##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarter Ended March 31, 2011
    
    Commission file number 000-29599
 PATRIOT NATIONAL BANCORP, INC.
  Connecticut
(State of incorporation)
    
    06-1559137
(I.R.S. Employer Identification Number)
 
 (Registrants telephone number)
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller Reporting Company þ
 o þ




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Table of Contents
 PagePart I FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    33Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    47Item 4. Controls and Procedures
    
    
    48Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    49Item 1A. Risk Factors
    
    
    49Item 6. Exhibits
    
    
    49Exhibit 31(1)Exhibit 31(2)Exhibit 32
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1:
    
    Consolidated Financial Statements
 PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED BALANCE SHEETS
 March 31, 2011
    
    
    December 31, 2010(Unaudited)ASSETSCash and due from banks:Noninterest bearing deposits and cash
    
    $
    5,902,555
    
    
    $
    4,613,211Interest bearing deposits
    
    
    140,645,166
    
    
    
    131,711,047Federal funds sold
    
    
    10,000,000
    
    
    
    10,000,000Short-term investments
    
    
    501,074
    
    
    
    453,400Total cash and cash equivalents
    
    
    157,048,795
    
    
    
    146,777,658Securities:Available for sale securities, at fair value (Note 2)
    
    
    38,539,143
    
    
    
    40,564,700Other Investments
    
    
    3,500,000
    
    
    
    3,500,000Federal Reserve Bank stock, at cost
    
    
    2,175,900
    
    
    
    1,192,000Federal Home Loan Bank stock, at cost
    
    
    4,508,300
    
    
    
    4,508,300Total securities
    
    
    48,723,343
    
    
    
    49,765,000Loans receivable (net of allowance for loan losses: 2011: $12,208,476,
2010: $15,374,101) (Note 3)
    
    
    466,869,274
    
    
    
    534,531,213Accrued interest and dividends receivable
    
    
    2,325,703
    
    
    
    2,512,186Premises and equipment, net
    
    
    4,915,587
    
    
    
    5,270,312Cash surrender value of life insurance
    
    
    20,516,592
    
    
    
    20,348,332Other real estate owned
    
    
    950,000
    
    
    
    16,408,787Deferred tax asset (Note 9)
    
    
    
    
    
    
    Other assets
    
    
    8,365,016
    
    
    
    8,711,366Total assets
    
    $
    709,714,310
    
    
    $
    784,324,854LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDeposits (Note 4):Noninterest bearing deposits
    
    $
    55,691,927
    
    
    $
    51,058,373Interest bearing deposits
    
    
    525,591,104
    
    
    
    595,750,456Total deposits
    
    
    581,283,031
    
    
    
    646,808,829Borrowings:Repurchase agreements
    
    
    7,000,000
    
    
    
    7,000,000Federal Home Loan Bank borrowings
    
    
    50,000,000
    
    
    
    50,000,000Total borrowings
    
    
    57,000,000
    
    
    
    57,000,000Junior subordinated debt owed to unconsolidated trust
    
    
    8,248,000
    
    
    
    8,248,000Accrued expenses and other liabilities
    
    
    4,990,464
    
    
    
    5,095,837Total liabilities
    
    
    651,521,495
    
    
    
    717,152,666Commitments (Note 7)Shareholders equityPreferred stock, no par value; 1,000,000 shares authorized,no shares issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, 100,000,000 shares authorized;38,374,432 shares issued;
38,362,727 shares outstanding
    
    
    383,744
    
    
    
    383,744Additional paid-in capital
    
    
    105,050,433
    
    
    
    105,050,433Accumulated deficit
    
    
    (48,381,943
    )
    
    
    (39,399,345
    )Less: Treasury stock, at cost: 2011 and 2010 11,705 shares
    
    
    (160,025
    )
    
    
    (160,025
    )Accumulated other comprehensive income
    
    
    1,300,606
    
    
    
    1,297,381Total shareholders equity
    
    
    58,192,815
    
    
    
    67,172,188Total liabilities and shareholders equity
    
    $
    709,714,310
    
    
    $
    784,324,854
   3




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Interest and Dividend IncomeInterest and fees on loans
    
    $
    6,956,561
    
    
    $
    9,096,489Interest on investment securities
    
    
    274,183
    
    
    
    489,564Dividends on investment securities
    
    
    69,901
    
    
    
    69,286Interest on federal funds sold
    
    
    4,026
    
    
    
    3,361Other interest income
    
    
    61,890
    
    
    
    31,815Total interest and dividend income
    
    
    7,366,561
    
    
    
    9,690,515Interest ExpenseInterest on deposits
    
    
    1,865,349
    
    
    
    3,117,316Interest on Federal Home Loan Bank borrowings
    
    
    418,875
    
    
    
    418,875Interest on subordinated debt
    
    
    70,398
    
    
    
    69,333Interest on other borrowings
    
    
    76,082
    
    
    
    76,081Total interest expense
    
    
    2,430,704
    
    
    
    3,681,605Net interest income
    
    
    4,935,857
    
    
    
    6,008,910Provision for Loan Losses
    
    
    6,981,629
    
    
    
    727,000Net interest (loss) income after
provision for loan losses
    
    
    (2,045,772
    )
    
    
    5,281,910Non-interest IncomeMortgage brokerage referral fees
    
    
    13,000
    
    
    
    26,884Loan application, inspection & processing fees
    
    
    16,799
    
    
    
    35,828Fees and service charges
    
    
    280,901
    
    
    
    253,521Earnings on
cash surrender value of life insurance
    
    
    168,260
    
    
    
    130,111Other income
    
    
    103,890
    
    
    
    92,124Total non-interest income
    
    
    582,850
    
    
    
    538,468Non-interest ExpensesSalaries and benefits
    
    
    3,214,515
    
    
    
    3,361,284Occupancy and equipment expense
    
    
    1,354,567
    
    
    
    1,416,150Data processing
    
    
    327,804
    
    
    
    348,934Advertising and promotional expenses
    
    
    157,974
    
    
    
    83,633Professional and other outside services
    
    
    881,707
    
    
    
    1,063,595Loan administration and processing expenses
    
    
    37,059
    
    
    
    95,803Regulatory assessments
    
    
    611,268
    
    
    
    694,843Insurance expense
    
    
    230,774
    
    
    
    273,297Other real estate operations
    
    
    270,507
    
    
    
    978,691Material and communications
    
    
    200,138
    
    
    
    201,282Other operating expenses
    
    
    233,363
    
    
    
    209,432Total non-interest expenses
    
    
    7,519,676
    
    
    
    8,726,944Loss before income taxes
    
    
    (8,982,598
    )
    
    
    (2,906,566
    )Provision for Income Taxes
    
    
    
    
    
    
    (225,000
    )Net loss
    
    $
    (8,982,598
    )
    
    $
    (3,131,566
    )Basic and diluted loss per share
    
    $
    (0.23
    )
    
    $
    (0.66
    )
   4




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PATRIOT NATIONAL BANCORP, INC
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherNumber of
    
    
    Common
    
    
    Paid-In
    
    
    Accumulated
    
    
    Treasury
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    Income
    
    
    TotalThree months ended March 31, 2010Balance at December 31, 2009
    
    
    4,762,727
    
    
    $
    9,548,864
    
    
    $
    49,651,534
    
    
    $
    (24,000,400
    )
    
    $
    (160,025
    )
    
    $
    821,337
    
    
    $
    35,861,310Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,131,566
    )
    
    
    
    
    
    
    
    
    
    
    (3,131,566
    )Unrealized holding gain on
available for
sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344,376
    
    
    
    344,376Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,787,190
    )Balance, March 31, 2010
    
    
    4,762,727
    
    
    $
    9,548,864
    
    
    $
    49,651,534
    
    
    $
    (27,131,966
    )
    
    $
    (160,025
    )
    
    $
    1,165,713
    
    
    $
    33,074,120Three months ended March 31, 2011Balance at December 31, 2010
    
    
    38,362,727
    
    
    $
    383,744
    
    
    $
    105,050,433
    
    
    $
    (39,399,345
    )
    
    $
    (160,025
    )
    
    $
    1,297,381
    
    
    $
    67,172,188Comprehensive lossNet loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,982,598
    )
    
    
    
    
    
    
    
    
    
    
    (8,982,598
    )Unrealized holding gain on
available for
sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,225
    
    
    
    3,225Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,979,373
    )Balance, March 31, 2011
    
    
    38,362,727
    
    
    $
    383,744
    
    
    $
    105,050,433
    
    
    $
    (48,381,943
    )
    
    $
    (160,025
    )
    
    $
    1,300,606
    
    
    $
    58,192,815
   5




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Cash Flows from Operating Activities:Net loss
    
    $
    (8,982,598
    )
    
    $
    (3,131,566
    )Adjustments
to reconcile net loss to net cash used in operating activities:Amortization and accretion of investment premiums and discounts, net
    
    
    54,861
    
    
    
    45,171Amortization and accretion of purchase loan premiums and discounts,
net
    
    
    2,514
    
    
    
    1,338Provision for loan losses
    
    
    6,981,629
    
    
    
    727,000Amortization of core deposit intangible
    
    
    3,753
    
    
    
    3,975Earnings on cash surrender value of life insurance
    
    
    (168,260
    )
    
    
    (130,111
    )Depreciation and amortization
    
    
    347,700
    
    
    
    389,515Loss on sale of other real estate owned
    
    
    58,215
    
    
    
    52,977Impairment writedown on other real estate owned
    
    
    165,764
    
    
    
    701,197Changes in assets and liabilities:Increase (decrease) in deferred loan fees
    
    
    149,244
    
    
    
    (134,918
    )Decrease in accrued interest and dividends receivable
    
    
    186,483
    
    
    
    7,713Decrease in other assets
    
    
    342,597
    
    
    
    853,474(Decrease) increase in accrued expenses and other liabilities
    
    
    (107,350
    )
    
    
    401,878Net cash used in operating activities
    
    
    (965,448
    )
    
    
    (212,357
    )Cash Flows from Investing Activities:Purchases of available for sale securities
    
    
    
    
    
    
    (15,162,500
    )Principal repayments on available for sale securities
    
    
    1,975,898
    
    
    
    1,502,234Proceeds from repurchase of excess stock by the Federal Reserve Bank
    
    
    190,200
    
    
    
    Purchases of Federal Reserve Bank Stock
    
    
    (1,174,100
    )
    
    
    Proceeds from sale of loans
    
    
    46,440,794
    
    
    
    Net decrease in loans
    
    
    14,087,758
    
    
    
    19,670,978Purchase of other real estate owned
    
    
    (481,165
    )
    
    
    Proceeds from sale of other real estate owned
    
    
    15,715,973
    
    
    
    112,623Refund (purchase) of bank premises and equipment
    
    
    7,025
    
    
    
    (24,634
    )Net cash provided by investing activities
    
    
    76,762,383
    
    
    
    6,098,701Cash Flows from Financing Activities:Net decrease in demand, savings and money market deposits
    
    
    (7,445,003
    )
    
    
    (8,359,465
    )Net decrease in time certificates of deposits
    
    
    (58,080,795
    )
    
    
    (41,133,952
    )Net cash used in financing activities
    
    
    (65,525,798
    )
    
    
    (49,493,417
    )Net increase (decrease) in cash and cash equivalents
    
    
    10,271,137
    
    
    
    (43,607,073
    )Cash and Cash Equivalents:Beginning
    
    
    146,777,658
    
    
    
    107,799,432Ending
    
    $
    157,048,795
    
    
    $
    64,192,359
  6




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PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
 (Unaudited)
 Three Months EndedMarch 31,2011
    
    
    2010Supplemental Disclosures of Cash Flow InformationInterest paid
    
    $
    2,355,998
    
    
    $
    3,658,816Income taxes paid
    
    $
    8,534
    
    
    $
    2,080Supplemental disclosures of noncash investing
and financing activities:Unrealized holding gain on available for sale
securities arising during the period
    
    $
    5,202
    
    
    $
    555,444
   7




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PATRIOT NATIONAL BANCORP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Note 1: Basis of Financial Statement Presentation
    Note 2: Investment Securities
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueMarch 31, 2011:U. S. Government agency mortgage-backed
securities
    
    $
    34,541,671
    
    
    $
    738,434
    
    
    $
    (2,929
    )
    
    $
    35,277,176Auction rate preferred equity securities
    
    
    1,899,720
    
    
    
    1,362,247
    
    
    
    
    
    
    
    3,261,967$
    36,441,391
    
    
    $
    2,100,681
    
    
    $
    (2,929
    )
    
    $
    38,539,143December 31, 2010:U. S. Government agency mortgage-backed
securities
    
    $
    36,572,430
    
    
    $
    900,286
    
    
    $
    (838
    )
    
    $
    37,471,878Auction rate preferred equity securities
    
    
    1,899,720
    
    
    
    1,193,102
    
    
    
    
    
    
    
    3,092,822$
    38,472,150
    
    
    $
    2,093,388
    
    
    $
    (838
    )
    
    $
    40,564,700
  8




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Less Than 12 Months
    
    
    12 Months or More
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    Loss
    
    
    Value
    
    
    LossMarch 31, 2011:U. S. Government mortgage -
backed securities
    
    $
    340,570
    
    
    $
    (2,929
    )
    
    $
    
    
    
    $
    
    
    
    $
    340,570
    
    
    $
    (2,929
    )Totals
    
    $
    340,570
    
    
    $
    (2,929
    )
    
    $
    
    
    
    $
    
    
    
    $
    340,570
    
    
    $
    (2,929
    )December 31, 2010:U. S. Government mortgage -
backed securities
    
    $
    86,375
    
    
    $
    (838
    )
    
    $
    
    
    
    $
    
    
    
    $
    86,375
    
    
    $
    (838
    )Totals
    
    $
    86,375
    
    
    $
    (838
    )
    
    $
    
    
    
    $
    
    
    
    $
    86,375
    
    
    $
    (838
    )
     9




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Amortized Cost
    
    
    Fair ValueMaturity:> 10 years
    
    $
    
    
    
    $
    Mortgage-backed securities
    
    
    34,541,671
    
    
    
    35,277,176Amortized Cost
    
    
    Fair ValueTotal
    
    $
    34,541,671
    
    
    $
    35,277,176Amortized Cost
    
    
    Fair Value
 Note 3: Loans Receivable and Allowance for Loan Losses
  March 31,
    
    
    December 31,2011
    
    
    2010Real EstateCommercial
    
    $
    212,785,433
    
    
    $
    228,842,489Residential
    
    
    157,743,571
    
    
    
    187,058,318Construction
    
    
    39,639,058
    
    
    
    63,889,083Construction to permanent
    
    
    10,315,902
    
    
    
    10,331,043Commercial
    
    
    18,873,362
    
    
    
    14,573,790Consumer home equity
    
    
    37,432,068
    
    
    
    42,884,962Consumer installment
    
    
    2,047,248
    
    
    
    1,932,763Total Loans
    
    
    478,836,642
    
    
    
    549,512,448Premiums on purchased loans
    
    
    239,912
    
    
    
    242,426Net deferred costs
    
    
    1,196
    
    
    
    150,440Allowance for loan losses
    
    
    (12,208,476
    )
    
    
    (15,374,101
    )Loans receivable, net
    
    $
    466,869,274
    
    
    $
    534,531,213
  Three months endedMarch 31,2011
    
    
    2010Balance, beginning of period
    
    $
    15,374,101
    
    
    $
    15,794,118Provision for loan losses
    
    
    6,981,629
    
    
    
    727,000Loans charged-off
    
    
    (4,153,547
    )
    
    
    (1,583,247
    )Recoveries of loans previously charged-off
    
    
    20,606
    
    
    
    123,925Transferred to loans held-for-sale
    
    
    (6,014,313
    )
    
    
    Balance, end of period
    
    $
    12,208,476
    
    
    $
    15,061,796
  10




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11




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##### Table of Contents



Commercial
    
    
    
    
    
    
    ConstructionThree months ended March 31, 2011
    
    Commercial
    
    
    Real Estate
    
    
    Construction
    
    
    to Permanent
    
    
    Residential
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalAllowance for loan losses:Beginning Balance
    
    $
    441,319
    
    
    $
    7,632,355
    
    
    $
    3,478,058
    
    
    $
    491,446
    
    
    $
    2,363,838
    
    
    $
    578,612
    
    
    $
    388,473
    
    
    $
    15,374,101Charge-offs
    
    
    
    
    
    
    (934,588
    )
    
    
    (1,760,760
    )
    
    
    
    
    
    
    (1,458,199
    )
    
    
    
    
    
    
    
    
    
    
    (4,153,547
    )Recoveries
    
    
    240
    
    
    
    
    
    
    
    17,694
    
    
    
    
    
    
    
    
    
    
    
    2,672
    
    
    
    
    
    
    
    20,606Transferred to loans held-for sale
    
    
    
    
    
    
    (963,461
    )
    
    
    (1,369,354
    )
    
    
    
    
    
    
    (3,681,498
    )
    
    
    
    
    
    
    
    
    
    
    (6,014,313
    )Provision
    
    
    149,313
    
    
    
    842,195
    
    
    
    2,572,464
    
    
    
    38,299
    
    
    
    3,873,621
    
    
    
    (128,576
    )
    
    
    (365,687
    )
    
    
    6,981,629Ending Balance
    
    $
    590,872
    
    
    $
    6,576,501
    
    
    $
    2,938,102
    
    
    $
    529,745
    
    
    $
    1,097,762
    
    
    $
    452,708
    
    
    $
    22,786
    
    
    $
    12,208,476Ending balance: individuallyevaluated for impairment
    
    $
    78,286
    
    
    $
    1,887,042
    
    
    $
    1,657,278
    
    
    $
    187,094
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,809,700Ending balance: collectively
evaluated for impairment
    
    $
    512,586
    
    
    $
    4,689,459
    
    
    $
    1,280,824
    
    
    $
    342,651
    
    
    $
    1,097,762
    
    
    $
    452,708
    
    
    $
    22,786
    
    
    $
    8,398,776Total Allowance for Loan Losses
    
    $
    590,872
    
    
    $
    6,576,501
    
    
    $
    2,938,102
    
    
    $
    529,745
    
    
    $
    1,097,762
    
    
    $
    452,708
    
    
    $
    22,786
    
    
    $
    12,208,476Total Loans ending balance
    
    $
    18,873,362
    
    
    $
    212,785,433
    
    
    $
    39,639,058
    
    
    $
    10,315,902
    
    
    $
    157,743,571
    
    
    $
    39,479,316
    
    
    $
    
    
    
    $
    478,836,642Ending balance:individually
evaluated for
impairment
    
    $
    1,362,000
    
    
    $
    20,461,392
    
    
    $
    13,907,356
    
    
    $
    1,364,694
    
    
    $
    11,927,547
    
    
    $
    1,516,977
    
    
    $
    
    
    
    $
    50,539,966Ending
balance: collectively
evaluated for
impairment
    
    $
    17,511,362
    
    
    $
    192,324,041
    
    
    $
    25,731,702
    
    
    $
    8,951,208
    
    
    $
    145,816,024
    
    
    $
    37,962,339
    
    
    $
    
    
    
    $
    428,296,676
  12




---



##### Table of Contents



13




---



##### Table of Contents



CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY
 Construction toCommercial
    
    
    Commercial Real Estate
    
    
    Construction
    
    
    Permanent
    
    
    Residential Real Estate
    
    
    ConsumerLTVs:
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    Other
    
    
    TotalInternal Risk RatingPass
    
    $
    12,638,504
    
    
    $
    413,296
    
    
    $
    125,971,796
    
    
    $
    9,408,746
    
    
    $
    627,784
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    96,850,024
    
    
    $
    41,830,172
    
    
    $
    32,292,893
    
    
    $
    575,265
    
    
    $
    1,458,206
    
    
    $
    322,066,686Special Mention
    
    
    700,862
    
    
    
    177,925
    
    
    
    27,115,428
    
    
    
    4,661,064
    
    
    
    11,897,872
    
    
    
    4,485,209
    
    
    
    1,709,333
    
    
    
    
    
    
    
    521,451
    
    
    
    
    
    
    
    274,340
    
    
    
    3,029,363
    
    
    
    
    
    
    
    54,572,847Substandard &
Doubtful
    
    
    4,782,005
    
    
    
    160,770
    
    
    
    15,266,412
    
    
    
    30,361,987
    
    
    
    5,693,859
    
    
    
    16,934,334
    
    
    
    
    
    
    
    8,606,569
    
    
    
    3,659,013
    
    
    
    14,882,911
    
    
    
    99,235
    
    
    
    1,736,237
    
    
    
    13,777
    
    
    
    102,197,109$
    18,121,371
    
    
    $
    751,991
    
    
    $
    168,353,636
    
    
    $
    44,431,797
    
    
    $
    18,219,515
    
    
    $
    21,419,543
    
    
    $
    1,709,333
    
    
    $
    8,606,569
    
    
    $
    101,030,488
    
    
    $
    56,713,083
    
    
    $
    32,666,468
    
    
    $
    5,340,865
    
    
    $
    1,471,983
    
    
    $
    478,836,642
 CREDIT RISK PROFILE
 Commercial Real
    
    
    
    
    
    
    Construction to
    
    
    ResidentialCommercial
    
    
    Estate
    
    
    Construction
    
    
    Permanent
    
    
    Real Estate
    
    
    Consumer
    
    
    TotalsPerforming
    
    $
    17,511,362
    
    
    $
    196,982,562
    
    
    $
    29,231,702
    
    
    $
    8,951,208
    
    
    $
    155,243,570
    
    
    $
    38,386,339
    
    
    $
    446,306,743Non Performing
    
    
    1,362,000
    
    
    
    15,802,871
    
    
    
    10,407,356
    
    
    
    1,364,694
    
    
    
    2,500,001
    
    
    
    1,092,977
    
    
    
    32,529,899Total
    
    $
    18,873,362
    
    
    $
    212,785,433
    
    
    $
    39,639,058
    
    
    $
    10,315,902
    
    
    $
    157,743,571
    
    
    $
    39,479,316
    
    
    $
    478,836,642
  14




---



##### Table of Contents



CREDIT RISK PROFILE BY CREDITWORTHINESS CATEGORY
 Construction toCommercial
    
    
    Commercial Real Estate
    
    
    Construction
    
    
    Permanent
    
    
    Residential Real Estate
    
    
    ConsumerLTVs:
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    < 75%
    
    
    >= 75%
    
    
    Other
    
    
    TotalInternal Risk RatingPass
    
    $
    11,225,261
    
    
    $
    256,296
    
    
    $
    124,645,152
    
    
    $
    9,449,059
    
    
    $
    1,272,028
    
    
    $
    350,000
    
    
    $
    
    
    
    $
    
    
    
    $
    91,534,348
    
    
    $
    51,996,851
    
    
    $
    35,192,214
    
    
    $
    
    
    
    
    1,917,783
    
    
    $
    327,838,992Special Mention
    
    
    704,053
    
    
    
    181,600
    
    
    
    35,253,018
    
    
    
    4,645,738
    
    
    
    15,059,704
    
    
    
    4,485,209
    
    
    
    1,709,333
    
    
    
    
    
    
    
    2,088,700
    
    
    
    2,907,285
    
    
    
    3,146,244
    
    
    
    2,879,621
    
    
    
    
    
    
    
    73,060,505Substandard &
Doubtful
    
    
    1,424,161
    
    
    
    782,419
    
    
    
    13,792,482
    
    
    
    41,057,040
    
    
    
    10,712,146
    
    
    
    32,009,996
    
    
    
    
    
    
    
    8,621,710
    
    
    
    18,052,003
    
    
    
    20,479,131
    
    
    
    99,235
    
    
    
    1,567,648
    
    
    
    14,980
    
    
    
    148,612,951$
    13,353,475
    
    
    $
    1,220,315
    
    
    $
    173,690,652
    
    
    $
    55,151,837
    
    
    $
    27,043,878
    
    
    $
    36,845,205
    
    
    $
    1,709,333
    
    
    $
    8,621,710
    
    
    $
    111,675,051
    
    
    $
    75,383,267
    
    
    $
    38,437,693
    
    
    $
    4,447,269
    
    
    $
    1,932,763
    
    
    $
    549,512,448
 CREDIT RISK PROFILE
 Commercial Real
    
    
    
    
    
    Construction to
    
    
    ResidentialCommercial
    
    
    Estate
    
    
    Construction
    
    
    Permanent
    
    
    Real Estate
    
    
    Consumer
    
    
    TotalsPerforming
    
    $
    13,358,840
    
    
    $
    202,054,317
    
    
    $
    33,003,060
    
    
    $
    8,951,208
    
    
    $
    159,270,574
    
    
    $
    43,724,749
    
    
    $
    460,362,748Non Performing
    
    
    1,214,950
    
    
    
    26,788,172
    
    
    
    30,886,023
    
    
    
    1,379,835
    
    
    
    27,787,744
    
    
    
    1,092,976
    
    
    
    89,149,700Total
    
    $
    14,573,790
    
    
    $
    228,842,489
    
    
    $
    63,889,083
    
    
    $
    10,331,043
    
    
    $
    187,058,318
    
    
    $
    44,817,725
    
    
    $
    549,512,448
  15




---



##### Table of Contents



Non-Accrual and Past Due LoansTotal Non->90 Days Past
    
    
    Accrual and31-60 Days
    
    
    61-90 Days
    
    
    Greater Than
    
    
    Total Past
    
    
    
    
    
    
    Due and
    
    
    Past Due2011
    
    Past Due
    
    
    Past Due
    
    
    90 Days
    
    
    Due
    
    
    Current
    
    
    Accruing
    
    
    LoansCommercialPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    160,000
    
    
    $
    160,000Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,289
    
    
    
    63,289Substandard
    
    
    
    
    
    
    
    
    
    
    797,088
    
    
    
    797,088
    
    
    
    564,912
    
    
    
    
    
    
    
    1,362,000Total Commercial
    
    $
    
    
    
    $
    
    
    
    $
    797,088
    
    
    $
    797,088
    
    
    $
    564,912
    
    
    $
    223,289
    
    
    $
    1,585,289Commercial Real EstateSubstandard
    
    $
    215,947
    
    
    $
    1,444,681
    
    
    $
    11,040,965
    
    
    $
    12,701,593
    
    
    $
    3,101,278
    
    
    $
    
    
    
    $
    15,802,871Total Commercial Real Estate
    
    $
    215,947
    
    
    $
    1,444,681
    
    
    $
    11,040,965
    
    
    $
    12,701,593
    
    
    $
    3,101,278
    
    
    $
    
    
    
    $
    15,802,871ConstructionSubstandard
    
    $
    
    
    
    $
    2,562,975
    
    
    $
    3,103,580
    
    
    $
    5,666,555
    
    
    $
    4,740,801
    
    
    $
    
    
    
    $
    10,407,356Total Construction
    
    $
    
    
    
    $
    2,562,975
    
    
    $
    3,103,580
    
    
    $
    5,666,555
    
    
    $
    4,740,801
    
    
    $
    
    
    
    $
    10,407,356Construction to PermanentSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,364,694
    
    
    $
    
    
    
    $
    1,364,694Total Construction to
Permanent
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,364,694
    
    
    $
    
    
    
    $
    1,364,694Residential Real EstateSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    2,500,001
    
    
    $
    2,500,001
    
    
    $
    
    
    
    $
    
    
    
    $
    2,500,001Total Residential Real Estate
    
    $
    
    
    
    $
    
    
    
    $
    2,500,001
    
    
    $
    2,500,001
    
    
    $
    
    
    
    $
    
    
    
    $
    2,500,001ConsumerSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    1,092,977
    
    
    $
    1,092,977
    
    
    $
    
    
    
    $
    
    
    
    $
    1,092,977Total Consumer
    
    $
    
    
    
    $
    
    
    
    $
    1,092,977
    
    
    $
    1,092,977
    
    
    $
    
    
    
    $
    
    
    
    $
    1,092,977Total
    
    $
    215,947
    
    
    $
    4,007,656
    
    
    $
    18,534,611
    
    
    $
    22,758,214
    
    
    $
    9,771,685
    
    
    $
    223,289
    
    
    $
    32,753,188
  16




---



##### Table of Contents



Non-Accrual and Past Due LoansTotal Non->90 Days Past
    
    
    Accrual and31-60 Days
    
    
    61-90 Days
    
    
    Greater Than
    
    
    Total Past
    
    
    
    
    
    
    Due and
    
    
    Past Due2010
    
    Past Due
    
    
    Past Due
    
    
    90 Days
    
    
    Due
    
    
    Current
    
    
    Accruing
    
    
    LoansCommercialSpecial Mention
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    63,289
    
    
    $
    63,289Substandard
    
    
    350,000
    
    
    
    100,000
    
    
    
    698,767
    
    
    
    1,148,767
    
    
    
    66,183
    
    
    
    175,000
    
    
    
    1,389,950Total Commercial
    
    $
    350,000
    
    
    $
    100,000
    
    
    $
    698,767
    
    
    $
    1,148,767
    
    
    $
    66,183
    
    
    $
    238,289
    
    
    $
    1,453,239Commercial Real EstateSubstandard
    
    $
    269,672
    
    
    $
    6,449,096
    
    
    $
    13,521,123
    
    
    $
    20,239,891
    
    
    $
    6,548,281
    
    
    $
    
    
    
    $
    26,788,172Total Commercial Real Estate
    
    $
    269,672
    
    
    $
    6,449,096
    
    
    $
    13,521,123
    
    
    $
    20,239,891
    
    
    $
    6,548,281
    
    
    $
    
    
    
    $
    26,788,172ConstructionSubstandard
    
    $
    1,517,943
    
    
    $
    4,059,516
    
    
    $
    13,736,985
    
    
    $
    19,314,444
    
    
    $
    11,571,579
    
    
    $
    3,135,953
    
    
    $
    34,021,976Total Construction
    
    $
    1,517,943
    
    
    $
    4,059,516
    
    
    $
    13,736,985
    
    
    $
    19,314,444
    
    
    $
    11,571,579
    
    
    $
    3,135,953
    
    
    $
    34,021,976Construction to PermanentSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,379,835
    
    
    $
    
    
    
    $
    1,379,835Total Construction to
Permanent
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,379,835
    
    
    $
    
    
    
    $
    1,379,835Residential Real EstateSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    15,897,248
    
    
    $
    15,897,248
    
    
    $
    11,890,496
    
    
    $
    
    
    
    $
    27,787,744Total Residential Real Estate
    
    $
    
    
    
    $
    
    
    
    $
    15,897,248
    
    
    $
    15,897,248
    
    
    $
    11,890,496
    
    
    $
    
    
    
    $
    27,787,744ConsumerSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    1,092,976
    
    
    $
    1,092,976
    
    
    $
    
    
    
    $
    
    
    
    $
    1,092,976Total Consumer
    
    $
    
    
    
    $
    
    
    
    $
    1,092,976
    
    
    $
    1,092,976
    
    
    $
    
    
    
    $
    
    
    
    $
    1,092,976Total
    
    $
    2,137,615
    
    
    $
    10,608,612
    
    
    $
    44,947,099
    
    
    $
    57,693,326
    
    
    $
    31,456,374
    
    
    $
    3,374,242
    
    
    $
    92,523,942
   17




---



##### Table of Contents



Performing (Accruing) Loans
    
    
    
    
    
    
    Total Non-Greater
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    Accrual and31-60 Days
    
    
    61-90 Days
    
    
    Than 90
    
    
    Total Past
    
    
    
    
    
    
    Performing
    
    
    Past Due2011
    
    Past Due
    
    
    Past Due
    
    
    Days
    
    
    Due
    
    
    Current
    
    
    Loans
    
    
    Loans
    
    
    Total LoansCommercialPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    12,891,800
    
    
    $
    12,891,800
    
    
    $
    160,000
    
    
    $
    13,051,800Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    815,498
    
    
    
    815,498
    
    
    
    63,289
    
    
    
    878,787Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,580,775
    
    
    
    3,580,775
    
    
    
    1,362,000
    
    
    
    4,942,775Total Commercial
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    17,288,073
    
    
    $
    17,288,073
    
    
    $
    1,585,289
    
    
    $
    18,873,362Commercial Real EstatePass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    135,380,542
    
    
    $
    135,380,542
    
    
    $
    
    
    
    $
    135,380,542Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,776,492
    
    
    
    31,776,492
    
    
    
    
    
    
    
    31,776,492Substandard
    
    
    1,236,000
    
    
    
    915,762
    
    
    
    
    
    
    
    2,151,762
    
    
    
    27,673,766
    
    
    
    29,825,528
    
    
    
    15,802,871
    
    
    
    45,628,399Total Commercial Real Estate
    
    $
    1,236,000
    
    
    $
    915,762
    
    
    $
    
    
    
    $
    2,151,762
    
    
    $
    194,830,800
    
    
    $
    196,982,562
    
    
    $
    15,802,871
    
    
    $
    212,785,433ConstructionPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    627,784
    
    
    $
    627,784
    
    
    $
    
    
    
    $
    627,784Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,383,081
    
    
    
    16,383,081
    
    
    
    
    
    
    
    16,383,081Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,220,837
    
    
    
    12,220,837
    
    
    
    10,407,356
    
    
    
    22,628,193Total Construction
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    29,231,702
    
    
    $
    29,231,702
    
    
    $
    10,407,356
    
    
    $
    39,639,058Construction to PermanentPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,709,333
    
    
    
    1,709,333
    
    
    
    
    
    
    
    1,709,333Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,241,875
    
    
    
    7,241,875
    
    
    
    1,364,694
    
    
    
    8,606,569Total Construction to
Permanent
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8,951,208
    
    
    $
    8,951,208
    
    
    $
    1,364,694
    
    
    $
    10,315,902Residential Real EstatePass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    138,680,196
    
    
    $
    138,680,196
    
    
    $
    
    
    
    $
    138,680,196Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    521,451
    
    
    
    521,451
    
    
    
    
    
    
    
    521,451Substandard
    
    
    2,907,285
    
    
    
    
    
    
    
    
    
    
    
    2,907,285
    
    
    
    13,134,638
    
    
    
    16,041,923
    
    
    
    2,500,001
    
    
    
    18,541,924Total Residential Real Estate
    
    $
    2,907,285
    
    
    $
    
    
    
    $
    
    
    
    $
    2,907,285
    
    
    $
    152,336,285
    
    
    $
    155,243,570
    
    
    $
    2,500,001
    
    
    $
    157,743,571ConsumerPass
    
    $
    15,655
    
    
    $
    
    
    
    $
    
    
    
    $
    15,655
    
    
    $
    34,310,709
    
    
    $
    34,326,364
    
    
    $
    
    
    
    $
    34,326,364Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,303,703
    
    
    
    3,303,703
    
    
    
    
    
    
    
    3,303,703Substandard
    
    
    168,589
    
    
    
    
    
    
    
    
    
    
    
    168,589
    
    
    
    587,683
    
    
    
    756,272
    
    
    
    1,092,977
    
    
    
    1,849,249Total Consumer
    
    $
    184,244
    
    
    $
    
    
    
    $
    
    
    
    $
    184,244
    
    
    $
    38,202,095
    
    
    $
    38,386,339
    
    
    $
    1,092,977
    
    
    $
    39,479,316Total
    
    $
    4,327,529
    
    
    $
    915,762
    
    
    $
    
    
    
    $
    5,243,291
    
    
    $
    440,840,163
    
    
    $
    446,083,454
    
    
    $
    32,753,188
    
    
    $
    478,836,642
  18




---



##### Table of Contents



Performing (Accruing) Loans
    
    
    
    
    
    
    Total Non-Greater
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    Accrual and31-60 Days
    
    
    Than 60
    
    
    Total Past
    
    
    
    
    
    
    Perfoming
    
    
    Past Due2010
    
    Past Due
    
    
    Days
    
    
    Due
    
    
    Current
    
    
    Loans
    
    
    Loans
    
    
    Total LoansCommercialPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    11,481,557
    
    
    $
    11,481,557
    
    
    $
    
    
    
    $
    11,481,557Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    822,364
    
    
    
    822,364
    
    
    
    63,289
    
    
    
    885,653Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    816,630
    
    
    
    816,630
    
    
    
    1,389,950
    
    
    
    2,206,580Total Commercial
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13,120,551
    
    
    $
    13,120,551
    
    
    $
    1,453,239
    
    
    $
    14,573,790Commercial Real EstatePass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    134,094,210
    
    
    $
    134,094,210
    
    
    $
    
    
    
    $
    134,094,210Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,898,756
    
    
    
    39,898,756
    
    
    
    
    
    
    
    39,898,756Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,061,351
    
    
    
    28,061,351
    
    
    
    26,788,172
    
    
    
    54,849,523Total Commercial Real Estate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    202,054,317
    
    
    $
    202,054,317
    
    
    $
    26,788,172
    
    
    $
    228,842,489ConstructionPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,622,029
    
    
    $
    1,622,029
    
    
    $
    
    
    
    $
    1,622,029Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,544,913
    
    
    
    19,544,913
    
    
    
    
    
    
    
    19,544,913Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,700,165
    
    
    
    8,700,165
    
    
    
    34,021,976
    
    
    
    42,722,141Total Construction
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    29,867,107
    
    
    $
    29,867,107
    
    
    $
    34,021,976
    
    
    $
    63,889,083Construction to PermanentPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,709,333
    
    
    
    1,709,333
    
    
    
    
    
    
    
    1,709,333Substandard
    
    
    1,127,875
    
    
    
    
    
    
    
    1,127,875
    
    
    
    6,114,000
    
    
    
    7,241,875
    
    
    
    1,379,835
    
    
    
    8,621,710Total Construction to
Permanent
    
    $
    1,127,875
    
    
    $
    
    
    
    $
    1,127,875
    
    
    $
    7,823,333
    
    
    $
    8,951,208
    
    
    $
    1,379,835
    
    
    $
    10,331,043Residential Real EstatePass
    
    $
    198,357
    
    
    $
    
    
    
    $
    198,357
    
    
    $
    143,332,842
    
    
    $
    143,531,199
    
    
    $
    
    
    
    $
    143,531,199Special Mention
    
    
    2,907,285
    
    
    
    
    
    
    
    2,907,285
    
    
    
    2,088,700
    
    
    
    4,995,985
    
    
    
    
    
    
    
    4,995,985Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,743,390
    
    
    
    10,743,390
    
    
    
    27,787,744
    
    
    
    38,531,134Total Residential Real Estate
    
    $
    3,105,642
    
    
    $
    
    
    
    $
    3,105,642
    
    
    $
    156,164,932
    
    
    $
    159,270,574
    
    
    $
    27,787,744
    
    
    $
    187,058,318ConsumerPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    37,109,997
    
    
    $
    37,109,997
    
    
    $
    
    
    
    $
    37,109,997Special Mention
    
    
    168,589
    
    
    
    
    
    
    
    168,589
    
    
    
    5,857,276
    
    
    
    6,025,865
    
    
    
    
    
    
    
    6,025,865Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    588,887
    
    
    
    588,887
    
    
    
    1,092,976
    
    
    
    1,681,863Total Consumer
    
    $
    168,589
    
    
    $
    
    
    
    $
    168,589
    
    
    $
    43,556,160
    
    
    $
    43,724,749
    
    
    $
    1,092,976
    
    
    $
    44,817,725Total
    
    $
    4,402,106
    
    
    $
    
    
    
    $
    4,402,106
    
    
    $
    452,586,400
    
    
    $
    456,988,506
    
    
    $
    92,523,942
    
    
    $
    549,512,448
  19




---



##### Table of Contents



Recorded
    
    
    Unpaid Principal2011
    
    Investment
    
    
    Balance
    
    
    Related AllowanceWith no related allowance
recorded:Commercial
    
    $
    1,236,317
    
    
    $
    1,627,637
    
    
    $
    Commercial Real Estate
    
    
    8,616,291
    
    
    
    9,119,235
    
    
    
    Construction
    
    
    1,726,344
    
    
    
    1,874,386
    
    
    
    Construction to Permanent
    
    
    
    
    
    
    
    
    
    
    Residential
    
    
    11,927,547
    
    
    
    12,047,680
    
    
    
    Consumer
    
    
    1,516,977
    
    
    
    1,939,800
    
    
    
    Total:
    
    $
    25,023,476
    
    
    $
    26,608,738
    
    
    $
    With an allowance recorded:Commercial
    
    $
    125,683
    
    
    $
    141,149
    
    
    $
    78,286Commercial Real Estate
    
    
    11,845,101
    
    
    
    15,272,361
    
    
    
    1,887,042Construction
    
    
    12,181,012
    
    
    
    14,535,354
    
    
    
    1,657,278Construction to Permanent
    
    
    1,364,694
    
    
    
    1,425,000
    
    
    
    187,094Residential
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    Total:
    
    $
    25,516,490
    
    
    $
    31,373,864
    
    
    $
    3,809,700Commercial
    
    $
    1,362,000
    
    
    $
    1,768,786
    
    
    $
    78,286Commercial Real Estate
    
    
    20,461,392
    
    
    
    24,391,596
    
    
    
    1,887,042Construction
    
    
    13,907,356
    
    
    
    16,409,740
    
    
    
    1,657,278Construction to Permanent
    
    
    1,364,694
    
    
    
    1,425,000
    
    
    
    187,094Residential
    
    
    11,927,547
    
    
    
    12,047,680
    
    
    
    Consumer
    
    
    1,516,977
    
    
    
    1,939,800
    
    
    
    Total:
    
    $
    50,539,966
    
    
    $
    57,982,602
    
    
    $
    3,809,700
    20




---



##### Table of Contents



Note 4: Deposits
  March 31,
    
    
    December 31,2011
    
    
    2010Non-interest bearing
    
    $
    55,691,927
    
    
    $
    51,058,373Interest bearingNOW
    
    
    25,161,243
    
    
    
    19,297,225Savings
    
    
    57,979,524
    
    
    
    57,041,943Money market
    
    
    73,803,322
    
    
    
    92,683,478Time certificates, less than $100,000
    
    
    219,759,502
    
    
    
    251,296,558Time certificates, $100,000 or more
    
    
    148,887,513
    
    
    
    175,431,252Total interest bearing
    
    
    525,591,104
    
    
    
    595,750,456Total Deposits
    
    $
    581,283,031
    
    
    $
    646,808,829
   21




---



##### Table of Contents



Note 5: Loss per share
   Three months ended March 31, 2011
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (8,982,598
    )
    
    
    38,362,727
    
    
    $
    (0.23
    )
 Three months ended March 31, 2010
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (3,131,566
    )
    
    
    4,762,727
    
    
    $
    (0.66
    )
 Note 6: Other Comprehensive Income
  Three Months Ended
    
    
    Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Before Tax
    
    
    
    
    
    
    Net of Tax
    
    
    Before Tax
    
    
    
    
    
    
    Net of TaxAmount
    
    
    Tax Effect
    
    
    Amount
    
    
    Amount
    
    
    Tax Effect
    
    
    AmountUnrealized holding gains
arising during the period
    
    $
    5,202
    
    
    $
    (1,977
    )
    
    $
    3,225
    
    
    $
    555,443
    
    
    $
    (211,067
    )
    
    $
    344,376Reclassification adjustment
for gains recognized in
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized holding gains
on available for sale
securities,
net of taxes
    
    $
    5,202
    
    
    $
    (1,977
    )
    
    $
    3,225
    
    
    $
    555,443
    
    
    $
    (211,067
    )
    
    $
    344,376
  22




---



##### Table of Contents



Note 7: Financial Instruments with Off-Balance Sheet Risk
    Commitments to extend credit:Future loan commitments
    
    $
    12,232,022Home equity lines of credit
    
    
    18,771,768Unused lines of credit
    
    
    12,914,391Undisbursed construction loans
    
    
    1,536,329Financial standby letters of credit
    
    
    52,000$
    45,506,510
    23




---



##### Table of Contents



Note 8: Regulatory and Operational Matters
      24




---



##### Table of Contents



To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(dollars in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioMarch 31, 2011The Company:Total Capital (to Risk Weighted Assets)
    
    $
    70,398
    
    
    
    18.14
    %
    
    $
    31,047
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Risk Weighted
Assets)
    
    
    64,843
    
    
    
    16.71
    %
    
    
    15,522
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Average Assets)
    
    
    64,843
    
    
    
    8.71
    %
    
    
    29,779
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AThe Bank:Total Capital (to Risk Weighted Assets)
    
    $
    67,888
    
    
    
    17.50
    %
    
    $
    31,035
    
    
    
    8.00
    %
    
    $
    38,793
    
    
    
    10.00
    %Tier 1 Capital (to Risk Weighted
Assets)
    
    
    62,336
    
    
    
    16.07
    %
    
    
    15,516
    
    
    
    4.00
    %
    
    
    23,274
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets)
    
    
    62,336
    
    
    
    8.38
    %
    
    
    29,755
    
    
    
    4.00
    %
    
    
    37,193
    
    
    
    5.00
    %December 31, 2010The Company:Total Capital (to Risk Weighted Assets)
    
    $
    80,358
    
    
    
    17.08
    %
    
    $
    37,643
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Risk Weighted
Assets)
    
    
    73,822
    
    
    
    15.69
    %
    
    
    18,822
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Average Assets)
    
    
    73,822
    
    
    
    9.16
    %
    
    
    32,219
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AThe Bank:Total Capital (to Risk Weighted Assets)
    
    $
    77,705
    
    
    
    16.54
    %
    
    $
    37,582
    
    
    
    8.00
    %
    
    $
    46,978
    
    
    
    10.00
    %Tier 1 Capital (to Risk Weighted
Assets)
    
    
    71,178
    
    
    
    15.15
    %
    
    
    18,791
    
    
    
    4.00
    %
    
    
    28,187
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets)
    
    
    71,178
    
    
    
    8.84
    %
    
    
    32,203
    
    
    
    4.00
    %
    
    
    40,253
    
    
    
    5.00
    %
   25




---



##### Table of Contents



Restrictions on dividends, loans and advances
    Recent Legislative Developments
  Note 9: Income Taxes
   26




---



##### Table of Contents



Note 10: Fair Value and Interest Rate Risk
    o
    
    Level 1 Inputs- Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the measurement date.
 o
    
    Level 2 Inputs- Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. These might include
quoted prices for similar assets or liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active, inputs other
than quoted prices that are observable for the asset or liability (such as interest rates,
volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally
from or corroborated by market data by correlation or other means.
 o
    
    Level 3 Inputs- Unobservable inputs for determining the fair values of assets or
liabilities that reflect an entitys own assumptions about the assumptions that market
participants would use in pricing the assets or liabilities.
  27




---



##### Table of Contents



Cash and due from banks, federal funds sold, short-term investments and accrued interest receivable
and payable:
 Available-for-Sale Securities:
 Loans:
 Other Real Estate Owned:
 Deposits:
 Short-term borrowings:
  28




---



##### Table of Contents



Junior Subordinated Debt:
 Federal Home Loan Bank Borrowings:
 Other Borrowings:
 Off-balance sheet instruments:
  Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    Unobservable
    
    
    Balancefor Identical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    as ofMarch 31, 2011
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    March 31, 2011Securities
available for sale
    
    $
    
    
    
    $
    38,539,143
    
    
    $
    
    
    
    $
    38,539,143
 Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    Unobservable
    
    
    Balancefor Identical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    as ofDecember 31, 2010
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    December 31, 2010Securities
available for sale
    
    $
    
    
    
    $
    40,564,700
    
    
    $
    
    
    
    $
    40,564,700
   29




---



##### Table of Contents



Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    Unobservable
    
    
    Balancefor Identical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    as ofMarch 31, 2011
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    March 31, 2011Impaired Loans(1)
    
    $
    
    
    
    $
    
    
    
    $
    4,577,157
    
    
    $
    4,577,157Other real estate owned(2)
    
    $
    
    
    
    $
    
    
    
    $
    950,000
    
    
    $
    950,000December 31, 2010Impaired Loans (1)
    
    $
    
    
    
    $
    
    
    
    $
    30,999,865
    
    
    $
    30,999,865Other real estate owned (2)
    
    $
    
    
    
    $
    
    
    
    $
    10,103,199
    
    
    $
    10,103,199
 
 (1)
    
    Represents carrying value for which adjustments are based on the appraised value of
the collateral.(2)
    
    Represents carrying value for which adjustments are based on the appraised value of
the property.     30




---



##### Table of Contents



March 31, 2011
    
    
    December 31, 2010Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and noninterest bearing balances due
from banks
    
    $
    5,903
    
    
    $
    5,903
    
    
    $
    4,613
    
    
    $
    4,613Interest-bearing deposits due from banks
    
    
    140,645
    
    
    
    140,645
    
    
    
    131,711
    
    
    
    131,711Federal funds sold
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000
    
    
    
    10,000Short-term investments
    
    
    501
    
    
    
    501
    
    
    
    453
    
    
    
    453Other investments
    
    
    3,500
    
    
    
    3,500
    
    
    
    3,500
    
    
    
    3,500Available-for-sale securities
    
    
    38,539
    
    
    
    38,539
    
    
    
    40,565
    
    
    
    40,565Federal Reserve Bank stock
    
    
    2,176
    
    
    
    2,176
    
    
    
    1,192
    
    
    
    1,192Federal Home Loan Bank stock
    
    
    4,508
    
    
    
    4,508
    
    
    
    4,508
    
    
    
    4,508Loans receivable, net
    
    
    466,869
    
    
    
    476,967
    
    
    
    534,531
    
    
    
    542,360Accrued interest receivable
    
    
    2,326
    
    
    
    2,326
    
    
    
    2,512
    
    
    
    2,512Financial Liabilities:Demand deposits
    
    $
    55,692
    
    
    $
    55,692
    
    
    $
    51,058
    
    
    $
    51,058Savings deposits
    
    
    57,980
    
    
    
    57,980
    
    
    
    57,042
    
    
    
    57,042Money market deposits
    
    
    73,803
    
    
    
    73,803
    
    
    
    92,683
    
    
    
    92,683NOW accounts
    
    
    25,161
    
    
    
    25,161
    
    
    
    19,297
    
    
    
    19,297Time deposits
    
    
    368,647
    
    
    
    374,116
    
    
    
    426,728
    
    
    
    432,466FHLB Borrowings
    
    
    50,000
    
    
    
    51,014
    
    
    
    50,000
    
    
    
    51,195Securities sold under repurchase agreements
    
    
    7,000
    
    
    
    7,784
    
    
    
    7,000
    
    
    
    7,796Subordinated debentures
    
    
    8,248
    
    
    
    8,248
    
    
    
    8,248
    
    
    
    8,248Accrued interest payable
    
    
    804
    
    
    
    804
    
    
    
    729
    
    
    
    729
  Off-balance sheet instruments
   31




---



##### Table of Contents



Note 11: Recent Accounting Pronouncements
 Fair Value Measurements and
Disclosures
 
    
    Separate disclosure of the significant transfers into and out of Level 1 and Level 2
fair value measurements, and a description of the reasons for the transfers.
 
    
    In the rollforward of activity for Level 3 fair value measurements (significant
unobservable inputs), purchases, sales, issuances, and settlements should be presented
separately (on a gross basis rather than as one net number).
  
    
    Fair value measurements and disclosures should be presented for each class of assets
and liabilities within a line item in the statement of financial position.
 
    
    Reporting entities should provide disclosures about the valuation techniques and
inputs used to measure fair value for both recurring and nonrecurring fair value
measurements that fall in either Level 2 or Level 3.
  Disclosures about the Credit Quality of Financing Receivables and
the Allowance for Credit Losses
  32




---



##### Table of Contents



Item 2:
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   CRITICAL ACCOUNTING POLICIES
  Summary
    33




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##### Table of Contents



Financial Condition
 Cash and Cash Equivalents
  Investments
  March 31,
    
    
    December 312011
    
    
    2010U. S. Government agency mortgage-backed
securities
    
    $
    35,277,176
    
    
    $
    37,471,878Auction rate preferred equity securities
    
    
    3,261,967
    
    
    
    3,092,822Total Available-for-Sale Securities
    
    $
    38,539,143
    
    
    $
    40,564,700
   34




---



##### Table of Contents



Loans
  March 31,
    
    
    December 31,2011
    
    
    2010Real EstateCommercial
    
    $
    212,785,433
    
    
    $
    228,842,489Residential
    
    
    157,743,571
    
    
    
    187,058,318Construction
    
    
    39,639,058
    
    
    
    63,889,083Construction to permanent
    
    
    10,315,902
    
    
    
    10,331,043Commercial
    
    
    18,873,362
    
    
    
    14,573,790Consumer home equity
    
    
    37,432,068
    
    
    
    42,884,962Consumer installment
    
    
    2,047,248
    
    
    
    1,932,763Total Loans
    
    
    478,836,642
    
    
    
    549,512,448Premiums on purchased loans
    
    
    239,912
    
    
    
    242,426Net deferred costs
    
    
    1,196
    
    
    
    150,440Allowance for loan losses
    
    
    (12,208,476
    )
    
    
    (15,374,101
    )Loans receivable, net
    
    $
    466,869,274
    
    
    $
    534,531,213
    Allowance for Loan Losses
   35




---



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36




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##### Table of Contents



37




---



##### Table of Contents



Three months endedMarch 31,
    
    
    March 31,(Thousands of dollars)
    
    2011
    
    
    2010Balance at beginning of period
    
    $
    15,374
    
    
    $
    15,794Charge-offs
    
    
    (4,154
    )
    
    
    (1,583
    )Recoveries
    
    
    21
    
    
    
    124Net Charge-offs
    
    
    (4,133
    )
    
    
    (1,459
    )Transferred to loans held-for-sale
    
    
    (6,014
    )
    
    

    Provision charged to operations
    
    
    6,981
    
    
    
    727Balance at end of period
    
    $
    12,208
    
    
    $
    15,062Ratio of net charge-offs during
the period to average loans
outstanding during the period
    
    
    0.78
    %
    
    
    0.22
    %Ratio of ALLL / Gross Loans
    
    
    2.55
    %
    
    
    2.35
    %
  Non-Accrual, Past Due and Restructured Loans
  March 31,
    
    
    December 31,(Thousands of dollars)
    
    2011
    
    
    2010Loans past due over 90 days
still accruing
    
    $
    223
    
    
    $
    3,374Non accruing loans
    
    
    32,530
    
    
    
    89,150Total
    
    $
    32,753
    
    
    $
    92,524% of Total Loans
    
    
    6.84
    %
    
    
    16.83
    %% of Total Assets
    
    
    4.61
    %
    
    
    11.80
    %
   38




---



##### Table of Contents



Potential Problem Loans
   Other Real Estate Owned
  March 31,
    
    
    December 31,2011
    
    
    2010Residential construction
    
    $
    
    
    
    $
    15,774,187Land
    
    
    950,000
    
    
    
    634,600Other real estate owned
    
    $
    950,000
    
    
    $
    16,408,787
  Deferred Taxes
   39




---



##### Table of Contents



Deposits
  March 31,
    
    
    December 31,2011
    
    
    2010Non-interest bearing
    
    $
    55,691,927
    
    
    $
    51,058,373Interest bearingNOW
    
    
    25,161,243
    
    
    
    19,297,225Savings
    
    
    57,979,524
    
    
    
    57,041,943Money market
    
    
    73,803,322
    
    
    
    92,683,478Time
certificates, less than $100,000
    
    
    219,759,502
    
    
    
    251,296,558Time certificates, $100,000 or more
    
    
    148,887,513
    
    
    
    175,431,252Total interest bearing
    
    
    525,591,104
    
    
    
    595,750,456Total Deposits
    
    $
    581,283,031
    
    
    $
    646,808,829
  Borrowings
   40




---



##### Table of Contents



Capital
  Off-Balance Sheet Arrangements
   41




---



##### Table of Contents



Results of Operations
 Interest and dividend income and expense
  Three months ended March 31,2011
    
    
    2010Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(dollars in thousands)Interest earning assets:Loans
    
    $
    532,985
    
    
    $
    6,957
    
    
    
    5.22
    %
    
    $
    654,046
    
    
    $
    9,097
    
    
    
    5.56
    %Investments
    
    
    49,005
    
    
    
    344
    
    
    
    2.81
    %
    
    
    66,391
    
    
    
    559
    
    
    
    3.37
    %Interest bearing deposits in
banks
    
    
    99,270
    
    
    
    62
    
    
    
    0.25
    %
    
    
    43,957
    
    
    
    32
    
    
    
    0.29
    %Federal funds sold
    
    
    10,000
    
    
    
    4
    
    
    
    0.16
    %
    
    
    10,000
    
    
    
    3
    
    
    
    0.13
    %Total interest
earning assets
    
    
    691,260
    
    
    
    7,367
    
    
    
    4.26
    %
    
    
    774,394
    
    
    
    9,691
    
    
    
    5.01
    %Cash and due from banks
    
    
    20,101
    
    
    
    
    
    
    
    
    
    
    
    20,268Premises and equipment, net
    
    
    4,968
    
    
    
    
    
    
    
    
    
    
    
    6,246Allowance for loan losses
    
    
    (15,504
    )
    
    
    
    
    
    
    
    
    
    
    (15,921
    )Other assets
    
    
    45,888
    
    
    
    
    
    
    
    
    
    
    
    49,605Total Assets
    
    $
    746,713
    
    
    
    
    
    
    
    
    
    
    $
    834,592Interest bearing liabilities:Deposits
    
    $
    557,135
    
    
    $
    1,865
    
    
    
    1.34
    %
    
    $
    679,451
    
    
    $
    3,117
    
    
    
    1.84
    %FHLB advances
    
    
    50,000
    
    
    
    419
    
    
    
    3.35
    %
    
    
    50,000
    
    
    
    419
    
    
    
    3.36
    %Subordinated debt
    
    
    8,248
    
    
    
    70
    
    
    
    3.39
    %
    
    
    8,248
    
    
    
    69
    
    
    
    3.35
    %Other borrowings
    
    
    7,000
    
    
    
    77
    
    
    
    4.42
    %
    
    
    7,000
    
    
    
    76
    
    
    
    4.35
    %Total interest
bearing liabilities
    
    
    622,383
    
    
    
    2,431
    
    
    
    1.56
    %
    
    
    744,699
    
    
    
    3,681
    
    
    
    1.98
    %Demand deposits
    
    
    52,898
    
    
    
    
    
    
    
    
    
    
    
    49,926Accrued expenses and
other liabilities
    
    
    5,995
    
    
    
    
    
    
    
    
    
    
    
    4,681Shareholders equity
    
    
    65,437
    
    
    
    
    
    
    
    
    
    
    
    35,286Total liabilities and equity
    
    $
    746,713
    
    
    
    
    
    
    
    
    
    
    $
    834,592Net interest income
    
    
    
    
    
    $
    4,936
    
    
    
    
    
    
    
    
    
    
    $
    6,010Interest margin
    
    
    
    
    
    
    
    
    
    
    2.86
    %
    
    
    
    
    
    
    
    
    
    
    3.10
    %Interest spread
    
    
    
    
    
    
    
    
    
    
    2.70
    %
    
    
    
    
    
    
    
    
    
    
    3.03
    %
  42




---



##### Table of Contents



Three months ended March 31,2011 vs 2010Increase (decrease) in InterestIncome/ExpenseDue to change in:Volume
    
    
    Rate
    
    
    Total(dollars in thousands)Interest earning assets:Loans
    
    $
    (1,609
    )
    
    $
    (531
    )
    
    $
    (2,140
    )Investments
    
    
    (131
    )
    
    
    (84
    )
    
    
    (215
    )Interest bearing deposits in
banks
    
    
    35
    
    
    
    (5
    )
    
    
    30Federal funds sold
    
    
    
    
    
    
    1
    
    
    
    1Total interest
earning assets
    
    
    (1,705
    )
    
    
    (619
    )
    
    
    (2,324
    )Interest bearing liabilities:Deposits
    
    $
    (499
    )
    
    $
    (753
    )
    
    $
    (1,252
    )FHLB advances
    
    
    
    
    
    
    (0
    )
    
    
    (0
    )Subordinated debt
    
    
    
    
    
    
    1
    
    
    
    1Other borrowings
    
    
    
    
    
    
    1
    
    
    
    1Total interest
bearing liabilities
    
    
    (499
    )
    
    
    (751
    )
    
    
    (1,250
    )Net interest income
    
    $
    (1,206
    )
    
    $
    132
    
    
    $
    (1,074
    )
   43




---



##### Table of Contents



Provision for Loan Losses
   Non-interest income
  Non-interest expenses
   44




---



##### Table of Contents



Liquidity
  Capital
  March 31, 2011
    
    
    December 31, 2010Tier 1 Leverage Capital
    
    
    8.71
    %
    
    
    9.16
    %Tier 1 Risk-based Capital
    
    
    16.71
    %
    
    
    15.69
    %Total Risk-based Capital
    
    
    18.14
    %
    
    
    17.08
    %
  March 31, 2011
    
    
    December 31, 2010Tier 1 Leverage Capital
    
    
    8.38
    %
    
    
    8.84
    %Tier 1 Risk-based Capital
    
    
    16.07
    %
    
    
    15.15
    %Total Risk-based Capital
    
    
    17.50
    %
    
    
    16.54
    %
    45




---



##### Table of Contents



IMPACT OF INFLATION AND CHANGING PRICES
   46




---



##### Table of Contents



Item 3:
    
    Quantitative and Qualitative Disclosures about Market Risk
  Qualitative Aspects of Market Risk
   Quantitative Aspects of Market Risk
     47




---



##### Table of Contents



March 31, 2011Net Interest Income
    
    
    Net Portfolio ValueProjected Interest
    
    Estimated
    
    
    $ Change
    
    
    % Change
    
    
    Estimated
    
    
    $ Change
    
    
    % ChangeRate Scenario
    
    Value
    
    
    from Base
    
    
    from Base
    
    
    Value
    
    
    from Base
    
    
    from Base+ 200
    
    
    24,059
    
    
    
    1,224
    
    
    
    5.36
    %
    
    
    56,635
    
    
    
    (4,600
    )
    
    
    -7.51
    %+ 100
    
    
    23,353
    
    
    
    518
    
    
    
    2.27
    %
    
    
    59,042
    
    
    
    (2,193
    )
    
    
    -3.58
    %BASE
    
    
    22,835
    
    
    
    
    
    
    
    
    
    
    
    61,235- 100
    
    
    21,741
    
    
    
    (1,094
    )
    
    
    -4.79
    %
    
    
    64,024
    
    
    
    2,789
    
    
    
    4.55
    %- 200
    
    
    20,724
    
    
    
    (2,111
    )
    
    
    -9.24
    %
    
    
    69,514
    
    
    
    8,279
    
    
    
    13.52
    %
 December 31, 2010Net Interest Income
    
    
    Net Portfolio ValueProjected Interest
    
    Estimated
    
    
    $ Change
    
    
    % Change
    
    
    Estimated
    
    
    $ Change
    
    
    % ChangeRate Scenario
    
    Value
    
    
    from Base
    
    
    from Base
    
    
    Value
    
    
    from Base
    
    
    from Base+ 200
    
    
    26,290
    
    
    
    110
    
    
    
    0.42
    %
    
    
    63,164
    
    
    
    (4,420
    )
    
    
    -6.54
    %+ 100
    
    
    26,209
    
    
    
    29
    
    
    
    0.11
    %
    
    
    65,502
    
    
    
    (2,082
    )
    
    
    -3.08
    %BASE
    
    
    26,180
    
    
    
    
    
    
    
    
    
    
    
    67,584- 100
    
    
    25,869
    
    
    
    (311
    )
    
    
    -1.19
    %
    
    
    70,228
    
    
    
    2,644
    
    
    
    3.91
    %- 200
    
    
    25,068
    
    
    
    (1,112
    )
    
    
    -4.25
    %
    
    
    75,096
    
    
    
    7,512
    
    
    
    11.12
    %
 
 Item 4:
    
    Controls and Procedures
     48




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1:
    
    Legal Proceedings
  
 Item 1A:
    
    Risk Factors
  
 Item 6:
    
    Exhibits
 No.
    
    Description2
    
    
    Agreement and Plan of Reorganization dated as of June 28,
1999 between Bancorp and the Bank (incorporated by reference
to Exhibit 2 to Bancorps Current Report on Form 8-K dated
December 1, 1999 (Commission File No. 000-29599)).3
    (i)
    
    Certificate of Incorporation of Bancorp, (incorporated by
reference to Exhibit 3(i) to Bancorps Current Report on Form 8-K dated
December 1, 1999 (Commission File No. 000-29599)).3(i
    )(A)
    
    Certificate of Amendment of Certificate of Incorporation of Patriot
National Bancorp, Inc. dated July 16, 2004 (incorporated by reference to
Exhibit 3(i)(A) to Bancorps Annual Report on Form 10-KSB for the year ended
December 31, 2004 (Commission File No. 000-29599)).3(i
    )(B)
    
    Certificate of Amendment of Certificate of Incorporation of Patriot
National Bancorp, Inc. dated June 15, 2006 (incorporated by reference to
Exhibit 3(i)(B) to Bancorps Quarterly Report of Form 10-Q for the quarter
ended September 30, 2006 (commission File No. 000-29599)).
  49




---



##### Table of Contents



No.
    
    Description3(i
    )(C)
    
    Certificate of Amendment to the Certificate of Incorporation of
Patriot National Bancorp, Inc., filed with the Secretary of State
of the State of Connecticut on October 6, 2010 (incorporated
by reference to Exhibit 3.1 to Bancorps Current Report on
Form 8-K dated October 20, 2010 (Commission File No. 000-
29599)).3(i
    )(D)
    
    Registration Rights Agreement, dated as of October 15, 2010, by and between
Patriot National Bancorp, Inc. and PNBK Holdings LLC (incorporated by
reference to Exhibit 10.1 to Bancorps Current Report on Form 8-K dated
October 20, 2010 (Commission File No. 000-29599)).3(ii)
    
    Amended and Restated By-laws of Bancorp (incorporated by
reference to Exhibit 3.2 to Bancorps Current Report on Form 8-K dated
December 26, 2007 (Commission File No. 1-32007))10(a
    )(1)
    
    2001 Stock Appreciation Rights Plan of Bancorp (incorporated by reference
to Exhibit 10(a)(1) to Bancorps Annual Report on Form 10-KSB for the year
ended December 31, 2001 (Commission File No. 000-29599)).10(a
    )(3)
    
    Employment Agreement, dated as of October 23, 2000, as amended by a First
Amendment, dated as of March 21, 2001, among the Bank, Bancorp and Charles F.
Howell (incorporated by reference to Exhibit 10(a)(4) to Bancorps Annual
Report on Form 10-KSB for the year ended December 31, 2000 (Commission File
No. 000-29599)).10(a
    )(4)
    
    Change of Control Agreement, dated as of January 1, 2007 among Angelo De
Caro, and Patriot National Bank and Bancorp (incorporated by reference to
Exhibit 10(a)(4) to Bancorps Annual Report on Form 10-K for the year ended
December 31, 2006 (Commission File No. 000-29599)).10(a
    )(5)
    
    Employment Agreement dated as of January 1, 2008 among
Patriot National Bank, Bancorp and Robert F. OConnell
(incorporated by reference to Exhibit 10(a)(5) to Bancorps Annual
Report on Form 10-K for the year ended December 31, 2007 (Commission
File No. 000-29599)).
  50




---



##### Table of Contents



No.
    
    Description10(a
    )(6)
    
    Change of Control Agreement, dated as of January 1, 2007 among Robert F.
OConnell, Patriot National Bank and Bancorp (incorporated by reference to
Exhibit 10(a)(6) to Bancorps Annual Report on Form 10-K for the year ended
December 31, 2006 (Commission File No. 000-29599)).10(a
    )(9)
    
    License agreement dated July 1, 2003 between Patriot National Bank and L.
Morris Glucksman (incorporated by reference to Exhibit 10(a)(9) to Bancorps
Annual Report on Form 10-KSB for the year ended December 31, 2003 (Commission
File No. 000-29599))10(a
    )(10)
    
    Employment Agreement dated as of January 1, 2007 among Patriot National
Bank, Bancorp and Charles F. Howell (incorporated by reference to Exhibit
10(a)(10) to Bancorps Annual Report on Form 10-K for the year ended December
31, 2006 (Commission File No. 000-29599)).10(a
    )(11)
    
    Change of Control Agreement, dated as of January 1, 2007 among Charles F.
Howell, Patriot National Bank and Bancorp (incorporated by reference to
Exhibit 10(a)(11) to Bancorps Annual Report on Form 10-K for the year ended
December 31, 2006 (Commission File No. 000-29599)).10(a
    )(12)
    
    2005 Director Stock Award Plan (incorporated by reference to Exhibit
10(a)(12) to Bancorps Quarterly Report on Form 10-Q for the quarter ended
June 30, 2006 (Commission File No. 000  295999)).10(a
    )(13)
    
    Change of Control Agreement, dated as of January
1, 2007 between Martin G. Noble and Patriot
National Bank (incorporated by reference to
Exhibit 10(a)(13) to Bancorps Annual Report on
Form 10-K for the year ended December 31, 2006
(Commission File No. 000-29599)).10(a
    )(14)
    
    Change of Control Agreement, dated as of January
1, 2007 among Philip W. Wolford, Patriot
National Bank and Bancorp (incorporated by
reference to Exhibit 10(a)(14) to Bancorps
Annual Report on Form 10-K for the year ended
December 31, 2006 (Commission File No.
000-29599)).
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##### Table of Contents



No.
    
    Description10(a
    )(15)
    
    Formal Written Agreement between Patriot National Bank and the Office of
the Comptroller of the Currency (incorporated by reference to Exhibit
10(a)(15) to Bancorps Current Report on Form 8-K dated February 9, 2009
(Commission File No. 000-29599)).10(a
    )(16)
    
    Securities Purchase Agreement by and among Patriot National Bancorp,
Inc., Patriot National Bank and PNBK Holdings LLC dated as of December 16,
2009 (incorporated by reference to Exhibit 10.1 to Bancorps Current Report on
Form 8-K dated December 17, 2009).10(a
    )(17)
    
    First Amendment to Securities Purchase Agreement by and among Patriot
National Bancorp, Inc., Patriot National Bank and PNBK Holdings LLC dated as
of May 3, 2010 (incorporated by reference to Exhibit 10(a) to
Bancorps Current Report on Form 8-K dated May 4, 2010).10(a
    )(18)
    
    Purchase and Sale Agreement, dated February 25, 2011, by and among
Patriot National Bank, Pinpat Acquisition Corporation and ES Ventures One LLC
(incorporated by reference to Exhibit 2.1 to Bancorps Current Report on Form
8-K dated March 29, 2011).10(a
    )(19)
    
    Formal Written Agreement between Patriot National Bank and the Federal
Reserve Bank of New York (as incorporated by reference to Exhibit 10(a)(16) to
Bancorps Annual Report on Form 10-K for the year ended December 31, 2010).10
    (c)
    
    1999 Stock Option Plan of the Bank (incorporated by
reference to Exhibit 10(c) to Bancorps Current Report on Form 8-K dated
December 1, 1999 (Commission File No. 000-29599)).14
    
    
    Code of Conduct for Senior Financial Officers (incorporated
by reference to Exhibit 14 to Bancorps Annual Report on Form 10  KSB for the
year ended December 31, 2004 (Commission File No. 000-29599).21
    
    
    Subsidiaries of Bancorp (incorporated by reference
to Exhibit 21 to Bancorps Annual Report on Form
10-KSB for the year ended December 31, 1999
(Commission File No. 000-29599)).31
    (1)
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief
Executive Officer31
    (2)
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief
Financial Officer32
    
    
    Section 1350 Certifications
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##### Table of Contents



SIGNATURES
  Patriot National Bancorp, inc.
(Registrant)By:
    /s/  Robert F. OConnellRobert F. OConnell,Senior Executive Vice President
Chief Financial Officer


(On behalf of the registrant and as
chief financial officer)   53