portfolio) (1)                                                              |   | $                                            | 200,093 |   |                             | $      | 364,317 |                           |   | $      | 43,632                                    |   |   | $                 | 146,642 |   |           | $      | 75,223 |   |   | $ | 17,890 |   |   | $ | 847,797 |   |
| Ending balance: individually                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |
|    evaluated for impairment                                                       |   |                                         | 24,379  |   |                             |   | 31,636  |                           |   |   | 17,111                                    |   |   |              | 7,501   |   |           |   | 3,560  |   |   |   | 502 |   |   |   | 84,689 |   |
| Ending balance: collectively                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|    evaluated for impairment                                                       |   |                                         | 175,714 |   |                             |   | 332,681 |                           |   |   | 26,521                                    |   |   |              | 139,141 |   |           |   | 71,663 |   |   |   | 17,388 |   |   |   | 763,108 |   |
| (1) Other loans of $428, not included here, consist primarily of advances under lines of credit. |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |

|                                                                                             |   | Commercial, financial, and agricultural |    |   | Commercial real estate mortgages |   |    | Real estate construction loans |   |   | Residential mortgages (1st and 2nd liens) |   |   | Home equity loans |    |   | Consumer loans |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|--------|----------------------------------|--------|---------|--------------------------------|--------|--------|-------------------------------------------|--------|--------|-------------------|---------|--------|----------------|--------|--------|--------|--------|
| Allowance for loan losses:                                                                       |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |
| Ending balance (total allowance)                                                                 |   | $                                            | 25,080  |   |                             | $      | 11,029  |                           |   | $      | 623                                       |   |   | $                 | 2,401   |   |           | $      | 512    |   |   | $ | 313 |   |   | $ | 39,958 |   |
| Ending balance: individually                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |
| evaluated for impairment                                                                    |   |                                         | 7,477   |   |                             |   | 3,092   |                           |   |   | 57                                        |   |   |              | -       |   |           |   | -      |   |   |   | - |   |   |   | 10,626 |   |
| Ending balance: collectively                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|     evaluated for impairment                                                 |   |                                         | 17,603  |   |                             |   | 7,937   |                           |   |   | 566                                       |   |   |              | 2,401   |   |           |   | 512    |   |   |   | 313 |   |   |   | 29,332 |   |
| Loan balances:                                                                                   |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance (loan portfolio) (1)                                                              |   | $                                            | 206,652 |   |                             | $      | 428,646 |                           |   | $      | 49,704                                    |   |   | $                 | 160,619 |   |           | $      | 79,684 |   |   | $ | 43,806 |   |   | $ | 969,111 |   |
| Ending balance: individually                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |
| evaluated for impairment                                                                    |   |                                         | 36,559  |   |                             |   | 66,402  |                           |   |   | 19,251                                    |   |   |              | 8,345   |   |           |   | 3,897  |   |   |   | 646 |   |   |   | 135,100 |   |
| Ending balance: collectively                                                                     |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |              |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| evaluated for impairment                                                                    |   |                                         | 170,093 |   |                             |   | 362,244 |                           |   |   | 30,453                                    |   |   |              | 152,274 |   |           |   | 75,787 |   |   |   | 43,160 |   |   |   | 834,011 |   |
| (1) Other loans of $543, not included here, consist primarily of advances under lines of credit. |   |                                         |    |   |                             |   |    |                           |   |   |                                      |   |   |

|                                                                                             |   | Past Due     |   |   |         |   |   |             |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|------------------|--------|
|                                                                                             |   | 30 - 59 days |   |   | 60 - 89 days |   |   | 90 days and over |   |   | Total |   |   | Current |   |   | Total |   |
| Commercial:                                                                                      |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial                                                                            |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |
| and agricultural                                                                                 |   | $            | 1,047  |   |         | $      | 1,134  |             |   | $ | 15,633 |   |   | $ | 7,814 |   |   | $ | 182,279 |   |   | $ | 200,093 |   |
| Commercial real estate                                                                           |   |         | 3,131  |   |         |   | 596    |             |   |   | 22,541 |   |   |   | 26,268 |   |   |   | 338,049 |   |   |   | 364,317 |   |
| Real estate construction loans                                                                   |   |         | -      |   |         |   | 4,250  |             |   |   | 6,334 |   |   |   | 10,584 |   |   |   | 33,048 |   |   |   | 43,632 |   |
| Consumer:                                                                                        |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgages                                                                            |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1st and 2nd liens)                                                                              |   |         | 3,181  |   |         |   | -      |             |   |   | 5,847 |   |   |   | 9,028 |   |   |   | 137,614 |   |   |   | 146,642 |   |
| Home equity loans                                                                                |   |         | 100    |   |         |   | -      |             |   |   | 3,560 |   |   |   | 3,660 |   |   |   | 71,563 |   |   |   | 75,223 |   |
| Consumer loans                                                                                   |   |         | 343    |   |         |   | -      |             |   |   | 164 |   |   |   | 507 |   |   |   | 17,383 |   |   |   | 17,890 |   |
| Total (1)                                                                                        |   | $            | 7,802  |   |         | $      | 5,980  |             |   | $ | 54,079 |   |   | $ | 67,861 |   |   | $ | 779,936 |   |   | $ | 847,797 |   |
| (1) Other loans of $428, not included here, consist primarily of advances under lines of credit. |   |         |   |   |         |   |   |             |   |

----

|                                                                                             |   | Past Due     |   |   |         |   |   |             |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|------------------|--------|
|                                                                                             |   | 30 - 59 days |   |   | 60 - 89 days |   |   | 90 days and over |   |   | Total |   |   | Current |   |   | Total |   |
| Commercial:                                                                                      |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial                                                                            |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |
| and agricultural                                                                                 |   | $            | 9,774  |   |         | $      | 8,574  |             |   | $ | 16,867 |   |   | $ | 35,215 |   |   | $ | 171,437 |   |   | $ | 206,652 |   |
| Commercial real estate                                                                           |   |         | 4,981  |   |         |   | 4,843  |             |   |   | 45,344 |   |   |   | 55,168 |   |   |   | 373,478 |   |   |   | 428,646 |   |
| Real estate construction loans                                                                   |   |         | 1,282  |   |         |   | -      |             |   |   | 6,978 |   |   |   | 8,260 |   |   |   | 41,444 |   |   |   | 49,704 |   |
| Consumer:                                                                                        |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential mortgages                                                                            |   |         |   |   |         |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1st and 2nd liens)                                                                              |   |         | 3,479  |   |         |   | 1,144  |             |   |   | 7,028 |   |   |   | 11,651 |   |   |   | 148,968 |   |   |   | 160,619 |   |
| Home equity loans                                                                                |   |         | -      |   |         |   | 198    |             |   |   | 3,897 |   |   |   | 4,095 |   |   |   | 75,589 |   |   |   | 79,684 |   |
| Consumer loans                                                                                   |   |         | 215    |   |         |   | 78     |             |   |   | 646 |   |   |   | 939 |   |   |   | 42,867 |   |   |   | 43,806 |   |
| Total (1)                                                                                        |   | $            | 19,731 |   |         | $      | 14,837 |             |   | $ | 80,760 |   |   | $ | 115,328 |   |   | $ | 853,783 |   |   | $ | 969,111 |   |
| (1) Other loans of $543, not included here, consist primarily of advances under lines of credit. |   |         |   |   |         |   |   |             |   |

|                                                       |   | June 30, 2012            |   |   | December 31, 2011 |   |
|------------------------------------------------------------|--------|--------------------------|--------|--------|-------------------|--------|
|                                                       |   | Impaired Loans           |   |   | Impaired Loans    |   |
|                                                       |   | Unpaid Principal Balance |   |   | Recorded Balance  |   |   | Allowance Allocated |   |   | Unpaid Principal Balance |   |   | Recorded Balance |   |   | Allowance Allocated |   |
| With no allowance recorded:                                |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Commercial, financial & agricultural loans |   | $                        | 12,648 |   |              | $      | 12,401 |   |   | $ | - |   |   | $ | 21,162 |   |   | $ | 20,885 |   |   | $ | - |   |
|   Commercial real estate mortgages               |   |                     | 34,233 |   |              |   | 29,530 |   |   |   | - |   |   |   | 52,679 |   |   |   | 46,687 |   |   |   | - |   |
|   Real estate construction loans                 |   |                     | 19,983 |   |              |   | 17,111 |   |   |   | - |   |   |   | 19,939 |   |   |   | 17,044 |   |   |   | - |   |
|   Residential mortgages (1st & 2nd liens)    |   |                     | -      |   |              |   | - |   |   |   | - |   |   |   | 8,914 |   |   |   | 8,345 |   |   |   | - |   |
|   Home equity loans                              |   |                     | -      |   |              |   | - |   |   |   | - |   |   |   | 3,995 |   |   |   | 3,897 |   |   |   | - |   |
|   Consumer loans                                 |   |                     | -      |   |              |   | - |   |   |   | - |   |   |   | 646 |   |   |   | 646 |   |   |   | - |   |
|   Subtotal                                       |   | $                        | 66,864 |   |              | $      | 59,042 |   |   | $ | - |   |   | $ | 107,335 |   |   | $ | 97,504 |   |   | $ | - |   |
|                                                       |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| With an allowance recorded:                                |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Commercial, financial & agricultural loans |   | $                        | 12,361 |   |              | $      | 11,977 |   |   | $ | 3,336 |   |   | $ | 15,877 |   |   | $ | 15,674 |   |   | $ | 7,477 |   |
|   Commercial real estate mortgages               |   |                     | 2,128  |   |              |   | 2,106 |   |   |   | 281 |   |   |   | 20,609 |   |   |   | 19,715 |   |   |   | 3,092 |   |
|   Real estate construction loans                 |   |                     | -      |   |              |   | - |   |   |   | - |   |   |   | 2,207 |   |   |   | 2,207 |   |   |   | 57 |   |
|   Residential mortgages (1st & 2nd liens)    |   |                     | 8,397  |   |              |   | 7,501 |   |   |   | 930 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Home equity loans                              |   |                     | 3,838  |   |              |   | 3,560 |   |   |   | 468 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Consumer loans                                 |   |                     | 502    |   |              |   | 502 |   |   |   | 4 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Subtotal                                       |   | $                        | 27,226 |   |              | $      | 25,646 |   |   | $ | 5,019 |   |   | $ | 38,693 |   |   | $ | 37,596 |   |   | $ | 10,626 |   |
| Total                                                      |   | $                        | 94,090 |   |              | $      | 84,688 |   |   | $ | 5,019 |   |   | $ | 146,028 |   |   | $ | 135,100 |   |   | $ | 10,626 |   |
|                                                       |   |                     |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                           |   | Quarter Ended June 30, 2012                   |    |   | Quarter Ended June 30, 2011                  |   |
|------------------------------------------------|--------|-----------------------------------------------|---------|--------|----------------------------------------------|--------|
|                                           |   | Impaired Loans                                |    |   | Impaired Loans                               |   |
|                                           |   | Average recorded investment in impaired loans |    |   | Interest income recognized on impaired loans |   |   | Interest income recognized on a cash basis on impaired loans |   | Average recorded investment in impaired loans |   |   | Interest income recognized on impaired loans |   |   | Interest income recognized on a cash basis on impaired loans |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial & agricultural loans |   | $                                             | 28,398  |   |                                         | $      | 315 |   |   | $ | - |   |   | $ | 23,034 |   |   | $ | 336 |   |   | $ | - |   |
| Commercial real estate mortgages               |   |                                          | 54,531  |   |                                         |   | 259 |   |   |   | - |   |   |   | 60,316 |   |   |   | 555 |   |   |   | - |   |
| Real estate construction loans                 |   |                                          | 18,093  |   |                                         |   | 338 |   |   |   | - |   |   |   | 30,027 |   |   |   | - |   |   |   | - |   |
| Residential mortgages (1st & 2nd liens)    |   |                                          | 1,898   |   |                                         |   | 85 |   |   |   | - |   |   |   | 6,887 |   |   |   | - |   |   |   | - |   |
| Home equity loans                              |   |                                          | 3,863   |   |                                         |   | - |   |   |   | - |   |   |   | 3,687 |   |   |   | - |   |   |   | - |   |
| Consumer loans                                 |   |                                          | 624     |   |                                         |   | - |   |   |   | - |   |   |   | 182 |   |   |   | - |   |   |   | - |   |
| Total                                          |   | $                                             | 107,407 |   |                                         | $      | 997 |   |   | $ | - |   |   | $ | 124,133 |   |   | $ | 891 |   |   | $ | - |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | Six Months Ended June 30, 2012                |    |   | Six Months Ended June 30, 2011               |   |
|                                           |   | Impaired Loans                                |    |   | Impaired Loans                               |   |
|                                           |   | Average recorded investment in impaired loans |    |   | Interest income recognized on impaired loans |   |   | Interest income recognized on a cash basis on impaired loans |   | Average recorded investment in impaired loans |   |   | Interest income recognized on impaired loans |   |   | Interest income recognized on a cash basis on impaired loans |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial & agricultural loans |   | $                                             | 31,425  |   |                                         | $      | 315 |   |   | $ | - |   |   | $ | 20,863 |   |   | $ | 606 |   |   | $ | - |   |
| Commercial real estate mortgages               |   |                                          | 60,363  |   |                                         |   | 259 |   |   |   | - |   |   |   | 57,113 |   |   |   | 1,356 |   |   |   | - |   |
| Real estate construction loans                 |   |                                          | 18,557  |   |                                         |   | 338 |   |   |   | - |   |   |   | 29,450 |   |   |   | - |   |   |   | - |   |
| Residential mortgages (1st & 2nd liens)    |   |                                          | 8,287   |   |                                         |   | 85 |   |   |   | - |   |   |   | 5,765 |   |   |   | - |   |   |   | - |   |
| Home equity loans                              |   |                                          | 3,900   |   |                                         |   | - |   |   |   | - |   |   |   | 2,776 |   |   |   | - |   |   |   | - |   |
| Consumer loans                                 |   |                                          | 641     |   |                                         |   | - |   |   |   | - |   |   |   | 145 |   |   |   | - |   |   |   | - |   |
| Total                                          |   | $                                             | 123,173 |   |                                         | $      | 997 |   |   | $ | - |   |   | $ | 116,112 |   |   | $ | 1,962 |   |   | $ | - |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   |                                          |    |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                           |   |     |   |   |          |   |
|------------------------------------------------|--------|----------|--------|--------|---------------|--------|
|                                           |   | June 30, |   |   | De cember 31, |   |
|                                           |   | 2012     |   |   | 2011          |   |
| Non-accrual Loans                              |   | $        | 54,079 |   |          | $      | 80,760 |   |
| Non-accrual Loans Held-for-Sale                |   |     | 7,500  |   |          |   | - |   |
| Loans 90 Days Past Due and Still Accruing      |   |     | -      |   |          |   | - |   |
| Other Real Estate Owned                        |   |     | 2,172  |   |          |   | 1,800 |   |
| Total Non-performing Assets                    |   | $        | 63,751 |   |          | $      | 82,560 |   |
| Troubled debt restructurings accruing interest |   | $        | 9,789  |   |          | $      | 1,496 |   |
| Troubled debt restructurings - nonaccruing     |   | $        | 15,834 |   |          | $      | 24,979 |   |

----

|                                        |   | Non-accrual Loans |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   |              |   |   |   |   |   | Total |   |   | % of |   |   |   |   |   |   |   |   | Total |   |   | % of |   |
|                                        |   |              |   |   | % of |   |   | Loans (1) |   |   | Total |   |   |   |   |   | % of |   |   | Loans (1) |   |   | Total |   |
|                                        |   | 6/30/2012         |   |   | Total |   |   | 6/30/2012 |   |   | Loans |   |   | 12/31/2011 |   |   | Total |   |   | 12/31/2011 |   |   | Loans |   |
| Commercial, financial & agricultural    |   | $                 | 15,633 |   |   |   | 28.9 | % |   | $ | 200,093 |   |   |   | 1.8 | % |   | $ | 16,867 |   |   |   | 20.9 | % |   | $ | 206,652 |   |   |   | 1.7 | % |
| Commercial real estate mortgages            |   |              | 22,541 |   |   |   | 41.7 |   |   |   | 364,317 |   |   |   | 2.7 |   |   |   | 45,344 |   |   |   | 56.2 |   |   |   | 428,646 |   |   |   | 4.7 |   |
| Real estate construction loans              |   |              | 6,334  |   |   |   | 11.7 |   |   |   | 43,632 |   |   |   | 0.8 |   |   |   | 6,978 |   |   |   | 8.6 |   |   |   | 49,704 |   |   |   | 0.7 |   |
| Residential mortgages (1st & 2nd liens) |   |              | 5,847  |   |   |   | 10.8 |   |   |   | 146,642 |   |   |   | 0.7 |   |   |   | 7,028 |   |   |   | 8.7 |   |   |   | 160,619 |   |   |   | 0.7 |   |
| Home equity loans                           |   |              | 3,560  |   |   |   | 6.6 |   |   |   | 75,223 |   |   |   | 0.4 |   |   |   | 3,897 |   |   |   | 4.8 |   |   |   | 79,684 |   |   |   | 0.4 |   |
| Consumer loans                              |   |              | 164    |   |   |   | 0.3 |   |   |   | 17,890 |   |   |   | - |   |   |   | 646 |   |   |   | 0.8 |   |   |   | 43,806 |   |   |   | 0.1 |   |
| Other loans                                 |   |              | -      |   |   |   | - |   |   |   | 428 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 543 |   |   |   | - |   |
| Total non-accrual loans                     |   | $                 | 54,079 |   |   |   | 100.0 | % |   | $ | 848,225 |   |   |   | 6.4 | % |   | $ | 80,760 |   |   |   | 99.9 | % |   | $ | 969,654 |   |   |   | 8.3 | % |
| (1) Net of unearned discount                |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                               |   | June 30, 2012     |   |   | December 31, 2011 |   |
|----------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                               |   | Non-accrual Loans |   |   | Non-accrual Loans |   |
|                                               |   | Principal Balance |   |   | Collateral Value  |   |   | Principal Balance |   |   | Collateral Value |   |   |
| Commercial, financial & agricultural loans (1) |   | $                 | 15,633 |   |              | $      | - |   |   | $ | 16,867 |   |   | $ | - |   |   |
| Commercial real estate mortgages                   |   |              | 22,541 |   |              |   | 52,840 |   |   |   | 45,344 |   |   |   | 68,067 |   |   |
| Real estate construction loans                     |   |              | 6,334  |   |              |   | 2,666 |   |   |   | 6,978 |   |   |   | 6,715 |   |   |
| Residential mortgages (1st and 2nd liens)          |   |              | 5,847  |   |              |   | 14,319 |   |   |   | 7,028 |   |   |   | 14,133 |   |   |
| Home equity loans                                  |   |              | 3,560  |   |              |   | 7,145 |   |   |   | 3,897 |   |   |   | 7,438 |   |   |
| Consumer loans                                     |   |              | 164    |   |              |   | - |   |   |   | 646 |   |   |   | - |   |   |
| Total                                              |   | $                 | 54,079 |   |              | $      | 76,970 |   |   | $ | 80,760 |   |   | $ | 96,353 |   |   |
|                                               |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                   |   | Commercial, financial, and agricultural |    |   | Commercial real estate mortgages |   |    | Real estate construction loans |   |   | Residential mortgages (1st and 2nd liens) |    |      | Home equity loans |   |   | Consumer loans (4) |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|----------------------------------|--------|---------|--------------------------------|--------|--------|-------------------------------------------|---------|-----------|-------------------|--------|--------|--------------------|--------|--------|--------|--------|
| Unimpaired loans:                                                                                      |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |              |   |   |               |   |   |   |   |   |   |
| Total pass loans (1)                                                                                   |   | $                                       | 150,656 |   |                             | $      | 281,960 |                           |   | $      | 7,551                                     |    |      |              |   | $      | 139,141            |   |   | $      | 71,664 |   |   | $ | 17,388 |   |   | $ | 668,360 |   |
| Loss factor (2)                                                                                        |   |                                    | 7.38    | %      |                             |   | 2.49    | %                              |   |   | 0.61                                      | %       |      |              |   |   | 0.97               | %      |   |   | 1.31   | % |   |   | 1.06 | % |   |   | 3.09 | % |
| Reserve                                                                                                |   |                                    | 11,111  |   |                             |   | 7,020   |                           |   |   | 46                                        |    |      |              |   |   | 1,356              |   |   |   | 938    |   |   |   | 185 |   |   |   | 20,656 |   |
| Total special mention loans                                                                            |   |                                    | 11,561  |   |                             |   | 34,191  |                           |   |   | 3,962                                     |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 49,714 |   |
| Loss factor                                                                                            |   |                                    | 6.31    | %      |                             |   | 2.87    | %                              |   |   | 0.58                                      | %       |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 3.49 | % |
| Reserve                                                                                                |   |                                    | 729     |   |                             |   | 981     |                           |   |   | 23                                        |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 1,733 |   |
| Total substandard loans                                                                                |   |                                    | 13,497  |   |                             |   | 16,529  |                           |   |   | 15,008                                    |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 45,034 |   |
| Loss factor                                                                                            |   |                                    | 8.47    | %      |                             |   | 3.44    | %                              |   |   | 0.71                                      | %       |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 4.04 | % |
| Reserve                                                                                                |   |                                    | 1,143   |   |                             |   | 569     |                           |   |   | 107                                       |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 1,819 |   |
| Impaired loans:                                                                                        |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total substandard loans                                                                                |   |                                    | 24,379  |   |                             |   | 31,637  |                           |   |   | 15,465                                    |    |      |              |   |   | 7,501              |   |   |   | 3,559  |   |   |   | 502 |   |   |   | 83,043 |   |
| Loss factor                                                                                            |   |                                    | 13.68   | %      |                             |   | 0.89    | %                              |   |   | 0.00                                      | %       | (3)  |              |   |   | 12.40              | %      |   |   | 13.15  | % |   |   | 0.80 | % |   |   | 6.04 | % |
| Reserve                                                                                                |   |                                    | 3,336   |   |                             |   | 281     |                           |   |   | -                                         |    |      |              |   |   | 930                |   |   |   | 468    |   |   |   | 4 |   |   |   | 5,019 |   |
| Total doubtful loans                                                                                   |   |                                    | -       |   |                             |   | -       |                           |   |   | 1,646                                     |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 1,646 |   |
| Loss factor                                                                                            |   |                                    |    |   |                             |   |    |                           |   |   | 0.00                                 | %  |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 0.00 | % |
| Reserve                                                                                                |   |                                    | -       |   |                             |   | -       |                           |   |   | -                                         |    |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Total unimpaired loans                                                                                 |   | $                                       | 175,714 |   |                             | $      | 332,680 |                           |   | $      | 26,521                                    |    |      |              |   | $      | 139,141            |   |   | $      | 71,664 |   |   | $ | 17,388 |   |   | $ | 763,108 |   |
| Total reserve on unimpaired loans                                                                      |   | $                                       | 12,983  |   |                             | $      | 8,570   |                           |   | $      | 176                                       |    |      |              |   | $      | 1,356              |   |   | $      | 938    |   |   | $ | 185 |   |   | $ | 24,208 |   |
| (1) Other loans of $428, not included here, consist primarily of advances under lines of credit.       |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |
| (2) Loss factor calculation is reserve as a percentage of balance for a loan class.                    |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |              |   |   |               |   |   |
| (3) Loss factor is driven by higher collateral positions and charge-offs taken within this loan class. |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |
| (4) Net of unearned discount.                                                                          |   |                                    |    |   |                             |   |    |                           |   |   |                                      |    |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                   |   | Commercial, financial, and agricultural |    |   | Commercial real estate mortgages |   |    | Real estate construction loans |   |   | Residential mortgages (1st and 2nd liens) |   |      | Home equity loans |   |   | Consumer loans (4) |   |   | Total  |   |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|----------------------------------|--------|---------|--------------------------------|--------|--------|-------------------------------------------|--------|-----------|-------------------|--------|--------|--------------------|--------|--------|--------|--------|
| Unimpaired loans:                                                                                      |   |                                    |    |   |                             |   |    |                           |   |   |                                      |   |      |              |   |   |               |   |   |   |   |   |   |
| Total pass loans (1)                                                                                   |   | $                                       | 151,553 |   |                             | $      | 289,856 |                           |   | $      | 4,932                                     |   |      |              |   | $      | 152,274            |   |   | $      | 75,787 |   |   | $ | 31,385 |   |   | $ | 705,787 |   |
| Loss factor (2)                                                                                        |   |                                    | 9.98    | %      |                             |   | 2.19    | %                              |   |   | 1.74                                      | %      |      |              |   |   | 1.58               | %      |   |   | 0.68   | % |   |   | 1.00 | % |   |   | 3.51 | % |
| Reserve                                                                                                |   |                                    | 15,121  |   |                             |   | 6,359   |                           |   |   | 86                                        |   |      |              |   |   | 2,401              |   |   |   | 512    |   |   |   | 313 |   |   |   | 24,792 |   |
| Total special mention loans                                                                            |   |                                    | 16,448  |   |                             |   | 41,283  |                           |   |   | 7,772                                     |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 65,503 |   |
| Loss factor                                                                                            |   |                                    | 8.68    | %      |                             |   | 2.18    | %                              |   |   | 1.88                                      | %      |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 3.78 | % |
| Reserve                                                                                                |   |                                    | 1,428   |   |                             |   | 900     |                           |   |   | 146                                       |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 2,474 |   |
| Total substandard loans                                                                                |   |                                    | 13,892  |   |                             |   | 31,105  |                           |   |   | 17,749                                    |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 62,746 |   |
| Loss factor                                                                                            |   |                                    | 7.59    | %      |                             |   | 2.18    | %                              |   |   | 1.88                                      | %      |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 3.29 | % |
| Reserve                                                                                                |   |                                    | 1,054   |   |                             |   | 678     |                           |   |   | 334                                       |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 2,066 |   |
| Impaired loans:                                                                                        |   |                                    |    |   |                             |   |    |                           |   |   |                                      |   |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total substandard loans                                                                                |   |                                    | 36,316  |   |                             |   | 66,402  |                           |   |   | 17,639                                    |   |      |              |   |   | 8,345              |   |   |   | 3,897  |   |   |   | 646 |   |   |   | 133,245 |   |
| Loss factor                                                                                            |   |                                    | 20.52   | %      |                             |   | 4.66    | %                              |   |   | 0.32                                      | %      | (3)  |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 7.96 | % |
| Reserve                                                                                                |   |                                    | 7,452   |   |                             |   | 3,092   |                           |   |   | 57                                        |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 10,601 |   |
| Total doubtful loans                                                                                   |   |                                    | 243     |   |                             |   | -       |                           |   |   | 1,612                                     |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 1,855 |   |
| Loss factor                                                                                            |   |                                    | 10.29   | %      |                             |   |    |                           |   |   | 0.00                                      | %      |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   | 1.35 | % |
| Reserve                                                                                                |   |                                    | 25      |   |                             |   | -       |                           |   |   | -                                         |   |      |              |   |   | -                  |   |   |   | -      |   |   |   | - |   |   |   | 25 |   |
| Total unimpaired loans                                                                                 |   | $                                       | 181,893 |   |                             | $      | 362,244 |                           |   | $      | 30,453                                    |   |      |              |   | $      | 152,274            |   |   | $      | 75,787 |   |   | $ | 31,385 |   |   | $ | 834,036 |   |
| Total reserve on unimpaired loans                                                                      |   | $                                       | 17,603  |   |                             | $      | 7,937   |                           |   | $      | 566                                       |   |      |              |   | $      | 2,401              |   |   | $      | 512    |   |   | $ | 313 |   |   | $ | 29,332 |   |
| (1) Other loans of $543, not included here, consist primarily of advances under lines of credit.       |   |                                    |    |   |                             |   |    |                           |   |
| (2) Loss factor calculation is specific reserve as a percentage of balance for a loan class.           |   |                                    |    |   |                             |   |    |                           |   |
| (3) Loss factor is driven by higher collateral positions and charge-offs taken within this loan class. |   |                                    |    |   |                             |   |    |                           |   |
| (4) Net of unearned discount.                                                                          |   |                                    |    |   |                             |   |    |                           |   |   |                                      |   |      |              |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                               |   | Commercial and Industrial |   |   | Commercial Real Estate |   |   | Real Estate Construction Loans |   |   | Residential mortgages (1st and 2nd liens) |   |   | Home equity loans |   |   | Consumer loans |   |   | Total  |   |
|------------------------------------|--------|---------------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------------------|--------|--------|-------------------|--------|--------|----------------|--------|--------|--------|--------|
|                               |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |
| Three months ended June 30, 2012   |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |
| Balance at beginning of period     |   | $                         | 25,598 |   |                   | $      | 11,029 |                           |   | $      | 623                                       |   |   | $                 | 2,007  |   |           | $      | 451    |   |   | $ | 300 |   |   | $ | 40,008 |   |
| Charge-offs                        |   |                      | (790   | )      |                   |   | (7,692 | )                              |   |   | -                                         |   |   |              | (193   | )      |           |   | (532   | )      |   |   | (50 | ) |   |   | (9,257 | ) |
| Recoveries                         |   |                      | 769    |   |                   |   | -      |                           |   |   | 80                                        |   |   |              | 1      |   |           |   | -      |   |   |   | 26 |   |   |   | 876 |   |
| (Credit) provision for loan losses |   |                      | (9,258 | )      |                   |   | 5,514  |                           |   |   | (527                                      | )      |   |              | 471    |   |           |   | 1,487  |   |   |   | (87 | ) |   |   | (2,400 | ) |
| Balance at end of period           |   | $                         | 16,319 |   |                   | $      | 8,851  |                           |   | $      | 176                                       |   |   | $                 | 2,286  |   |           | $      | 1,406  |   |   | $ | 189 |   |   | $ | 29,227 |   |
|                               |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Three months ended June 30, 2011   |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period     |   | $                         | 27,642 |   |                   | $      | 10,599 |                           |   | $      | 5,694                                     |   |   | $                 | 615    |   |           | $      | 2,282  |   |   | $ | 707 |   |   | $ | 47,539 |   |
| Charge-offs                        |   |                      | (562   | )      |                   |   | -      |                           |   |   | -                                         |   |   |              | (363   | )      |           |   | -      |   |   |   | (87 | ) |   |   | (1,012 | ) |
| Recoveries                         |   |                      | 141    |   |                   |   | -      |                           |   |   | -                                         |   |   |              | 1      |   |           |   | -      |   |   |   | 25 |   |   |   | 167 |   |
| Provision for loan losses          |   |                      | 3,265  |   |                   |   | 611    |                           |   |   | (1,531                                    | )      |   |              | 1,438  |   |           |   | (374   | )      |   |   | (192 | ) |   |   | 3,217 |   |
| Balance at end of period           |   | $                         | 30,486 |   |                   | $      | 11,210 |                           |   | $      | 4,163                                     |   |   | $                 | 1,691  |   |           | $      | 1,908  |   |   | $ | 453 |   |   | $ | 49,911 |   |
|                               |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Six months ended June 30, 2012     |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period     |   | $                         | 25,080 |   |                   | $      | 11,029 |                           |   | $      | 623                                       |   |   | $                 | 2,401  |   |           | $      | 512    |   |   | $ | 313 |   |   | $ | 39,958 |   |
| Charge-offs                        |   |                      | (1,127 | )      |                   |   | (7,692 | )                              |   |   | -                                         |   |   |              | (588   | )      |           |   | (593   | )      |   |   | (82 | ) |   |   | (10,082 | ) |
| Recoveries                         |   |                      | 1,624  |   |                   |   | -      |                           |   |   | 80                                        |   |   |              | 2      |   |           |   | -      |   |   |   | 45 |   |   |   | 1,751 |   |
| (Credit) provision for loan losses |   |                      | (9,258 | )      |                   |   | 5,514  |                           |   |   | (527                                      | )      |   |              | 471    |   |           |   | 1,487  |   |   |   | (87 | ) |   |   | (2,400 | ) |
| Balance at end of period           |   | $                         | 16,319 |   |                   | $      | 8,851  |                           |   | $      | 176                                       |   |   | $                 | 2,286  |   |           | $      | 1,406  |   |   | $ | 189 |   |   | $ | 29,227 |   |
|                               |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Six months ended June 30, 2011     |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period     |   | $                         | 13,826 |   |                   | $      | 9,226  |                           |   | $      | 3,177                                     |   |   | $                 | 519    |   |           | $      | 1,392  |   |   | $ | 279 |   |   | $ | 28,419 |   |
| Charge-offs                        |   |                      | (1,289 | )      |                   |   | -      |                           |   |   | -                                         |   |   |              | (411   | )      |           |   | (70    | )      |   |   | (144 | ) |   |   | (1,914 | ) |
| Recoveries                         |   |                      | 178    |   |                   |   | -      |                           |   |   | -                                         |   |   |              | 1      |   |           |   | -      |   |   |   | 39 |   |   |   | 218 |   |
| Provision for loan losses          |   |                      | 17,771 |   |                   |   | 1,984  |                           |   |   | 986                                       |   |   |              | 1,582  |   |           |   | 586    |   |   |   | 279 |   |   |   | 23,188 |   |
| Balance at end of period           |   | $                         | 30,486 |   |                   | $      | 11,210 |                           |   | $      | 4,163                                     |   |   | $                 | 1,691  |   |           | $      | 1,908  |   |   | $ | 453 |   |   | $ | 49,911 |   |
|                               |   |                      |   |   |                   |   |   |                           |   |   |                                      |   |   |              |   |   |           |   |   |   |   |   |   |   |   |   |   |   |

----

| ·   | At inception, the loan was properly underwritten, did not possess an unwarranted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loans are inadequately protected by the current net worth and paying capacity of the obligor. |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | Unusual courses of action are needed to maintain a high probability of repayment. |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | The lender is forced into a subordinated or unsecured position due to flaws in documentation. |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | There is a significant deterioration in market conditions to which the borrower is highly vulnerable. |
|--------------------|-------------------------------------------------------------------------------------------------------|

----

| ·   | Loans have all of the weaknesses of those classified as Substandard. However, based on existing conditions, these weaknesses make full collection of principal highly improbable. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Credit Risk Profile By Internally Assigned Grade                                                 |   |
|--------------------------------------------------------------------------------------------------|--------|
|                                                                                             |   | ----------Commercial Credit Exposure---------- |   |   | ----------Consumer Credit Exposure---------- |   |   |   |   |
|                                                                                             |   | Commercial, financial, and agricultural |   | Commercial real estate mortgages |   | Real estate construction loans |   | Residential mortgages (1st and 2nd liens) |   |   | Home equity loans |   |   | Consumer loans |   |   | Total |   |
| Grade:                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass (1)                                                                                         |   | $ | 150,656 |   |   | $ | 281,960 |   |   | $ | 7,551 |   |   | $ | 139,141 |   |   | $ | 71,664 |   |   | $ | 17,388 |   |   | $ | 668,360 |   |
| Special mention                                                                                  |   |   | 11,561 |   |   |   | 34,191 |   |   |   | 3,962 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 49,714 |   |
| Substandard                                                                                      |   |   | 37,876 |   |   |   | 48,166 |   |   |   | 30,473 |   |   |   | 7,501 |   |   |   | 3,559 |   |   |   | 502 |   |   |   | 128,077 |   |
| Doubtful                                                                                         |   |   | - |   |   |   | - |   |   |   | 1,646 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,646 |   |
| Total                                                                                            |   | $ | 200,093 |   |   | $ | 364,317 |   |   | $ | 43,632 |   |   | $ | 146,642 |   |   | $ | 75,223 |   |   | $ | 17,890 |   |   | $ | 847,797 |   |
| (1) Other loans of $428, not included here, consist primarily of advances under lines of credit. |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Credit Risk Profile By Internally Assigned Grade                                                 |   |
|--------------------------------------------------------------------------------------------------|--------|
|                                                                                             |   | ----------Commercial Credit Exposure---------- |   |   | ----------Consumer Credit Exposure---------- |   |   |   |   |
|                                                                                             |   | Commercial, financial, and agricultural |   | Commercial real estate mortgages |   | Real estate construction loans |   | Residential mortgages (1st and 2nd liens) |   |   | Home equity loans |   |   | Consumer loans |   |   | Total |   |
| Grade:                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass (1)                                                                                         |   | $ | 144,952 |   |   | $ | 289,856 |   |   | $ | 4,932 |   |   | $ | 152,274 |   |   | $ | 75,787 |   |   | $ | 43,160 |   |   | $ | 710,961 |   |
| Special mention                                                                                  |   |   | 16,448 |   |   |   | 41,283 |   |   |   | 7,772 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 65,503 |   |
| Substandard                                                                                      |   |   | 45,009 |   |   |   | 97,507 |   |   |   | 35,388 |   |   |   | 8,345 |   |   |   | 3,897 |   |   |   | 646 |   |   |   | 190,792 |   |
| Doubtful                                                                                         |   |   | 243 |   |   |   | - |   |   |   | 1,612 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,855 |   |
| Total                                                                                            |   | $ | 206,652 |   |   | $ | 428,646 |   |   | $ | 49,704 |   |   | $ | 160,619 |   |   | $ | 79,684 |   |   | $ | 43,806 |   |   | $ | 969,111 |   |
| (1) Other loans of $543, not included here, consist primarily of advances under lines of credit. |   |   |   |   |   |   |   |   |   |   |   |   |   |

| The following table presents information regarding troubled debt restructurings as of June 30, 2012 and December 31, 2011 |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|
| (dollars in thousands) :                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   | June 30, 2012 |   |   | December 31, 2011 |   |
| Total Troubled Debt Restructurings                                                                                        |   | Number of Loans |   |   | Outstanding Recorded Balance |   | Number of Loans |   |   | Outstanding Recorded Balance |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial, and agricultural                                                                                   |   |   | 60 |   |   | $ | 9,199 |   |   |   | 52 |   |   | $ | 6,011 |   |
| Commercial, secured by real estate                                                                                        |   |   | 9 |   |   |   | 8,104 |   |   |   | 9 |   |   |   | 12,083 |   |
| Real estate construction loans                                                                                            |   |   | 2 |   |   |   | 5,217 |   |   |   | 2 |   |   |   | 5,183 |   |
| Residential mortgages                                                                                                     |   |   | 12 |   |   |   | 2,853 |   |   |   | 11 |   |   |   | 2,986 |   |
| Consumer                                                                                                                  |   |   | 6 |   |   |   | 250 |   |   |   | 5 |   |   |   | 212 |   |
|                                                                                                                      |   |   | 89 |   |   | $ | 25,623 |   |   |   | 79 |   |   | $ | 26,475 |   |

|                                    |   | For the three months ended |        | For the six months ended |             |
|-----------------------------------------|--------|----------------------------|-------------|--------------------------|------------------|
|                                    |   | June 30, 2012              |        |                     | June 30, 2012    |   |
|                                    |   |                       |        |                     | Pre-Modification |   |   | Post-Modification |   |   | Pre-Modification |   |   | Post-Modification |   |
| New Troubled Debt Restructurings        |   |                       | Outstanding |                     |             | Outstanding |   |   | Outstanding |   |   | Outstanding |   |
|                                    |   | Number of                  |        |                     | Recorded         |   |   | Recorded |   | Number of |   |   | Recorded |   |   | Recorded |   |
|                                    |   | Loans                      |        |                     | Balance          |   |   | Balance |   | Loans |   |   | Balance |   |   | Balance |   |
|                                    |   |                       |        |                     |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial, and agricultural |   |                       | 5           |                     |             | $ | 2,140 |   |   | $ | 2,272 |   |   |   | 14 |   |   | $ | 5,456 |   |   | $ | 5,588 |   |
| Residential mortgages                   |   |                       | 1           |                     |             |   | 81 |   |   |   | 81 |   |   |   | 1 |   |   |   | 81 |   |   |   | 81 |   |
| Consumer                                |   |                       | 1           |                     |             |   | 49 |   |   |   | 49 |   |   |   | 1 |   |   |   | 49 |   |   |   | 49 |   |
|                                    |   |                       | 7           |                     |             | $ | 2,270 |   |   | $ | 2,402 |   |   |   | 16 |   |   | $ | 5,586 |   |   | $ | 5,718 |   |
|                                    |   |                       |        |                     |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| The table below presents by class, information regarding loans modified as troubled debt restructurings in the last 12 months that had payment defaults of 90 days or more during the three months and six months ended June 30, 2012 (dollars in thousands) |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Defaulted Troubled Debt Restructurings                                                                                                                                                                                                                       |   | For the three months ended |   |   | For the six months ended |   |
|                                                                                                                                                                                                                                                         |   | June 30, 2012 |   |   | June 30, 2012 |   |
|                                                                                                                                                                                                                                                         |   |   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |
|                                                                                                                                                                                                                                                         |   | Number |   |   | Recorded |   |   | Number |   |   | Recorded |   |
|                                                                                                                                                                                                                                                         |   | of Loans |   |   | Balance |   |   | of Loans |   |   | Balance |   |
|                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial, and agricultural                                                                                                                                                                                                                      |   |   | 1 |   |   | $ | 1,127 |   |   |   | 2 |   |   | $ | 2,508 |   |
| Commercial, secured by real estate                                                                                                                                                                                                                           |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | - |   |
| Real estate construction loans                                                                                                                                                                                                                               |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1,646 |   |
| Residential mortgages                                                                                                                                                                                                                                        |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 488 |   |
|                                                                                                                                                                                                                                                         |   |   | 1 |   |   | $ | 1,127 |   |   |   | 5 |   |   | $ | 4,642 |   |

| (7)   | Retirement Plan |
|-----------------|-----------------|

|                               |   | Three Months Ended |   |   | Six Months Ended |   |
|------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                               |   | June 30, 2012      |   |   | June 30, 2011    |   |   | June 30, 2012 |   |   | June 30, 2011 |   |
| Service cost                       |   | $                  | 667    |   |             | $      | 545 |   |   | $ | 1,333 |   |   | $ | 1,090 |   |
| Interest cost                      |   |               | 554    |   |             |   | 563 |   |   |   | 1,109 |   |   |   | 1,125 |   |
| Expected return on plan assets     |   |               | (591   | )      |             |   | (560 | ) |   |   | (1,181 | ) |   |   | (1,120 | ) |
| Amortization of prior service cost |   |               | 654    |   |             |   | 244 |   |   |   | 814 |   |   |   | 488 |   |
| Net periodic benefit expense       |   | $                  | 1,284  |   |             | $      | 792 |   |   | $ | 2,075 |   |   | $ | 1,583 |   |
|                               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |

| (8)   | Stock-based Compensation |
|-----------------|--------------------------|

----

|                          |   |      |    |   | Weighted-Average |   |
|-------------------------------|--------|-----------|---------|--------|------------------|--------|
|                          |   | Number    |    |   | Exercise Price   |   |
|                          |   | of Shares |    |   | Per Share        |   |
| Outstanding - January 1, 2012 |   |      | 81,500  |   |             | $      | 26.91 |   |
| Granted                       |   |      | 100,000 |   |             | $      | 12.93 |   |
| Exercised                     |   |      | -       |   |             |   | - |   |
| Forfeited or expired          |   |      | (26,000 | )      |             | $      | 32.29 |   |
| Outstanding - June 30, 2012   |   |      | 155,500 |   |             | $      | 17.02 |   |
|                          |   |      |    |   |             |   |   |   |

| Black-Scholes Assumptions for Options Granted During the Six Months Ended June 30, 2012: |   |
|------------------------------------------------------------------------------------------|--------|
|                                                                                     |   |   |   |
| Risk-free interest rate                                                                  |   |   | 0.83 | % |
| Expected dividend yield                                                                  |   |   | - |   |
| Expected life in years                                                                   |   |   | 10 |   |
| Expected volatility                                                                      |   |   | 42.98 | % |

----

|                     |           |   | Outstanding |   |                   | Exercisable |             |
|--------------------------|----------------|--------|-------------|--------|------------------------|-------------|------------------|
|                     |           |   |        |   |  Weighted-Average |        |             |   |   |   |   |   | Weighted-Average |   |   |   |   |
|                     |           |   |        |   |  Remaining        |        | Weighted-Average |   |   |   |   |   | Remaining |   |   | Weighted-Average |   |
| Range of Exercise Prices |           |   | Shares      |   |  Contractual Life |        | Exercise Price   |   |   | Shares |   |   | Contractual Life |   |   | Exercise Price |   |
| $                        | 10.79 - $12.44 |   |        |   | 90,000                 |        |  9.7 years  |   | $ | 11.47 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| $                        | 13.13 - $13.44 |   |        |   | 60,000                 |        |  9.7 years  |   | $ | 13.34 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| $                        | 28.30 - $31.83 |   |        |   | 19,000                 |        |  4.6 years  |   | $ | 30.36 |   |   |   | 19,000 |   |   | 4.6 years |   |   | $ | 30.36 |   |
| $                        | 32.90 - $34.95 |   |        |   | 16,500                 |        |  3.7 years  |   | $ | 34.00 |   |   |   | 16,500 |   |   | 3.7 years |   |   | $ | 34.00 |   |
|                     |           |   |        |   | 185,500                |        |  8.6 years  |   | $ | 16.01 |   |   |   | 35,500 |   |   | 4.2 years |   |   | $ | 32.05 |   |
|                     |           |   |        |   |                   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (9)   | Income Taxes |
|-----------------|--------------|

| (10)   |  Regulatory Matters |
|------------------|--------------------------|

| -   | Hired a new, qualified, and highly-experienced President and Chief Executive Officer effective December 31, 2011. |
|---------------|-------------------------------------------------------------------------------------------------------------------|

----

| -   | Hired a new, qualified, and highly-experienced Chief Lending Officer during the second quarter of 2011.  During the first quarter of 2012, the Chief Lending Officer was promoted into the newly created position of Chief Credit Officer. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Hired a new, qualified, highly-experienced Chief Lending Officer during the first quarter of 2012. |
|---------------|---------------------------------------------------------------------------------------------------------|

| -   | During the first quarter of 2012, hired a qualified and highly-experienced Chief Financial Officer with sufficient knowledge of U.S. GAAP, regulatory accounting and the banking industry and the skills to implement this knowledge. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Improved credit function by hiring a new loan administrator, additional underwriting staff and a loan workout specialist. |
|---------------|---------------------------------------------------------------------------------------------------------------------------|

| -   | During the first quarter of 2012, hired a qualified and highly-experienced Comptroller with sufficient knowledge of U.S. GAAP, regulatory accounting and the banking industry and the skills to implement this knowledge. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | During the third quarter of 2012, created and filled the position of Financial Reporting Manager with experience in regulatory and SEC reporting. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Created and filled the position of Treasurer to further relieve the Chief Financial Officer of day-to-day duties in asset liability management, investment portfolio management, and additional treasury functions. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | During the second quarter of 2012, hired a qualified and highly experienced General Counsel and Corporate Secretary with prior experience as general counsel of publicly held financial institutions. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Appointed a Vice Chairman of the Board of Directors, who was subsequently named Chairman in May 2012, to provide daily oversight of management on behalf of the full Board and to communicate back to the Board. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Outsourced the internal audit function to a qualified risk management firm to provide greater independence and depth to the function. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------|

----

| -   | Reorganized the credit department to ensure appropriate separation of duties and developed expanded training for lenders. |
|---------------|---------------------------------------------------------------------------------------------------------------------------|

| -   | Hired a senior credit officer to run a newly created separate loan review and workout department. |
|---------------|---------------------------------------------------------------------------------------------------|

| -   | Changed the Bank’s credit policy to require identification of concentrations of risk, analysis of our customer’s global cash flows, reappraisal and re-evaluation of collateral, more accurate and timely credit-risk rating procedures and improved underwriting processes and standards. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Incorporated the results of a systematic re-appraisal of commercial real estate which secures loans in excess of $1 million. |
|---------------|------------------------------------------------------------------------------------------------------------------------------|

| -   | Engaged qualified outside consultants to assist in re-evaluating risk ratings. |
|---------------|--------------------------------------------------------------------------------|

| -   | Improved the processes for identifying loans and the determination of the amount of impairment. |
|---------------|-------------------------------------------------------------------------------------------------|

| -   | Augmented the Bank’s credit policy to govern loan workout. |
|---------------|------------------------------------------------------------------|

| -   | Implemented a new procedure to ensure that OREO was accounted for in accordance with U.S. GAAP. |
|---------------|-------------------------------------------------------------------------------------------------|

----

| (11)   |  Legal Proceedings |
|------------------|-------------------------|

----

----

| Financial Performance of Suffolk Bancorp                              |   |                    |   |
|-----------------------------------------------------------------------|--------|-------------------------|--------|
| (dollars in thousands, except per share data)                         |   |                    |   |
| As of or for the quarters and six months ended June 30, 2012 and 2011 |   |                    |   |
|                                                                  |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Quarters ended June 30, |   |   |   |   | Six Months ended June 30, |   |   |   |   |
|                                                                  |   |                    |   |   |   |   |   | Over/ |   |   |   |   |   |   |   |   |   |   | Over/ |   |   |   |   |
|                                                                  |   |                    |   |   |   |   |   | (under) |   |   |   |   |   |   |   |   |   |   | (under) |   |   |   |   |
|                                                                  |   | 2012                    |   |   | 2011 |   |   | 2011 |   |   |   |   | 2012 |   |   | 2011 |   |   | 2011 |   |   |   |   |
| Revenue (1)                                                           |   | $                       | 17,279 |   |   | $ | 21,991 |   |   |   | (21.4 | %) |   |   |   | $ | 33,742 |   |   | $ | 42,619 |   |   |   | (20.8 | %) |   |   |   |
| Operating expenses                                                    |   | $                       | 14,139 |   |   | $ | 15,030 |   |   |   | (5.9 | %) |   |   |   | $ | 28,744 |   |   | $ | 28,803 |   |   |   | (0.2 | %) |   |   |   |
| (Credit) provision for loan losses                                    |   | $                       | (2,400 | ) |   | $ | 3,217 |   |   |   | N/M |  (2) |   |   |   | $ | (2,400 | ) |   | $ | 23,188 |   |   |   | N/M |  (2) |   |   |   |
| Net income (loss)                                                     |   | $                       | 4,200  |   |   | $ | 3,270 |   |   |   | 28.4 | % |   |   |   | $ | 5,368 |   |   | $ | (4,304 | ) |   |   | (224.7 | %) |   |   |   |
| Net income (loss) per common share - diluted                          |   | $                       | 0.43   |   |   | $ | 0.34 |   |   |   | 26.5 | % |   |   |   | $ | 0.55 |   |   | $ | (0.44 | ) |   |   | N/M |  (2) |   |   |   |
| Return on average assets                                              |   |                    | 1.10   | % |   |   | 0.80 | % |   |   | 30 |  bp |   |   |   |   | 0.71 | % |   |   | (0.53 | %) |   |   | 124 |  bp |   |   |   |
| Return on average stockholders' equity                                |   |                    | 12.39  | % |   |   | 9.92 | % |   |   | 247 |  bp |   |   |   |   | 7.91 | % |   |   | (6.46 | %) |   |   | 1,437 |  bp |   |   |   |
| Tier 1 leverage ratio                                                 |   |                    | 8.89   | % |   |   | 8.03 | % |   |   | 86 |  bp |   |   |   |   | 8.89 | % |   |   | 8.03 | % |   |   | 86 |  bp |   |   |   |
| Tier 1 risk-based capital ratio                                       |   |                    | 14.32  | % |   |   | 11.66 | % |   |   | 266 |  bp |   |   |   |   | 14.32 | % |   |   | 11.66 | % |   |   | 266 |  bp |   |   |   |
| Total risk-based capital ratio                                        |   |                    | 15.59  | % |   |   | 12.95 | % |   |   | 264 |  bp |   |   |   |   | 15.59 | % |   |   | 12.95 | % |   |   | 264 |  bp |   |   |   |
| Tangible common equity ratio (non-GAAP)                               |   |                    | 8.78   | % |   |   | 8.43 | % |   |   | 35 |  bp |   |   |   |   | 8.78 | % |   |   | 8.43 | % |   |   | 35 |  bp |   |   |   |
|                                                                  |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| bp - denotes basis points; 100 bp equals 1%.                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Represents net interest income plus total non-interest income.    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (2) N/M - denotes % variance not meaningful for statistical purposes. |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

| Total stockholders' equity |   | $      | 139,104 |   | Total assets            |   | $      | 1,558,402 |   |
|----------------------------|--------|--------|---------|--------|-------------------------|--------|--------|-----------|--------|
| Less: intangible assets    |   |   | 2,438   |   | Less: intangible assets |   |   | 2,438     |   |
| Tangible common equity     |   | $      | 136,666 |   | Tangible assets         |   | $      | 1,555,964 |   |
|                       |   |   |    |   |                    |   |   |      |   |

|                                     |   |                  |    |   |     |   |   | Minimum                      |   |   | Minimum to be "Well       |   |
|------------------------------------------|--------|-----------------------|---------|--------|----------|--------|--------|------------------------------|--------|--------|---------------------------|--------|
|                                     |   |                  |    |   |     |   |   | for capital                  |   |   | Capitalized" under prompt |   |
|                                     |   | Actual capital ratios |    |   | adequacy |   |   | corrective action provisions |   |
|                                     |   | Amount                |    |   | Ratio    |   |   | Amount                       |   |   | Ratio                     |   |   | Amount |   |   | Ratio |   |
| As of June 30, 2012                      |   |                  |    |   |     |   |   |                         |   |   |                      |   |   |   |   |   |   |   |
| Total Capital (to risk-weighted assets)  |   | $                     | 145,547 |   |     |   | 15.57  | %                            |   | $      | 74,800                    |   |   |   | 8.00 | % |   | $ | 93,500 |   |   |   | 10.00 | % |
| Tier 1 Capital (to risk-weighted assets) |   |                  | 133,638 |   |     |   | 14.29  | %                            |   |   | 37,400                    |   |   |   | 4.00 | % |   |   | 56,100 |   |   |   | 6.00 | % |
| Tier 1 Capital (to average assets)       |   |                  | 133,638 |   |     |   | 8.88   | %                            |   |   | 60,218                    |   |   |   | 4.00 | % |   |   | 75,272 |   |   |   | 5.00 | % |
| As of December 31, 2011                  |   |                  |    |   |     |   |   |                         |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk-weighted assets)  |   | $                     | 146,990 |   |     |   | 14.21  | %                            |   | $      | 82,756                    |   |   |   | 8.00 | % |   | $ | 103,445 |   |   |   | 10.00 | % |
| Tier 1 Capital (to risk-weighted assets) |   |                  | 133,716 |   |     |   | 12.93  | %                            |   |   | 41,378                    |   |   |   | 4.00 | % |   |   | 62,067 |   |   |   | 6.00 | % |
| Tier 1 Capital (to average assets)       |   |                  | 133,716 |   |     |   | 8.81   | %                            |   |   | 60,726                    |   |   |   | 4.00 | % |   |   | 75,907 |   |   |   | 5.00 | % |
|                                     |   |                  |    |   |     |   |   |                         |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| NET INTEREST INCOME ANALYSIS                                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| For the Three Months Ended June 30, 2012 and 2011                                                                                    |   |
| (dollars in thousands)                                                                                                               |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   | 2012 |   |   | 2011 |   |
|                                                                                                                                 |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                                                                                                                 |   | Balance |   |   | Interest |   |   | Yield/Cost |   |   | Balance |   |   | Interest |   |   | Yield/Cost |   |
| Assets:                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities (1)                                                                                                                       |   | $ | 302,867 |   |   | $ | 3,557 |   |   |   | 4.72 | % |   | $ | 397,134 |   |   | $ | 4,527 |   |   |   | 4.57 | % |
| Federal Home Loan Bank and other stock                                                                                               |   |   | 2,405 |   |   |   | 17 |   |   |   | 2.84 |   |   |   | 4,207 |   |   |   | 60 |   |   |   | 5.72 |   |
| Federal funds sold and interest-bearing deposits                                                                                     |   |   | 228,505 |   |   |   | 137 |   |   |   | 0.24 |   |   |   | 71,525 |   |   |   | 45 |   |   |   | 0.25 |   |
| Loans                                                                                                                                |   |   | 902,864 |   |   |   | 12,927 |   |   |   | 5.76 |   |   |   | 1,080,789 |   |   |   | 15,940 |   |   |   | 5.92 |   |
| Total interest-earning assets                                                                                                        |   |   | 1,436,641 |   |   | $ | 16,638 |   |   |   | 4.66 | % |   |   | 1,553,655 |   |   | $ | 20,572 |   |   |   | 5.31 | % |
| Non-interest-earning assets                                                                                                          |   |   | 98,079 |   |   |   |   |   |   |   |   |   |   |   | 75,835 |   |   |   |   |   |   |   |   |   |
| Total Assets                                                                                                                         |   | $ | 1,534,720 |   |   |   |   |   |   |   |   |   |   | $ | 1,629,490 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity:                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings deposits                                                                                                                     |   | $ | 550,446 |   |   | $ | 303 |   |   |   | 0.22 | % |   | $ | 609,927 |   |   | $ | 549 |   |   |   | 0.36 | % |
| Time deposits                                                                                                                        |   |   | 259,533 |   |   |   | 664 |   |   |   | 1.03 |   |   |   | 295,155 |   |   |   | 844 |   |   |   | 1.15 |   |
| Total savings and time deposits                                                                                                      |   |   | 809,979 |   |   |   | 967 |   |   |   | 0.48 |   |   |   | 905,082 |   |   |   | 1,393 |   |   |   | 0.62 |   |
| Borrowings                                                                                                                           |   |   | 233 |   |   |   | - |   |   |   | 0.00 |   |   |   | 38,222 |   |   |   | 315 |   |   |   | 3.31 |   |
| Total interest-bearing liabilities                                                                                                   |   |   | 810,212 |   |   |   | 967 |   |   |   | 0.48 |   |   |   | 943,304 |   |   |   | 1,708 |   |   |   | 0.73 |   |
| Demand deposits                                                                                                                      |   |   | 543,745 |   |   |   |   |   |   |   |   |   |   |   | 516,008 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                                                    |   |   | 44,419 |   |   |   |   |   |   |   |   |   |   |   | 38,026 |   |   |   |   |   |   |   |   |   |
| Total Liabilities                                                                                                                    |   |   | 1,398,376 |   |   |   |   |   |   |   |   |   |   |   | 1,497,338 |   |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                                                                                                 |   |   | 136,344 |   |   |   |   |   |   |   |   |   |   |   | 132,152 |   |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                           |   | $ | 1,534,720 |   |   |   |   |   |   |   |   |   |   | $ | 1,629,490 |   |   |   |   |   |   |   |   |   |
| Net interest rate spread                                                                                                             |   |   |   |   |   |   |   |   |   |   | 4.18 | % |   |   |   |   |   |   |   |   |   |   | 4.58 | % |
| Net interest income/margin                                                                                                           |   |   |   |   |   |   | 15,671 |   |   |   | 4.39 | % |   |   |   |   |   |   | 18,864 |   |   |   | 4.87 | % |
| Less tax-equivalent basis adjustment                                                                                                 |   |   |   |   |   |   | (793 | ) |   |   |   |   |   |   |   |   |   |   | (976 | ) |   |   |   |   |
| Net interest income                                                                                                                  |   |   |   |   |   | $ | 14,878 |   |   |   |   |   |   |   |   |   |   | $ | 17,888 |   |   |   |   |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Interest on securities includes the effects of tax-equivalent basis adjustments of $793 and $976 in 2012 and 2011, respectively. |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| NET INTEREST INCOME ANALYSIS                                                                                                             |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|
| For the Six Months Ended June 30, 2012 and 2011                                                                                          |   |
| (dollars in thousands)                                                                                                                   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   | 2012 |   |   | 2011 |   |
|                                                                                                                                     |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                                                                                                                     |   | Balance |   |   | Interest |   |   | Yield/Cost |   |   | Balance |   |   | Interest |   |   | Yield/Cost |   |
| Assets:                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities (1)                                                                                                                           |   | $ | 311,096 |   |   | $ | 7,078 |   |   |   | 4.58 | % |   | $ | 399,934 |   |   | $ | 9,293 |   |   |   | 4.69 | % |
| Federal Home Loan Bank and other stock                                                                                                   |   |   | 2,471 |   |   |   | 63 |   |   |   | 5.13 |   |   |   | 4,301 |   |   |   | 144 |   |   |   | 6.75 |   |
| Federal funds sold and interest-bearing deposits                                                                                         |   |   | 185,033 |   |   |   | 214 |   |   |   | 0.23 |   |   |   | 53,041 |   |   |   | 61 |   |   |   | 0.23 |   |
| Loans                                                                                                                                    |   |   | 926,933 |   |   |   | 25,321 |   |   |   | 5.49 |   |   |   | 1,097,209 |   |   |   | 32,388 |   |   |   | 5.95 |   |
| Total interest-earning assets                                                                                                            |   |   | 1,425,533 |   |   | $ | 32,676 |   |   |   | 4.61 | % |   |   | 1,554,485 |   |   | $ | 41,886 |   |   |   | 5.43 | % |
| Non-interest-earning assets                                                                                                              |   |   | 88,635 |   |   |   |   |   |   |   |   |   |   |   | 92,299 |   |   |   |   |   |   |   |   |   |
| Total Assets                                                                                                                             |   | $ | 1,514,168 |   |   |   |   |   |   |   |   |   |   | $ | 1,646,784 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity:                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings deposits                                                                                                                         |   | $ | 545,030 |   |   | $ | 620 |   |   |   | 0.23 | % |   | $ | 618,856 |   |   | $ | 1,183 |   |   |   | 0.39 | % |
| Time deposits                                                                                                                            |   |   | 260,393 |   |   |   | 1,383 |   |   |   | 1.07 |   |   |   | 297,145 |   |   |   | 1,783 |   |   |   | 1.21 |   |
| Total savings and time deposits                                                                                                          |   |   | 805,424 |   |   |   | 2,003 |   |   |   | 0.50 |   |   |   | 916,001 |   |   |   | 2,966 |   |   |   | 0.65 |   |
| Borrowings                                                                                                                               |   |   | 117 |   |   |   | - |   |   |   | 0.00 |   |   |   | 40,729 |   |   |   | 654 |   |   |   | 3.24 |   |
| Total interest-bearing liabilities                                                                                                       |   |   | 805,540 |   |   |   | 2,003 |   |   |   | 0.50 |   |   |   | 956,730 |   |   |   | 3,620 |   |   |   | 0.76 |   |
| Demand deposits                                                                                                                          |   |   | 528,611 |   |   |   |   |   |   |   |   |   |   |   | 504,879 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                                                                        |   |   | 43,617 |   |   |   |   |   |   |   |   |   |   |   | 50,757 |   |   |   |   |   |   |   |   |   |
| Total Liabilities                                                                                                                        |   |   | 1,377,768 |   |   |   |   |   |   |   |   |   |   |   | 1,512,366 |   |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                                                                                                     |   |   | 136,400 |   |   |   |   |   |   |   |   |   |   |   | 134,418 |   |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                               |   | $ | 1,514,168 |   |   |   |   |   |   |   |   |   |   | $ | 1,646,784 |   |   |   |   |   |   |   |   |   |
| Net interest rate spread                                                                                                                 |   |   |   |   |   |   |   |   |   |   | 4.11 | % |   |   |   |   |   |   |   |   |   |   | 4.67 | % |
| Net interest income/margin                                                                                                               |   |   |   |   |   |   | 30,673 |   |   |   | 4.33 | % |   |   |   |   |   |   | 38,266 |   |   |   | 4.96 | % |
| Less tax-equivalent basis adjustment                                                                                                     |   |   |   |   |   |   | (1,587 | ) |   |   |   |   |   |   |   |   |   |   | (1,971 | ) |   |   |   |   |
| Net interest income                                                                                                                      |   |   |   |   |   | $ | 29,086 |   |   |   |   |   |   |   |   |   |   | $ | 36,295 |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Interest on securities includes the effects of tax-equivalent basis adjustments of $1,587 and $1,971 in 2012 and 2011, respectively. |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Non-Interest Income of Suffolk Bancorp                       |
|--------------------------------------------------------------|
| (dollars in thousands)                                       |
| For the quarters and six months ended June 30, 2012 and 2011 |
|                                                         |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |   | Quarters ended June 30, |   | Six months ended June 30, |   |
|                                                         |   |   |   |   | Over/ |   |   |   | Over/ |   |
|                                                         |   |   |   |   | (under) |   |   |   | (under) |   |
|                                                         |   |   | 2012 | 2011 | 2011 |   | 2012 | 2011 | 2011 |   |
| Service charges on deposit accounts                          |   |  $     1,000 |  $     1,006 | (0.6) | % |  $      1,950 |  $      2,011 | (3.0) | % |
| Other service charges, commissions & fees                |            846 |            976 | (13.3) |   |          1,596 |          1,643 | (2.9) |   |
| Fiduciary fees                                               |   |   |            208 |            206 | 1.0 |   |             409 |             431 | (5.1) |   |
| Net gain on sale of securities available for sale            |                4 |         1,645 | (99.8) |   |                  - |          1,645 | (100.0) |   |
| Other operating income                                       |   |   |            343 |            270 | 27.0 |   |             701 |             594 | 18.0 |   |
| Total non-interest income                                    |   |  $     2,401 |  $     4,103 | (41.5) | % |  $      4,656 |  $      6,324 | (26.4) | % |
|                                                         |   |   |   |   |   |   |   |   |   |   |

| Operating expenses of Suffolk Bancorp                                 |
|-----------------------------------------------------------------------|
| (dollars in thousands)                                                |
| For the quarters and six months ended June 30, 2012 and 2011          |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   | Quarters ended June 30, | Six months ended June 30, |
|                                                                  |   |   |   |   |   |   | Over/ |   |   |   | Over/ |   |
|                                                                  |   |   |   |   |   |   | (under) |   |   |   | (under) |   |
|                                                                  |   |   |   |   | 2012 | 2011 | 2011 |   | 2012 | 2011 | 2011 |   |
| Total employee compensation                                           |   |   |  $     8,875 |  $     7,772 | 14.2 | % |  $    17,459 |  $    15,317 | 14.0 | % |
| Net occupancy expense                                                 |   |   |   |         1,276 |         1,422 | (10.3) |   |          2,730 |          2,956 | (7.6) |   |
| Equipment expense                                                     |   |   |   |            491 |            463 | 6.0 |   |          1,003 |             945 | 6.1 |   |
| Outside services                                                      |   |   |   |         1,047 |         1,400 | (25.2) |   |          2,193 |          2,288 | (4.2) |   |
| FDIC assessments                                                      |   |   |   |            478 |            855 | (44.1) |   |             548 |          1,986 | (72.4) |   |
| OREO expense (income)                                                 |   |   |              12 |             (29) | N/M | (1) |               59 |             111 | (46.8) |   |
| Prepayment fee on borrowing                                           |   |   |                 - |         1,028 | (100.0) |   |                  - |          1,028 | (100.0) |   |
| Other operating expense                                               |   |   |         1,960 |         2,119 | (7.5) |   |          4,752 |          4,172 | 13.9 |   |
| Total operating expenses                                              |   |   |  $   14,139 |  $   15,030 | (5.9) | % |  $    28,744 |  $    28,803 | (0.2) | % |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) N/M - denotes % variance not meaningful for statistical purposes. |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ANALYSIS OF NON-PERFORMING ASSETS                                                                               |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| AND THE ALLOWANCE FOR LOAN LOSSES                                                                               |   |
| June 30, 2012 versus December 31, 2011 and June 30, 2011                                                        |   |
| (dollars in thousands)                                                                                          |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |
| NON-PERFORMING ASSETS BY TYPE:                                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | At |   |
|                                                                                                            |   | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2011 |   |
| Non-accrual Loans                                                                                               |   | $ | 54,079 |   |   | $ | 80,760 |   |   | $ | 58,599 |   |
| Non-accrual Loans Held-for-Sale                                                                                 |   |   | 7,500 |   |   |   | - |   |   |   | - |   |
| Loans 90 Days or More Past Due and Still Accruing                                                               |   |   | - |   |   |   | - |   |   |   | - |   |
| Foreclosed Real Estate Owned ("OREO")                                                                           |   |   | 2,172 |   |   |   | 1,800 |   |   |   | 1,800 |   |
| Total Non-performing Assets                                                                                     |   | $ | 63,751 |   |   | $ | 82,560 |   |   | $ | 60,399 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Loans Outstanding                                                                                         |   | $ | 848,225 |   |   | $ | 969,654 |   |   | $ | 1,059,256 |   |
| Total Loans Held-for-Sale                                                                                       |   | $ | 7,500 |   |   | $ | - |   |   | $ | - |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES:                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | Quarter Ended |   |
|                                                                                                            |   | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2011 |   |
| Beginning Balance                                                                                               |   | $ | 40,008 |   |   | $ | 43,693 |   |   | $ | 47,539 |   |
| (Credit) provision                                                                                              |   |   | (2,400 | ) |   |   | 800 |   |   |   | 3,217 |   |
| Charge-offs                                                                                                     |   |   | (9,257 | ) |   |   | (5,217 | ) |   |   | (1,012 | ) |
| Recoveries                                                                                                      |   |   | 876 |   |   |   | 682 |   |   |   | 167 |   |
| Ending Balance                                                                                                  |   | $ | 29,227 |   |   | $ | 39,958 |   |   | $ | 49,911 |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| KEY  RATIOS:                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | At |   |
|                                                                                                            |   | 6/30/2012 |   |   | 12/31/2011 |   |   | 6/30/2011 |   |
| Allowance as a % of Total Loans (1)                                                                             |   |   | 3.4 | % |   |   | 4.1 | % |   |   | 4.7 | % |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-accrual Loans as a % of Total Loans (1)                                                                     |   |   | 6.4 | % |   |   | 8.3 | % |   |   | 5.5 | % |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing Assets as a % of Total Loans, Loans Held-for-Sale and OREO                                       |   |   | 7.4 | % |   |   | 8.5 | % |   |   | 5.7 | % |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses as a % of Non-accrual Loans (1)                                                       |   |   | 54 | % |   |   | 49 | % |   |   | 85 | % |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses as a % of Non-accrual Loans and Loans 90 days or More Past Due and Still Accruing (1) |   |   | 54 | % |   |   | 49 | % |   |   | 85 | % |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Excludes loans held-for-sale.                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

| 1.   | Hired a new Chief Lending Officer during the second quarter of 2011. During the first quarter of 2012, the Chief Lending Officer was promoted into the newly created position of Chief Credit Officer. As Chief Credit Officer, the position’s responsibilities include credit administration, credit review, and loan workout. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Hired a new, highly-experienced Chief Lending Officer during the first quarter of 2012. |
|----------------|-----------------------------------------------------------------------------------------|

| 3.   | Improved staff by hiring a new loan administrator, additional underwriting staff and a loan workout specialist. |
|----------------|-----------------------------------------------------------------------------------------------------------------|

| 4.   | Reorganized the credit department to ensure appropriate separation of duties and developed expanded training for the Company’s lenders. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| 5.   | Hired a senior credit officer to run a newly created separate loan review and workout department. |
|----------------|---------------------------------------------------------------------------------------------------|

| 6.   | Changed the Company’s credit policy to require identification of concentrations of risk, analysis of our customer’s global cash flows, re-appraisal and re-evaluation of collateral, more accurate and timely credit-risk rating procedures and improved underwriting processes and standards. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.   | Incorporated the results of a systematic re-appraisal of commercial real estate which secures loans in excess of $1 million. |
|----------------|------------------------------------------------------------------------------------------------------------------------------|

| 8.   | Engaged qualified outside consultants to assist in re-evaluating risk ratings. |
|----------------|--------------------------------------------------------------------------------|

----

| 9.   | Improved the processes for identifying loans and the determination of the amount of impairment. |
|----------------|-------------------------------------------------------------------------------------------------|

| 10.   | Augmented the Company’s credit policy to govern loan workout. |
|-----------------|---------------------------------------------------------------------|

| 11.   | Implemented a new policy and procedure to ensure that OREO was accounted for in accordance with U.S. GAAP. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| 12.   | During the first quarter of 2012, hired a qualified and highly-experienced Chief Financial Officer with sufficient knowledge of U.S. GAAP, regulatory accounting and the banking industry and the skills to effectively implement that knowledge. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.   | During the first quarter of 2012, hired a qualified and highly-experienced Comptroller with sufficient knowledge of U.S. GAAP, regulatory accounting, and the banking industry and the skills to effectively implement that knowledge. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.   | Increased oversight of the financial reporting process through the Audit Committee and the Compliance Committee, the latter of which meets at least monthly or more often. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15.   | During the third quarter of 2012, created and filled the position of Financial Reporting Manager with experience in regulatory and SEC reporting. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| 16.   | Created and filled the new position of Treasurer to further relieve the Chief Financial Officer of day-to-day duties in asset liability management, investment portfolio management and additional treasury functions. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.   | Enhanced procedures to ensure that all reconciliations of all departments are completed and reviewed to ensure accuracy. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------|

| 18.   | Compiled individual policies into comprehensive written policies and procedures for the accounting function which will include specific policies, procedures and controls for financial reporting. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.   | Increased automation of the accounting and financial reporting process to free staff resources to focus on financial reporting. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------|

| 20.   | Established a process for both credit and finance staff to review the computation of specific impairment allowances under ASC 310-10 – Receivables – Impairment of a Loan and established enhanced reporting from core systems available directly to personnel in accounting and finance. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.   | Hired a new, qualified, and highly-experienced President and Chief Executive Officer effective December 31, 2011. |
|-----------------|-------------------------------------------------------------------------------------------------------------------|

| 22.   | During the second quarter of 2012, hired a qualified and highly experienced General Counsel and Corporate Secretary with prior experience as general counsel of publicly held financial institutions. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.   | Formed a Compliance Committee of the Board to oversee compliance and, later, to respond to the Agreement with the OCC. |
|-----------------|------------------------------------------------------------------------------------------------------------------------|

| 24.   | Implemented procedures to track all regulatory compliance through structured matrices. |
|-----------------|----------------------------------------------------------------------------------------|

| 25.   | Engaged qualified independent consultants to assist with compliance with the Agreement with the OCC, including an assessment of key management roles. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| 26.   | Outsourced the internal audit function to a qualified risk management firm to provide greater independence and depth to the function. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------|

| 27.   | Appointed a Vice Chairman of the Board, who was subsequently named Chairman in May 2012, to provide daily oversight of management on behalf of the full Board and to communicate back to the Board. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 31.1   | Certification of principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                  |
| 31.2   | Certification of principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Actof 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                  |
| 32.1   | Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section) |
|   |                                                                                                                                                                                                                                                                                                                  |
| 32.2   | Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section) |
|   |                                                                                                                                                                                                                                                                                                                  |

----

|                 |   |                                    |
|----------------------|--------|-----------------------------------------|
|                 |   |                                    |   |
| Date: August 9, 2012 |   | /s/ Howard C. Bluver               |   |
|                 |   | Howard C. Bluver                        |   |
|                 |   | President & Chief Executive Officer |   |
|                 |   |                                    |   |

|                 |   |                       |
|----------------------|--------|----------------------------|
|                 |   |                       |   |
| Date: August 9, 2012 |   | /s/ Brian K. Finneran |   |
|                 |   | Brian K. Finneran          |   |
|                 |   | Chief Financial Officer    |   |
|                 |   |                       |   |

----

|  Exhibit Number |  Description                                                                                                                                                                                                                                                                                                     |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                                                                                  |
| 31.1                 | Certification of principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                     |
|                 |                                                                                                                                                                                                                                                                                                                  |
| 31.2                 | Certification of principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Actof 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                      |
|                 |                                                                                                                                                                                                                                                                                                                  |
| 32.1                 | Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section) |
|                 |                                                                                                                                                                                                                                                                                                                  |
| 32.2                 | Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (this exhibit will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section) |