----

| ·   | future economic and business conditions; |
|--------------------|------------------------------------------|

| ·   | the Company’s growth and ability to maintain growth; |
|--------------------|------------------------------------------------------------|

| ·   | governmental monetary and fiscal policies; |
|--------------------|--------------------------------------------|

| ·   | legislative changes; |
|--------------------|----------------------|

| ·   | actions taken by regulatory authorities; |
|--------------------|------------------------------------------|

| ·   | the effect of interest rate changes on our level, costs and composition of deposits, loan demand, and the values of our loan collateral, securities, and interest sensitive assets and liabilities; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services, as well as competitors that offer banking products and services by mail, telephone, computer, and/or the Internet; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | credit risks; |
|--------------------|---------------|

| ·   | higher than anticipated levels of defaults on loans; |
|--------------------|------------------------------------------------------|

| ·   | perceptions by depositors about the safety of deposits; |
|--------------------|---------------------------------------------------------|

| ·   | failure of our customers to repay loans; |
|--------------------|------------------------------------------|

| ·   | failure of assumptions underlying the establishment of the allowance for loan losses, including the value of collateral securing loans; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the risks of opening new offices, including, without limitation, the related costs and time of building customer relationships and integrating operations, and the risk of failure to achieve expected gains, revenue growth and/or expense savings; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the effect of agreements with regulatory authorities, which restrict various activities and impose additional administrative requirements without commensurate benefits; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes in requirements of regulatory authorities; |
|--------------------|----------------------------------------------------|

| ·   | changes in accounting policies, rules, and practices; |
|--------------------|-------------------------------------------------------|

| ·   | cost and difficulty of implementing changes in technology or products; |
|--------------------|------------------------------------------------------------------------|

| ·   | loss of consumer confidence and economic disruptions resulting from terrorist activities; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | ability to weather the current economic downturn; |
|--------------------|---------------------------------------------------|

| ·   | loss of consumer or investor confidence; and |
|--------------------|----------------------------------------------|

| ·   | other factors and information described in this report and in any of the other reports we file with the Securities and Exchange Commission under the Securities Act of 1934. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

|         |   | Year ended December 31, 2010 |   |                   | Year ended December 31, 2009 |   |
|--------------|--------|------------------------------|--------|------------------------|------------------------------|--------|
|         |   | AverageBalances(1)           |   | InterestIncome/Expense |                         |   | AverageYields/Rates(2) |   |   | AverageBalances(1) |   | InterestIncome/Expense |   |   | AverageYields/Rates(2) |   |
|  Assets |   |                         |   |                   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Securities                                                                        |   | $      | 27,021  |   |   | $      | 916    |   |   |   | 3.39   | %      |   | $      | 23,652  |   |   | $      | 1,026  |   |   |   | 4.34   | %      |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal Funds Sold                                                                |   |   | 13,349  |   |   |   | 19     |   |   |   | .14    | %      |   |   | 9,994   |   |   |   | 16     |   |   |   | .16    | %      |
| Loans (3), (4)                                                                    |   |   | 128,651 |   |   |   | 6,913  |   |   |   | 5.37   | %      |   |   | 138,066 |   |   |   | 6,998  |   |   |   | 5.07   | %      |
| Total interest earning assets                                                     |   |   | 169,021 |   |   |   | 7,848  |   |   |   | 4.64   | %      |   |   | 171,712 |   |   |   | 8,040  |   |   |   | 4.68   | %      |
| Cash and due from banks, non-interest bearing                                     |   |   | 799     |   |   |   |   |   |   |   |   |   |   |   | 1,187   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses                                                         |   |   | (2,690  | )      |   |   |   |   |   |   |   |   |   |   | (1,982  | )      |   |   |   |   |   |   |   |   |
| Premises and equipment                                                            |   |   | 5,248   |   |   |   |   |   |   |   |   |   |   |   | 5,424   |   |   |   |   |   |   |   |   |   |
| Cash surrender value of life insurance policies                                   |   |   | 1,872   |   |   |   |   |   |   |   |   |   |   |   | 1,801   |   |   |   |   |   |   |   |   |   |
| Other real estate owned                                                           |   |   | 8,079   |   |   |   |   |   |   |   |   |   |   |   | 2,402   |   |   |   |   |   |   |   |   |   |
| Other assets                                                                      |   |   | 3,091   |   |   |   |   |   |   |   |   |   |   |   | 2,308   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                      |   | $      | 185,420 |   |   |   |   |   |   |   |   |   |   | $      | 182,852 |   |   |   |   |   |   |   |   |   |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Liabilities and shareholders' equity                                              |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                                                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest bearing transaction accounts                                             |   | $      | 12,887  |   |   |   | 59     |   |   |   | .46    | %      |   | $      | 13,169  |   |   |   | 75     |   |   |   | .57    | %      |
| Savings and money market                                                          |   |   | 50,451  |   |   |   | 753    |   |   |   | 1.49   | %      |   |   | 34,936  |   |   |   | 657    |   |   |   | 1.88   | %      |
| Time deposits                                                                     |   |   | 75,635  |   |   |   | 1,519  |   |   |   | 2.01   | %      |   |   | 86,435  |   |   |   | 2,199  |   |   |   | 2.54   | %      |
|                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Total interest bearing deposits                                                   |   |   | 138,973 |   |   |   | 2,331  |   |   |   | 1.68   | %      |   |   | 134,540 |   |   |   | 2,931  |   |   |   | 2.18   | %      |
| Federal Funds purchased and    customer repurchase agreements |   |   | 2,864   |   |   |   | 38     |   |   |   | 1.33   | %      |   |   | 3,842   |   |   |   | 78     |   |   |   | 2.04   | %      |
| FHLB advances                                                                     |   |   | 8,033   |   |   |   | 201    |   |   |   | 2.50   | %      |   |   | 8,559   |   |   |   | 238    |   |   |   | 2.78   | %      |
| Broker repurchase agreements                                                      |   |   | 5,000   |   |   |   | 177    |   |   |   | 3.54   | %      |   |   | 5,000   |   |   |   | 177    |   |   |   | 3.53   | %      |
| Total interest bearing liabilities                                                |   |   | 154,870 |   |   |   | 2,747  |   |   |   | 1.77   | %      |   |   | 151,941 |   |   |   | 3,424  |   |   |   | 2.25   | %      |
| Noninterest bearing demand deposits and other    liabilities  |   |   | 12,271  |   |   |   |   |   |   |   |   |   |   |   | 11,941  |   |   |   |   |   |   |   |   |   |
| Shareholders' equity                                                              |   |   | 18,279  |   |   |   |   |   |   |   |   |   |   |   | 18,970  |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders' equity                                        |   | $      | 185,420 |   |   |   |   |   |   |   |   |   |   | $      | 182,852 |   |   |   |   |   |   |   |   |   |
| Interest rate spread (5)                                                          |   |   |    |   |   |   |   |   |   |   | 2.87   | %      |   |   |    |   |   |   |   |   |   |   | 2.43   | %      |
| Net interest income and net yield   on earning assets(6)                |   |   |    |   |   | $      | 5,101  |   |   |   | 3.02   | %      |   |   |    |   |   | $      | 4,616  |   |   |   | 2.69   | %      |
| Interest free funds supporting earning assets (7)                                 |   | $      | 14,151  |   |   |   |   |   |   |   |   |   |   | $      | 19,771  |   |   |   |   |   |   |   |   |   |

| (2) | Calculated based on the number of days in the year that each type of asset or liability was in existence. Yield calculated on a pre-tax basis. The estimated tax equivalent yield on securities was 3.80% in 2010 and 4.81% in 2009. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Nonaccruing loans are included in the average loan balances and income on such loans is recognized on a cash basis. |
|-----|---------------------------------------------------------------------------------------------------------------------|

| (4) | Interest income on loans includes loan fee income as well as interest income. The amount of loan fees included is $91,712 and $236,777 in 2010 and 2009, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Total yield on interest earning assets less the rate paid on total interest bearing liabilities. |
|-----------------|--------------------------------------------------------------------------------------------------|

| (6)   | Net interest income divided by total interest earning assets. |
|-----------------|---------------------------------------------------------------|

| (7)   | Total interest earning assets less total interest bearing liabilities. |
|-----------------|------------------------------------------------------------------------|

----

|         |   | Year ended December 31, 2009 |   |                   | Year ended December 31, 2008 |   |
|--------------|--------|------------------------------|--------|------------------------|------------------------------|--------|
|         |   | AverageBalances(1)           |   | InterestIncome/Expense |                         |   | AverageYields/Rates(2) |   |   | AverageBalances(1) |   | InterestIncome/Expense |   |   | AverageYields/Rates(2) |   |
|  Assets |   |                         |   |                   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| Securities                                          |   | $      | 23,652  |   |   | $      | 1,026  |   |   |   | 4.34   | %      |   | $      | 22,607  |   |   | $      | 1,161  |   |   |   | 5.14   | %      |
|-----------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|-------------|--------|--------|--------|--------|--------|--------|--------|--------------|--------|--------|--------|-------------|--------|--------|--------|--------|--------|
| Federal Funds Sold                                                                |   |   | 9,994        |   |   |   | 16          |   |   |   | .16    | %      |   |   | 3,429        |   |   |   | 92          |   |   |   | 2.68   | %      |
| Loans (3), (4)                                                                    |   |   | 138,066      |   |   |   | 6,998       |   |   |   | 5.07   | %      |   |   | 115,162      |   |   |   | 7,849       |   |   |   | 6.82   | %      |
| Total interest earning assets                                                     |   |   | 171,712      |   |   |   | 8,040       |   |   |   | 4.68   | %      |   |   | 141,198      |   |   |   | 9,102       |   |   |   | 6.45   | %      |
| Cash and due from banks                                                           |   |   | 1,187        |   |   |   |        |   |   |   |   |   |   |   | 3,624        |   |   |   |        |   |   |   |   |   |
| Allowance for loan losses                                                         |   |   | (1,982       | )      |   |   |        |   |   |   |   |   |   |   | (1,394       | )      |   |   |        |   |   |   |   |   |
| Premises and equipment                                                            |   |   | 5,424        |   |   |   |        |   |   |   |   |   |   |   | 5,687        |   |   |   |        |   |   |   |   |   |
| Cash surrender value of life insurance policies                                   |   |   | 1,801        |   |   |   |        |   |   |   |   |   |   |   | 1,731        |   |   |   |        |   |   |   |   |   |
| Other real estate owned                                                           |   |   | 2,402        |   |   |   |        |   |   |   |   |   |   |   | 372          |   |   |   |        |   |   |   |   |   |
| Other assets                                                                      |   |   | 2,308        |   |   |   |        |   |   |   |   |   |   |   | 1,489        |   |   |   |        |   |   |   |   |   |
| Total assets                                                                      |   | $      | 182,852      |   |   |   |        |   |   |   |   |   |   | $      | 152,707      |   |   |   |        |   |   |   |   |   |
|                                                                              |   |   |         |   |   |   |        |   |   |   |   |   |   |   |         |   |   |   |        |   |   |   |   |   |
| Liabilities and shareholders' equity                                              |   |   |         |   |   |   |        |   |   |   |   |   |   |   |         |   |   |   |        |   |   |   |   |   |
| Interest bearing liabilities:                                                     |   |   |         |   |   |   |        |   |   |   |   |   |   |   |         |   |   |   |        |   |   |   |   |   |
| Interest bearing transaction accounts                                             |   | $      | 13,169       |   |   |   | 75          |   |   |   | .57    | %      |   | $      | 13,502       |   |   |   | 125         |   |   |   | .92    | %      |
| Savings and money market                                                          |   |   | 34,936       |   |   |   | 657         |   |   |   | 1.88   | %      |   |   | 14,994       |   |   |   | 296         |   |   |   | 1.98   | %      |
| Time deposits                                                                     |   |   | 86,435       |   |   |   | 2,199       |   |   |   | 2.54   | %      |   |   | 76,234       |   |   |   | 2,808       |   |   |   | 3.68   | %      |
|                                                                              |   |   |         |   |   |   |        |   |   |   |   |   |   |   |         |   |   |   |        |   |   |   |   |   |
| Total interest bearing deposits                                                   |   |   | 134,540      |   |   |   | 2,931       |   |   |   | 2.18   | %      |   |   | 104,730      |   |   |   | 3,229       |   |   |   | 3.08   | %      |
| Federal Funds purchased and    customer repurchase agreements |   |   | 3,842        |   |   |   | 78          |   |   |   | 2.04   | %      |   |   | 5,351        |   |   |   | 170         |   |   |   | 3.18   | %      |
| FHLB advances                                                                     |   |   | 8,559        |   |   |   | 238         |   |   |   | 2.78   | %      |   |   | 6,955        |   |   |   | 228         |   |   |   | 3.28   | %      |
| Broker repurchase agreements                                                      |   |   | 5,000        |   |   |   | 177         |   |   |   | 3.53   | %      |   |   | 4,836        |   |   |   | 171         |   |   |   | 3.53   | %      |
| Total interest bearing liabilities                                                |   |   | 151,941      |   |   |   | 3,424       |   |   |   | 2.25   | %      |   |   | 121,872      |   |   |   | 3,798       |   |   |   | 3.12   | %      |
| Noninterest bearing demand deposits and other    liabilities  |   |   | 11,941       |   |   |   |        |   |   |   |   |   |   |   | 11,466       |   |   |   |        |   |   |   |   |   |
| Shareholders' equity                                                              |   |   | 18,970       |   |   |   |        |   |   |   |   |   |   |   | 19,369       |   |   |   |        |   |   |   |   |   |
| Total liabilities and shareholders' equity                                        |   | $      | 182,852      |   |   |   |        |   |   |   |   |   |   | $      | 152,707      |   |   |   |        |   |   |   |   |   |
| Interest rate spread (5)                                                          |   |   |         |   |   |   |        |   |   |   | 2.43   | %      |   |   |         |   |   |   |        |   |   |   | 3.33   | %      |
| Net interest income and net yield on earning   assets(6)                |   |   |         |   |   | $      | 4,616       |   |   |   | 2.69   | %      |   |   |         |   |   | $      | 5,304       |   |   |   | 3.76   | %      |
| Interest free funds supporting earning assets (7)                                 |   | $      | 19,771       |   |   |   |        |   |   |   |   |   |   | $      | 19,326       |   |   |   |        |   |   |   |   |   |

| (1) | Average balances of interest-earning assets and interest-bearing liabilities calculated based on a daily basis. |
|-----|-----------------------------------------------------------------------------------------------------------------|

| (2) | Calculated based on the number of days in the year that each type of asset or liability was in existence. Yield calculated on a pre-tax basis. The estimated tax equivalent yield on securities was 4.81% in 2009 and 5.63% in 2008. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Nonaccruing loans are included in the average loan balances and income on such loans is recognized on a cash basis. |
|-----|---------------------------------------------------------------------------------------------------------------------|

| (4) | Interest income on loans includes loan fee income as well as interest income. The amount of loan fees included is $236,777 in 2009 and $401,297 in 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Total yield on interest earning assets less the rate paid on total interest bearing liabilities. |
|-----------------|--------------------------------------------------------------------------------------------------|

| (6)   | Net interest income divided by total interest earning assets. |
|-----------------|---------------------------------------------------------------|

| (7)   | Total interest earning assets less total interest bearing liabilities. |
|-----------------|------------------------------------------------------------------------|

----

|                                                                                                                                                                  |   | Increase (Decrease) Due to |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|
|                                                                                                                                                                  |   | Rate                       |   |   | Volume |   |   | Rate/Volume(1) |   |   | Change |   |
| Interest earned on:                                                                                                                                                   |   |                       |   |   | (Dollars in thousands) |   |   |   |   |
|      Securities (2)                                                                                                                          |   | $                          | (224   | ) |   | $ | 146 |   |   | $ | (32 | ) |   | $ | (110 | ) |
|      Federal Funds sold                                                                                                                      |   |                       | (2     | ) |   |   | 5 |   |   |   | - |   |   |   | 3 |   |
|      Loans                                                                                                                                   |   |                       | 421    |   |   |   | (477 | ) |   |   | (29 | ) |   |   | (85 | ) |
| Total interest income                                                                                                                                                 |   |                       | 195    |   |   |   | (326 | ) |   |   | (61 | ) |   |   | (192 | ) |
|                                                                                                                                                                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest paid on:                                                                                                                                                     |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                                                                                                                |   |                       | (613   | ) |   |   | 15 |   |   |   | (2 | ) |   |   | (600 | ) |
|      Federal Funds purchased and customer             repurchase agreements |   |                       | (27    | ) |   |   | (20 | ) |   |   | 7 |   |   |   | (40 | ) |
|      FHLB advances                                                                                                                           |   |                       | (24    | ) |   |   | (15 | ) |   |   | 2 |   |   |   | (37 | ) |
|      Broker repurchase agreements                                                                                                            |   |                       | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
|               Total interest expense                                                            |   |                       | (664   | ) |   |   | (20 | ) |   |   | 7 |   |   |   | (677 | ) |
|                                                                                                                                                                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in Net Interest Income                                                                                                                                         |   | $                          | 859    |   |   | $ | (306 | ) |   | $ | (68 | ) |   | $ | 485 |   |

| (1)   | Rate/ Volume is calculated as the difference between the average balances for the periods multiplied by the difference between the average rates for the periods. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Income calculated on a pre-tax basis. |
|-----------------|---------------------------------------|

|                                                                                                                                                                  |   | Increase (Decrease) Due to |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|
|                                                                                                                                                                  |   | Rate                       |   |   | Volume |   |   | Rate/Volume(1) |   |   | Change |   |
| Interest earned on:                                                                                                                                                   |   |                       |   |   | (Dollars in thousands) |   |   |   |   |
|      Securities (2)                                                                                                                          |   | $                          | (181   | ) |   | $ | 54 |   |   | $ | (9 | ) |   | $ | (136 | ) |
|      Federal Funds sold                                                                                                                      |   |                       | (86    | ) |   |   | 176 |   |   |   | (165 | ) |   |   | (75 | ) |
|      Loans                                                                                                                                   |   |                       | (2,012 | ) |   |   | 1,561 |   |   |   | (400 | ) |   |   | (851 | ) |
| Total interest income                                                                                                                                                 |   |                       | (2,279 | ) |   |   | 1,791 |   |   |   | (574 | ) |   |   | (1,062 | ) |
|                                                                                                                                                                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest paid on:                                                                                                                                                     |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Deposits                                                                                                                                |   |                       | (931   | ) |   |   | 767 |   |   |   | (134 | ) |   |   | (298 | ) |
|      Federal Funds purchased and customer             repurchase agreements |   |                       | (61    | ) |   |   | (48 | ) |   |   | 17 |   |   |   | (92 | ) |
|      FHLB advances                                                                                                                           |   |                       | (35    | ) |   |   | 53 |   |   |   | (8 | ) |   |   | 10 |   |
|      Broker repurchase agreements                                                                                                            |   |                       | -      |   |   |   | 6 |   |   |   | - |   |   |   | 6 |   |
|               Total interest expense                                                            |   |                       | (1,027 | ) |   |   | 778 |   |   |   | (125 | ) |   |   | (374 | ) |
|                                                                                                                                                                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in Net Interest Income                                                                                                                                         |   | $                          | (1,252 | ) |   | $ | 1,013 |   |   | $ | (449 | ) |   | $ | (688 | ) |

| (1)   | Rate/ Volume is calculated as the difference between the average balances for the periods multiplied by the difference between the average rates for the periods. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | Income calculated on a pre-tax basis. |
|-----------|---------------------------------------|

----

----

|                                                                               |  December 31, 2010      |             |
|------------------------------------------------------------------------------------|------------------------------|------------------|
|                                                                               |                         |   Immediate |   |   |   1-3Months |   |   |   3-12Months |   |   |   1-3Years |   |   |   3-5Years |   |   |   5-15Years |   |   |   > 15Years |   |   |   Total |   |
| Interest earning assets                                                            |  (Dollars in thousands) |             |
| Securities (1)                                                                     |                         | $                | - |   |   | $ | - |   |   | $ | - |   |   | $ | 102 |   |   | $ | 997 |   |   | $ | 10,210 |   |   | $ | 13,346 |   |   | $ | 24,655 |   |
| Federal funds sold                                                                 |                         |             | 5,110 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,110 |   |
| Loans (2)(3)                                                                       |                         |             | 47,867 |   |   |   | 7,844 |   |   |   | 7,746 |   |   |   | 24,985 |   |   |   | 21,687 |   |   |   | 1,036 |   |   |   | 8,749 |   |   |   | 119,914 |   |
| Total interest earning assets                                                      |                         |             | 52,977 |   |   |   | 7,844 |   |   |   | 7,746 |   |   |   | 25,087 |   |   |   | 22,684 |   |   |   | 11,246 |   |   |   | 22,095 |   |   |   | 149,679 |   |
|                                                                               |                         |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing deposits                                                          |                         |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing transaction   accounts                                  |                         |             | 12,622 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 12,622 |   |
| MMDAs & Savings                                                                |                         |             | 50,897 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,897 |   |
| Time deposits                                                                      |                         |             | 995 |   |   |   | 16,252 |   |   |   | 31,300 |   |   |   | 14,217 |   |   |   | 3,981 |   |   |   | - |   |   |   | - |   |   |   | 66,745 |   |
| Federal Funds purchased   and Customer repurchase   agreements |                         |             | 896 |   |   |   | - |   |   |   | 2,050 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,946 |   |
| FHLB advances                                                                      |                         |             | - |   |   |   | 4,038 |   |   |   | 113 |   |   |   | 301 |   |   |   | 140 |   |   |   | 2,000 |   |   |   | - |   |   |   | 6,592 |   |
| Broker repurchase agreements                                                       |                         |             | - |   |   |   | - |   |   |   | - |   |   |   | 2,000 |   |   |   | 3,000 |   |   |   | - |   |   |   | - |   |   |   | 5,000 |   |
| Total interest bearing   liabilities                                     |                         |             | 65,410 |   |   |   | 20,290 |   |   |   | 33,463 |   |   |   | 16,518 |   |   |   | 7,121 |   |   |   | 2,000 |   |   |   | - |   |   |   | 144,802 |   |
|                                                                               |                         |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap                                                           |                         | $                | (12,433 | ) |   | $ | (12,446 | ) |   | $ | (25,717 | ) |   | $ | 8,569 |   |   | $ | 15,563 |   |   | $ | 9,246 |   |   | $ | 22,095 |   |   | $ | 4,877 |   |
| Cumulative interest   sensitivity gap                               |                         | $                | (12,433 | ) |   | $ | (24,879 | ) |   | $ | (50,596 | ) |   | $ | (42,027 | ) |   | $ | (26,464 | ) |   | $ | (17,218 | ) |   | $ | 4,877 |   |   | $ | 4,877 |   |
| Gap ratio                                                                          |                         |             | .81 |   |   |   | .39 |   |   |   | .23 |   |   |   | 1.52 |   |   |   | 3.19 |   |   |   | 5.62 |   |   |   | - |   |   |   |   |   |
| Cumulative gap ratio                                                               |                         |             | .81 |   |   |   | .71 |   |   |   | .58 |   |   |   | .69 |   |   |   | .81 |   |   |   | .88 |   |   |   | 1.03 |   |   |   |   |   |
|                                                                               |                         |             |   |

|   |   |   December 31, 2009 |      |
|--------|--------|-------------------------------|-----------|
|   |   |                          | Immediate |   |   |   | 1-3Months |   |   |   | 3-12Months |   |   |   | 1-3Years |   |   |   | 3-5Years |   |   |   | 5-15Years |   |   |   | > 15Years |   |   |   | Total |   |
|   |   |  (Dollars in thousands)  |      |

|  Interest earning assets                                                             |   |   |   |   |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |    |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|
| Securities (1)                                                                            |   | $      | -      |   |   | $      | -      |   |   | $      | -       |   |   | $      | 185     |   |   | $      | 2,302   |   |   | $      | 10,999  |   |   | $      | 16,558 |   |   | $      | 30,044  |   |
| Federal funds sold                                                                        |   |   | 1,670  |   |   |   | -      |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -      |   |   |   | 1,670   |   |
| Loans(2) (3)                                                                              |   |   | 72,333 |   |   |   | 7,200  |   |   |   | 8,213   |   |   |   | 15,573  |   |   |   | 21,406  |   |   |   | 3,285   |   |   |   | 9,753  |   |   |   | 137,763 |   |
|                                                                                      |   |   | 74,003 |   |   |   | 7,200  |   |   |   | 8,213   |   |   |   | 15,758  |   |   |   | 23,708  |   |   |   | 14,284  |   |   |   | 26,311 |   |   |   | 169,477 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |    |   |
|  Interest bearing deposits                                                           |   |   |   |   |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |    |   |
| Interest bearing transaction   accounts                                         |   |   | 13,309 |   |   |   | -      |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -      |   |   |   | 13,309  |   |
| MMDAs & Savings                                                                       |   |   | 48,077 |   |   |   | -      |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -      |   |   |   | 48,077  |   |
| Time deposits                                                                             |   |   | 1,233  |   |   |   | 14,834 |   |   |   | 37,404  |   |   |   | 21,925  |   |   |   | 4,365   |   |   |   | -       |   |   |   | -      |   |   |   | 79,761  |   |
| Federal Funds purchased    and Customer repurchase    agreements |   |   | 588    |   |   |   | 150    |   |   |   | 2,519   |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |   |   | -      |   |   |   | 3,257   |   |
| FHLB advances                                                                             |   |   | -      |   |   |   | 1,538  |   |   |   | 1,613   |   |   |   | 4,302   |   |   |   | 231     |   |   |   | 2,059   |   |   |   | -      |   |   |   | 9,743   |   |
| Broker repurchase agreements                                                              |   |   | -      |   |   |   | -      |   |   |   | -       |   |   |   | 2,000   |   |   |   | -       |   |   |   | 3,000   |   |   |   | -      |   |   |   | 5,000   |   |
|                                                                                      |   |   | 63,207 |   |   |   | 16,522 |   |   |   | 41,536  |   |   |   | 28,227  |   |   |   | 4,596   |   |   |   | 5,059   |   |   |   | -      |   |   |   | 159,147 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |   |   |   |    |   |
| Interest sensitivity gap                                                                  |   | $      | 10,796 |   |   | $      | (9,322 | )      |   | $      | (33,323 | )      |   | $      | (12,469 | )      |   | $      | 19,112  |   |   | $      | 9,225   |   |   | $      | 26,311 |   |   | $      | 10,330  |   |
| Cumulative interest sensitivity    gap                                     |   | $      | 10,796 |   |   | $      | 1,474  |   |   | $      | (31,849 | )      |   | $      | (44,318 | )      |   | $      | (25,206 | )      |   | $      | (15,981 | )      |   | $      | 10,330 |   |   |   |
| Gap ratio                                                                                 |   |   | 1.17   |   |   |   | .44    |   |   |   | .20     |   |   |   | .56     |   |   |   | 5.16    |   |   |   | 2.82    |   |   |   | -      |   |   |   |
| Cumulative gap ratio                                                                      |   |   | 1.17   |   |   |   | 1.02   |   |   |   | .74     |   |   |   | .72     |   |   |   | .84     |   |   |   | .90     |   |   |   | 1.06   |   |   |   |

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

| (1)   | Securities with call features have been included in the period in which the security matures. |
|-----------------|-----------------------------------------------------------------------------------------------|

| (2)   | There were no unamortized deferred loan fees included in the above tables in either year. |
|-----------------|-------------------------------------------------------------------------------------------|

| (3)   | Nonaccruing loans of $9.7 million are included in the 2010 table.  Nonaccruing loans of $9.7 million are also included in the 2009 table. All nonaccruing loans are included in the >15 years category. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Provision for Loan Losses |
|--------|---------------------------|

|                                         |   | Year ended December 31, |   |
|----------------------------------------------|--------|-------------------------|--------|
|                                         |   | 2010                    |   |   | 2009 |   |   | 2008 |   |
|                                         |   | (Dollars in thousands)  |   |
| Allowance for loan losses, beginning of year |   | $                       | 2,695  |   |   | $ | 1,699 |   |   | $ | 1,293 |   |
| Provision for loan losses                    |   |                    | 1,260  |   |   |   | 2,955 |   |   |   | 815 |   |
| Charge-offs                                  |   |                    | (1,252 | ) |   |   | (1,959 | ) |   |   | (685 | ) |
| Recoveries                                   |   |                    | -      |   |   |   | - |   |   |   | 276 |   |
|                                         |   |                    |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses, end of year       |   | $                       | 2,703  |   |   | $ | 2,695 |   |   | $ | 1,699 |   |
|                                         |   |                    |   |   |   |   |   |   |   |   |   |   |

----

|                                                         |   | December 31,                       |   |
|--------------------------------------------------------------|--------|------------------------------------|--------|
|                                                         |   | 2010                               |   |   | 2009 |   |
|                                                         |   |   (Dollars in thousands) |   |
| Available for sale:                                          |   |                               |   |   |   |   |
|    Government sponsored enterprise bonds      |   | $                                  | 4,377  |   |   | $ | 10,188 |   |
|    Mortgage-backed securities                 |   |                               | 10,993 |   |   |   | 12,364 |   |
|    Municipal bonds                            |   |                               | 8,223  |   |   |   | 6,350 |   |
|       Total available for sale |   |                               | 23,593 |   |   |   | 28,902 |   |
|                                                         |   |                               |   |   |   |   |   |   |
| Federal Reserve Bank of Richmond stock                       |   |                               | 405    |   |   |   | 405 |   |
| Federal Home Loan Bank of Atlanta stock                      |   |                               | 658    |   |   |   | 737 |   |
|                                                         |   |                               |   |   |   |   |   |   |
| Total                                                        |   | $                                  | 24,656 |   |   | $ | 30,044 |   |

----

|                                 |   | December 31, 2010      |   |   | December 31, 2009      |   |
|--------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
|                                 |   | Amount                 |   |   | Yield(1)               |   |   | Amount |   |   | Yield(1) |   |
|                                 |   | (Dollars in thousands) |   |   | (Dollars in thousands) |   |
|  Available for sale securities: |   |                   |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Government sponsored enterprises     |   |                   |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

| After one through five years                                                 |   | $      | -      |   |   |   | -      | %      |   | $      | 2,032  |   |   |   | 4.34   | %      |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| After five through ten years                                                 |   |   | 2,509  |   |   |   | 3.88   | %      |   |   | 8,155  |   |   |   | 3.96   | %      |
| After 10 years                                                               |   |   | 1,868  |   |   |   | 3.25   | %      |   |   | -      |   |   |   | -      | %      |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA and FHLMC Mortgage-backed securities (2)                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| After one through five years                                                 |   |   | 102    |   |   |   | 3.82   | %      |   |   | 185    |   |   |   | 3.79   | %      |
| After five through ten years                                                 |   |   | -      |   |   |   | -      | %      |   |   | -      |   |   |   | -      | %      |
| After 10 years                                                               |   |   | 10,891 |   |   |   | 2.25   | %      |   |   | 12,180 |   |   |   | 3.97   | %      |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Municipal bonds                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         After one through five years |   |   | 997    |   |   |   | 3.69   | %      |   |   | 269    |   |   |   | 3.62   | %      |
|         After five through ten years |   |   | 992    |   |   |   | 4.04   | %      |   |   | 1,536  |   |   |   | 3.86   | %      |
|         After 10 years               |   |   | 6,233  |   |   |   | 4.18   | %      |   |   | 4,545  |   |   |   | 4.09   | %      |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other securities                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| No stated maturity                                                           |   |   | 1,063  |   |   |   | 2.52   | %      |   |   | 1,142  |   |   |   | 2.33   | %      |
| Total                                                                        |   | $      | 24,655 |   |   |   |   |   |   | $      | 30,044 |   |   |   | 3.94   | %      |

| (1)   | Yields calculated on a pre-tax basis. |
|-----------------|---------------------------------------|

| (2)   | These securities mature on an amortizing basis, and are included in the table in the period of final maturity. |
|-----------------|----------------------------------------------------------------------------------------------------------------|

----

----

|   |   | December 31,           |   |
|--------|--------|------------------------|--------|
|   |   | 2010                   |   |   | 2009 |   |
|   |   | (Dollars in thousands) |   |
|   |   | Amount                 |   |   | % ofLoans |   |   | Amount |   |   | % ofLoans |   |
|   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial and other                                            |   | $      | 12,581  |   |   |   | 10.5   | %      |   | $      | 14,974  |   |   |   | 10.9   | %      |
|--------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Real Estate – construction and development                               |   |   | 41,855  |   |   |   | 34.9   |   |   |   | 53,827  |   |   |   | 39.1   |   |
| Real Estate – mortgage                                                   |   |   |    |   |   |   |   |   |   |   |    |   |   |   |   |   |
| 1-4 family residential                                                         |   |   | 19,605  |   |   |   | 16.4   |   |   |   | 23,285  |   |   |   | 16.9   |   |
| Nonfarm, nonresidential                                                        |   |   | 43,080  |   |   |   | 35.9   |   |   |   | 41,810  |   |   |   | 30.3   |   |
| Multifamily residential                                                        |   |   | 1,794   |   |   |   | 1.5    |   |   |   | 2,520   |   |   |   | 1.8    |   |
| Consumer installment                                                           |   |   | 999     |   |   |   | .8     |   |   |   | 1,347   |   |   |   | 1.0    |   |
| Total Loans                                                                    |   |   | 119,914 |   |   |   | 100.0  | %      |   |   | 137,763 |   |   |   | 100.0  | %      |
|         Less allowance for loan losses |   |   | (2,703  | )      |   |   |   |   |   |   | (2,695  | )      |   |   |   |   |
|            Net Loans    |   | $      | 117,211 |   |   |   |   |   |   | $      | 135,068 |   |   |   |   |   |

| Maturity Distribution on Loans                     |   |
|----------------------------------------------------|--------|
|                                               |   |   |   |
|                                               |   | December 31, 2010 |   |
|                                               |   |   |   |   |   |  (Dollars in thousands) |   |   |   |
|                                               |   | 1 Year |   |   |   | 1-5 |   |   | 5 Years |   |   |   |   |
|                                               |   | or Less |   |   | Years |   |   | or More |   |   | Total |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial and other                |   | $ | 7,602 |   |   |   | 4,880 |   |   |   | 98 |   |   | $ | 12,581 |   |
| Real Estate-construction and development           |   |   | 23,486 |   |   |   | 18,069 |   |   |   | 301 |   |   |   | 41,855 |   |
| Real Estate-mortgage                               |   |   | 12,891 |   |   |   | 41,072 |   |   |   | 10,516 |   |   |   | 64,479 |   |
| Consumer                                           |   |   | 749 |   |   |   | 250 |   |   |   | - |   |   |   | 999 |   |
| Total                                              |   | $ | 44,728 |   |   | $ | 64,271 |   |   | $ | 10,915 |   |   | $ | 119,914 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Predetermined rate, maturity greater than one year |   |   |   |   |   | $ | 45,932 |   |   | $ | 892 |   |   | $ | 46,824 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable rate, maturity greater than one year      |   |   |   |   |   | $ | 18,339 |   |   | $ | 10,023 |   |   | $ | 28,362 |   |

----

----

----

| Summary of Loan Loss Experience                |
|------------------------------------------------|
|                                           |   |   |   |
|                                           |   |   | Year ended December 31, |
|                                           |   |   | 2010 |   | 2009 |
|                                           |   |   | (Dollars in thousands) |
|                                           |   |   |   |   |
| Total loans outstanding at end of period       |   | $  119,914 |   | $ 137,763 |
| Average amount of loans outstanding            |   | 128,652 |   | $ 138,066 |
|                                           |   |   |   |   |
| Balance of allowance for loan losses-beginning |   | $ 2,695 |   | $    1,699 |
| Loans charged-off                              |   |   |   |   |
|                                           | Commercial and industrial |   | 21 |   | 669 |
|                                           | Commercial real estate and construction |   | 1,228 |   | 1,289 |
|                                           | Consumer installment |   |         3 |   |         1 |
|                                           |    Total charge-offs |   | 1,252 |   | 1,959 |
| Recoveries of loans previously charged-off     |   |          - |   |           - |
| Net (charge-offs) recoveries                   |   | (1,252) |   | (1,959) |
|                                           |   |   |   |   |
| Additions to allowance charged to expense      |   | 1,260 |   |   2,955 |
| Balance of allowance for loan losses-ending    |   | $ 2,703 |   | $    2,695 |
|                                           |   |   |   |   |   |
|                                           |   |   |   |   |
| Ratios                                         |   |   |   |   |
|                                           | Net (charge-offs) recoveries to average loans outstanding |   | (.973%) |   | (1.42%) |
|                                           | Net (charge-offs) recoveries to loans at end of period |   | (1.04%) |   | (1.42%) |
|                                           | Allowance for loan losses to average loans |   | 2.10% |   | 1.95% |
|                                           | Allowance for loan losses to loans at end of period |   | 2.25% |   | 1.96% |
|                                           | Net (charge-offs) recoveries to allowance for loan losses |   | (46.31%) |   | (72.7%) |
|                                           | Net (charge-offs) recoveries to provision for loan losses |   | (99.4%) |   | (66.3%) |

----

|                                  |   |   December 31,                 |
|---------------------------------------|--------|------------------------------------------|
|                                  |   |   (Dollars in thousands)  |
|                                  |   |                                     | 2010 |   |   | 2009 |
|                                  |   |                                     | Amount |   |   |   | % of Deposits |   |   | Amount |   |   |   | % of Deposits |
| Noninterest bearing demand            |   | $                                        | 10,383 |   |   |   | 7.4 | % |   | $ | 11,235 |   |   |   | 7.4 | % |
| Interest bearing transaction accounts |   |                                     | 12,621 |   |   |   | 9.0 |   |   |   | 13,308 |   |   |   | 8.7 |   |
| Savings                               |   |                                     | 35,344 |   |   |   | 25.1 |   |   |   | 37,317 |   |   |   | 24.5 |   |
| Money market                          |   |                                     | 15,553 |   |   |   | 11.0 |   |   |   | 10,760 |   |   |   | 7.1 |   |
| Time deposits $100,000 and over       |   |                                     | 15,739 |   |   |   | 11.2 |   |   |   | 51,245 |   |   |   | 33.6 |   |
| Other time deposits                   |   |                                     | 51,006 |   |   |   | 36.3 |   |   |   | 28,516 |   |   |   | 18.7 |   |
| Total deposits                        |   | $                                        | 140,646 |   |   |   | 100.0 | % |   | $ | 152,381 |   |   |   | 100.0  |  % |

|   |   | Year ended December 31, |   |
|--------|--------|-------------------------|--------|
|   |   | 2010                    |   |   | 2009 |   |
|   |   | Amount                  |   |   | Rate |   |   | Amount |   |   | Rate |   |
|   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                  |   | (Dollars in Thousands) |
|---------------------------------------|--------|------------------------|
| Noninterest bearing demand            |   | $                      | 11,568 |   |   |   | - | % |   | $ | 11,227 |   |   |   | - | % |
| Interest bearing transaction accounts |   |                   | 12,887 |   |   |   | .46 | % |   |   | 13,169 |   |   |   | .57 | % |
| Savings and money market              |   |                   | 50,451 |   |   |   | 1.49 | % |   |   | 34,936 |   |   |   | 1.88 | % |
| Time deposits                         |   |                   | 75,635 |   |   |   | 2.01 | % |   |   | 86,435 |   |   |   | 2.54 | % |
| Total average deposits                |   | $                      | 150,541 |   |   |   |   |   |   | $ | 145,767 |   |   |   |   |   |

----

----

----

|   |   | 2010   |   |   | 2009   |   |
|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |   |   |
| Return on assets                 |   |   | (.27  | %)     |   |   | (.75  | %)     |
|----------------------------------|--------|--------|-------|--------|--------|--------|-------|--------|
| Return on equity                 |   |   | (2.72 | %)     |   |   | (7.21 | %)     |
| Dividend payout ratio            |   |   | -     |   |   |   | -     |   |
| Equity to assets ratio (average) |   |   | 9.93  | %      |   |   | 10.42 | %      |

----

|           |   | Year endedDecember 31, 2010 |   |   | Year endedDecember 31, 2009 |   |
|----------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|           |   | Low                         |   |   | High                        |   |   | Low |   |   | High |   |
| First Quarter  |   | $                           | 3.33   |   |                        | $      | 3.81 |   |   | $ | 3.90 |   |   | $ | 7.86 |   |
| Second Quarter |   | $                           | 4.28   |   |                        | $      | 4.52 |   |   | $ | 3.90 |   |   | $ | 5.71 |   |
| Third Quarter  |   | $                           | 2.90   |   |                        | $      | 3.50 |   |   | $ | 3.81 |   |   | $ | 5.71 |   |
| Fourth Quarter |   | $                           | 1.70   |   |                        | $      | 2.80 |   |   | $ | 3.38 |   |   | $ | 5.62 |   |

----

----

----

|                                                                                                                                                     |   | December 31, |        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-------------|
|                                                                                                                                                     |   | 2010         |        |   | 2009 |   |
| Assets                                                                                                                                                   |   |         |        |   |   |   |
|                                                                                                                                                     |   |         |        |   |   |   |
| Cash and due from banks                                                                                                                                  |   | $            | 7,043,911   |   |   | $ | 4,369,596 |   |
| Federal funds sold                                                                                                                                       |   |         | 5,110,000   |   |   |   | 1,670,000 |   |
|        Cash and cash equivalents                                                                                      |   |         | 12,153,911  |   |   |   | 6,039,596 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Investment securities                                                                                                                                    |   |         |        |   |   |   |   |   |
| Available-for-sale                                                                                                                                       |   |         | 23,592,336  |   |   |   | 28,902,143 |   |
| Other investments                                                                                                                                        |   |         | 1,063,350   |   |   |   | 1,142,050 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Loans, net                                                                                                                                               |   |         | 117,210,770 |   |   |   | 135,067,914 |   |
| Property and equipment, net                                                                                                                              |   |         | 5,230,835   |   |   |   | 5,291,203 |   |
| Cash surrender value of life insurance policies                                                                                                          |   |         | 1,908,112   |   |   |   | 1,838,663 |   |
| Other real estate owned                                                                                                                                  |   |         | 10,278,599  |   |   |   | 6,712,948 |   |
| Other assets                                                                                                                                             |   |         | 2,530,552   |   |   |   | 3,975,813 |   |
|               Total assets                                                         |   | $            | 173,968,465 |   |   | $ | 188,970,330 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Liabilities And Shareholders’ Equity                                                                                                               |   |         |        |   |   |   |   |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Liabilities                                                                                                                                              |   |         |        |   |   |   |   |   |
| Deposits                                                                                                                                                 |   |         |        |   |   |   |   |   |
| Noninterest bearing                                                                                                                                      |   | $            | 10,382,882  |   |   | $ | 11,234,486 |   |
| Interest bearing                                                                                                                                         |   |         | 130,263,510 |   |   |   | 141,146,788 |   |
| Total deposits                                                                                                                                           |   |         | 140,646,392 |   |   |   | 152,381,274 |   |
| Customer repurchase agreements                                                                                                                           |   |         | 2,945,937   |   |   |   | 3,257,002 |   |
| Borrowings from Federal Home Loan Bank of Atlanta                                                                                                        |   |         | 6,592,338   |   |   |   | 9,743,172 |   |
|        Broker repurchase agreements                                                                                   |   |         | 5,000,000   |   |   |   | 5,000,000 |   |
| Other liabilities                                                                                                                                        |   |         | 425,086     |   |   |   | 549,477 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Total liabilities                                                                                                                                        |   |         | 155,609,753 |   |   |   | 170,930,925 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Commitments and contingencies – Notes 12 and 16                                                                                                    |   |         |        |   |   |   |   |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Shareholders’ equity                                                                                                                               |   |         |        |   |   |   |   |   |
| Preferred stock, 10,000,000 shares authorized, 1,038 shares issued at           December 31, 2010 |   |         | 998,538     |   |   |   | - |   |
| Common stock, no par value, 20,000,000 shares authorized, 2,210,769 and 2,105,738 shares issued at December 31, 2010 and 2009, respectively              |   |         | 18,859,924  |   |   |   | 18,799,728 |   |
| Retained deficit                                                                                                                                         |   |         | (1,418,781  | ) |   |   | (921,014 | ) |
|        Accumulated other comprehensive (loss) income                                                                  |   |         | (80,969     | ) |   |   | 160,691 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Total shareholders’ equity                                                                                                                         |   |         | 18,358,712  |   |   |   | 18,039,405 |   |
|                                                                                                                                                     |   |         |        |   |   |   |   |   |
| Total liabilities and shareholders’ equity                                                                                                         |   | $            | 173,968,465 |   |   | $ | 188,970,330 |   |

----

|                                                                                                            |   | Year ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                                                            |   | 2010                    |      |   | 2009 |   |   | 2008 |   |
| Interest Income                                                                                                 |   |                    |      |   |   |   |   |   |   |
|      Loans and fees on loans                                                           |   | $                       | 6,912,550 |   |   | $ | 6,997,466 |   |   | $ | 7,848,630 |   |
|      Investment securities                                                             |   |                    | 916,464   |   |   |   | 1,025,983 |   |   |   | 1,161,545 |   |
|      Federal funds sold and other                                                      |   |                    | 18,968    |   |   |   | 16,378 |   |   |   | 91,870 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Total interest income                               |   |                    | 7,847,982 |   |   |   | 8,039,827 |   |   |   | 9,102,045 |   |
| Interest Expense                                                                                                |   |                    |      |   |   |   |   |   |   |   |   |   |
|      Deposits                                                                          |   |                    | 2,331,067 |   |   |   | 2,930,929 |   |   |   | 3,229,237 |   |
|      Federal funds sold and customer repurchase agreements                             |   |                    | 38,259    |   |   |   | 78,438 |   |   |   | 170,090 |   |
|      Federal Home Loan Bank advances                                                   |   |                    | 200,885   |   |   |   | 237,870 |   |   |   | 228,129 |   |
|      Broker repurchase agreements                                                      |   |                    | 177,103   |   |   |   | 176,619 |   |   |   | 170,756 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Total interest expense                              |   |                    | 2,747,314 |   |   |   | 3,423,856 |   |   |   | 3,798,212 |   |
|           Net interest income                                 |   |                    | 5,100,668 |   |   |   | 4,615,971 |   |   |   | 5,303,833 |   |
|      Provision for loan losses                                                         |   |                    | 1,260,000 |   |   |   | 2,955,000 |   |   |   | 815,000 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Net interest income after provision for loan losses |   |                    | 3,840,668 |   |   |   | 1,660,971 |   |   |   | 4,488,833 |   |
| Noninterest Income (Expense)                                                                                    |   |                    |      |   |   |   |   |   |   |   |   |   |
|      Mortgage loan origination fees                                                    |   |                    | -         |   |   |   | 154,905 |   |   |   | 275,721 |   |
|      Service fees on deposit accounts                                                  |   |                    | 536,480   |   |   |   | 572,973 |   |   |   | 579,298 |   |
|      Gain on sale of available-for-sale investments                                    |   |                    | 325,656   |   |   |   | 299,063 |   |   |   | - |   |
|      Other-than-temporary-impairment of FNMA preferred stock                           |   |                    | -         |   |   |   | - |   |   |   | (918,264 | ) |
|      Other                                                                             |   |                    | 206,540   |   |   |   | 183,225 |   |   |   | 123,747 |   |
|           Total noninterest income                            |   |                    | 1,068,676 |   |   |   | 1,210,166 |   |   |   | 60,502 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Noninterest Expenses                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|      Salaries and benefits                                                             |   |                    | 2,238,400 |   |   |   | 2,392,717 |   |   |   | 2,415,115 |   |
|      Occupancy and equipment                                                           |   |                    | 542,138   |   |   |   | 572,025 |   |   |   | 600,426 |   |
|      Data processing                                                                   |   |                    | 233,631   |   |   |   | 218,110 |   |   |   | 231,958 |   |
|      Advertising                                                                       |   |                    | 21,225    |   |   |   | 30,258 |   |   |   | 69,859 |   |
|      Supplies                                                                          |   |                    | 67,136    |   |   |   | 69,383 |   |   |   | 85,895 |   |
|      Professional and regulatory fees                                                  |   |                    | 584,539   |   |   |   | 551,330 |   |   |   | 320,027 |   |
|      Directors’ fees                                                             |   |                    | 137,025   |   |   |   | 138,475 |   |   |   | 130,450 |   |
|      Loan expenses                                                                     |   |                    | 213,035   |   |   |   | 322,687 |   |   |   | 51,706 |   |
|      Holding costs of other real estate owned                                          |   |                    | 461,598   |   |   |   | 117,272 |   |   |   | 50,889 |   |
|      (Gain) loss on sale of repossessed collateral                                     |   |                    | 180,397   |   |   |   | 228,547 |   |   |   | (3,464 | ) |
|      Impairment of other real estate owned                                             |   |                    | 709,751   |   |   |   | - |   |   |   | - |   |
|      Other operating                                                                   |   |                    | 406,509   |   |   |   | 411,344 |   |   |   | 388,758 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Total noninterest expenses                          |   |                    | 5,795,384 |   |   |   | 5,052,148 |   |   |   | 4,341,619 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Income (loss) before income taxes                   |   |                    | (886,040  | ) |   |   | (2,181,011 | ) |   |   | 207,716 |   |
|      Income tax benefit                                                                |   |                    | (388,273  | ) |   |   | (819,737 | ) |   |   | (17,600 | ) |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Net income (loss)                                   |   |                    | (497,767  | ) |   |   | (1,361,274 | ) |   |   | 225,316 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
|           Dividend on preferred stock                         |   |                    | (30,159   | ) |   |   |  - |   |   |   |  - |   |
|           Income (loss) available to common shareholders      |   | $                       | (527,926  | ) |   | $ | (1,361,274 | ) |   | $ | 225,316 |   |
|                                                                                                            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Earnings (Loss) Per Common Share                                                                                |   |                    |      |   |   |   |   |   |   |   |   |   |
|      Basic                                                                             |   | $                       | (.24      | ) |   | $ | (.62 | ) |   | $ | .10 |   |
|      Diluted                                                                           |   | $                       | (.24      | ) |   | $ | (.62 | ) |   | $ | .10 |   |
| Weighted Average Common Shares Outstanding                                                                      |   |                    |      |   |   |   |   |   |   |   |   |   |
|      Basic                                                                             |   |                    | 2,210,769 |   |   |   | 2,208,191 |   |   |   | 2,193,853 |   |
|      Diluted                                                                           |   |                    | 2,210,769 |   |   |   | 2,208,191 |   |   |   | 2,251,151 |   |

----

|                                                                                           |   |   | Preferred stock |   |   |   | Common stock |   |   |   | Retained earnings |   |   |   | Accumulated othercompre-hensiveincome |   |   |   | Total share-holders’ |   |
|------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|--------------|--------|--------|--------|-------------------|--------|--------|--------|---------------------------------------|--------|--------|--------|----------------------------|--------|
|                                                                                           |   |   | Shares     |   |   |   | Amount  |   |   |   | Shares       |   |   |   | Amount                           |   |   |   | (deficit)             |   |   |   | (loss)  |   |   |   | equity  |   |
| Balance, December 31, 2007                                                                     |   |   | -               |   |   | $      | -            |   |   |   | 1,983,169         |   |   | $      | 18,185,328                            |   |   | $      | 1,177,450                  |   |   | $ | 218,052 |   |   | $ |  19,580,830 |   |
| Net income                                                                                     |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | 225,316                    |   |   |   | - |   |   |   | 225,316 |   |
| Other comprehensive income, net of income taxes:                                               |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   |   |   |
|    Unrealized loss on investment       securities |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | -                          |   |   |   | (170,344 | ) |   |   | (170,344 | ) |
|    Comprehensive income                                                         |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   | 54,972 |   |
| Cumulative effect of     accounting change                                      |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | (39,389                    | )      |   |   | - |   |   |   | (39,389 | ) |
| Stock based compensation                                                                       |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | 56,172                                |   |   |   | -                          |   |   |   | - |   |   |   | 56,172 |   |
| Stock option exercises                                                                         |   |   | -               |   |   |   | -            |   |   |   | 8,396             |   |   |   | 81,833                                |   |   |   | -                          |   |   |   | - |   |   |   | 81,833 |   |
| Cash dividend paid                                                                             |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | (597,471                   | )      |   |   | - |   |   |   | (597,471 | ) |
| Balance, December 31, 2008                                                                     |   |   | -               |   |   |   | -            |   |   |   | 1,991,565         |   |   |   | 18,323,333                            |   |   |   | 765,906                    |   |   |   | 47,708 |   |   |   | 19,136,947 |   |
|                                                                                           |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                       |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | (1,361,274                 | )      |   |   | - |   |   |   | (1,361,274 | ) |
| Other comprehensive income, net of income taxes:                                               |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   |   |   |
|    Unrealized gain on investment       securities      |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | -                          |   |   |   | 112,983 |   |   |   | 112,983 |   |
|    Comprehensive loss                                                           |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   | (1,248,291 | ) |
| Stock based compensation                                                                       |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | 72,464                                |   |   |   | -                          |   |   |   | - |   |   |   | 72,464 |   |
| Stock option exercises                                                                         |   |   | -               |   |   |   | -            |   |   |   | 14,172            |   |   |   | 80,000                                |   |   |   | -                          |   |   |   | - |   |   |   | 80,000 |   |
| Stock dividend (5%), net of cash in lieu of fractional shares                                  |   |   | -               |   |   |   | -            |   |   |   | 100,001           |   |   |   | 323,931                               |   |   |   | (325,646                   | )      |   |   | - |   |   |   | (1,715 | ) |
| Balance, December 31, 2009                                                                     |   |   | -               |   |   |   | -            |   |   |   | 2,105,738         |   |   |   | 18,799,728                            |   |   |   | (921,014                   | )      |   |   | 160,691 |   |   |   | 18,039,405 |   |
|                                                                                           |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                       |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | (497,767                   | )      |   |   | - |   |   |   | (497,767 | ) |
| Other comprehensive income, net of income taxes:                                               |   |   |            |   |   |   |         |   |   |   |              |   |   |   |                                  |   |   |   |                       |   |   |   |   |   |   |   |   |   |
|    Unrealized loss on investment       securities      |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | -                          |   |   |   | (241,660 | ) |   |   | (241,660 | ) |
|    Comprehensive loss                                                           |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | -                                     |   |   |   | -                          |   |   |   | - |   |   |   | (739,427 | ) |
| Stock based compensation                                                                       |   |   | -               |   |   |   | -            |   |   |   | -                 |   |   |   | 61,220                                |   |   |   | -                          |   |   |   | - |   |   |   | 61,220 |   |
| Preferred stock issuance, net of offering expenses                                             |   |   | 1,038           |   |   |   | 998,538      |   |   |   | -                 |   |   |   | -                                     |   |   |   | -                          |   |   |   | - |   |   |   | 998,538 |   |
| Stock dividend (5%), net of cash in lieu of fractional shares                                  |   |   | -               |   |   |   | -            |   |   |   | 105,031           |   |   |   | (1,024                                | )      |   |   | -                          |   |   |   | - |   |   |   | (1,024 | ) |
| Balance, December 31, 2010                                                                     |   |   | 1,038           |   |   | $      | 998,538      |   |   |   | 2,210,769         |   |   | $      | 18,859,924                            |   |   | $      | (1,418,781                 | )      |   | $ | (80,969 | ) |   | $ | 18,358,712 |   |

----

|                                                                                                                                                                         |   | Years ended December 31, |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                                                                                                         |   | 2010                     |        |   | 2009 |   |   | 2008 |   |
| Operating Activities                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |
|        Net income (loss)                                                                                                                  |   | $                        | (497,767    | ) |   | $ | (1,361,274 | ) |   | $ | 225,316 |   |
|        Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|              Depreciation and net amortization                                                              |   |                     | 484,081     |   |   |   | 351,303 |   |   |   | 292,585 |   |
|              Deferred income tax benefit                                                                    |   |                     | (132,306    | ) |   |   | (37,863 | ) |   |   | (453,776 | ) |
|              Provision for loan losses                                                                      |   |                     | 1,260,000   |   |   |   | 2,955,000 |   |   |   | 815,000 |   |
|              Impairment of other real estate owned                                                          |   |                     | 709,751     |   |   |   | - |   |   |   | - |   |
|              Other than temporary impairment of FNMA Preferred                                              |   |                     | -           |   |   |   | - |   |   |   | 918,264 |   |
|              Gain on sale of available-for-sale investments                                                 |   |                     | (325,656    | ) |   |   | (299,063 | ) |   |   | - |   |
|              (Gain) loss on sale of repossessed collateral                                                  |   |                     | 180,397     |   |   |   | 228,547 |   |   |   | (3,464 | ) |
|              (Gain) loss on sale/disposal of property and equipment                                         |   |                     | 1,881       |   |   |   | (625 | ) |   |   | (481 | ) |
|              Non-cash option expense                                                                        |   |                     | 61,220      |   |   |   | 72,464 |   |   |   | 56,172 |   |
|              (Increase) decrease in other assets                                                            |   |                     | 1,508,383   |   |   |   | (2,459,514 | ) |   |   | 128,711 |   |
|              Increase (decrease) in other liabilities                                                       |   |                     |  101   |   |   |   | 145,474 |   |   |   | (240,717 | ) |
|                                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|                Net cash provided by (used for) operating activities                               |   |                     | 3,250,085   |   |   |   | (405,551 | ) |   |   | 1,737,610 |   |
|                                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
| Investing Activities                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|        Proceeds from maturities and principal paydowns of investment securities                                                           |   |                     | 8,277,549   |   |   |   | 5,901,304 |   |   |   | 4,276,949 |   |
|        Proceeds from sale of investment securities                                                                                        |   |                     | 8,120,975   |   |   |   | 10,752,749 |   |   |   | - |   |
|        Proceeds from sale of OREO                                                                                                         |   |                     | 3,947,388   |   |   |   | 2,498,705 |   |   |   | 399,208 |   |
|        Purchase of investment securities                                                                                                  |   |                     | (11,385,110 | ) |   |   | (25,495,248 | ) |   |   | (7,085,514 | ) |
|        (Purchase) sale of FHLB and Federal Reserve stock, net                                                                             |   |                     | 78,700      |   |   |   | (27,900 | ) |   |   | (297,650 | ) |
|        (Increase) decrease in loans, net                                                                                                  |   |                     | 8,558,681   |   |   |   | (17,167,459 | ) |   |   | (23,849,672 | ) |
|        Proceeds from sale of property and equipment                                                                                       |   |                     | -           |   |   |   | 625 |   |   |   | 7,495 |   |
|        Capitalization of improvements to OREO                                                                                             |   |                     | (364,989    | ) |   |   | (63,943 | ) |   |   | - |   |
|        Purchase of property and equipment                                                                                                 |   |                     | (169,697    | ) |   |   | (5,448 | ) |   |   | (32,295 | ) |
|                                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|                Net cash provided by (used for) investing activities                               |   |                     | 17,063,497  |   |   |   | (23,606,615 | ) |   |   | (26,581,479 | ) |
| Financing Activities                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|        Net (decrease) increase in deposits                                                                                                |   |                     | (11,734,882 | ) |   |   | 29,799,700 |   |   |   | 11,647,106 |   |
|        Net decrease in customer repurchase agreements                                                                                     |   |                     | (311,065    | ) |   |   | (1,325,617 | ) |   |   | (1,220,316 | ) |
|        Net increase (decrease) Federal funds purchased                                                                                    |   |                     | -           |   |   |   | (1,810,000 | ) |   |   | 1,810,000 |   |
|        Borrowings from Federal Home Loan Bank of Atlanta                                                                                  |   |                     | -           |   |   |   | 4,500,000 |   |   |   | 11,800,000 |   |
|        Repayments to Federal Home Loan Bank of Atlanta                                                                                    |   |                     | (3,150,834  | ) |   |   | (5,150,833 | ) |   |   | (4,950,833 | ) |
|        Proceeds from sale of preferred stock, net of expenses                                                                             |   |                     | 998,538     |   |   |   | - |   |   |   | - |   |
|        Proceeds from broker repurchase agreements                                                                                         |   |                     | -           |   |   |   | - |   |   |   | 5,000,000 |   |
|        Proceeds from exercise of stock options                                                                                            |   |                     | -           |   |   |   | 80,000 |   |   |   | 81,833 |   |
|        Cash dividends paid                                                                                                                |   |                     | -           |   |   |   | - |   |   |   | (597,471 | ) |
|        Cash paid in lieu of fractional shares                                                                                             |   |                     | (1,024      | ) |   |   | (1,715 | ) |   |   | - |   |
|                                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|                Net cash (used for) provided by financing activities                               |   |                     | (14,199,267 | ) |   |   | 26,091,535 |   |   |   | 23,570,319 |   |
|                                                                                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|                     Net increase (decrease) in cash and cash equivalents |   |                     | 6,114,315   |   |   |   | 2,079,369 |   |   |   | (1,273,550 | ) |
| Cash and cash equivalents, beginning of year                                                                                                                                 |   |                     | 6,039,596   |   |   |   | 3,960,227 |   |   |   | 5,233,777 |   |
| Cash and cash equivalents, end of year                                                                                                                                       |   | $                        | 12,153,911  |   |   | $ | 6,039,596 |   |   | $ | 3,960,227 |   |
| Cash paid for:                                                                                                                                                               |   |                     |        |   |   |   |   |   |   |   |   |   |
|        Interest                                                                                                                           |   | $                        | 2,776,547   |   |   | $ | 3,457,004 |   |   | $ | 3,803,188 |   |
|        Income taxes (refunds, received)                                                                                                   |   | $                        | (892,557    | ) |   | $ | 54,946 |   |   | $ | 438,048 |   |
| Non-cash Supplemental information:                                                                                                                                           |   |                     |        |   |   |   |   |   |   |   |   |   |
|        Loans transferred to other real estate owned                                                                                       |   | $                        | 8,038,463   |   |   | $ | 8,922,517 |   |   | $ | 931,761 |   |
|        Loans charged-off, net                                                                                                             |   | $                        | 1,251,907   |   |   | $ | 1,958,726 |   |   | $ | 409,567 |   |

----

----

| 1.   |  Available-for-sale securities: These are securities that are not classified as either held to maturity or as trading securities. These securities are reported at fair market value. Unrealized gains and losses are reported, net of income taxes, as separate components of shareholders’ equity (accumulated other comprehensive income). |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   |  Held-to-maturity securities: These are investment securities that the Company has the ability and intent to hold until maturity. These securities are stated at cost, adjusted for amortization of premiums and the accretion of discounts. The Company has no held-to-maturity securities. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Trading securities: These are securities that are bought and held principally for the purpose of selling in the near future. Trading securities are reported at fair market value, and related unrealized gains and losses are recognized in the income statement. The Company has no trading securities. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | Cash and due from banks - The carrying amounts of cash and due from banks approximate their fair value. |
|--------|--------------------------------------------------------------------------------------------------------------|

----

----

----

|                                           |   | December 31, 2010 |
|------------------------------------------------|--------|-------------------|
|                                           |   | Amortized         |   |   | Gross unrealized |   |   | Fair |   |
|                                           |   | Cost              |   |   | Gains |   |   | Losses |   |   | value |   |
| Government sponsored enterprise bonds          |   | $                 | 4,486,806 |   |   | $ | 21,597 |   |   | $ | 131,752 |   |   | $ | 4,376,651 |   |
| Mortgage-backed securities                     |   |              | 10,909,120 |   |   |   | 132,800 |   |   |   | 48,842 |   |   |   | 10,993,078 |   |
| Municipal bonds                                |   |              | 8,319,212 |   |   |   | 123,001 |   |   |   | 219,606 |   |   |   | 8,222,607 |   |
| Total investment securities available-for-sale |   | $                 | 23,715,138 |   |   | $ | 277,398 |   |   | $ | 400,200 |   |   | $ | 23,592,336 |   |
|                                           |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | December 31, 2009 |
|                                           |   | Amortized         |   |   | Gross unrealized |   |   | Fair |   |
|                                           |   | cost              |   |   | Gains |   |   | Losses |   |   | value |   |
| Government sponsored enterprise bonds          |   | $                 | 10,339,754 |   |   | $ | 38,979 |   |   | $ | 191,026 |   |   | $ | 10,187,707 |   |
| Mortgage-backed securities                     |   |              | 12,232,754 |   |   |   | 189,480 |   |   |   | 57,812 |   |   |   | 12,364,422 |   |
| Municipal bonds                                |   |              | 6,086,285 |   |   |   | 263,729 |   |   |   | - |   |   |   | 6,350,014 |   |
| Total investment securities available-for-sale |   | $                 | 28,658,793 |   |   | $ | 492,188 |   |   | $ | 248,838 |   |   | $ | 28,902,143 |   |

|   | December 31, 2010 |
|--------|-------------------|

|                                                                    |   | Less than Twelve Months |    |   | Over Twelve Months |   |       | Total Unrealized Losses      |   |
|-------------------------------------------------------------------------|--------|-------------------------|---------|--------|--------------------|--------|------------|------------------------------|--------|
|                                                                    |   | Gross Unrealized Losses |    |   | Fair Value         |   |       | Gross Unrealized Losses |   |   | Fair Value |   |   |   |   |
| Government sponsored enterprise bonds                                   |   | $                       | 131,752 |   |               | $      | 1,868,247  |                         |   | $ | - |   |   | $ | - |   |   | $ | 131,752 |   |
| Mortgage-backed securities                                              |   |                    | 48,842  |   |               |   | 5,279,417  |                         |   |   | - |   |   |   | - |   |   |   | 48,842 |   |
| Municipal bonds                                                         |   |                    | 219,606 |   |               |   | 4,755,566  |                         |   |   | - |   |   |   | - |   |   |   | 219,606 |   |
|            Total |   | $                       | 400,200 |   |               | $      | 11,903,230 |                         |   | $ | - |   |   | $ | - |   |   | $ | 400,200 |   |
|                                                                    |   |                    |    |

----

|   | December 31, 2009 |
|--------|-------------------|

|                                                                    |   |   | Less than Twelve Months |   |   |   | Over Twelve Months |   |   |   | Total Unrealized Losses |   |
|-------------------------------------------------------------------------|--------|--------|-------------------------|--------|--------|--------|--------------------|--------|--------|--------|-------------------------|--------|
|                                                                    |   |   | Gross Unrealized Losses |   |   |   | Fair Value         |   |   |   | Gross UnrealizedLosses  |   |   |   | Fair Value |   |   |   |   |   |
| Government sponsored     enterprise bonds      |   | $      | 191,026                 |   |   | $      | 5,898,728          |   |   | $      | -                       |   |   | $ | - |   |   | $ | 191,026 |   |
| Mortgage-backed securities                                              |   |   | 57,812                  |   |   |   | 7,727,556          |   |   |   | -                       |   |   |   | - |   |   |   | 57,812 |   |
| Municipal bonds                                                         |   |   | -                       |   |   |   | -                  |   |   |   | -                       |   |   |   | - |   |   |   | - |   |
|            Total |   | $      | 248,838                 |   |   | $      | 13,626,284         |   |   | $      | -                       |   |   | $ | - |   |   | $ | 248,838 |   |

|                             |   | December 31, 2010 |       |
|----------------------------------|--------|-------------------|------------|
|                             |   | Amortized Cost    |       |   | Fair Value |   |
|                             |   |              |       |   |   |
| Due after one through five years |   | $                 | 1,054,367  |   |   | $ | 1,099,303 |   |
| Due after five through ten years |   |              | 3,420,319  |   |   |   | 3,500,284 |   |
| After ten years or no maturity   |   |              | 19,240,452 |   |   |   | 18,992,749 |   |
|                             |   |              |       |   |   |   |   |   |
| Total investment securities      |   | $                 | 23,715,138 |   |   | $ | 23,592,336 |   |

|                             |   | December 31, |        |
|----------------------------------|--------|--------------|-------------|
|                             |   | 2010         |        |   | 2009 |   |
| Commercial                       |   | $            | 12,580,841  |   |   | $ | 14,974,286 |   |
| Real estate – construction |   |         | 41,855,338  |   |   |   | 53,827,245 |   |
| Real estate – mortgage     |   |         | 64,478,568  |   |   |   | 67,614,913 |   |
| Consumer                         |   |         | 999,453     |   |   |   | 1,346,807 |   |
|                             |   |         |        |   |   |   |   |   |
| Loans, gross                     |   |         | 119,914,200 |   |   |   | 137,763,251 |   |
| Less allowance for loan losses   |   |         | (2,703,430  | ) |   |   | (2,695,337 | ) |
|                             |   |         |        |   |   |   |   |   |
| Loans, net                       |   | $            | 117,210,770 |   |   | $ | 135,067,914 |   |

----

|                                                                   |   | December 31, 2010   |      |   | December 31, 2009                  |   |
|------------------------------------------------------------------------|--------|---------------------|-----------|--------|------------------------------------|--------|
|                                                                   |   | Past due 30-89 Days |      |   | Nonaccrual orPast due over 90 Days |   |   | Past due 30-89 Days |   |   | Nonaccrual orPast due over 90 Days |   |
|                                                                   |   |                |      |   |                               |   |   |   |   |   |   |   |
|   Loan secured by real estate – construction           |   | $                   | 891,035   |   |                               | $      | 7,218,012 |   |   | $ | 17,263 |   |   | $ | 7,561,664 |   |
|   Loan secured by real estate – single family          |   |                | 1,977,519 |   |                               |   | 1,522,290 |   |   |   | 1,315,299 |   |   |   | 1,525,282 |   |
|   Loan secured by real estate –nonfarm, nonresidential |   |                | -         |   |                               |   | - |   |   |   | 1,422,931 |   |   |   | 654,109 |   |
|   Commercial and industrial loans                            |   |                | -         |   |                               |   | 992,027 |   |   |   | 17,232 |   |   |   | - |   |
|   Loans to consumers                                         |   |                | -         |   |                               |   | - |   |   |   | 8,478 |   |   |   | - |   |
|           Total      |   | $                   | 2,868,554 |   |                               | $      | 9,732,329 |   |   | $ | 2,781,203 |   |   | $ | 9,741,055 |   |
|                                                                   |   |                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                   |   |  Year ended December 31, |       |
|----------------------------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                                                   |   |                          | 2010       |   |   |   | 2009 |   |   |   | 2008 |   |
| Allowance for loan losses, beginning of year                                           |   | $                             | 2,695,337  |   |   | $ | 1,698,563 |   |   | $ | 1,293,130 |   |
| Provision for loan losses                                                              |   |                          | 1,260,000  |   |   |   | 2,955,000 |   |   |   | 815,000 |   |
| Charge-offs                                                                            |   |                          | (1,251,907 | ) |   |   | (1,958,726 | ) |   |   | (685,166 | ) |
| Recoveries                                                                             |   |                          | -          |   |   |   | 500 |   |   |   | 275,599 |   |
|                                                                                   |   |                          |       |   |   |   |   |   |   |   |   |   |
|         Allowance for loan losses, end of year |   | $                             | 2,703,430  |   |   | $ | 2,695,337 |   |   | $ | 1,698,563 |   |
|                                                                                   |   |                          |       |   |   |   |   |   |   |   |   |   |

----

|                                                        |   | Year ended December 31, |      |
|-------------------------------------------------------------|--------|-------------------------|-----------|
|                                                        |   | 2010                    |      |   | 2009 |   |   | 2008 |   |
|                                                        |   |                    |      |   |   |   |   |   |   |
| Loan secured by real estate – construction            |   | $                       | 978,425   |   |   | $ | 882,684 |   |   | $ | 355,515 |   |
| Loan secured by real estate – single family           |   |                    | 249,034   |   |   |   | 250,072 |   |   |   | 69,955 |   |
| Loan secured by real estate –nonfarm, nonresidential  |   |                    | -         |   |   |   | 156,643 |   |   |   | 72,461 |   |
| Commercial and industrial loans                             |   |                    | 21,315    |   |   |   | 668,829 |   |   |   | 185,066 |   |
| Loans to consumers                                          |   |                    | 3,133     |   |   |   | 500 |   |   |   | 2,169 |   |
|        Total charge-offs |   |                    | 1,251,907 |   |   |   | 1,958,728 |   |   |   | 685,166 |   |
| Recoveries                                                  |   |                    | -         |   |   |   | (500 | ) |   |   | (275,599 | ) |
|      Total net charge-offs         |   | $                       | 1,251,907 |   |   | $ | 1,958,228 |   |   | $ | 409,567 |   |
|                                                        |   |                    |      |   |   |   |   |   |   |   |   |   |

|                                                                   |   | December 31, |       |
|------------------------------------------------------------------------|--------|--------------|------------|
|                                                                   |   | 2010         |       |   | 2009 |   |
|                                                                   |   |         |       |   |   |   |
| Land and improvements                                                  |   | $            | 1,468,480  |   |   | $ | 1,468,480 |   |
| Bank premises                                                          |   |         | 4,271,773  |   |   |   | 4,271,773 |   |
| Furniture, equipment and software                                      |   |         | 1,594,038  |   |   |   | 1,531,250 |   |
| Vehicles                                                               |   |         | 58,005     |   |   |   | 58,005 |   |
|         Property and equipment |   |         | 7,392,296  |   |   |   | 7,329,508 |   |
| Accumulated depreciation                                               |   |         | (2,161,461 | ) |   |   | (2,038,305 | ) |
| Property and equipment, net                                            |   | $            | 5,230,835  |   |   | $ |  5,291,203 |   |

| Type of Asset                     |    | Life in Years |   | Depreciation Method |
|-----------------------------------|---------|---------------|--------|---------------------|
| Furniture, equipment and software | 3 to 7  | Straight-line |
| Improvements                      | 5 to 40 | Straight-line |
| Vehicles                          | 5       | Straight-line |

----

|                                                                           |   | December 31, |       |
|--------------------------------------------------------------------------------|--------|--------------|------------|
|                                                                           |   | 2010         |       |   | 2009 |   |
|                                                                           |   |         |       |   |   |   |
| Beginning balance                                                              |   | $            | 6,712,948  |   |   | $ | 575,000 |   |
| Additions from foreclosures and capitalized improvements                       |   |         | 8,403,452  |   |   |   | 8,691,617 |   |
| Write downs of value                                                           |   |         | (709,751   | ) |   |   | - |   |
| Sales                                                                          |   |         | (4,128,050 | ) |   |   | (2,553,669 | ) |
|         Ending other real estate owned |   | $            | 10,278,599 |   |   | $ | 6,712,948 |   |

|                                         |   | December 31, |        |
|----------------------------------------------|--------|--------------|-------------|
|                                         |   | 2010         |        |   | 2009 |   |
|                                         |   |         |        |   |   |   |
| Noninterest bearing                          |   | $            | 10,382,882  |   |   | $ | 11,234,486 |   |
| Interest bearing:                            |   |         |        |   |   |   |   |   |
| NOW accounts                                 |   |         | 12,621,719  |   |   |   | 13,308,457 |   |
| Money market accounts                        |   |         | 15,552,889  |   |   |   | 10,760,323 |   |
|   Savings                               |   |         | 35,344,088  |   |   |   | 37,317,247 |   |
| Time, less than $100,000                     |   |         | 51,005,987  |   |   |   | 28,516,218 |   |
| Time, $100,000 and over                      |   |         | 15,738,827  |   |   |   | 51,244,543 |   |
|                                         |   |         |        |   |   |   |   |   |
|      Total deposits |   | $            | 140,646,392 |   |   | $ | 152,381,274 |   |

| 2011                |   | $      | 48,251,535 |   |
|---------------------|--------|--------|------------|--------|
| 2012                |   |   | 11,498,486 |   |
| 2013                |   |   | 3,074,070  |   |
| 2014                |   |   | 3,309,208  |   |
| 2015 and thereafter |   |   | 611,515    |   |
|                |   | $      | 66,744,814 |   |

----

|                         |   | December 31, |      |
|------------------------------|--------|--------------|-----------|
|                         |   | 2010         |      |   | 2009 |   |
| Sweep accounts               |   | $            | 895,937   |   |   | $ | 587,802 |   |
| Retail repurchase agreements |   |         | 2,050,000 |   |   |   | 2,669,200 |   |
|                         |   | $            | 2,945,937 |   |   | $ | 3,257,002 |   |

|                          |   |   |                      |          |            |   |       | December 31, |   |
|-------------------------------|--------|--------|---------------------------|---------------|-----------------|--------|------------|--------------|--------|
| Terms                         |   |   | Interest Rate   | Maturity Date |            |   | 2010  |         |   |   | 2009  |   |
| Fixed rate                    |   |   | 1.07                      | %             |  1/10/2011 |   | $          | 3,000,000    |   |   | $ | 3,000,000 |   |
| Fixed rate                    |   |   | 2.73                      |          |  3/16/2010 |   |       | -            |   |   |   | 1,500,000 |   |
| Fixed rate                    |   |   | 2.84                      |          |  9/16/2010 |   |       | -            |   |   |   | 1,500,000 |   |
| Fixed rate                    |   |   | 2.72                      |          |  1/25/2011 |   |       | 1,000,000    |   |   |   | 1,000,000 |   |
| Fixed rate, amortizing        |   |   | 4.49                      |          | 12/01/2013      |   |       | 133,333      |   |   |   | 177,778 |   |
| Fixed rate, amortizing        |   |   | 4.89                      |          |  4/14/2014 |   |       | 129,630      |   |   |   | 168,519 |   |
| Fixed rate, amortizing        |   |   | 4.78                      |          |  7/27/2015 |   |       | 329,375      |   |   |   | 396,875 |   |
|  Fixed rate, convertible |   |   | 3.52                      |          |  1/16/2018 |   |       | 2,000,000    |   |   |   | 2,000,000 |   |
|                          |   |   |                      |          |            |   |       |         |   |   |   |   |   |
|                          |   |   |                      |          |            |   | $          | 6,592,338    |   |   | $ | 9,743,172 |   |
|                          |   |   |                      |          |            |   |       |         |   |   |   |   |   |

----

|   |   |   |  Year ended December 31, |   |
|--------|--------|--------|-------------------------------|--------|
|   |   |   | 2010                          |   |   |   | 2009 |   |   |   | 2008 |   |
|   |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                                                                       |   |   |     |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Tax expense (benefit) at statutory rate                                                                                                                    |   | $      | (301,254 | )      |   |   | (34    | )%     |   | $      | (741,544 | )      |   |   | (34    | )%     |   | $      | 70,623  |   |   |   | 34     | %      |
| Increase (decrease) in taxes    resulting from:                                                                                             |   |   |     |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |    |   |   |   |   |   |
| State income taxes, net of             federal benefit                                    |   |   | -        |   |   |   | -      |   |   |   | -        |   |   |   | -      |   |   |   | 7,789   |   |   |   | 4      |   |
|        Tax-exempt investments                                                                                           |   |   | (77,747  | )      |   |   | (9     | )      |   |   | (78,845  | )      |   |   | (5     | )      |   |   | (75,249 | )      |   |   | (36    | )      |
|        Increase in cash value of             life insurance |   |   | (23,613  | )      |   |   | (3     | )      |   |   | (23,849  | )      |   |   | (2     | )      |   |   | (24,171 | )      |   |   | (12    | )      |
| Other                                                                                                                                                      |   |   | 14,341   |   |   |   | 1      |   |   |   | 24,501   |   |   |   | 2      |   |   |   | 3,408   |   |   |   | 2      |   |
| Income tax benefit                                                                                                                                         |   | $      | (388,273 | )      |   |   | (45    | )%     |   | $      | (819,737 | )      |   |   | (39    | )%     |   | $      | (17,600 | )      |   |   | (8     | )%     |

|                                                 |   | 2010   |      |   | 2009   |   |
|------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Deferred tax assets:                                 |   |   |      |   |   |   |
| Allowance for loan losses                            |   | $      | 665,122   |   |   | $      | 704,559 |   |
| Unrealized net loss on securities available for sale |   |   | 41,753    |   |   |   | - |   |
| Stock based compensation                             |   |   | 47,622    |   |   |   | 37,036 |   |
| Other real estate owned                              |   |   | 179,374   |   |   |   | - |   |
| Other                                                |   |   | 157,528   |   |   |   | 148,957 |   |
|                                                 |   |   | 1,091,399 |   |   |   | 890,552 |   |
|                                                 |   |   |      |   |   |   |   |   |
|                                                 |   |   |      |   |   |   |   |   |
|                                                 |   |   |      |   |   |   |   |   |
| Deferred tax liabilities:                            |   |   |      |   |   |   |   |   |
| Unrealized net gain on securities available for sale |   |   | -         |   |   |   | 82,739 |   |
| Depreciation                                         |   |   | 95,659    |   |   |   | 68,414 |   |
| Prepaid expenses                                     |   |   | 25,074    |   |   |   | 25,531 |   |
|                                                 |   |   | 120,733   |   |   |   | 176,684 |   |
| Net deferred tax asset                               |   | $      | 970,666   |   |   | $      | 713,868 |   |

----

|                                        |   |                    |     |
|---------------------------------------------|--------|-------------------------|----------|
|                                        |   | Year ended December 31, |     |
|                                        |   | 2010                    |     |   | 2009 |   |   | 2008 |   |
|                                        |   |                    |     |   |   |   |   |   |   |
| Income taxes currently payable (receivable) |   | $                       | (255,967 | ) |   | $ | (781,874 | ) |   | $ | 436,176 |   |
|                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Deferred income tax benefit                 |   |                    | (132,306 | ) |   |   | ( 37,863 | ) |   |   | (453,776 | ) |
|                                        |   |                    |     |   |   |   |   |   |   |   |   |   |
| Income tax benefit                          |   | $                       | (388,273 | ) |   | $ | (819,737 | ) |   | $ | (17,600 | ) |

|                                                   |   | Year ended December 31, |       |
|--------------------------------------------------------|--------|-------------------------|------------|
|                                                   |   | 2010                    |       |   | 2009 |   |   | 2008 |   |
| Balance, beginning of year                             |   | $                       | 7,638,399  |   |   | $ | 5,958,663 |   |   | $ | 6,443,949 |   |
| New loans or lines of credit                           |   |                    | 209,100    |   |   |   | 2,588,627 |   |   |   | 1,272,822 |   |
|    Payments on loans or lines of credit |   |                    | (1,844,893 | ) |   |   | (908,891 | ) |   |   | (1,758,108 | ) |
| Balance, end of year                                   |   | $                       | 6,002,606  |   |   | $ | 7,638,399 |   |   | $ | 5,958,663 |   |

----

----

|                                         |   | Shares |    |   | Weighted Average Exercise Price(1) |   |   | Aggregate Intrinsic Value (2) |   |
|----------------------------------------------|--------|--------|---------|--------|------------------------------------|--------|--------|-------------------------------|--------|
|                                         |   |   |    |   |                               |   |   |                          |   |
| Outstanding at December 31, 2007             |   |   | 127,273 |   |                               |   | 8.74   |                          |   |   |   |
| Granted                                      |   |   | 19,200  |   |                               |   | 11.90  |                          |   |   |   |
| Exercised                                    |   |   | (8,396  | )      |                               |   | 9.29   |                          |   |   |   |
| Forfeited or expired                         |   |   | (6,265  | )      |                               |   | 12.20  |                          |   |   |   |
| Outstanding at December 31, 2008             |   |   | 131,812 |   |                               |   | 9.46   |                          |   |   |   |
| Granted (3)                                  |   |   | 22,241  |   |                               |   | 9.45   |                          |   |   |   |
| Exercised                                    |   |   | (14,172 | )      |                               |   | 5.64   |                          |   |   |   |
| Forfeited or expired                         |   |   | (33,626 | )      |                               |   | 6.39   |                          |   |   |   |
| Outstanding at December 31, 2009             |   |   | 106,255 |   |                               |   | 10.49  |                          |   |   |   |
| Granted as a result of stock dividend 5% (3) |   |   | 5,310   |   |                               |   | 9.99   |                          |   |   |   |
| Exercised                                    |   |   | -       |   |                               |   | -      |                          |   |   |   |
| Forfeited or expired                         |   |   | -       |   |                               |   | -      |                          |   |   |   |
|                                         |   |   | 111,565 |   |                               | $      | 9.99   |                          |   |   |   |
|                                         |   |   |    |   |                               |   |   |                          |   |   |   |
| Options exercisable at end of year           |   |   | 76,396  |   |                               | $      | 9.65   |                          |   | $ | - |   |
|                                         |   |   |    |   |                               |   |   |                          |   |   |   |   |
| Shares available for grant                   |   |   | 63,785  |   |                               |   |   |                          |   |   |   |   |
|                                         |   |   |    |   |                               |   |   |                          |   |   |   |   |

| (1)   | The weighted average exercise price has been adjusted to reflect 10% stock dividends declared by the Company’s Board of Directors annually from 2002 through 2007 and a 5% stock dividend declared by the Company’s Board of Directors in each of 2010 and 2009. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option). At December 31, 2010 the amount represents the value that would have been received by the option holders had all option holders exercised their options on that date. This amount changes based on changes in the market value of the Company’s common stock. At December 31, 2010 the OTCBB quoted price was $1.70. Therefore, none of the Company’s options had intrinsic value as of that date. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Granted options include new grants in years prior to 2010 as well as adjustments of previous grants as a result of 10% stock dividends declared by the Company’s Board of Directors annually from 2002 through 2007 and a 5% stock dividend in each of 2009 and 2010. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    |   |   |   |   | For capitaladequacy purposes |   |   | To be well capitalizedunder prompt correctiveaction provisions (1) |   |
|-------------------------|--------|--------|--------|--------|------------------------------|--------|--------|--------------------------------------------------------------------|--------|
|                    |   |   |   |   |                         |   |   |                                                               |   |
|                    |   | Actual |   |   | Minimum                      |   |   | Minimum                                                            |   |
|                    |   |   |   |   |                         |   |   | (Dollars in thousands)                                             |   |   |   |   |   |   |   |
|                    |   | Amount |   |   | Ratio                        |   |   | Amount                                                             |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2010 |   |   |   |   |                         |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |
|                    |   |   |   |   |                         |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk weighted assets)                                                                                                                      |   | $      | 19,307 |   |   |   | 13.8   | %      |   | $      | 11,234 |   |   |   | 8.0    | %      |   | $      | 14,043 |   |   |   | 10.0   | %      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Tier 1 Capital (to risk weighted assets)                                                                                                                     |   |   | 17,531 |   |   |   | 12.5   |   |   |   | 5,617  |   |   |   | 4.0    |   |   |   | 8,426  |   |   |   | 6.0    |   |
| Tier 1 leverage ratio                                                                                                                                        |   |   | 17,531 |   |   |   | 9.8    |   |   |   | 7,188  |   |   |   | 4.0    |   |   |   | 8,985  |   |   |   | 5.0    |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As of December 31, 2009                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to risk weighted assets)                                                                                                                      |   | $      | 19,730 |   |   |   | 12.8   | %      |   | $      | 12,366 |   |   |   | 8.0    | %      |   | $      | 15,458 |   |   |   | 10.0   | %      |
| Tier 1 Capital (to risk weighted assets)                                                                                                                     |   |   | 17,788 |   |   |   | 11.5   |   |   |   | 6,183  |   |   |   | 4.0    |   |   |   | 9,274  |   |   |   | 6.0    |   |
| Tier 1 leverage ratio                                                                                                                                        |   |   | 17,788 |   |   |   | 9.2    |   |   |   | 7,702  |   |   |   | 4.0    |   |   |   | 9,627  |   |   |   | 5.0    |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) The regulations of the OCC exclude the Bank from the well capitalized category as of December 31, 2010 due to the formal agreement described below. |   |

----

|   | December 31, |
|--------|--------------|

|                                            |   |  2010 |            |   |  2009 |   |
|-------------------------------------------------|--------|------------|-----------------|--------|------------|--------|
| Financial Assets                                |   |       | CarryingAmount  |   |       |   | FairValue |   |   |   | CarryingAmount |   |   |   | FairValue |   |
| Cash and due from banks                         |   | $          | 7,043,911       |   |       | $      | 7,043,911 |   |   | $ | 4,369,596 |   |   | $ | 4,369,596 |   |
| Federal funds sold                              |   |       | 5,110,000       |   |       |   | 5,110,000 |   |   |   | 1,670,000 |   |   |   | 1,670,000 |   |
| Investment securities                           |   |       | 24,655,686      |   |       |   | 24,655,686 |   |   |   | 30,044,193 |   |   |   | 30,044,193 |   |
| Loans, gross                                    |   |       | 119,914,200     |   |       |   | 120,947,231 |   |   |   | 137,763,251 |   |   |   | 139,365,487 |   |
| Cash surrender value of life insurance policies |   |       | 1,908,112  |   |       |   | 1,908,112  |   |   |   | 1,838,663  |   |   |   | 1,838,663  |   |
| Financial Liabilities                           |   |       |            |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                        |   |       | 140,646,392     |   |       |   | 139,176,006 |   |   |   | 152,381,274 |   |   |   | 150,540,716 |   |
| Fed Funds purchased and customer sweeps         |   |       | 895,937         |   |       |   | 895,937 |   |   |   | 587,802 |   |   |   | 587,802 |   |
| Customer repurchase agreements                  |   |       | 2,050,000       |   |       |   | 2,137,395 |   |   |   | 2,669,200 |   |   |   | 2,766,397 |   |
| Borrowings from FHLB                            |   |       | 6,592,338       |   |       |   | 6,731,378 |   |   |   | 9,743,172 |   |   |   | 9,925,595 |   |
| Broker repurchase agreements                    |   |       | 5,000,000       |   |       |   | 5,212,655 |   |   |   | 5,000,000 |   |   |   | 5,182,105 |   |
|                                            |   |       |            |   |       |   |   |   |   |   |   |   |   |   |   |   |

|                                  |   | December 31,2010 |       |
|---------------------------------------|--------|------------------|------------|
|                                  |   | Total            |       |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Investment securities, recurring      |   | $                | 24,655,686 |   |   | $ | 15,369,729 |   |   | $ | 8,222,607 |   |   | $ | 1,063,350 |   |
| Other real estate owned, nonrecurring |   | $                | 10,278,599 |   |   | $ | - |   |   | $ | - |   |   | $ | 10,278,599 |   |
| Impaired loans, nonrecurring          |   | $                | 10,414,838 |   |   | $ | - |   |   | $ | - |   |   | $ | 10,414,838 |   |
|                                  |   | December 31,2009 |       |
| Investment securities, recurring      |   | $                | 30,044,193 |   |   | $ | 22,552,129 |   |   | $ | 6,350,014 |   |   | $ | 1,142,050 |   |
| Other real estate owned, nonrecurring |   | $                | 6,712,945  |   |   | $ | - |   |   | $ | - |   |   | $ | 6,712,948 |   |
| Impaired loans, nonrecurring          |   | $                | 13,793,781 |   |   | $ | - |   |   | $ | - |   |   | $ | 13,793,781 |   |

|                                               |   | Other Investments |      |
|----------------------------------------------------|--------|-------------------|-----------|
| Beginning balance                                  |   | $                 | 1,142,050 |   |
| Total realized and unrealized gains or losses:     |   |              |      |   |
|   Included in earnings                   |   |              | -         |   |
|   Included in other comprehensive income |   |              | -         |   |
| Purchases                                          |   |              | -         |   |
| Sales (redemptions by FHLB)                        |   |              | 78,700    |   |
| Principal reductions                               |   |              | -         |   |
| Transfers in and/or out of Level 3                 |   |              | -         |   |
| Ending balance                                     |   | $                 | 1,063,350 |   |
|                                               |   |              |      |   |

----

| Condensed Balance Sheets                                                                                     |   |         |       |
|--------------------------------------------------------------------------------------------------------------|--------|--------------|------------|
|                                                                                                         |   | December 31, |       |
|                                                                                                         |   | 2010         |       |   | 2009 |   |
| Assets                                                                                                       |   |         |       |   |   |   |
|      Cash and interest bearing deposits                                             |   | $            | 525,773    |   |   | $ | 94,502 |   |
|       Investment in subsidiary                                                 |   |         | 17,827,490 |   |   |   | 17,949,044 |   |
|       Other assets                                                             |   |         | 8,996      |   |   |   | 9,720 |   |
|           Total Assets                                     |   | $            | 18,362,259 |   |   | $ | 18,053,266 |   |
|                                                                                                         |   |         |       |   |   |   |   |   |
| Liabilities And Shareholders’ Equity                                                                   |   |         |       |   |   |   |   |   |
|       Accrued expenses                                                         |   | $            | 3,547      |   |   | $ | 13,861 |   |
|       Shareholders’ equity                                               |   |         | 18,358,712 |   |   |   | 18,039,405 |   |
|           Total Liabilities and Shareholders’ Equity |   | $            | 18,362,259 |   |   | $ | 18,053,266 |   |

|                                                                                                                                                                                                                          |   | Year ended December 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                                                                                                                                                                          |   | 2010                    |     |   | 2009 |   |   | 2008 |   |
| Income                                                                                                                                                                                                                        |   |                    |     |   |   |   |   |   |   |
|      Interest                                                                                                                                                                                        |   | $                       | 4,848    |   |   | $ | 4,645 |   |   | $ | 19,117 |   |
|                                                                                                                                                                                                                          |   |                    |     |   |   |   |   |   |   |   |   |   |
| Expenses                                                                                                                                                                                                                      |   |                    |     |   |   |   |   |   |   |   |   |   |
|      Sundry                                                                                                                                                                                          |   |                    | 61,502   |   |   |   | 58,893 |   |   |   | 56,063 |   |
|           Loss before equity in undistributed net               income (loss) of bank subsidiary |   |                    | (56,654  | ) |   |   | (54,248 | ) |   |   | (36,946 | ) |
|                                                                                                                                                                                                                          |   |                    |     |   |   |   |   |   |   |   |   |   |
|           Equity in undistributed net income (loss) of               subsidiary                  |   |                    | (441,113 | ) |   |   | (1,307,026 | ) |   |   | 262,262 |   |
| Net income (loss)                                                                                                                                                                                                             |   | $                       | (497,767 | ) |   | $ | (1,361,274 | ) |   | $ | 225,316 |   |

|                                                                                                                                                                                                                                                                                                  |   | Year ended December 31, |     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                                                                                                                                                                                                                                                  |   | 2010                    |     |   | 2009 |   |   | 2008 |   |
| Operating Activities                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |
| Net income (loss)                                                                                                                                                                                                                                                                                     |   | $                       | (497,767 | ) |   | $ | (1,361,274 | ) |   | $ | 225,316 |   |
| Adjustments to reconcile net income to net cash provided by (used for) operating activities                                                                                                                                                                                                           |   |                    |     |   |   |   |   |   |   |   |   |   |
| Equity in undistributed net (income) loss of subsidiary                                                                                                                                                                                                                                               |   |                    | 441,113  |   |   |   | 1,307,026 |   |   |   | (262,262 | ) |
|               Decrease (increase) in other assets                                                                                                                                                                               |   |                    | 724      |   |   |   | (715 | ) |   |   | 2 |   |
|    Increase (decrease) in accrued expenses                                                                                                                                                                                                                                             |   |                    | (10,314  | ) |   |   | (489 | ) |   |   | 343 |   |
|                    Net cash used for operating activities                                                                                                                                              |   |                    | (66,244  | ) |   |   | (55,452 | ) |   |   | (36,601 | ) |
|                                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
| Investing Activities                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
| Investment in bank subsidiary                                                                                                                                                                                                                                                                         |   |                    | (499,999 | ) |   |   | (299,999 | ) |   |   | - |   |
|                                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
| Financing Activities                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
|        Cash dividend paid                                                                                                                                                                                                                                          |   |                    | -        |   |   |   | - |   |   |   | (597,471 | ) |
| Cash paid in lieu of fractional shares                                                                                                                                                                                                                                                                |   |                    | (1,024   | ) |   |   | (1,715 | ) |   |   | - |   |
|        Issuance of preferred stock, net of expenses                                                                                                                                                                                                                |   |                    | 998,538  |   |   |   | - |   |   |   | - |   |
|        Exercise of stock options, net of tax                                                                                                                                                                                                                       |   |                    | -        |   |   |   | 80,000 |   |   |   | 81,833 |   |
|                    Net cash provided (used) by financing                      activities |   |                    | 997,514  |   |   |   | 78,285 |   |   |   | (515,638 | ) |
|                                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
|     Net increase (decrease) in cash                                                                                                                                                                                                                                               |   |                    | 431,271  |   |   |   | (277,166 | ) |   |   | (552,239 | ) |
|                                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash, beginning of year                                                                                                                                                                                                                                                                               |   |                    | 94,502   |   |   |   | 371,668 |   |   |   | 923,907 |   |
|                                                                                                                                                                                                                                                                                                  |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash, end of year                                                                                                                                                                                                                                                                                     |   | $                       | 525,773  |   |   | $ |  94,502 |   |   | $ | 371,668 |   |

----