**FORM      10-Q**

|   | **[X]  Quarterly                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934** |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For                the quarterly period ended June 30,                2007 |
|--------|----------------------------------------------------------------------------|

|   | or |
|--------|----|

|   | **[  ]  Transition                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934** |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For                the transition period from  _________________ to                _____________________ |
|--------|--------------------------------------------------------------------------------------------------------------------|

|   | Commission                file                Number  0-21292 |
|--------|-------------------------------------------------------------------------|

|   | **MERCHANTS                AND MANUFACTURERS BANCORPORATION,                INC.** |
|--------|------------------------------------------------------------------------------------|

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

| Wisconsin                                                                     |   | 39-1413328                                             |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification Number) |

|   | 5445                S. Westridge Drive |
|--------|----------------------------------------|

|   | New                Berlin, Wisconsin  53151 |
|--------|-------------------------------------------------------|

|   | (Address                  of principal executive                  office) |
|--------|---------------------------------------------------------------------------|

|   | (262)                827-6700 |
|--------|-------------------------------|

|   | Registrant's                  telephone number, including area                  code: |
|--------|---------------------------------------------------------------------------------------|

----

|   | **MERCHANTS                AND MANUFACTURERS BANCORPORATION,                INC.** |
|--------|------------------------------------------------------------------------------------|

|   | **FORM                10-Q** |
|--------|------------------------------|

|   | **INDEX** |
|--------|-----------|

|  **Part              I.  Financial Information**                                                                                                                                                         |  **Page              Number** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                                                                                                                                                                                                               |                               |
| Item                1. Financial Statements                                                                                                                                                                        |                               |
|                                                                                                                                                                                                               |                               |
| Unaudited                Consolidated Statements                of Financial Condition as ofJune                30, 2007, December 31, 2006,                and June 30, 2006                                 |  3                            |
|                                                                                                                                                                                                               |                               |
| Unaudited                Consolidated Statements of Income for                the Three and Six Monthsended                June 30, 2007 and June 30,                2006                                     |  4                            |
|                                                                                                                                                                                                               |                               |
| Unaudited                Consolidated Statements of                Changes in Shareholders' Equity and Comprehensive                Income for the Six Months                ended June 30, 2007 and June 30, 2006 |  6                            |
|                                                                                                                                                                                                               |                               |
| Unaudited                Consolidated Statements of Cash                Flows for the Six Monthsended                June 30, 2007 and June 30,                2006                                           |  7                            |
|                                                                                                                                                                                                               |                               |
| Notes                to Unaudited Consolidated Financial                Statements                                                                                                                                 | 9                                  |
|                                                                                                                                                                                                               |                               |
|                                                                                                                                                                                                               |                               |
| Item                2. Management's Discussion and Analysis                of Financial Condition and    Results                of                Operations                                   |  16                           |
|                                                                                                                                                                                                               |                               |
| Item                3. Quantitative and Qualitative                Disclosures About Market Risk                                                                                                                   | 27                                 |
|                                                                                                                                                                                                               |                               |
| Item                4. Controls and                Procedures                                                                                                                                                      | 27                                 |
|                                                                                                                                                                                                               |                               |

|  **Part              II.  Other Information** |   |
|---------------------------------------------------------|--------|
|                                                    |   |
| Items                1-6                           | 28     |
|                                                    |   |
| Signatures                                              | 30     |

----

| **Part                I. Financial Information**                                           |   |   |   |   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| **Merchants                and Manufacturers Bancorporation, Inc.**                        |   |   |   |   |
| **Unaudited                Consolidated Statements of                Financial Condition** |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | **June                30,**                                                 |      |   | **December                31,** |   |      | **June                30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|-----------|--------|---------------------------------|--------|-----------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | **2007**                                                                    |      |   | **2006**                        |   |      | **2006**                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | *(Dollars                in Thousands, Except Share and Per Share Amounts)* |      |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                        |      |   |                            |   |      |                        |   |
| Cash                and due from                banks                                                                                                        |   | $                                                                           | 38,280    |   |                            | $      | 31,601    |                        |   | $ | 40,871 |   |
| Interest                bearing deposits in                banks                                                                                             |   |                                                                        | 1,784     |   |                            |   | 738       |                        |   |   | 3,697 |   |
| Federal                funds                sold                                                                                                             |   |                                                                        | 11,848    |   |                            |   | 5,524     |                        |   |   | 259 |   |
| Cash                and cash                equivalents                                                                                                                          |   |                                                                        | 51,912    |   |                            |   | 37,863    |                        |   |   | 44,827 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Available-for-sale                securities                                                                                                                 |   |                                                                        | 127,767   |   |                            |   | 134,917   |                        |   |   | 145,906 |   |
| Loans,                less allowance for loan losses of $11,515 at June 30,                2007,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
|  $11,835                at December 31, 2006 and $10,915 at June 30, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                        | 1,106,795 |   |                            |   | 1,098,377 |                        |   |   | 1,096,229 |   |
| Assets                held for                sale                                                                                                           |   |                                                                        | 81,130    |   |                            |   | 137,923   |                        |   |   | 138,161 |   |
| Accrued                interest                receivable                                                                                                    |   |                                                                        | 6,550     |   |                            |   | 6,519     |                        |   |   | 6,211 |   |
| FHLB                stock                                                                                                                                    |   |                                                                        | 11,446    |   |                            |   | 11,182    |                        |   |   | 13,997 |   |
| Premises                and                equipment                                                                                                         |   |                                                                        | 28,948    |   |                            |   | 29,349    |                        |   |   | 27,784 |   |
| Goodwill                                                                                                                                                     |   |                                                                        | 27,320    |   |                            |   | 27,222    |                        |   |   | 27,147 |   |
| Intangible                assets                                                                                                                             |   |                                                                        | 1,960     |   |                            |   | 2,104     |                        |   |   | 2,273 |   |
| Other                assets                                                                                                                                  |   |                                                                        | 23,345    |   |                            |   | 20,484    |                        |   |   | 19,767 |   |
| **Total                assets                                                                                   **                                                                         |   | $                                                                           | 1,467,173 |   |                            | $      | 1,505,940 |                        |   | $ | 1,522,302 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Non-interest                bearing                                                                                                                                         |   | $                                                                           | 113,756   |   |                            | $      | 127,033   |                        |   | $ | 123,585 |   |
| Interest                bearing                                                                                                                                             |   |                                                                        | 955,829   |   |                            |   | 933,372   |                        |   |   | 918,349 |   |
| Total                deposits                                                                                                                                                         |   |                                                                        | 1,069,585 |   |                            |   | 1,060,405 |                        |   |   | 1,041,934 |   |
| Short-term                borrowings                                                                                                                              |   |                                                                        | 53,895    |   |                            |   | 55,383    |                        |   |   | 93,063 |   |
| Long-term                borrowings                                                                                                                               |   |                                                                        | 109,152   |   |                            |   | 106,831   |                        |   |   | 111,191 |   |
| Junior                subordinated debt owed to                unconsolidated trusts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                        | 53,611    |   |                            |   | 53,611    |                        |   |   | 46,394 |   |
|   Liabilities                held for                sale                                                                                          |   |                                                                        | 71,480    |   |                            |   | 121,720   |                        |   |   | 122,534 |   |
| Accrued                interest                payable                                                                                                            |   |                                                                        | 3,747     |   |                            |   | 4,034     |                        |   |   | 3,723 |   |
| Other                liabilities                                                                                                                                  |   |                                                                        | 12,172    |   |                            |   | 9,659     |                        |   |   | 11,029 |   |
| **Total                liabilities                                                                                   **                                                                    |   |                                                                        | 1,373,642 |   |                            |   | 1,411,643 |                        |   |   | 1,429,868 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| Preferred                stock, $1.00 par                value; 250,000 shares authorized,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| shares                issued and shares                outstanding - none                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                        | -         |   |                            |   | -         |                        |   |   | - |   |
| Common                stock $1.00 par value;                25,000,000 shares authorized;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| shares                issued: 3,770,251 at                June 30, 2007, December 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| and                June 30, 2006; shares                outstanding: 3,662,416 at                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| June                30, 2007, 3,677,180 at                December 31, 2006 and 3,687,180                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| at                June 30,                2006                                                                                                                                   |   |                                                                        | 3,770     |   |                            |   | 3,770     |                        |   |   | 3,770 |   |
| Additional                paid-in                capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                        | 53,666    |   |                            |   | 53,684    |                        |   |   | 53,673 |   |
| Retained                earnings                                                                                                                                  |   |                                                                        | 41,147    |   |                            |   | 40,259    |                        |   |   | 39,991 |   |
| Accumulated                other comprehensive                loss                                                                                                |   |                                                                        | (2,049    | )      |                            |   | (881      | )                           |   |   | (2,781 | ) |
| Treasury                stock, at cost (107,835                shares at June 30, 2007, 93,071                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| shares                at December 31, 2006 and                83,071 shares at June 30, 2006)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                        | (3,003    | )      |                            |   | (2,535    | )                           |   |   | (2,219 | ) |
| **Total                stockholders'                equity                                                                                   **                                            |   |                                                                        | 93,531    |   |                            |   | 94,297    |                        |   |   | 92,434 |   |
| **Total                liabilities and                stockholders'                equity                                                                                   **             |   | $                                                                           | 1,467,173 |   |                            | $      | 1,505,940 |                        |   | $ | 1,522,302 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |
| *See                notes to unaudited consolidated financial statements.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                        |      |   |                            |   |      |                        |   |   |   |   |

----

| **Merchants                and Manufacturers Bancorporation, Inc.**           |   |   |   |   |   |   |
|-------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| **Unaudited                Consolidated Statements of                Income** |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Three                Months Ended**                             |   |   | **Six                Months Ended** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **June                30,**                                       |   |   | **June                30,**         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2007**                                                          |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | *(Dollars                In Thousands, Except Per Share Amounts)* |   |
| Interest                income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                              |   |   |                                |   |   |   |   |   |   |   |
|   Interest                and fees on                loans                                                                                                                                                                  |   | $                                                                 | 19,928 |   |                                | $      | 19,204 |   |   | $ | 39,921 |   |   | $ | 36,986 |   |
|   Interest                and dividends on securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Taxable                                                                                                                                                                                                       |   |                                                              | 209    |   |                                |   | 249 |   |   |   | 412 |   |   |   | 535 |   |
|     Tax-exempt                                                                                                                                                                                                    |   |                                                              | 521    |   |                                |   | 585 |   |   |   | 1,032 |   |   |   | 1,170 |   |
|   Interest                on mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                              | 779    |   |                                |   | 855 |   |   |   | 1,579 |   |   |   | 1,654 |   |
|   Interest                on interest bearing deposits in    banks                and federal funds                sold                                                                                 |   |                                                              | 265    |   |                                |   | 43 |   |   |   | 495 |   |   |   | 98 |   |
|       Total                interest                income                                                                                                                                               |   |                                                              | 21,702 |   |                                |   | 20,936 |   |   |   | 43,439 |   |   |   | 40,443 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Interest                on deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              | 8,898  |   |                                |   | 7,049 |   |   |   | 17,379 |   |   |   | 13,411 |   |
|   Interest                on short-term                borrowings                                                                                                                                                           |   |                                                              | 534    |   |                                |   | 1,302 |   |   |   | 1,331 |   |   |   | 2,338 |   |
|   Interest                on long-term                borrowings                                                                                                                                                            |   |                                                              | 1,298  |   |                                |   | 1,183 |   |   |   | 2,550 |   |   |   | 2,190 |   |
|   Interest                on junior subordinated debt owed to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     unconsolidated                trusts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                              | 1,058  |   |                                |   | 903 |   |   |   | 2,104 |   |   |   | 1,766 |   |
|       Total                interest                expense                                                                                                                                              |   |                                                              | 11,788 |   |                                |   | 10,437 |   |   |   | 23,364 |   |   |   | 19,705 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest                income                                                                                                                                                                                     |   |                                                              | 9,914  |   |                                |   | 10,499 |   |   |   | 20,075 |   |   |   | 20,738 |   |
| Provision                for loan                losses                                                                                                                                                                               |   |                                                              | 450    |   |                                |   | 390 |   |   |   | 900 |   |   |   | 780 |   |
| Net                interest income after provision for                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   loan                losses                                                                                                                                                                                                |   |                                                              | 9,464  |   |                                |   | 10,109 |   |   |   | 19,175 |   |   |   | 19,958 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest                income:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Service                charges on deposit                accounts                                                                                                                                                         |   |                                                              | 967    |   |                                |   | 960 |   |   |   | 1,864 |   |   |   | 1,892 |   |
|   Service                charges on                loans                                                                                                                                                                    |   |                                                              | 588    |   |                                |   | 804 |   |   |   | 1,466 |   |   |   | 1,519 |   |
|   Securities                gains,                net                                                                                                                                                                       |   |                                                              | -      |   |                                |   | - |   |   |   | - |   |   |   | - |   |
|   Gain                on sale of loans,                net                                                                                                                                                                  |   |                                                              | 9      |   |                                |   | 39 |   |   |   | 33 |   |   |   | 54 |   |
|   Gain                on sale of fixed assets,                net                                                                                                                                                           |   |                                                              | 162    |   |                                |   | - |   |   |   | 161 |   |   |   | 175 |   |
|   Tax                fees, brokerage and insurance commissions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                              | 535    |   |                                |   | 461 |   |   |   | 1,412 |   |   |   | 1,265 |   |
|   Other                                                                                                                                                                                                                     |   |                                                              | 681    |   |                                |   | 758 |   |   |   | 1,280 |   |   |   | 1,688 |   |
|       Total                noninterest                income                                                                                                                                            |   |                                                              | 2,942  |   |                                |   | 3,022 |   |   |   | 6,216 |   |   |   | 6,593 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Salaries                and employee                benefits                                                                                                                                                              |   |                                                              | 6,633  |   |                                |   | 6,821 |   |   |   | 13,194 |   |   |   | 14,081 |   |
|   Premises                and                equipment                                                                                                                                                                      |   |                                                              | 1,781  |   |                                |   | 1,564 |   |   |   | 3,691 |   |   |   | 3,300 |   |
|   Data                processing                fees                                                                                                                                                                        |   |                                                              | 848    |   |                                |   | 770 |   |   |   | 1,653 |   |   |   | 1,582 |   |
|   Marketing                and business development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                              | 449    |   |                                |   | 416 |   |   |   | 867 |   |   |   | 865 |   |
|   Other                                                                                                                                                                                                                     |   |                                                              | 1,824  |   |                                |   | 1,890 |   |   |   | 3,493 |   |   |   | 3,817 |   |
|       Total                noninterest                expense                                                                                                                                           |   |                                                              | 11,535 |   |                                |   | 11,461 |   |   |   | 22,898 |   |   |   | 23,645 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Income                from continuing operations before        income                taxes                                                                |   |                                                              | 871    |   |                                |   | 1,670 |   |   |   | 2,493 |   |   |   | 2,906 |   |
| Income                taxes                                                                                                                                                                                                           |   |                                                              | 260    |   |                                |   | 510 |   |   |   | 803 |   |   |   | 861 |   |
|       Income                from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              | 611    |   |                                |   | 1,160 |   |   |   | 1,690 |   |   |   | 2,045 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued                operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Income                from discontinued  operations before        income                tax expense                                                                                                                                                                                                                                                                                                                                                                        |   |                                                              | 1,695  |   |                                |   | 306 |   |   |   | 1,993 |   |   |   | 509 |   |
|       Income                tax                expense                                                                                                                                                  |   |                                                              | 1,386  |   |                                |   | 99 |   |   |   | 1,485 |   |   |   | 159 |   |
|       Income                from discontinued operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                              | 309    |   |                                |   | 207 |   |   |   | 508 |   |   |   | 350 |   |
|       Net                income                                                                                                                                                                         |   | $                                                                 | 920    |   |                                | $      | 1,367 |   |   | $ | 2,198 |   |   | $ | 2,395 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

| **Merchants                and Manufacturers Bancorporation, Inc.**       |   |   |   |   |   |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| **Unaudited                Consolidated Statements of Income, continued** |   |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Three                Months Ended**                             |   |   | **Six                Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **June                30,**                                       |   |   | **June                30,**         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **2007**                                                          |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | *(Dollars                In Thousands, Except Per Share Amounts)* |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                              |   |
| Basic                earnings per share from continuing operations                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                                                 | 0.17   |   |                                | $      | 0.31 |   |   | $ | 0.46 |   |   | $ | 0.55 |   |
| Basic                earnings per share from discontinued operations                                                                                                                                                                                                                                                                                                                                                                               |   | $                                                                 | 0.08   |   |                                | $      | 0.06 |   |   | $ | 0.14 |   |   | $ | 0.10 |   |
| Basic                earnings per                share                                                                  |   | $                                                                 | 0.25   |   |                                | $      | 0.37 |   |   | $ | 0.60 |   |   | $ | 0.65 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                earnings per share from continuing operations                                                                                                                                                                                                                                                                                                                                                                               |   | $                                                                 | 0.17   |   |                                | $      | 0.31 |   |   | $ | 0.46 |   |   | $ | 0.55 |   |
| Diluted                earnings per share from discontinued operations                                                                                                                                                                                                                                                                                                                                                                             |   | $                                                                 | 0.08   |   |                                | $      | 0.06 |   |   | $ | 0.14 |   |   | $ | 0.10 |   |
| Diluted                earnings per                share                                                                |   | $                                                                 | 0.25   |   |                                | $      | 0.37 |   |   | $ | 0.60 |   |   | $ | 0.65 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                per                share                                                                       |   | $                                                                 | 0.18   |   |                                | $      | 0.18 |   |   | $ | 0.36 |   |   | $ | 0.36 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| *See                notes to unaudited consolidated financial statements.*                                                                                                                                                                                                                                                                                                                                                                         |   |                                                              |   |   |                                |   |   |   |   |   |   |   |   |

----

| **Merchants                and Manufacturers Bancorporation, Inc.**                                                                            |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **Unaudited                Consolidated Statements of Changes                in                Stockholders' Equity and Comprehensive Income** |   |

|                                                                                                                                    |   | Shares                of Common StockOutstanding                                                                                                                                                                                                                  |         |   |   | Common                Stock  |   |   |   | Additional                Paid-In Capital  |   |   |   | Retained                Earnings  |   |   |   | Accumulated                Other Comprehensive Income  |   |   |   | Treasury                Stock  |   |   |   | Total   |                       |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------|--------|-----------------------------------|--------|--------|--------|-------------------------------------------------|--------|--------|--------|----------------------------------------|--------|--------|--------|-------------------------------------------------------------|--------|--------|--------|-------------------------------------|--------|--------|--------|--------------|----------------------------|
|                                                                                                                                    |   | (In                thousands, except Shares of Common Stock Outstanding and per share                data)                           |
|                                                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Six                Months Ended June 30, 2006                                                                                           |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Balance                at December 31, 2005                                                                                             |   | 3,701,621                                                                                                                                                                                                                                                              |         |   | $      | 3,770                             |   |   | $      | 53,614                                          |   |   | $      | 38,928                                 |   |   | $      | (1,369                                                      | )      |   | $      | (1,718                              | )      |   | $      | 93,225       |                       |
| Comprehensive                income:                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Net                income                                                                                                               |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | 2,395                                  |   |   |   | -                                                           |   |   |   | -                                   |   |   |   | 2,395        |                       |
|                  Change in net unrealized losses                   on available                for-sale securities  |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | -                                      |   |   |   | (2,173                                                      | )      |   |   | -                                   |   |   |   | (2,173       | )                          |
| Income                tax                effect                                                                                         |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | -                                      |   |   |   | 761                                                         |   |   |   | -                                   |   |   |   | 761          |                       |
| Total                comprehensive income                                                                                               |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   | 983          |                       |
|                                                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Stock-based compensation                                                                                       |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   | 65                                              |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   | 65           |                       |
| Cash                dividend - $0.36 per share                                                                                          |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | (1,332                                 | )      |   |   | -                                                           |   |   |   | -                                   |   |   |   | (1,332       | )                          |
| Purchase                of treasury stock                                                                                               |   | (15,000                                                                                                                                                                                                                                                                | )            |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   | (515                                | )      |   |   | (515         | )                          |
| Exercise                of stock options                                                                                           |   | 559                                                                                                                                                                                                                                                                    |         |   |   | -                                 |   |   |   | (6                                              | )      |   |   | -                                      |   |   |   |                                                        |   |   |   | 14                                  |   |   |   | 8            |                       |
| Balance                at June 30, 2006                                                                                                 |   | 3,687,180                                                                                                                                                                                                                                                              |    |   | $      | 3,770                             |   |   | $      | 53,673                                          |   |   | $      | 39,991                                 |   |   | $      | (2,781                                                      | )      |   | $      | (2,219                              | )      |   | $      | 92,434       |                       |
|                                                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Six                Months Ended June 30, 2007                                                                                           |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |
| Balance                at December 31, 2006                                                                                             |   | 3,677,180                                                                                                                                                                                                                                                              |         |   | $      | 3,770                             |   |   | $      | 53,684                                          |   |   | $      | 40,259                                 |   |   | $      | (881                                                        | )      |   | $      | (2,535                              | )      |   | $      | 94,297       |                       |
| Comprehensive                income:                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Net                income                                                                                                               |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | 2,198                                  |   |   |   | -                                                           |   |   |   | -                                   |   |   |   | 2,198        |                       |
|                    Change in net unrealized gains on   available-for-sale                  securities                    |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | -                                      |   |   |   | (1,779                                                      | )      |   |   | -                                   |   |   |   | (1,779       | )                          |
|                  Reclassification adjustment for gains    realized                in net                income |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | -                                      |   |   |   | -                                                           |   |   |   | -                                   |   |   |   | -            |                       |
| Income                tax                effect                                                                                         |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | -                                      |   |   |   | 611                                                         |   |   |   | -                                   |   |   |   | 611          |                       |
| Total                comprehensive income                                                                                               |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   | 1,030        |                       |
|                                                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |         |                       |
| Stock-based                compensation                                                                                                 |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | 5                                               |   |   |   | -                                      |   |   |   | -                                                           |   |   |   | -                                   |   |   |   | 5            |                       |
| Cash                dividend - $0.36 per share                                                                                          |   | -                                                                                                                                                                                                                                                                      |         |   |   | -                                 |   |   |   | -                                               |   |   |   | (1,310                                 | )      |   |   | -                                                           |   |   |   | -                                   |   |   |   | (1,310       | )                          |
| Purchase                of treasury stock                                                                                |   | (17,000                                                                                                                                                                                                                                                                | )            |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   | (524                                | )      |   |   | (524         | )                          |
| Exercise                of stock options                                                                                                |   | 2,236                                                                                                                                                                                                                                                                  |         |   |   | -                                 |   |   |   | (23                                             | )      |   |   | -                                      |   |   |   | -                                                           |   |   |   | 56                                  |   |   |   | 33           |                  |
| Balance                at June 30, 2007                                                                                                 |   | 3,662,416                                                                                                                                                                                                                                                              |         |   | $      | 3,770                             |   |   | $      | 53,666                                          |   |   | $      | 41,147                                 |   |   | $      | (2,049                                                      | )      |   | $      | (3,003                              | )      |   | $      | 93,531       |                       |
|                                                                                                                                    |   |                                                                                                                                                                                                                                                                   |         |   |   |                              |   |   |   |                                            |   |   |   |                                   |   |   |   |                                                        |   |   |   |                                |   |   |   |    |                       |
| *See                notes to unaudited consolidated financial                statements.*                                               |

----

| **Merchants                and Manufacturers Bancorporation, Inc. and                Subsidiaries** |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|
| **Unaudited                Consolidated Statements                of Cash                Flows**    |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Six                Months Ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007**                                     |    |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | *(Dollars                in Thousands)*      |    |
| Cash                Flows From Operating Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |    |   |   |   |
|   Net                income                                                                                                                                                                                     |   | $                                            | 2,198   |   |   | $ | 2,395 |   |
|   Net                income from discontinued                operations                                                                                                                                         |   |                                         | (508    | ) |   |   | (350 | ) |
|   Adjustments                to reconcile net income to cash provided by operating                activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                         |    |   |   |   |   |   |
|        Provision                for loan                losses                                                                                                                         |   |                                         | 650     |   |   |   | 780 |   |
|        Depreciation                                                                                                                                                                    |   |                                         | 1,312   |   |   |   | 1,270 |   |
|        Amortization                and accretion of premiums and discounts, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                         | 100     |   |   |   | 185 |   |
|        Amortization                of                intangibles                                                                                                                       |   |                                         | 151     |   |   |   | 169 |   |
|        Gain                on sale of loans,                net                                                                                                                        |   |                                         | (33     | ) |   |   | (54 | ) |
|        Loans                originated for                sale                                                                                                                         |   |                                         | (19,202 | ) |   |   | (16,235 | ) |
|        Proceeds                from sales of                loans                                                                                                                      |   |                                         | 19,055  |   |   |   | 15,555 |   |
|        Gain                on sale of fixed assets,                net                                                                                                                 |   |                                         | (161    | ) |   |   | (132 | ) |
|        (Increase)                decrease in accrued interest                receivable                                                                                                               |   |                                         | 331     |   |   |   | (465 | ) |
|        Increase                (decrease) in accrued interest                payable                                                                                                   |   |                                         | (466    | ) |   |   | 392 |   |
|        Stock-based                compensation                expense                                                                                                                  |   |                                         | 5       |   |   |   | 65 |   |
|        FHLB                Stock                dividend                                                                                                                               |   |                                         | (9      | ) |   |   | - |   |
|        Other                                                                                                                                                                           |   |                                         | 3,710   |   |   |   | (91 | ) |
| **           Net                cash provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         | 7,133   |   |   |   | 3,484 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         |    |   |   |   |   |   |
| Cash                Flows From Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |    |   |   |   |   |   |
|   Purchase                of available-for-sale                securities                                                                                                                                       |   |                                         | (3,715  | ) |   |   | (16,353 | ) |
|   Proceeds                from sale of available-for-sale                securities                                                                                                                             |   |                                         | 5,489   |   |   |   | - |   |
|   Proceeds                from redemptions and maturities of available-for-sale                securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         | 13,077  |   |   |   | 17,517 |   |
|   Net                (increase) decrease in                loans                                                                                                                                                |   |                                         | 28,193  |   |   |   | (62,712 | ) |
|   Purchase                of premises and equipment,                net                                                                                                                                         |   |                                         | (547    | ) |   |   | (1,513 | ) |
|   Proceeds                from sale of premises and                equipment                                                                                                                                    |   |                                         | 1,048   |   |   |   | - |   |
|   Proceeds                from sale of other real estate                owned                                                                                                                                   |   |                                         | 779     |   |   |   | 2,195 |   |
|   Redemption                (purchase) of Federal Home Loan Bank stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                         | -       |   |   |   | 5,627 |   |
| **Net                cash provided by (used in) investing                activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                         | 44,324  |   |   |   | (55,239 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         |    |   |   |   |   |   |
| Cash                Flows From Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         |    |   |   |   |   |   |
|   Net                decrease in                deposits                                                                                                                                                        |   |                                         | (36,904 | ) |   |   | (19,203 | ) |
|   Dividends                paid                                                                                                                                                                                 |   |                                         | (1,235  | ) |   |   | (932 | ) |
|   Net                increase (decrease) in short-term                borrowings                                                                                                                                |   |                                         | (1,493  | ) |   |   | 51,498 |   |
|   Proceeds                from long-term                borrowings                                                                                                                                              |   |                                         | 20,500  |   |   |   | 51,055 |   |
|   Repayment                of long-term                borrowings                                                                                                                                               |   |                                         | (21,254 | ) |   |   | (28,803 | ) |
|   Increase                in advance payments by borrowers for taxes and insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         | 660     |   |   |   | 673 |   |
|   Common                stock transactions,                net                                                                                                                                                  |   |                                         | (491    | ) |   |   | (507 | ) |
| **          Net                cash provided by (used in) financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                         | (40,217 | ) |   |   | 53,781 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         |    |   |   |   |   |   |
| Cash                Flows From Discontinued Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                         |    |   |   |   |   |   |
|   Operating                cash flows,                net                                                                                                                                                       |   |                                         | 474     |   |   |   | 531 |   |
|   Investing                cash flows,                net                                                                                                                                                       |   |                                         | 451     |   |   |   | (7,961 | ) |
|   Financing                cash flows,                net                                                                                                                                                       |   |                                         | (781    | ) |   |   | 7,711 |   |
|   Cash                and cash                equivalents                                                                                                                                                       |   |                                         | 2,887   |   |   |   | 3,977 |   |
| **          Net                cash provided by discontinued operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                         | 3,031   |   |   |   | 4,258 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         |    |   |   |   |   |   |
| **          Increase                in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         | 11,240  |   |   |   | 2,026 |   |
| Cash                and cash equivalents at beginning of                period                                                                                                                                            |   |                                         | 40,672  |   |   |   | 42,801 |   |
| Cash                and cash equivalents at end of                period                                                                                                                                                  |   | $                                            | 51,912  |   |   | $ | 44,827 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         |    |   |   |   |   |   |

----

| **Merchants                and Manufacturers Bancorporation, Inc. and                Subsidiaries** |   |   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|--------|
| **Unaudited                Consolidated Statements of Cash Flows**                                  |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Six                Months Ended June 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **2007**                                     |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | *(Dollars                in Thousands)*      |   |
| Supplemental                Cash Flow Information and Noncash Transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         |   |   |   |   |
|   Interest                paid                                                                                                                                                 |   | $                                            | 25,755 |   |   | $ | 20,894 |   |
|   Income                taxes                paid                                                                                                                              |   |                                         | 1,716  |   |   |   | 923 |   |
|   Loans                transferred to other real estate                owned                                                                                                   |   |                                         | 2,495  |   |   |   | 600 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| Supplemental                Schedules of Noncash Investing Activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                         |   |   |   |   |   |   |
|   Change                in accumulated other comprehensive income, unrealized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         |   |   |   |   |   |   |
|   losses                on available-for-sale securities,                net                                                                                                   |   | $                                            | (1,168 | ) |   | $ | (1,412 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                         |   |   |   |   |   |   |
| *See                notes to unaudited consolidated financial statements*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                         |   |   |   |   |   |   |

----

**Merchants      and Manufacturers Bancorporation, Inc.**

Notes      to Unaudited Consolidated Financial Statements

**NOTE      A -- Basis of Presentation**

**NOTE      B --  Subsequent Events**

*Pending      Merger*

----

*Pending      Sale of Fortress Bank of Cresco*

| **(Unaudited)**                                                                |   | **June                30, 2007** |                                                          |    | **December                31, 2006** |   |   | **June                30, 2006** |         |
|--------------------------------------------------------------------------------|--------|----------------------------------|---------------------------------------------------------------|--------------|--------------------------------------|--------|--------|----------------------------------|--------------|
|                                                                           |   |                             |   *(Dollars              in Thousands)*   |         |                                 |
| **ASSETS**                                                                     |   |                             |                                                          |         |                                 |   |   |                             |         |
| Cash                and cash equivalents                                       |   | $                                | 3,031                                                         |         |                                 | $      | 2,778  |                             |         | $ | 1,950 |   |
| Available-for-sale                securities                                   |   |                             | 12,080                                                        |         |                                 |   | 13,672 |                             |         |   | 14,711 |   |
| Loans,                less allowance for loan losses of $329 at June 30, 2007, |   |                             |                                                          |         |                                 |   |   |                             |         |   |   |   |
|   $487                at December 31, 2006 and $494 at June 30, 2006 |   |                             | 56,735                                                        |         |                                 |   | 55,704 |                             |         |   | 55,186 |   |
| FHLB                stock                                                      |   |                             | 531                                                           |         |                                 |   | 4,597  |                             |         |   | 4,681 |   |
| Premises                and equipment                                          |   |                             | 4,473                                                         |         |                                 |   | 526    |                             |         |   | 587 |   |
| Goodwill                                                                       |   |                             | 3,283                                                         |         |                                 |   | 3,283  |                             |         |   | 3,283 |   |
| Intangible                assets                                               |   |                             | 294                                                           |         |                                 |   | 321    |                             |         |   | 351 |   |
| Other                assets                                                    |   |                             | 703                                                           |         |                            |   | 822    |                             |    |   | 743 |                  |
| **Total                assets**                                                |   | $                                | 81,130                                                        |         |                            | $      | 81,703 |                             |         | $ | 81,491 |   |
|                                                                           |   |                             |                                                          |         |                                 |   |   |                             |         |   |   |   |
| **LIABILITIES**                                                                |   |                             |                                                          |         |                                 |   |   |                             |         |   |   |   |
|  Total                deposits                                            |   | $                                | 61,893                                                        |         |                                 | $      | 58,761 |                             |         | $ | 57,820 |   |
| Short-term                borrowings                                           |   |                             | 485                                                           |         |                                 |   | 4,323  |                             |         |   | 3,253 |   |
| Long-term                borrowings                                            |   |                             | 8,606                                                         |         |                                 |   | 8,615  |                             |         |   | 11,124 |   |
| Other                liabilities                                               |   |                             | 497                                                           |         |                                 |   | 464    |                             |         |   | 223 |   |
| **Total                liabilities**                                           |   | $                                | 71,480                                                        |         |                                 | $      | 72,163 |                             |         | $ | 72,420 |   |

| **(Unaudited)**                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **Three                Months Ended** |   |   | **Six                Months Ended**     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **June                30,**           |   |   | **June                30,**             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **2007**                              |   |   | **2006**                                |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                  |   |   | *(Dollars                in Thousands)* |   |   |   |   |
| Interest                income                                                                                               |   | $                                     | 1,279  |   |                                    | $      | 1,165 |   |   | $ | 2,511 |   |   | $ | 2,223 |   |
| Interest                expense                                                                                              |   |                                  | 669    |   |                                    |   | 574 |   |   |   | 1,307 |   |   |   | 1,066 |   |
|   Net                interest                income                                                                |   |                                  | 610    |   |                                    |   | 591 |   |   |   | 1,204 |   |   |   | 1,157 |   |
| Provision                for loan                losses                                                                      |   |                                  | -      |   |                                    |   | - |   |   |   | - |   |   |   | - |   |
| Noninterest                income                                                                                            |   |                                  | 163    |   |                                    |   | 155 |   |   |   | 299 |   |   |   | 264 |   |
| Noninterest                expenses                                                                                          |   |                                  | 555    |   |                                    |   | 560 |   |   |   | 1,103 |   |   |   | 1,104 |   |
| Income                before income                taxes                                                                     |   |                                  | 218    |   |                                    |   | 186 |   |   |   | 400 |   |   |   | 317 |   |
| Income                taxes                                                                                                  |   |                                  | 72     |   |                                    |   | 61 |   |   |   | 131 |   |   |   | 99 |   |
|   Net                income                                                                                        |   | $                                     | 146    |   |                                    | $      | 125 |   |   | $ | 269 |   |   | $ | 218 |   |

----

**NOTE      C **
** Discontinued Operations**

| **(Unaudited)**                                                                |   | **December                31, 2006**    |   |   | **June                30, 2006** |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|----------------------------------|--------|
|                                                                           |   | *(Dollars                in Thousands)* |   |
| **ASSETS**                                                                     |   |                                    |   |   |                             |   |
| Cash                and cash equivalents                                       |   | $                                       | 2,918  |   |                             | $      | 2,308 |   |
| Available-for-sale                securities                                   |   |                                    | 9,664  |   |                             |   | 10,766 |   |
| Loans,                less allowance for loan losses of                        |   |                                    |   |   |                             |   |   |   |
|   $475                at December 31, 2006 and $467 at June 30, 2006 |   |                                    | 39,577 |   |                             |   | 39,403 |   |
| FHLB                stock                                                      |   |                                    | 255    |   |                             |   | 302 |   |
| Premises                and equipment                                          |   |                                    | 1,251  |   |                             |   | 1,304 |   |
| Goodwill                                                                       |   |                                    | 1,576  |   |                             |   | 1,576 |   |
| Intangible                assets                                               |   |                                    | 369    |   |                             |   | 407 |   |
| Other                assets                                                    |   |                                    | 610    |   |                             |   | 604 |   |
| **Total                assets**                                                |   | $                                       | 56,220 |   |                             | $      | 56,670 |   |
|                                                                           |   |                                    |   |   |                             |   |   |   |
| **LIABILITIES**                                                                |   |                                    |   |   |                             |   |   |   |
|  Total                deposits                                            |   | $                                       | 46,072 |   |                             | $      | 43,153 |   |
| Short-term                borrowings                                           |   |                                    | 4      |   |                             |   | 2,092 |   |
| Long-term                borrowings                                            |   |                                    | 3,076  |   |                             |   | 4,631 |   |
| Other                liabilities                                               |   |                                    | 406    |   |                        |   | 239 |   |
| **Total                liabilities**                                           |   | $                                       | 49,557 |   |                             | $      | 50,114 |   |

| **(Unaudited)**                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **Three                Months Ended** |   |                       | **Six                Months Ended**     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------------------------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **June                30,**           |   |                       | **June                30,**             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **2007**                              |   |                       | **2006**                                |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                  |   |                       | *(Dollars                in Thousands)* |   |   |   |   |
| Interest                income                                                                                               |   | $                                     | 610    |                       |                                    | $      | 823 |   |   | $ | 1,449 |   |   | $ | 1,592 |   |
| Interest                expense                                                                                              |   |                                  | 262    |                       |                                    |   | 318 |   |   |   | 615 |   |   |   | 575 |   |
|   Net                interest                income                                                                |   |                                  | 348    |                       |                                    |   | 505 |   |   |   | 834 |   |   |   | 1,017 |   |
| Provision                for loan                losses                                                                      |   |                                  | (250   | )                          |                                    |   | - |   |   |   | (250 | ) |   |   | - |   |
| Noninterest                income                                                                                            |   |                                  | 1,272  |                       |                                    |   | 97 |   |   |   | 1,366 |   |   |   | 177 |   |
| Noninterest                expenses                                                                                          |   |                                  | 393    |                  |                                    |   | 482 |   |   |   | 857 |   |   |   | 1,002 |   |
| Income                before income                taxes                                                                     |   |                                  | 1,477  |                       |                                    |   | 120 |   |   |   | 1,593 |   |   |   | 192 |   |
| Income                taxes                                                                                                  |   |                                  | 1,314  |                       |                                    |   | 38 |   |   |   | 1,354 |   |   |   | 60 |   |
|   Net                income                                                                                        |   | $                                     | 163    |                       |                                    | $      | 82 |   |   | $ | 239 |   |   | $ | 132 |   |

----

**NOTE      D -- Earnings Per Share**

|                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three                  Months Ended                                                      |                                                                                   |   | Six                  Months Ended |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                         |   | June                  30,                                                                |                                                                                   |   | June                  30,         |   |
| Basic:                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2007                                                                                     |                                                                                   |   | 2006                              |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |   *(Dollars                  in Thousands, Except Per Share Data)*   |                                                                                   |
| Net                  income from continuing operations                                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                        | 611                                                                                    |   |                              | $      | 1,160 |   |   | $ | 1,690 |   |   | $ | 2,045 |   |
| Net                  income from discontinued operations                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                     | 309                                                                                    |   |                              |   | 207 |   |   |   | 508 |   |   |   | 350 |   |
| Net                  income                                                                                          |   | $                                                                                        | 920                                                                                    |   |                              | $      | 1,367 |   |   | $ | 2,198 |   |   | $ | 2,395 |   |
| Weighted                  average shares outstanding                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                     | 3,662                                                                                  |   |                              |   | 3,696 |   |   |   | 3,664 |   |   |   | 3,699 |   |
| Basic                  earnings per share from continuing operations                                                                                                                                                                                                                                                                                                                                         |   | $                                                                                        | 0.17                                                                                   |   |                              | $      | 0.31 |   |   | $ | 0.46 |   |   | $ | 0.55 |   |
| Basic                  earnings per share from discontinued operations                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                        | 0.08                                                                                   |   |                              | $      | 0.06 |   |   | $ | 0.14 |   |   | $ | 0.10 |   |
| Basic                  earnings per                  share                                                           |   | $                                                                                        | 0.25                                                                                   |   |                              | $      | 0.37 |   |   | $ | 0.60 |   |   | $ | 0.65 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                     |                                                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Diluted:                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                     |                                                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                     |   *(Dollars                in Thousands, Except Per Share Data)*   |   |                              |
| Net                  income from continuing operations                                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                        | 611                                                                                    |   |                              | $      | 1,160 |   |   | $ | 1,690 |   |   | $ | 2,045 |   |
| Net                  income from discontinued operations                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                     | 309                                                                                    |   |                              |   | 207 |   |   |   | 508 |   |   |   | 350 |   |
| Net                  income                                                                                          |   | $                                                                                        | 920                                                                                    |   |                              | $      | 1,367 |   |   | $ | 2,198 |   |   | $ | 2,395 |   |
| Weighted                  average shares outstanding                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                     | 3,662                                                                                  |   |                              |   | 3,696 |   |   |   | 3,664 |   |   |   | 3,699 |   |
| Effect                  of dilutive stock options outstanding                                                                                                                                                                                                                                                                                                                                                |   |                                                                                     | 3                                                                                      |   |                              |   | 11 |   |   |   | 3 |   |   |   | 13 |   |
| Diluted                  weighted average shares outstanding                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                     | 3,665                                                                                  |   |                              |   | 3,707 |   |   |   | 3,667 |   |   |   | 3,712 |   |
| Diluted                  earnings per share from continuing operations                                                                                                                                                                                                                                                                                                                                       |   | $                                                                                        | 0.17                                                                                   |   |                              | $      | 0.31 |   |   | $ | 0.46 |   |   | $ | 0.55 |   |
| Diluted                  earnings per share from discontinued operations                                                                                                                                                                                                                                                                                                                                     |   | $                                                                                        | 0.08                                                                                   |   |                              | $      | 0.06 |   |   | $ | 0.14 |   |   | $ | 0.10 |   |
| Diluted                  earnings per                  share                                                         |   | $                                                                                        | 0.25                                                                                   |   |                              | $      | 0.37 |   |   | $ | 0.60 |   |   | $ | 0.65 |   |

**NOTE        E -- Loans Receivable**

|                                                                                                                                                                                                                                                                                                                                                                                                                                |   | June                  30,2007                                                 |      |   | December                  31, 2006 |   |      | June                  30,2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|-----------|--------|-----------------------------------------|--------|-----------|-------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   |    *(Dollars                  in Thousands)*    |      |
| First                  Mortgage:                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                          |      |   |                                    |   |      |                          |   |
|   Conventional                  single-family residential                                                                                                                                                                                                                                                                                                                                                                 |   | $                                                                             | 184,207   |   |                                    | $      | 181,396   |                          |   | $ | 168,281 |   |
|   Commercial                  and multifamily residential                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                          | 466,069   |   |                                    |   | 471,139   |                          |   |   | 467,596 |   |
|   Construction                                                                                                     |   |                                                                          | 104,371   |   |                                    |   | 99,890    |                          |   |   | 90,514 |   |
|   Farmland                                                                                                         |   |                                                                          | 52,004    |   |                                    |   | 50,210    |                          |   |   | 47,796 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                          | 806,651   |   |                                    |   | 802,635   |                          |   |   | 774,187 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                          |      |   |                                    |   |      |                          |   |   |   |   |
| Commercial                  business                  loans                                                                  |   |                                                                          | 229,462   |   |                                    |   | 225,792   |                          |   |   | 253,834 |   |
| Consumer                  and installment                  loans                                                             |   |                                                                          | 45,568    |   |                                    |   | 48,201    |                          |   |   | 45,989 |   |
| Home                  equity                  loans                                                                          |   |                                                                          | 30,180    |   |                                    |   | 28,041    |                          |   |   | 26,735 |   |
| Other                                                                                                                        |   |                                                                          | 6,449     |   |                                    |   | 5,543     |                          |   |   | 6,399 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                          | 311,659   |   |                                    |   | 307,577   |                          |   |   | 332,957 |   |
| Total                  loans                                                                                                 |   |                                                                          | 1,118,310 |   |                                    |   | 1,110,212 |                          |   |   | 1,107,144 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                          |      |   |                                    |   |      |                          |   |   |   |   |
| Less:                  Allowance for loan                  losses                                                            |   |                                                                          | (11,515   | )      |                                    |   | (11,835   | )                             |   |   | (10,915 | ) |
| Loans,                  net                                                                                                  |   | $                                                                             | 1,106,795 |   |                                    | $      | 1,098,377 |                          |   | $ | 1,096,229 |   |

----

**NOTE      F – Stock-Based Compensation Plan**

|                                                                                                                                                                                                                                                                                                                                                                         |   | Six                months ended June 30, 2007 |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   |   |   |   | Weighted |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   |   |   |   | Average |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   | Weighted |   |   | Remaining |   |   | Aggregate |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   | Average |   |   | Contractual |   |   | Intrinsic |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   | Options                                       |    |   | Exercise                Price |   |   | Term |   |   | Value |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |
|  Outstanding                at beginning of period                                                                                                                                                                                                                                                                                                                      |   |                                          | 102,344 |   |   | $ | 34.37 |   |   |   |   |   |   |   |
|  Granted                                                                                                      |   |                                          | -       |   |   |   | - |   |   |   |   |   |   |   |
|  Canceled                                                                                                     |   |                                          | -       |   |   |   | - |   |   |   |   |   |   |   |
|  Exercised                                                                                                    |   |                                          | (2,236  | ) |   |   | 15.11 |   |   |   |   |   |   |   |
|  Outstanding                at end of                period                                                   |   |                                          | 100,108 |   |   | $ | 34.80 |   |   |   | 4.3 |   |   | $ | 62,000 |                  |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Options                exercisable                                                                           |   |                                          | 100,108 |   |   | $ | 34.80 |   |   |   | 4.3 |   |   | $ | 62,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                         |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                       |        |   | Options                Outstanding |   |    | Options                Exercisable |         |
|----------------------------|-------------|--------|------------------------------------|--------|---------|------------------------------------|--------------|
|                       |        |   |                               |   |    | Weighted                           |         |   | Weighted |   |   |   |   |   | Weighted |   |
| Exercise                   |        |   | Number                             |   |    | Average                            |         |   | Average |   |   | Number |   |   | Average |   |
| Price                Range |        |   | Outstanding                        |   |    | Exercise                Price      |         |   | Life* |   |   | Outstanding |   |   | Exercise                Price |    |
|                       |        |   |                               |   |    |                               |         |   |   |   |   |   |   |   |   |   |
| $                          | 15.11       |   |                               |   | 2,230   |                               |         | $ | 15.11 |   |   |   | 0.8 |   |   |   | 2,230 |   |   | $ | 15.11 |   |
|                       | 25.45-28.31 |   |                               |   | 38,756  |                               |         |   | 27.93 |   |   |   | 1.7 |   |   |   | 38,756 |   |   |   | 27.93 |   |
|                       | 30.50-35.00 |   |                               |   | 20,700  |                               |         |   | 30.65 |   |   |   | 7.4 |   |   |   | 20,700 |   |   |   | 30.65 |   |
|                       | 45.00-46.00 |   |                               |   | 38,422  |                               |    |   | 45.11 |   |   |   | 6.6 |   |   |   | 38,422 |   |    |   | 45.11 |   |
|                       |        |   |                               |   | 100,108 |                               |    | $ | 34.80 |   |   |   |   |   |   |   | 100,108 |   |    | $ | 34.80 |   |
|                       |        |   |                               |   |    |                               |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                       |   |         |   |   | Weighted                    |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|-----------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                                                                                       |   |         |   |   | Average                     |   |   |
|                                                                                                                                                                                                                                                                                                                                                                       |   |         |   |   | Grant                Date   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |   | Options |   |   | Fair                  Value |   |   |
|                                                                                                                                                                                                                                                                                                                                                                       |   |    |   |   |
|  Nonvested                at beginning of period                                                                                                                                                                                                                                                                                                                      |   |    | 3,278  |   |                        | $      | 30.50  |   |
|  Granted                                                                                                    |   |    | -      |   |                        |   | -      |   |
|  Vested                                                                                                     |   |    | (3,278 | )      |                        |   | 30.50  |   |
|  Canceled                                                                                                   |   |    | -      |   |                        |   | -      |   |
|  Nonvested                at end of                period                                                   |   |    | -      |   |                        | $      | -      |   |

*Shared-Based Payment*

**NOTE      G – Recent Accounting Pronouncements**

*Accounting for Deferred Compensation and Postretirement Benefit Aspects      of      Endorsement Split-Dollar Life Insurance Arrangements*

*Fair Value      Measurements*

*The Fair Value Option      for Financial Assets and Financial Liabilities – Including an amendment of FASB      Statement No. 115, *
*Fair      Value Measurements*

----

**NOTE        H – Commitments and Contingent Liabilities**

|                                                                                                                                                                                                                                                                                                                                                                                                                |   | June                30,2007 |                                                          |   | December                31,2006 |   |    | June                30,2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------------------------------------------------------------|--------|---------------------------------|--------|---------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |   *(Dollars              in Thousands)*   |   |                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |                                                          |   |                            |   |    |                        |   |
| Commitments                to originate mortgage loans                                                                                                                                                                                                                                                                                                                                                              |   | $                           | 13,542                                                        |   |                            | $      | 23,780  |                        |   | $ | 20,306 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |                                                          |   |                            |   |    |                        |   |   |   |   |
| Unused                lines of credit:                                                                                                                                                                                                                                                                                                                                                                              |   |                        |                                                          |   |                            |   |    |                        |   |   |   |   |
| Commercial                business                                                                                                    |   |                        | 173,657                                                       |   |                            |   | 192,582 |                        |   |   | 190,349 |   |
| Home                equity                                                                                                            |   |                        | 38,334                                                        |   |                            |   | 36,046  |                        |   |   | 32,822 |   |
| Credit                cards                                                                                                           |   |                        | 17,284                                                        |   |                            |   | 16,852  |                        |   |   | 16,084 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |                                                          |   |                            |   |    |                        |   |   |   |   |
| Standby                letters of                credit                                                           |   |                        | 7,862                                                         |   |                            |   | 4,762   |                        |   |   | 6,155 |   |

----

**Item      2.  Management's Discussion      and Analysis      of Financial Condition and Results of Operations**

*Overview*

*Financial      Condition*

**Total        Assets**

**Investment      Securities**

**Loans      Receivable**

**Total      Deposits and Borrowings**

----

**Capital      Resources**

**Nonperforming      Assets and Allowance for Losses**

|                                                                                                                                                                                                                                                                                                                                                                                                                            |   | June                30,2007 |                                                                |   | December                31, 2006 |   |   | June                30,2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------------------------------------------------------------------|--------|----------------------------------|--------|--------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |   *(Dollars              in Thousands)*    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |                                                                |   |                             |   |   |                        |   |
| Non-accrual                loans:                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |                                                                |   |                             |   |   |                        |   |
|     Conventional                single-family residential                                                                                                                                                                                                                                                                                                                                                   |   | $                           | 10,208                                                              |   |                             | $      | 7,527  |                        |   | $ | 2,220 |   |
|     Commercial                and multifamily residential                                                                                                                                                                                                                                                                                                                                                   |   |                        | 4,508                                                               |   |                             |   | 2,720  |                        |   |   | 2,491 |   |
|     Commercial                business                loans                                                         |   |                        | 4,919                                                               |   |                             |   | 3,427  |                        |   |   | 2,190 |   |
|     Consumer                and installment loans                                                                                                                                                                                                                                                                                                                                                           |   |                        | 983                                                                 |   |                             |   | 763    |                        |   |   | 786 |   |
| Total                non-accrual                loans                                                                                                                                |   |                        | 20,618                                                              |   |                             |   | 14,437 |                        |   |   | 7,687 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |                                                                |   |                             |   |   |                        |   |   |   |   |
| Other                real estate                owned                                                                                   |   |                        | 2,232                                                               |   |                             |   | 516    |                        |   |   | 299 |   |
| Total                nonperforming                assets                                                                                                                             |   | $                           | 22,850                                                              |   |                             | $      | 14,953 |                        |   | $ | 7,986 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |                                                                |   |                             |   |   |                        |   |   |   |   |
| Ratios:                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        |                                                                |   |                             |   |   |                        |   |   |   |   |
| Non-accrual                loans to total                loans                                                                          |   |                        | 1.84                                                                | %      |                             |   | 1.30   | %                           |   |   | 0.69 | % |
| Nonperforming                assets to total assets                                                                                                                                                                                                                                                                                                                                                                             |   |                        | 1.56                                                                | %      |                             |   | 0.99   | %                           |   |   | 0.52 | % |
| Loan                loss allowance to non-accrual loans                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 55.85                                                               | %      |                             |   | 81.98  | %                           |   |   | 141.99 | % |
| Loan                loss allowance to total loans                                                                                                                                                                                                                                                                                                                                                                          |   |                        | 1.03                                                                | %      |                             |   | 1.07   | %                           |   |   | 0.99 | % |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three                Months Ended |   |   | Six                Months Ended         |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | June                30,           |   |   | June                30,                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2007                              |   |   | 2006                                    |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |   |   | *(Dollars                in Thousands)* |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |   |   |                                    |   |   |   |   |   |   |   |
| Balance                at beginning of                period                                                                                     |   | $                                 | 12,775 |   |                                    | $      | 10,997 |   |   | $ | 11,835 |   |   | $ | 12,038 |   |
|   Provision                for loan                losses                                                                              |   |                              | 450    |   |                                    |   | 390 |   |   |   | 900 |   |   |   | 780 |   |
|                  Transfer from discontinued operations     to continuing                operations                                                                                                                                                                                                                                                                                                                                  |   |                              | 189    |   |                                    |   | - |   |   |   | 189 |   |   |   | - |   |
|   Charge-offs:                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial                and multifamily residential                                                                                                                                                                                                                                                                                                                                                                                |   |                              | (531   | )      |                                    |   | - |   |   |   | (997 | ) |   |   | (209 | ) |
|     Commercial                business                loans                                                                  |   |                              | (193   | )      |                                    |   | (382 | ) |   |   | (251 | ) |   |   | (1,410 | ) |
|     Consumer                and installment                loans                                                             |   |                              | (250   | )      |                                    |   | (206 | ) |   |   | (423 | ) |   |   | (463 | ) |
|       Total                charge-offs                                                                             |   |                              | (974   | )      |                                    |   | (588 | ) |   |   | (1,671 | ) |   |   | (2,082 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|   Recoveries:                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|     Commercial                and multifamily residential                                                                                                                                                                                                                                                                                                                                                                                |   |                              | 13     |   |                                    |   | 4 |   |   |   | 131 |   |   |   | 5 |   |
|     Commercial                business                loans                                                                  |   |                              | 22     |   |                                    |   | 100 |   |   |   | 37 |   |   |   | 105 |   |
|     Consumer                and installment                loans                                                             |   |                              | 40     |   |                                    |   | 12 |   |   |   | 93 |   |   |   | 69 |   |
|       Total                recoveries                                                                              |   |                              | 75     |   |                                    |   | 116 |   |   |   | 261 |   |   |   | 179 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net                charge-offs                                                                                                                   |   |                              | (899   | )      |                                    |   | (472 | ) |   |   | (1,410 | ) |   |   | (1,903 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at end of                period                                                                                           |   | $                                 | 11,515 |   |                                    | $      | 10,915 |   |   | $ | 11,515 |   |   | $ | 10,915 |    |

----

**Potential      Problem Loans**

*Comparison      of Three and Six Months Ended June 30, 2007 and 2006*

**Net      Income**

**Net      Interest Income**

----

| **AVERAGE                BALANCES, INTEREST RATES AND                YIELDS** |
|-------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                        |   | **For                the Three Months Ended June 30,** |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |      |   | **2007** |   |   |   |   |   |   |   |   | **2006** |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                        |   | **Average                Balance**                     |      |    | **Interest** |   |   | **Average                Rate** |   |   | **Average                Balance** |   |    | **Interest** |   |   | **Average                Rate** |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |      |   | *(Dollars                in thousands)*    |   |   |   |   |
| **Assets**                                                                                                                                                                                                                                                                                                                                                  |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,                net                (1)(2)                                                        |   | $                                                      | 1,097,701 |   |   | $ | 19,883 |   |   |   | 7.27 | % |   | $ | 1,085,642 |   |   | $ | 19,172 |   |   |   | 7.08 | % |
| Loans                exempt from federal income taxes (3)                                                                                                                                                                                                                                                                                                   |   |                                                   | 3,630     |   |   |   | 67 |   |   |   | 7.43 | % |   |   | 2,998 |   |   |   | 48 |   |   |   | 6.49 | % |
| Taxable                investment securities (4)                                                                                                                                                                                                                                                                                                            |   |                                                   | 19,735    |   |   |   | 209 |   |   |   | 4.25 | % |   |   | 29,577 |   |   |   | 249 |   |   |   | 3.38 | % |
| Mortgage-related                securities (4)                                                                                                                                                                                                                                                                                                              |   |                                                   | 65,411    |   |   |   | 779 |   |   |   | 4.78 | % |   |   | 75,597 |   |   |   | 855 |   |   |   | 4.54 | % |
| Investment                securities exempt from federal      income                taxes (3)(4)                                                                                                                                                                                                                                   |   |                                                   | 55,729    |   |   |   | 790 |   |   |   | 5.68 | % |   |   | 62,563 |   |   |   | 886 |   |   |   | 5.68 | % |
| Other                securities                                                                        |   |                                                   | 21,232    |   |   |   | 265 |   |   |   | 5.01 | % |   |   | 3,836 |   |   |   | 44 |   |   |   | 4.50 | % |
| Interest                earning                assets                                                  |   |                                                   | 1,263,438 |   |   |   | 21,993 |   |   |   | 6.98 | % |   |   | 1,260,213 |   |   |   | 21,254 |   |   |   | 6.76 | % |
| Non                interest earning assets                                                                                                                                                                                                                                                                                                                  |   |                                                   | 121,963   |   |   |   |   |   |   |   |   |   |   |   | 124,395 |   |   |   |   |   |   |   |   |   |
| Average                assets                                                                          |   | $                                                      | 1,385,401 |   |   |   |   |   |   |   |   |   |   | $ | 1,384,608 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                and Stockholders' Equity**                                                                                                                                                                                                                                                                                                     |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                deposits                                                                            |   | $                                                      | 91,545    |   |   |   | 210 |   |   |   | 0.92 | % |   | $ | 93,234 |   |   |   | 205 |   |   |   | 0.88 | % |
| Money                market                deposits                                                    |   |                                                   | 224,743   |   |   |   | 2,062 |   |   |   | 3.68 | % |   |   | 224,019 |   |   |   | 1,743 |   |   |   | 3.12 | % |
| Savings                deposits                                                                        |   |                                                   | 116,137   |   |   |   | 462 |   |   |   | 1.60 | % |   |   | 121,851 |   |   |   | 366 |   |   |   | 1.20 | % |
| Time                deposits                                                                           |   |                                                   | 530,756   |   |   |   | 6,164 |   |   |   | 4.66 | % |   |   | 459,606 |   |   |   | 4,735 |   |   |   | 4.13 | % |
| Short-term                borrowings                                                                   |   |                                                   | 34,205    |   |   |   | 534 |   |   |   | 6.26 | % |   |   | 95,884 |   |   |   | 1,302 |   |   |   | 5.45 | % |
| Long-term                borrowings                                                                    |   |                                                   | 109,615   |   |   |   | 1,298 |   |   |   | 4.75 | % |   |   | 110,746 |   |   |   | 1,183 |   |   |   | 4.28 | % |
| Junior                subordinated debt owed to      unconsolidated                trusts                                                                                                                                                                                                                                          |   |                                                   | 53,611    |   |   |   | 1,058 |   |   |   | 7.92 | % |   |   | 46,394 |                  |   |   | 903 |   |   |   | 7.81 | % |
| Interest                bearing liabilities                                                                                                                                                                                                                                                                                                                 |   |                                                   | 1,160,612 |   |   |   | 11,788 |   |   |   | 4.07 | % |   |   | 1,151,734 |                  |   |   | 10,437 |   |   |   | 3.63 | % |
| Demand                deposits and other non interest      bearing                liabilities                                                                                                                                                                                                                                      |   |                                                   | 129,193   |   |   |   |   |   |   |   |   |   |   |   | 139,048 |   |   |   |   |   |   |   |   |   |
| Stockholders'                equity                                                                    |   |                                                   | 95,596    |   |   |   |   |   |   |   |   |   |   |   | 93,826 |   |   |   |   |   |   |   |   |   |
| Average                liabilities and stockholders' equity                                                                                                                                                                                                                                                                                                 |   | $                                                      | 1,385,401 |   |   |   |   |   |   |   |   |   |   | $ | 1,384,608 |   |   |   |   |   |   |   |   |   |
| Net                interest spread                (5)                                                  |   |                                                   |      |   |   | $ | 10,205 |   |   |   | 2.91 | % |   |   |   |   |   | $ | 10,817 |   |   |   | 3.13 | % |
| Net                interest                earning assets                                                                                                                                                                                                                   |   | $                                                      | 102,826   |   |   |   |   |   |   |   |   |   |   | $ | 108,479 |   |   |   |   |   |   |   |   |   |
| Net                interest margin on a fully tax      equivalent                basis (6)                                                                                                                                                                                                                                         |   |                                                   |      |   |   |   |   |   |   |   | 3.24 | % |   |   |   |   |   |   |   |   |   |   | 3.44 | % |
| Net                interest margin                (6)                                                  |   |                                                   |      |   |   |   |   |   |   |   | 3.15 | % |   |   |   |   |   |   |   |   |   |   | 3.34 | % |
| Ratio                of average interest-earning assets to      average                interest-bearing liabilities                                                                                                                                                                                                                |   |                                                   |      |   |   |   |   |   |   |   | 1.09 |   |   |   |   |   |   |   |   |   |   |   | 1.09 |   |

| (1) | For                  the purpose of these computations, nonaccrual loans are included                  in the                  daily average loan amounts                  outstanding. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Interest                  earned on loans includes loan fees (which are not material in amount)                  and                  interest income which has been received from borrowers whose loans                  were                  removed from nonaccrual status during the period                  indicated. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Taxable-equivalent                  adjustments were made using a 34% corporate tax rate for all years                  presented in calculating interest income and                  yields. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Average                  balances of securities available-for-sale are based on amortized                  cost. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (5) | Interest                  rate spread represents the difference between the average yield                  on                  interest earning assets and the average cost of interest bearing                  liabilities and is represented on a fully tax equivalent                  basis. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Net                  interest margin represents net interest income as a percentage                  of average                  interest earning assets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **AVERAGE                  BALANCES, INTEREST RATES AND                  YIELDS** |
|-----------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                            |   | **For                  the Six Months Ended June 30,** |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                            |   |                                                   |      |    | **2007** |   |   |   |   |   |   |   |    | **2006** |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                            |   | **Average                  Balance**                   |      |   | **Interest** |   |    | **Average                  Rate** |   |   | **Average                  Balance** |   |    | **Interest** |   |   | **Average                  Rate** |   |
|                                                                                                                                                                                                                                                                                                                                                            |   |                                                   |      |   | (Dollars                  in thousands)    |   |   |   |   |
| **Assets**                                                                                                                                                                                                                                                                                                                                                      |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,                  net                  (1)(2)                                                        |   | $                                                      | 1,097,428 |   |   | $ | 39,840 |   |   |   | 7.32 | % |   | $ | 1,072,830 |   |   | $ | 36,921 |   |   |   | 6.94 | % |
| Loans                  exempt from federal income taxes (3)                                                                                                                                                                                                                                                                                                     |   |                                                   | 3,443     |   |   |   | 123 |   |   |   | 7.19 | % |   |   | 3,053 |   |   |   | 98 |   |   |   | 6.51 | % |
| Taxable                  investment securities (4)                                                                                                                                                                                                                                                                                                              |   |                                                   | 20,002    |   |   |   | 412 |   |   |   | 4.15 | % |   |   | 30,807 |   |   |   | 535 |   |   |   | 3.50 | % |
| Mortgage-related                  securities (4)                                                                                                                                                                                                                                                                                                                |   |                                                   | 66,671    |   |   |   | 1,579 |   |   |   | 4.78 | % |   |   | 74,815 |   |   |   | 1,654 |   |   |   | 4.46 | % |
| Investment                  securities exempt from federal     income                  taxes (3)(4)                                                                                                                                                                                                                                    |   |                                                   | 55,377    |   |   |   | 1,563 |   |   |   | 5.69 | % |   |   | 62,748 |   |   |   | 1,773 |   |   |   | 5.70 | % |
| Other                  securities                                                                          |   |                                                   | 19,682    |   |   |   | 495 |   |   |   | 5.07 | % |   |   | 4,557 |   |   |   | 98 |   |   |   | 4.34 | % |
| Interest                  earning                  assets                                                  |   |                                                   | 1,262,603 |   |   |   | 44,012 |   |   |   | 7.03 | % |   |   | 1,248,810 |   |   |   | 41,079 |                    |   |   | 6.63 | % |
| Non                  interest                  earning assets                                                                                                                                                                                                                                                                |   |                                                   | 120,793   |   |   |   |   |   |   |   |   |   |   |   | 125,484 |   |   |   |   |   |   |   |   |   |
| Average                  assets                                                                            |   | $                                                      | 1,383,396 |   |   |   |   |   |   |   |   |   |   | $ | 1,374,294 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                            |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**                                                                                                                                                                                                                                                                                                       |   |                                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                  deposits                                                                              |   | $                                                      | 92,246    |   |   |   | 439 |   |   |   | 0.96 | % |   | $ | 93,276 |   |   |   | 391 |   |   |   | 0.85 | % |
| Money                  market                  deposits                                                    |   |                                                   | 226,270   |   |   |   | 4,061 |   |   |   | 3.62 | % |   |   | 227,382 |   |   |   | 3,273 |   |   |   | 2.90 | % |
| Savings                  deposits                                                                          |   |                                                   | 116,483   |   |   |   | 905 |   |   |   | 1.57 | % |   |   | 123,920 |   |   |   | 761 |   |   |   | 1.24 | % |
| Time                  deposits                                                                             |   |                                                   | 516,398   |   |   |   | 11,974 |   |   |   | 4.68 | % |   |   | 453,008 |   |   |   | 8,986 |   |   |   | 4.00 | % |
| Short-term                  borrowings                                                                     |   |                                                   | 45,353    |   |   |   | 1,331 |   |   |   | 5.92 | % |   |   | 89,491 |   |   |   | 2,338 |   |   |   | 5.27 | % |
| Long-term                  borrowings                                                                      |   |                                                   | 110,149   |   |   |   | 2,550 |   |   |   | 4.67 | % |   |   | 105,885 |   |   |   | 2,190 |   |   |   | 4.17 | % |
| Junior                  subordinated debt owed to      unconsolidated                  trusts                                                                                                                                                                                                                                          |   |                                                   | 53,611    |   |   |   | 2,104 |   |   |   | 7.91 | % |   |   | 46,394 |   |   |   | 1,766 |   |   |   | 7.68 | % |
| Interest                  bearing liabilities                                                                                                                                                                                                                                                                                                                   |   |                                                   | 1,160,510 |   |   |   | 23,364 |   |   |   | 4.06 | % |   |   | 1,139,356 |   |   |   | 19,705 |   |   |   | 3.49 | % |
| Demand                  deposits and other non interest      bearing                  liabilities                                                                                                                                                                                                                                      |   |                                                   | 127,738   |   |   |   |   |   |   |   |   |   |   |   | 140,954 |   |   |   |   |   |   |   |   |   |
| Stockholders'                  equity                                                                      |   |                                                   | 95,148    |   |   |   |   |   |   |   |   |   |   |   | 93,984 |   |   |   |   |   |   |   |   |   |
| Average                  liabilities and stockholders' equity                                                                                                                                                                                                                                                                                                   |   | $                                                      | 1,383,396 |   |   |   |   |   |   |   |   |   |   | $ | 1,374,294 |   |   |   |   |   |   |   |   |   |
| Net                  interest spread                  (5)                                                  |   |                                                   |      |   |   | $ | 20,648 |   |   |   | 2.97 | % |   |   |   |   |   | $ | 21,374 |   |   |   | 3.15 | % |
| Net                  interest earning assets                                                                                                                                                                                                                                                                                                                    |   | $                                                      | 102,093   |   |   |   |   |   |   |   |   |   |   | $ | 109,454 |   |   |   |   |   |   |   |   |   |
| Net                  interest margin on a fully tax equivalent      basis                  (6)                                                                                                                                                                                                                                         |   |                                                   |      |   |   |   |   |   |   |   | 3.30 | % |   |   |   |   |   |   |   |   |   |   | 3.45 | % |
| Net                  interest margin                  (6)                                                  |   |                                                   |      |   |   |   |   |   |   |   | 3.21 | % |   |   |   |   |   |   |   |   |   |   | 3.35 | % |
| Ratio                  of average interest-earning assets to     average                  interest-bearing liabilities                                                                                                                                                                                                                      |   |                                                   |      |   |   |   |   |   |   |   | 1.09 |   |   |   |   |   |   |   |   |   |   |   | 1.10 |   |

| (1) | For                the purpose of these computations, nonaccrual loans are included                in the                daily average loan amounts                outstanding. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Interest                earned on loans includes loan fees (which are not material in amount)                and                interest income which has been received from borrowers whose loans                were                removed from nonaccrual status during the period                indicated. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Taxable-equivalent                adjustments were made using a 34% corporate tax rate for all years                presented in calculating interest income and                yields. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Average                balances of securities available-for-sale are based on amortized                cost. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (5) | Interest                rate spread represents the difference between the average yield on                interest earning assets and the average cost of interest bearing                liabilities and is represented on a fully tax equivalent                basis. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Net                interest margin represents net interest income as a percentage of                average                interest earning assets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **VOLUME,                RATE AND MIX ANALYSIS OF NET INTEREST                INCOME** |
|----------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                   |   | **Three                Months Ended June 30, 2007** |         |   | **Six                Months Ended June 30, 2007** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|--------------|--------|---------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                   |   | **Compared                to June 30, 2006**        |    |   | **Compared                to June 30, 2006**      |   |
|                                                                                                                                                                                                                                                                   |   | **Change                Due to Volume**             |         |   | **Change                Due to Rate**             |   |   | **Total                Change** |   |   | **Change                Due to Volume** |    |   | **Change                Due to Rate** |   |   | **Total                Change** |   |
|                                                                                                                                                                                                                                                                   |   |                                                |         |   |                                              |   |   | *(Dollars                in Thousands)* |   |   |   |   |   |   |   |
| Interest-Earning                Assets:                                                                                                                                                                                                                                |   |                                                |         |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,                net (1)                                                                                                                                                                                                                                          |   | $                                                   | 215          |   |                                              | $      | 496 |   |   | $ | 711 |   |   | $ | 860 |   |   | $ | 2,059 |   |   | $ | 2,919 |   |
| Loans                exempt from federal income taxes (2)                                                                                                                                                                                                              |   |                                                | 11           |   |                                              |   | 8 |   |   |   | 19 |   |   |   | 13 |   |   |   | 11 |   |   |   | 24 |   |
| Taxable                investment securities                                                                                                                                                                                                                      |   |                                                | (178         | )      |                                              |   | 138 |   |   |   | (40 | ) |   |   | (262 | ) |   |   | 139 |   |   |   | (123 | ) |
| Mortgage-related                securities                                                                                                                                                                                                                             |   |                                                | (125         | )      |                                              |   | 49 |   |   |   | (76 | ) |   |   | (217 | ) |   |   | 142 |   |   |   | (75 | ) |
| Investment                securities exempt from                     federal income taxes (2)                                                                                                                                                 |   |                                                | (97          | )      |                                              |   | - |   |   |   | (97 | ) |   |   | (208 | ) |   |   | (1 | ) |   |   | (209 | ) |
| Other                securities                                                                                                                                                                                                                                        |   |                                                | 217          |   |                                              |   | 5 |   |   |   | 222 |   |   |   | 378 |   |   |   | 19 |   |   |   | 397 |   |
| Total                interest-earning assets                                                                                                                                                                                                                           |   | $                                                   | 43           |   |                                              | $      | 696 |   |   | $ | 739 |   |   | $ | 564 |   |   | $ | 2,369 |    |   | $ | 2,933 |   |
| Interest-Bearing                Liabilities:                                                                                                                                                                                                                           |   |                                                |         |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW                deposits                                         |   | $                                                   | (4           | )      |                                              | $      | 9 |   |   | $ | 5 |   |   | $ | (4 | ) |   | $ | 52 |   |   | $ | 48 |   |
| Money                market deposits                                                                                                                                                                                                                                   |   |                                                | 6            |   |                                              |   | 313 |   |   |   | 319 |   |   |   | (16 | ) |   |   | 804 |   |   |   | 788 |   |
| Savings                deposits                                                                                                                                                                                                                                        |   |                                                | (16          | )      |                                              |   | 112 |   |   |   | 96 |   |   |   | (42 | ) |   |   | 186 |   |   |   | 144 |   |
| Time                deposits                                        |   |                                                | 784          |   |                                              |   | 645 |   |   |   | 1,429 |   |   |   | 1,354 |   |   |   | 1,634 |   |   |   | 2,988 |   |
| Short-term                borrowings                                                                                                                                                                                                                                   |   |                                                | (1,001       | )      |                                              |   | 233 |   |   |   | (768 | ) |   |   | (1,343 | ) |   |   | 336 |   |   |   | (1,007 | ) |
| Long-term                borrowings                                                                                                                                                                                                                                    |   |                                                | (12          | )      |                                              |   | 127 |   |   |   | 115 |   |   |   | 91 |   |   |   | 269 |   |   |   | 360 |   |
| Junior                subordinated debt owed                    to unconsolidated trusts                                                                                                                                                           |   |                                                | 142          |   |                                              |   | 13 |   |   |   | 155 |   |   |   | 282 |   |   |   | 56 |   |   |   | 338 |                   |
| Total                interest-bearing liabilities                                                                                                                                                                                                                      |   | $                                                   | (101         | )      |                                              | $      | 1,452 |   |   | $ | 1,351 |   |   | $ | 322 |   |   | $ | 3,337 |   |   | $ | 3,659 |   |
| Net                change in net interest income                                                                                                                                                                                                                       |   |                                                |         |   |                                              |   |   |   |   | $ | (612 | ) |   |   |   |   |   |   |   |   |   | $ | (726 | ) |

| (1) | Interest                earned on loans includes loan fees (which are not material in amount)                and                interest income which has been received from borrowers whose loans                were                removed from non-accrual during the period                indicated. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Taxable-equivalent                adjustments were made using a 34% corporate tax rate for all years                presented in calculating interest income and                yields. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Provision      for Loan Losses**

----

**Non-Interest      Income**

|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Three                Months Ended June 30, |   |   | Six                Months Ended June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2007                                       |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   | *(Dollars                in Thousands)*  |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                                     |   |   |   |   |   |   |   |
| Service                charges on deposit accounts                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                          | 967    |   |                                     | $      | 960 |   |   | $ | 1,864 |   |   | $ | 1,892 |   |
| Service                charges on                loans                                                                                     |   |                                       | 588    |   |                                     |   | 804 |   |   |   | 1,466 |   |   |   | 1,519 |   |
| Securities                gains,                net                                                                                        |   |                                       | -      |   |                                     |   | - |   |   |   | - |   |   |   | - |   |
| Gain                on sale of loans,                net                                                                                   |   |                                       | 9      |   |                                     |   | 39 |   |   |   | 33 |   |   |   | 54 |   |
| Gain                on sale of fixed assets,                net                                                                            |   |                                       | 162    |   |                                     |   | - |   |   |   | 161 |   |   |   | 175 |   |
| Tax                fees, brokerage and insurance commissions                                                                                                                                                                                                                                                                                                                                                                                      |   |                                       | 535    |   |                                     |   | 461 |   |   |   | 1,412 |   |   |   | 1,265 |   |
| Other                                                                                                                                      |   |                                       | 681    |   |                                     |   | 758 |   |   |   | 1,280 |                  |   |   | 1,688 |                  |
|     Total                non-interest                income                                                            |   | $                                          | 2,942  |   |                                     | $      | 3,022 |   |   | $ | 6,216 |   |   | $ | 6,593 |   |

----

**Non-Interest      Expense**

|                                                                                                                                                                                                                                                                                                                                                                                  |   | Three                Months Ended June 30, |   |   | Six                Months Ended June 30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                  |   | 2007                                       |   |   | 2006                                     |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                  |   |                                       |   |   | *(Dollars                in Thousands)*  |   |   |   |   |
| Salaries                and employee benefits                                                                                                                                                                                                                                                                                                                                         |   | $                                          | 6,633  |   |                                     | $      | 6,821 |   |   | $ | 13,194 |   |   | $ | 14,081 |   |
| Premises                and equipment                                                                                                                                                                                                                                                                                                                                                 |   |                                       | 1,781  |   |                                     |   | 1,564 |   |   |   | 3,691 |   |   |   | 3,300 |   |
| Data                processing fees                                                                                                                                                                                                                                                                                                                                                   |   |                                       | 848    |   |                                     |   | 770 |   |   |   | 1,653 |   |   |   | 1,582 |   |
| Marketing                and business development                                                                                                                                                                                                                                                                                                                                     |   |                                       | 449    |   |                                     |   | 416 |   |   |   | 867 |   |   |   | 865 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                 |   |                                       | 1,824  |   |                                     |   | 1,890 |                  |   |   | 3,493 |   |   |   | 3,817 |   |
|     Total                noninterest                expense                                                  |   | $                                          | 11,535 |   |                                     | $      | 11,461 |   |   | $ | 22,898 |   |   | $ | 23,645 |   |

**Income      Taxes**

**Liquidity**

----

** **

**Asset/Liability      Management**

----

|                                                                                    |   | **Amounts                  Maturing or Repricing as of June 30, 2007** |    |
|-----------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|---------|
|                                                                                    |   | **Within**                                                             |    |   | **Six                  to Twelve** |   |   | **One                  to Five** |   |   | **Over** |   |   |   |   |
|                                                                                    |   | **Six                  months**                                        |    |   | **Months** |   |    | **Years** |   |   | **Five                  Years** |   |   | **Total** |   |
|                                                                                    |   |                                                                   |    |   | *(Dollars                  in Thousands)* |   |   |   |   |
| Interest-earning                  assets:                                               |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate                  mortgage loans                                              |   | $                                                                      | 121,424 |   |   | $ | 122,457 |   |   | $ | 322,205 |   |   | $ | 13,677 |   |   | $ | 579,763 |   |
| Adjustable-rate                  mortgage loans                                    |   |                                                                   | 152,896 |   |   |   | 29,173 |   |   |   | 44,808 |   |   |   | 11 |   |   |   | 226,888 |   |
|       Total                  mortgage loans               |   |                                                                   | 274,320 |   |   |   | 151,630 |   |   |   | 367,013 |   |   |   | 13,688 |   |   |   | 806,651 |   |
| Commercial                  business loans                                              |   |                                                                   | 127,622 |   |   |   | 28,592 |   |   |   | 69,288 |   |   |   | 3,960 |   |   |   | 229,462 |   |
| Consumer                  loans                                                         |   |                                                                   | 18,227  |   |   |   | 6,520 |   |   |   | 20,117 |   |   |   | 1,609 |   |   |   | 46,473 |   |
| Home                  equity loans                                                      |   |                                                                   | 28,490  |   |   |   | 111 |   |   |   | 1,579 |   |   |   | - |   |   |   | 30,180 |   |
| Other                  loans                                                            |   |                                                                   | 1,855   |   |   |   | 257 |   |   |   | 2,487 |   |   |   | 945 |   |   |   | 5,544 |   |
| Mortgage-related                  securities                                       |   |                                                                   | 4,104   |   |   |   | 3,684 |   |   |   | 37,956 |   |   |   | 18,197 |   |   |   | 63,941 |   |
| Fixed                  rate investment securities and other                        |   |                                                                   | 482     |   |   |   | 3,691 |   |   |   | 21,098 |   |   |   | 38,555 |   |   |   | 63,826 |   |
| Variable                  rate investment securities and other                          |   |                                                                   | 26,204  |   |   |   | - |   |   |   | - |   |   |   | - |    |   |   | 26,204 |   |
|       Total                  interest-earning assets      |   | $                                                                      | 481,304 |   |   | $ | 194,485 |   |   | $ | 519,538 |   |   | $ | 76,954 |   |   | $ | 1,272,281 |   |
|                                                                                    |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                                          |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Time                  deposits                                              |   | $                                                                      | 216,842 |   |   | $ | 120,923 |   |   | $ | 184,887 |   |   | $ | 14 |   |   | $ | 522,666 |   |
|   NOW                  accounts                                               |   |                                                                   | 5,781   |   |   |   | 5,781 |   |   |   | 57,809 |   |   |   | 26,977 |   |   |   | 96,348 |   |
|   Savings                  accounts                                           |   |                                                                   | 6,924   |   |   |   | 6,924 |   |   |   | 69,242 |   |   |   | 32,313 |   |   |   | 115,403 |   |
|   Money                  market accounts                                      |   |                                                                   | 13,285  |   |   |   | 13,285 |   |   |   | 132,847 |   |   |   | 61,995 |   |   |   | 221,412 |   |
| Short-term                  borrowings                                                  |   |                                                                   | 51,331  |   |   |   | 2,564 |   |   |   | - |   |   |   | - |   |   |   | 53,985 |   |
| Long-term                  borrowings                                                   |   |                                                                   | 11,068  |   |   |   | 21,755 |   |   |   | 74,739 |   |   |   | 1,590 |   |   |   | 109,152 |   |
| Junior                  subordinated debt owed to unconsolidated trusts                 |   |                                                                   | 28,352  |   |   |   | - |   |   |   | - |   |   |   | 25,259 |   |   |   | 53,611 |    |
|       Total                  interest-bearing liabilities |   | $                                                                      | 333,583 |   |   | $ | 171,232 |   |   | $ | 519,524 |                  |   | $ | 148,148 |   |   | $ | 1,172,487 |   |
|                                                                                    |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                  assets less interest-bearing liabilities              |   | $                                                                      | 147,721 |   |   | $ | 23,253 |   |   | $ | 14 |   |   | $ | (71,194 | ) |   | $ | 99,794 |   |
| Cumulative                  interest rate sensitivity gap                               |   | $                                                                      | 147,721 |   |   | $ | 170,974 |   |   | $ | 170,988 |   |   | $ | 99,794 |   |   |   |   |   |
| Cumulative                  interest rate sensitivity gap as a                          |   |                                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    percentage                  of total assets                           |   |                                                                   | 10.07   | % |   |   | 11.65 | % |   |   | 11.65 | % |   |   | 6.80 | % |   |   |   |   |

----

**Forward-Looking      Statements**

**Item        3. Quantitative        and Qualitative Disclosures        About Market Risk**

**Item      4. Controls and      Procedures**

**Evaluation      of Disclosure Controls and Procedures**

**Changes      in Internal Control Over Financial Reporting**

----

**Part      II.  Other      Information**

| Item                1.  | Legal                Proceedings                                                                                                                                                                                                                                                                                                                                                                         |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    | As                of June 30, 2007 there were no material pending legal proceedings,                other                than ordinary routine litigation incidental to the business of the                Corporation, to which the Corporation or any of its subsidiaries                was a                party or to which any of their property was subject.                                     |
| Item                1A. | Risk                Factors There                have been no material changes from the risk factors previously disclosed                in Part I, Item 1A, "Risk Factors," of our Form 10-K for the year                ended                December 31, 2006.  Please refer to that section for disclosures                regarding the risks and uncertainties relating to our business. |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                          |
| Item                2.  | Unregistered                Sales of Equity Securities and Use of Proceeds (a)     NONE (b)     NONE (c)                    NONE                                                                                                                                                                                    |

| Item                3. | Defaults                upon Senior Securities – NONE |
|------------------------|-------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                            |   | Votes                cast “FOR” the reelection |      |   | Votes                Withheld |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|-----------|--------|-------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                            |   |                                                       |      |   |                          |   |
| **Nominees                for Director for Three-Year**                                                                                                                                                                                                                                                                                         |   |                                                       |      |   |                          |   |
| **Term                Expiring in 2010:**                                                                                                                                                                                                                                                                                                       |   |                                                       |      |   |                          |   |
| Michael                J.                Murry                                                       |   |                                                       | 2,289,494 |   |                          |   | 781,880 |   |
| William                J. Adamany,                Sr.                                                |   |                                                       | 2,424,541 |   |                          |   | 646,833 |   |
| Nicholas                S.                Logarakis                                                  |   |                                                       | 2,247,314 |   |                          |   | 824,060 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                                                       |      |   |                          |   |   |   |
| **Nominees                for Director for Two-Year**                                                                                                                                                                                                                                                                                           |   |                                                       |      |   |                          |   |   |   |
| **Term                Expiring in 2009:**                                                                                                                                                                                                                                                                                                       |   |                                                       |      |   |                          |   |   |   |
| Richard                C.                Bemis                                                       |   |                                                       | 2,478,335 |   |                          |   | 593,039 |   |

----

|   | 2.1 | Agreement                and Plan of Merger, dated as of July 9, 2007, among Merchants and                Manufacturers Bancorporation, Inc., Harris Bankcorp, Inc. and Boundary                Acquisition Corporation (incorporated by reference to Exhibit 2.1                of the                Corporation's Current Report on Form 8-K (File No. 000-21292) filed                by the                Corporation with the Securities and Exchange Commission on July 10,                2007). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Fourth                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and Michael                J.                Murry. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | First                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and James                C.                Mroczkowski. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | First                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and Frederick                Klug. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | First                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and John                Krawczyk. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | First                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and Charles                P.                Heffernan. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Second                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and Conrad                C.                Kaminski. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | First                Amendment to Executive Employment Agreement, dated as of June 29,                2007,                between Merchants and Manufacturers Bancorporation, Inc. and James                F.                Bomberg. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Amended                and Restated Executive Employee Salary Continuation Agreement, dated                as of                June 29, 2007, between Merchants and Manufacturers Bancorporation,                Inc.                and James Bomberg |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.9 | Amended                and Restated Supplemental Executive Retirement Agreement, dated as                of June                29, 2007, between Merchants and Manufacturers Bancorporation, Inc.                and                James Mroczkowski. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.10 | Amended                and Restated Supplemental Executive Retirement Agreement, dated as                of June                29, 2007, between Merchants and Manufacturers Bancorporation, Inc.                and                John Krawczyk. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

**MERCHANTS        AND MANUFACTURERS BANCORPORATION, INC.**

| Date    August                14, 2007       | /s/                Michael J.                Murry                                                                |
|------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                           | Michael                J. Murry                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                           | Chairman                of the Board of Directors                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                           |      and                Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                           | Principal                Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Date    August                14, 2007            | /s/                Frederick R.                Klug                                                                                                                                                    |
|                                                                                           | Frederick                R. Klug                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                           | Executive                Vice President & Chief     Financial                Officer                                                                                                                                                                                                                                                                                                                            |
|                                                                                           | Principal                Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                   |

----

**10-Q        EXHIBIT LIST**

| EXHIBIT                  NO.  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| EXHIBIT                  2.1       | Agreement                  and Plan of Merger, dated as of July 9, 2007, among Merchants and                  Manufacturers Bancorporation, Inc., Harris Bankcorp, Inc. and Boundary                  Acquisition Corporation (incorporated by reference to Exhibit 2.1                  of the                  Corporation's Current Report on Form 8-K (File No. 000-21292) filed                  by the                  Corporation with the Securities and Exchange Commission on July 10,                  2007).  |
| EXHIBIT                  10.1      | Fourth                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and Michael                  J.                  Murry.                                                                                                                                                                                                                                                                                   |
| EXHIBIT                  10.2      | First                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and James                  C.                  Mroczkowski.                                                                                                                                                                                                                                                                                |
| EXHIBIT                  10.3      | First                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and Frederick                  Klug.                                                                                                                                                                                                                                                                                                       |
| EXHIBIT                  10.4      | First                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and John                  Krawczyk.                                                                                                                                                                                                                                                                                                        |
| EXHIBIT                  10.5      | First                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and Charles                  P.                  Heffernan.                                                                                                                                                                                                                                                                                |
| EXHIBIT                  10.6      | Second                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and Conrad                  C.                  Kaminski.                                                                                                                                                                                                                                                                                 |
| EXHIBIT                  10.7      | First                  Amendment to Executive Employment Agreement, dated as of June 29,                  2007,                  between Merchants and Manufacturers Bancorporation, Inc. and James                  F.                  Bomberg.                                                                                                                                                                                                                                                                                    |
| EXHIBIT                  10.8      | Amended                  and Restated Executive Employee Salary Continuation Agreement,                  dated as of                  June 29, 2007, between Merchants and Manufacturers Bancorporation,                  Inc.                  and James Bomberg.                                                                                                                                                                                                                                                                   |
| EXHIBIT                  10.9      | Amended                  and Restated Supplemental Executive Retirement Agreement, dated                  as of June                  29, 2007, between Merchants and Manufacturers Bancorporation, Inc.                  and                  James Mroczkowski.                                                                                                                                                                                                                                                                    |
| EXHIBIT                  10.10     | Amended                  and Restated Supplemental Executive Retirement Agreement, dated                  as of June                  29, 2007, between Merchants and Manufacturers Bancorporation, Inc.                  and                  John Krawczyk.                                                                                                                                                                                                                                                                        |
| EXHIBIT                  31.1      | Certification                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                |
| EXHIBIT                  31.2      | Certification                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                |
| EXHIBIT                  32.1*     | Certification                  of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                |
| EXHIBIT                  32.2*     | Certification                  of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                     |

----