##### 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 June 30, 2011

    
    Commission file number 000-29599
 PATRIOT NATIONAL BANCORP, INC.
  Connecticut
    
    06-1559137(State of incorporation)
    
    (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
    
    
    38Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    52Item 4. Controls and Procedures
    
    
    54Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    55Item 1A. Risk Factors
    
    
    55Item 6. Exhibits
    
    
    55Exhibit 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
 June 30, 2011
    
    
    December 31, 2010(Unaudited)ASSETSCash and due from banks:Noninterest bearing deposits and cash
    
    $
    6,242,000
    
    
    $
    4,613,211Interest bearing deposits
    
    
    52,759,731
    
    
    
    131,711,047Federal funds sold
    
    
    5,000,000
    
    
    
    10,000,000Short-term investments
    
    
    547,146
    
    
    
    453,400Total cash and cash equivalents
    
    
    64,548,877
    
    
    
    146,777,658Securities:Available for sale securities, at fair value (Note 2)
    
    
    88,926,471
    
    
    
    40,564,700Other Investments
    
    
    3,500,000
    
    
    
    3,500,000Federal Reserve Bank stock, at cost
    
    
    1,910,600
    
    
    
    1,192,000Federal Home Loan Bank stock, at cost
    
    
    4,508,300
    
    
    
    4,508,300Total securities
    
    
    98,845,371
    
    
    
    49,765,000Loans receivable (net of allowance for loan losses: 2011: $11,399,727
2010: $15,374,101) (Note 3)
    
    
    451,981,025
    
    
    
    534,531,213Accrued interest and dividends receivable
    
    
    2,329,463
    
    
    
    2,512,186Premises and equipment, net
    
    
    4,234,211
    
    
    
    5,270,312Cash surrender value of life insurance
    
    
    20,669,577
    
    
    
    20,348,332Other real estate owned
    
    
    3,611,330
    
    
    
    16,408,787Deferred tax asset (Note 9)
    
    
    
    
    
    
    Other assets
    
    
    1,986,100
    
    
    
    8,711,366Total assets
    
    $
    648,205,954
    
    
    $
    784,324,854LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDeposits (Note 4):Noninterest bearing deposits
    
    $
    61,585,518
    
    
    $
    51,058,373Interest bearing deposits
    
    
    462,919,319
    
    
    
    595,750,456Total deposits
    
    
    524,504,837
    
    
    
    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
    
    
    7,188,149
    
    
    
    5,095,837Total liabilities
    
    
    596,940,986
    
    
    
    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
    
    
    (55,557,311
    )
    
    
    (39,399,345
    )Less: Treasury stock, at cost: 2011 and 2010, 11,705 shares
    
    
    (160,025
    )
    
    
    (160,025
    )Accumulated other comprehensive income
    
    
    1,548,127
    
    
    
    1,297,381Total shareholders equity
    
    
    51,264,968
    
    
    
    67,172,188Total liabilities and shareholders equity
    
    $
    648,205,954
    
    
    $
    784,324,854
   3




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Interest and Dividend IncomeInterest and fees on loans
    
    $
    6,538,593
    
    
    $
    8,937,870
    
    
    $
    13,495,154
    
    
    $
    18,034,359Interest on investment securities
    
    
    486,738
    
    
    
    377,286
    
    
    
    760,921
    
    
    
    866,848Dividends on investment securities
    
    
    80,728
    
    
    
    66,421
    
    
    
    150,629
    
    
    
    135,706Interest on federal funds sold
    
    
    2,385
    
    
    
    4,486
    
    
    
    6,411
    
    
    
    7,847Other interest income
    
    
    58,363
    
    
    
    21,456
    
    
    
    120,253
    
    
    
    53,270Total interest and dividend income
    
    
    7,166,807
    
    
    
    9,407,519
    
    
    
    14,533,368
    
    
    
    19,098,030Interest ExpenseInterest on deposits
    
    
    1,553,745
    
    
    
    2,948,548
    
    
    
    3,419,094
    
    
    
    6,065,864Interest on Federal Home Loan Bank borrowings
    
    
    423,529
    
    
    
    423,529
    
    
    
    842,404
    
    
    
    842,404Interest on subordinated debt
    
    
    71,219
    
    
    
    71,031
    
    
    
    141,617
    
    
    
    140,364Interest on other borrowings
    
    
    76,927
    
    
    
    76,927
    
    
    
    153,009
    
    
    
    153,008Total interest expense
    
    
    2,125,420
    
    
    
    3,520,035
    
    
    
    4,556,124
    
    
    
    7,201,640Net interest income
    
    
    5,041,387
    
    
    
    5,887,484
    
    
    
    9,977,244
    
    
    
    11,896,390Provision for Loan Losses
    
    
    1,482,798
    
    
    
    512,000
    
    
    
    8,464,427
    
    
    
    1,239,000Net interest income after
provision for loan losses
    
    
    3,558,589
    
    
    
    5,375,484
    
    
    
    1,512,817
    
    
    
    10,657,390Non-interest IncomeMortgage brokerage referral fees
    
    
    1,610
    
    
    
    26,790
    
    
    
    14,610
    
    
    
    53,674Loan application, inspection & processing fees
    
    
    23,966
    
    
    
    39,554
    
    
    
    40,765
    
    
    
    75,383Deposit fees and service charges
    
    
    248,039
    
    
    
    274,197
    
    
    
    528,940
    
    
    
    527,718Gains on sale of loans
    
    
    79,729
    
    
    
    
    
    
    
    79,729
    
    
    
    Earnings on cash surrender value of life insurance
    
    
    152,985
    
    
    
    138,722
    
    
    
    321,245
    
    
    
    268,833Other income
    
    
    203,984
    
    
    
    81,363
    
    
    
    307,874
    
    
    
    173,486Total non-interest income
    
    
    710,313
    
    
    
    560,626
    
    
    
    1,293,163
    
    
    
    1,099,094Non-interest ExpensesSalaries and benefits
    
    
    3,189,311
    
    
    
    3,191,355
    
    
    
    6,403,826
    
    
    
    6,552,640Occupancy and equipment expense
    
    
    1,291,826
    
    
    
    1,297,900
    
    
    
    2,646,393
    
    
    
    2,836,297Data processing
    
    
    336,005
    
    
    
    291,664
    
    
    
    663,809
    
    
    
    581,827Advertising and promotional expenses
    
    
    271,781
    
    
    
    71,045
    
    
    
    429,755
    
    
    
    154,678Professional and other outside services
    
    
    1,234,958
    
    
    
    702,994
    
    
    
    2,116,665
    
    
    
    1,875,171Loan administration and processing expenses
    
    
    48,159
    
    
    
    71,188
    
    
    
    85,218
    
    
    
    176,216Regulatory assessments
    
    
    628,476
    
    
    
    689,798
    
    
    
    1,239,744
    
    
    
    1,384,641Insurance expense
    
    
    228,637
    
    
    
    128,269
    
    
    
    459,411
    
    
    
    404,399Other real estate operations
    
    
    774,450
    
    
    
    511,453
    
    
    
    1,044,957
    
    
    
    1,305,627Material and communications
    
    
    164,115
    
    
    
    200,581
    
    
    
    364,253
    
    
    
    401,863Restructuring charges and asset disposals (Note
11)
    
    
    2,986,441
    
    
    
    
    
    
    
    2,986,441
    
    
    
    Other operating expenses
    
    
    290,111
    
    
    
    180,040
    
    
    
    523,474
    
    
    
    389,869Total non-interest expenses
    
    
    11,444,270
    
    
    
    7,336,287
    
    
    
    18,963,946
    
    
    
    16,063,228Loss before income taxes
    
    
    (7,175,368
    )
    
    
    (1,400,177
    )
    
    
    (16,157,966
    )
    
    
    (4,306,744
    )Provision for Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (225,000
    )Net loss
    
    $
    (7,175,368
    )
    
    $
    (1,400,177
    )
    
    $
    (16,157,966
    )
    
    $
    (4,531,744
    )Basic and diluted loss per share (Note 5)
    
    $
    (0.19
    )
    
    $
    (0.29
    )
    
    $
    (0.42
    )
    
    $
    (0.95
    )
   4




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherNumber of
    
    
    Common
    
    
    Paid-In
    
    
    Accumulated
    
    
    Treasury
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    Income
    
    
    TotalSix months ended June 30, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,531,744
    )
    
    
    
    
    
    
    
    
    
    
    (4,531,744
    )Unrealized holding gain on
available for
sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    258,733
    
    
    
    258,733Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,273,011
    )Balance, June 30, 2010
    
    
    4,762,727
    
    
    $
    9,548,864
    
    
    $
    49,651,534
    
    
    $
    (28,532,144
    )
    
    $
    (160,025
    )
    
    $
    1,080,070
    
    
    $
    31,588,299Six months ended June 30, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,157,966
    )
    
    
    
    
    
    
    
    
    
    
    (16,157,966
    )Unrealized holding gain on
available for
sale securities, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,746
    
    
    
    250,746Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,907,220
    )Balance, June 30, 2011
    
    
    38,362,727
    
    
    $
    383,744
    
    
    $
    105,050,433
    
    
    $
    (55,557,311
    )
    
    $
    (160,025
    )
    
    $
    1,548,127
    
    
    $
    51,264,968
   5




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,2011
    
    
    2010Cash Flows from Operating Activities:Net loss
    
    $
    (16,157,966
    )
    
    $
    (4,531,744
    )Adjustments to reconcile net loss to net cash
used in operating activities:Restructuring charges and asset disposals
    
    
    1,996,441
    
    
    
    Amortization and accretion of investment premiums and discounts, net
    
    
    116,431
    
    
    
    220,040Amortization and accretion of purchase loan premiums and discounts, net
    
    
    5,028
    
    
    
    7,096Provision for loan losses
    
    
    8,464,427
    
    
    
    1,239,000Gain on sale of loans
    
    
    (79,729
    )
    
    
    Amortization of core deposit intangible
    
    
    7,506
    
    
    
    7,950Earnings on cash surrender value of life insurance
    
    
    (321,245
    )
    
    
    (268,833
    )Depreciation and amortization
    
    
    684,904
    
    
    
    759,658Loss on sale of other real estate owned
    
    
    58,215
    
    
    
    173,289Impairment writedown on other real estate owned
    
    
    165,764
    
    
    
    855,697Changes in assets and liabilities:Decrease (increase) in deferred loan costs
    
    
    100,958
    
    
    
    (251,312
    )Decrease in accrued interest and dividends receivable
    
    
    182,723
    
    
    
    267,946Decrease in other assets
    
    
    6,717,760
    
    
    
    585,244Increase in accrued expenses and other liabilities
    
    
    457,203
    
    
    
    259,294Net cash provided by (used in) operating activities
    
    
    2,398,420
    
    
    
    (676,675
    )Cash Flows from Investing Activities:Purchases of available for sale securities
    
    
    (51,995,480
    )
    
    
    (15,162,500
    )Principal repayments on available for sale securities
    
    
    3,976,411
    
    
    
    3,099,854Purchases of Federal Reserve Bank Stock
    
    
    (1,174,100
    )
    
    
    Redemptions of Federal Reserve Bank Stock
    
    
    455,500
    
    
    
    605,450Proceeds from sale of loans
    
    
    55,089,794
    
    
    
    Net decrease in loans
    
    
    16,308,380
    
    
    
    40,246,529Purchase of other real estate owned
    
    
    (481,165
    )
    
    
    Proceeds from sale of other real estate owned
    
    
    15,715,973
    
    
    
    11,423,342Capital improvements of other real estate owned
    
    
    
    
    
    
    (114,871
    )Purchase of bank premises and equipment
    
    
    (218,522
    )
    
    
    (87,739
    )Net cash provided by investing activities
    
    
    37,676,791
    
    
    
    40,010,065Cash Flows from Financing Activities:Net decrease in demand, savings and money market deposits
    
    
    (9,443,954
    )
    
    
    (10,002,369
    )Net decrease in time certificates of deposits
    
    
    (112,860,038
    )
    
    
    (36,088,974
    )Net cash used in financing activities
    
    
    (122,303,992
    )
    
    
    (46,091,343
    )Net decrease in cash and cash equivalents
    
    
    (82,228,781
    )
    
    
    (6,757,953
    )Cash and Cash Equivalents:Beginning
    
    
    146,777,658
    
    
    
    107,799,432Ending
    
    $
    64,548,877
    
    
    $
    101,041,479
  6




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##### Table of Contents



PATRIOT NATIONAL BANCORP, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(Unaudited)
 2011
    
    
    2010Supplemental Disclosures of Cash Flow InformationInterest paid
    
    $
    4,432,799
    
    
    $
    7,111,982Income taxes paid
    
    $
    10,534
    
    
    $
    2,080Supplemental disclosures of noncash investing and financing activities:Unrealized holding gain on available for sale
securities arising during the period
    
    $
    459,133
    
    
    $
    417,308Transfer of loans to other real estate owned
    
    $
    2,661,330
    
    
    $
    
   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
    
    
    ValueJune 30, 2011:U. S. Government agency mortgage-backed
securities
    
    $
    75,475,069
    
    
    $
    1,294,977
    
    
    $
    (37,159
    )
    
    $
    76,732,887Auction rate preferred equity securities
    
    
    1,899,720
    
    
    
    1,355,175
    
    
    
    
    
    
    
    3,254,895Corporate bonds
    
    
    9,000,000
    
    
    
    
    
    
    
    (61,311
    )
    
    
    8,938,689$
    86,374,789
    
    
    $
    2,650,152
    
    
    $
    (98,470
    )
    
    $
    88,926,471December 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
    
    
    LossJune 30, 2011:Corporate bonds
    
    $
    8,938,689
    
    
    $
    (61,311
    )
    
    $
    
    
    
    $
    
    
    
    $
    8,938,689
    
    
    $
    (61,311
    )U. S. Government mortgage -
backed securities
    
    $
    14,964,561
    
    
    $
    (37,159
    )
    
    $
    
    
    
    $
    
    
    
    $
    14,964,561
    
    
    $
    (37,159
    )Totals
    
    $
    23,903,250
    
    
    $
    (98,470
    )
    
    $
    
    
    
    $
    
    
    
    $
    23,903,250
    
    
    $
    (98,470
    )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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##### Table of Contents



Amortized Cost
    
    
    Fair ValueMaturity:Corporate bonds 5 to 10 years
    
    $
    9,000,000
    
    
    $
    8,938,689Mortgage-backed securities
    
    
    75,475,069
    
    
    
    76,732,887Total
    
    $
    84,475,069
    
    
    $
    85,671,576
 Note 3: Loans Receivable and Allowance for Loan Losses
  June 30,
    
    
    December 31,2011
    
    
    2010Real EstateCommercial
    
    $
    203,889,507
    
    
    $
    228,842,489Residential
    
    
    154,301,727
    
    
    
    187,058,318Construction
    
    
    26,479,881
    
    
    
    63,889,083Construction to permanent
    
    
    10,300,425
    
    
    
    10,331,043Commercial
    
    
    23,512,120
    
    
    
    14,573,790Consumer home equity
    
    
    42,600,664
    
    
    
    42,884,962Consumer installment
    
    
    2,009,548
    
    
    
    1,932,763Total Loans
    
    
    463,093,872
    
    
    
    549,512,448Premiums on purchased loans
    
    
    237,398
    
    
    
    242,426Net deferred costs
    
    
    49,482
    
    
    
    150,440Allowance for loan losses
    
    
    (11,399,727
    )
    
    
    (15,374,101
    )Loans receivable, net
    
    $
    451,981,025
    
    
    $
    534,531,213
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Balance, beginning of period
    
    $
    12,208,476
    
    
    $
    15,061,796
    
    
    $
    15,374,101
    
    
    $
    15,794,118Provision for loan losses
    
    
    1,482,798
    
    
    
    512,000
    
    
    
    8,464,427
    
    
    
    1,239,000Loans charged-off
    
    
    (3,034,591
    )
    
    
    (1,594,136
    )
    
    
    (7,188,138
    )
    
    
    (3,177,383
    )Recoveries of loans previously charged-off
    
    
    743,044
    
    
    
    9,409
    
    
    
    763,650
    
    
    
    133,334Transferred to loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    (6,014,313
    )
    
    
    Balance, end of period
    
    $
    11,399,727
    
    
    $
    13,989,069
    
    
    $
    11,399,727
    
    
    $
    13,989,069
  10




---



##### Table of Contents



11




---



##### Table of Contents



Commercial Real Estate Loans 
 Construction Loans
  Residential Real Estate Loans
 Commercial and Industrial Loans
 Other Loans
   12




---



##### Table of Contents



Commercial Real
    
    
    
    
    
    
    ConstructionThree months ended June 30, 2011
    
    Commercial
    
    
    Estate
    
    
    Construction
    
    
    to Permanent
    
    
    Residential
    
    
    Consumer
    
    
    Unallocated
    
    
    TotalAllowance for loan losses:Beginning Balance
    
    $
    590,872
    
    
    $
    6,576,501
    
    
    $
    2,938,102
    
    
    $
    529,745
    
    
    $
    1,097,762
    
    
    $
    452,708
    
    
    $
    22,786
    
    
    $
    12,208,476Charge-offs
    
    
    
    
    
    
    (1,801,551
    )
    
    
    (1,071,281
    )
    
    
    
    
    
    
    
    
    
    
    (161,759
    )
    
    
    
    
    
    
    (3,034,591
    )Recoveries
    
    
    
    
    
    
    3,789
    
    
    
    443,588
    
    
    
    
    
    
    
    
    
    
    
    295,667
    
    
    
    
    
    
    
    743,044Transferred to loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision
    
    
    294,438
    
    
    
    1,658,960
    
    
    
    (969,470
    )
    
    
    355,307
    
    
    
    147,727
    
    
    
    17,442
    
    
    
    (21,606
    )
    
    
    1,482,798Ending Balance
    
    $
    885,310
    
    
    $
    6,437,699
    
    
    $
    1,340,939
    
    
    $
    885,052
    
    
    $
    1,245,489
    
    
    $
    604,058
    
    
    $
    1,180
    
    
    $
    11,399,727Ending balance: individually evaluated for impairment
    
    $
    226,674
    
    
    $
    1,356,134
    
    
    $
    228,599
    
    
    $
    818,217
    
    
    $
    220,476
    
    
    $
    151,500
    
    
    $
    
    
    
    $
    3,001,600Ending balance: collectively
evaluated for impairment
    
    $
    658,636
    
    
    $
    5,081,565
    
    
    $
    1,112,340
    
    
    $
    66,835
    
    
    $
    1,025,013
    
    
    $
    452,558
    
    
    $
    1,180
    
    
    $
    8,398,127Total Allowance for Loan Losses
    
    $
    885,310
    
    
    $
    6,437,699
    
    
    $
    1,340,939
    
    
    $
    885,052
    
    
    $
    1,245,489
    
    
    $
    604,058
    
    
    $
    1,180
    
    
    $
    11,399,727Total Loans ending balance
    
    $
    23,512,120
    
    
    $
    203,889,507
    
    
    $
    26,479,881
    
    
    $
    10,300,425
    
    
    $
    154,301,727
    
    
    $
    44,610,212
    
    
    $
    
    
    
    $
    463,093,872Ending balance: individually
evaluated for
impairment
    
    $
    1,212,521
    
    
    $
    11,812,331
    
    
    $
    6,364,172
    
    
    $
    8,591,092
    
    
    $
    13,413,155
    
    
    $
    1,417,742
    
    
    $
    
    
    
    $
    42,811,013Ending balance: collectively
evaluated for
impairment
    
    $
    22,299,599
    
    
    $
    192,077,176
    
    
    $
    20,115,709
    
    
    $
    1,709,333
    
    
    $
    140,888,572
    
    
    $
    43,192,470
    
    
    $
    
    
    
    $
    420,282,859
  13




---



##### Table of Contents



Commercial Real
    
    
    
    
    
    
    ConstructionSix months ended June 30, 2011
    
    Commercial
    
    
    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
    
    
    
    
    
    
    (2,736,139
    )
    
    
    (2,832,041
    )
    
    
    
    
    
    
    (1,458,199
    )
    
    
    (161,759
    )
    
    
    
    
    
    
    (7,188,138
    )Recoveries
    
    
    240
    
    
    
    3,789
    
    
    
    461,282
    
    
    
    
    
    
    
    
    
    
    
    298,339
    
    
    
    
    
    
    
    763,650Transferred to loans held-for-sale
    
    
    
    
    
    
    (963,461
    )
    
    
    (1,369,354
    )
    
    
    
    
    
    
    (3,681,498
    )
    
    
    
    
    
    
    
    
    
    
    (6,014,313
    )Provision
    
    
    443,751
    
    
    
    2,501,155
    
    
    
    1,602,994
    
    
    
    393,606
    
    
    
    4,021,348
    
    
    
    (111,134
    )
    
    
    (387,293
    )
    
    
    8,464,427Ending Balance
    
    $
    885,310
    
    
    $
    6,437,699
    
    
    $
    1,340,939
    
    
    $
    885,052
    
    
    $
    1,245,489
    
    
    $
    604,058
    
    
    $
    1,180
    
    
    $
    11,399,727Ending balance: individually evaluated for impairment
    
    $
    226,674
    
    
    $
    1,356,134
    
    
    $
    228,599
    
    
    $
    818,217
    
    
    $
    220,476
    
    
    $
    151,500
    
    
    $
    
    
    
    $
    3,001,600Ending balance: collectively
evaluated for impairment
    
    $
    658,636
    
    
    $
    5,081,565
    
    
    $
    1,112,340
    
    
    $
    66,835
    
    
    $
    1,025,013
    
    
    $
    452,558
    
    
    $
    1,180
    
    
    $
    8,398,127Total Allowance for Loan Losses
    
    $
    885,310
    
    
    $
    6,437,699
    
    
    $
    1,340,939
    
    
    $
    885,052
    
    
    $
    1,245,489
    
    
    $
    604,058
    
    
    $
    1,180
    
    
    $
    11,399,727Total Loans ending balance
    
    $
    23,512,120
    
    
    $
    203,889,507
    
    
    $
    26,479,881
    
    
    $
    10,300,425
    
    
    $
    154,301,727
    
    
    $
    44,610,212
    
    
    $
    
    
    
    $
    463,093,872Ending balance: individually
evaluated for
impairment
    
    $
    1,212,521
    
    
    $
    11,812,331
    
    
    $
    6,364,172
    
    
    $
    8,591,092
    
    
    $
    13,413,155
    
    
    $
    1,417,742
    
    
    $
    
    
    
    $
    42,811,013Ending balance: collectively
evaluated for
impairment
    
    $
    22,299,599
    
    
    $
    192,077,176
    
    
    $
    20,115,709
    
    
    $
    1,709,333
    
    
    $
    140,888,572
    
    
    $
    43,192,470
    
    
    $
    
    
    
    $
    420,282,859
  14




---



##### Table of Contents



15




---



##### 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
    
    $
    17,059,866
    
    
    $
    1,010,558
    
    
    $
    129,445,812
    
    
    $
    7,930,298
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100,042,773
    
    
    $
    36,102,022
    
    
    $
    38,681,443
    
    
    $
    504,874
    
    
    $
    689,849
    
    
    $
    331,467,495Special Mention
    
    
    244,506
    
    
    
    174,250
    
    
    
    26,506,967
    
    
    
    4,644,478
    
    
    
    11,364,872
    
    
    
    
    
    
    
    1,709,333
    
    
    
    
    
    
    
    1,040,930
    
    
    
    
    
    
    
    274,390
    
    
    
    3,029,362
    
    
    
    
    
    
    
    48,989,088Substandard & Doubtful
    
    
    4,850,852
    
    
    
    172,088
    
    
    
    13,939,247
    
    
    
    21,422,705
    
    
    
    5,402,712
    
    
    
    9,712,297
    
    
    
    
    
    
    
    8,591,092
    
    
    
    3,999,523
    
    
    
    13,116,479
    
    
    
    12,552
    
    
    
    1,417,742
    
    
    
    
    
    
    
    82,637,289$
    22,155,224
    
    
    $
    1,356,896
    
    
    $
    169,892,026
    
    
    $
    33,997,481
    
    
    $
    16,767,584
    
    
    $
    9,712,297
    
    
    $
    1,709,333
    
    
    $
    8,591,092
    
    
    $
    105,083,226
    
    
    $
    49,218,501
    
    
    $
    38,968,385
    
    
    $
    4,951,978
    
    
    $
    689,849
    
    
    $
    463,093,872
 CREDIT RISK PROFILE
 Commercial Real
    
    
    
    
    
    
    Construction to
    
    
    ResidentialCommercial
    
    
    Estate
    
    
    Construction
    
    
    Permanent
    
    
    Real Estate
    
    
    Consumer
    
    
    TotalsPerforming
    
    $
    22,299,599
    
    
    $
    192,319,547
    
    
    $
    20,115,709
    
    
    $
    6,614,333
    
    
    $
    151,395,323
    
    
    $
    43,616,470
    
    
    $
    436,360,981Non Performing
    
    
    1,212,521
    
    
    
    11,569,960
    
    
    
    6,364,172
    
    
    
    3,686,092
    
    
    
    2,906,404
    
    
    
    993,742
    
    
    
    26,732,891Total
    
    $
    23,512,120
    
    
    $
    203,889,507
    
    
    $
    26,479,881
    
    
    $
    10,300,425
    
    
    $
    154,301,727
    
    
    $
    44,610,212
    
    
    $
    463,093,872
  16




---



##### 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
  17




---



##### 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
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Substandard
    
    
    
    
    
    
    
    
    
    
    348,208
    
    
    
    348,208
    
    
    
    864,313
    
    
    
    
    
    
    
    1,212,521Total Commercial
    
    $
    
    
    
    $
    
    
    
    $
    348,208
    
    
    $
    348,208
    
    
    $
    864,313
    
    
    $
    
    
    
    $
    1,212,521Commercial Real EstateSubstandard
    
    $
    1,762,100
    
    
    $
    
    
    
    $
    6,471,749
    
    
    $
    8,233,849
    
    
    $
    3,336,111
    
    
    $
    906,962
    
    
    $
    12,476,922Total Commercial Real Estate
    
    $
    1,762,100
    
    
    $
    
    
    
    $
    6,471,749
    
    
    $
    8,233,849
    
    
    $
    3,336,111
    
    
    $
    906,962
    
    
    $
    12,476,922ConstructionSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    3,350,744
    
    
    $
    3,350,744
    
    
    $
    3,013,428
    
    
    $
    
    
    
    $
    6,364,172Total Construction
    
    $
    
    
    
    $
    
    
    
    $
    3,350,744
    
    
    $
    3,350,744
    
    
    $
    3,013,428
    
    
    $
    
    
    
    $
    6,364,172Construction to PermanentSubstandard
    
    $
    2,336,875
    
    
    $
    
    
    
    $
    
    
    
    $
    2,336,875
    
    
    $
    1,349,217
    
    
    $
    
    
    
    $
    3,686,092Total Construction to Permanent
    
    $
    2,336,875
    
    
    $
    
    
    
    $
    
    
    
    $
    2,336,875
    
    
    $
    1,349,217
    
    
    $
    
    
    
    $
    3,686,092Residential Real EstateSubstandard
    
    $
    
    
    
    $
    406,404
    
    
    $
    2,500,000
    
    
    $
    2,906,404
    
    
    $
    
    
    
    $
    
    
    
    $
    2,906,404Total Residential Real Estate
    
    $
    
    
    
    $
    406,404
    
    
    $
    2,500,000
    
    
    $
    2,906,404
    
    
    $
    
    
    
    $
    
    
    
    $
    2,906,404ConsumerSubstandard
    
    $
    
    
    
    $
    
    
    
    $
    993,742
    
    
    $
    993,742
    
    
    $
    
    
    
    $
    
    
    
    $
    993,742Total Consumer
    
    $
    
    
    
    $
    
    
    
    $
    993,742
    
    
    $
    993,742
    
    
    $
    
    
    
    $
    
    
    
    $
    993,742Total
    
    $
    4,098,975
    
    
    $
    406,404
    
    
    $
    13,664,443
    
    
    $
    18,169,822
    
    
    $
    8,563,069
    
    
    $
    906,962
    
    
    $
    27,639,853
  18




---



##### 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
   19




---



##### 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
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,070,424
    
    
    $
    18,070,424
    
    
    $
    
    
    
    $
    18,070,424Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    418,756
    
    
    
    418,756
    
    
    
    
    
    
    
    418,756Substandard
    
    
    248,318
    
    
    
    
    
    
    
    
    
    
    
    248,318
    
    
    
    3,562,101
    
    
    
    3,810,419
    
    
    
    1,212,521
    
    
    
    5,022,940Total Commercial
    
    $
    248,318
    
    
    $
    
    
    
    $
    
    
    
    $
    248,318
    
    
    $
    22,051,281
    
    
    $
    22,299,599
    
    
    $
    1,212,521
    
    
    $
    23,512,120Commercial Real EstatePass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    137,376,110
    
    
    $
    137,376,110
    
    
    $
    
    
    
    $
    137,376,110Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,151,444
    
    
    
    31,151,444
    
    
    
    
    
    
    
    31,151,444Substandard
    
    
    622,027
    
    
    
    949,141
    
    
    
    
    
    
    
    1,571,168
    
    
    
    21,313,863
    
    
    
    22,885,031
    
    
    
    12,476,922
    
    
    
    35,361,953Total Commercial Real Estate
    
    $
    622,027
    
    
    $
    949,141
    
    
    $
    
    
    
    $
    1,571,168
    
    
    $
    189,841,417
    
    
    $
    191,412,585
    
    
    $
    12,476,922
    
    
    $
    203,889,507ConstructionPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,364,872
    
    
    
    11,364,872
    
    
    
    
    
    
    
    11,364,872Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,750,837
    
    
    
    8,750,837
    
    
    
    6,364,172
    
    
    
    15,115,009Total Construction
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,115,709
    
    
    $
    20,115,709
    
    
    $
    6,364,172
    
    
    $
    26,479,881Construction to PermanentPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,709,333
    
    
    
    1,709,333
    
    
    
    
    
    
    
    1,709,333Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,905,000
    
    
    
    4,905,000
    
    
    
    3,686,092
    
    
    
    8,591,092Total Construction to Permanent
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6,614,333
    
    
    $
    6,614,333
    
    
    $
    3,686,092
    
    
    $
    10,300,425Residential Real EstatePass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    136,144,795
    
    
    $
    136,144,795
    
    
    $
    
    
    
    $
    136,144,795Special Mention
    
    
    521,406
    
    
    
    
    
    
    
    
    
    
    
    521,406
    
    
    
    519,524
    
    
    
    1,040,930
    
    
    
    
    
    
    
    1,040,930Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,209,598
    
    
    
    14,209,598
    
    
    
    2,906,404
    
    
    
    17,116,002Total Residential Real Estate
    
    $
    521,406
    
    
    $
    
    
    
    $
    
    
    
    $
    521,406
    
    
    $
    150,873,917
    
    
    $
    151,395,323
    
    
    $
    2,906,404
    
    
    $
    154,301,727ConsumerPass
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    39,876,166
    
    
    $
    39,876,166
    
    
    $
    
    
    
    $
    39,876,166Special Mention
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,303,753
    
    
    
    3,303,753
    
    
    
    
    
    
    
    3,303,753Substandard
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    436,551
    
    
    
    436,551
    
    
    
    993,742
    
    
    
    1,430,293Total Consumer
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    43,616,470
    
    
    $
    43,616,470
    
    
    $
    993,742
    
    
    $
    44,610,212Total
    
    $
    1,391,751
    
    
    $
    949,141
    
    
    $
    
    
    
    $
    2,340,892
    
    
    $
    433,113,127
    
    
    $
    435,454,019
    
    
    $
    27,639,853
    
    
    $
    463,093,872
  20




---



##### 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
  21




---



##### Table of Contents



Recorded
    
    
    Unpaid PrincipalInvestment
    
    
    Balance
    
    
    Related Allowance2011With no related allowance recorded:Commercial
    
    $
    848,208
    
    
    $
    1,167,972
    
    
    $
    Commercial Real Estate
    
    
    4,695,242
    
    
    
    5,418,345
    
    
    
    Construction
    
    
    5,106,134
    
    
    
    6,246,697
    
    
    
    Construction to Permanent
    
    
    4,905,000
    
    
    
    4,905,000Residential
    
    
    8,331,641
    
    
    
    8,331,641
    
    
    
    Consumer
    
    
    993,742
    
    
    
    1,038,640
    
    
    
    Total:
    
    $
    24,879,967
    
    
    $
    27,108,295
    
    
    $
    With an allowance recorded:Commercial
    
    $
    364,313
    
    
    $
    387,714
    
    
    $
    226,674Commercial Real Estate
    
    
    7,117,089
    
    
    
    8,092,062
    
    
    
    1,356,134Construction
    
    
    1,258,038
    
    
    
    2,386,713
    
    
    
    228,599Construction to Permanent
    
    
    3,686,092
    
    
    
    3,761,875
    
    
    
    818,217Residential
    
    
    5,081,514
    
    
    
    5,081,514
    
    
    
    220,476Consumer
    
    
    424,000
    
    
    
    424,000
    
    
    
    151,500Total:
    
    $
    17,931,046
    
    
    $
    20,133,878
    
    
    $
    3,001,600Commercial
    
    $
    1,212,521
    
    
    $
    1,555,686
    
    
    $
    226,674Commercial Real Estate
    
    
    11,812,331
    
    
    
    13,510,407
    
    
    
    1,356,134Construction
    
    
    6,364,172
    
    
    
    8,633,410
    
    
    
    228,599Construction to Permanent
    
    
    8,591,092
    
    
    
    8,666,875
    
    
    
    818,217Residential
    
    
    13,413,155
    
    
    
    13,413,155
    
    
    
    220,476Consumer
    
    
    1,417,742
    
    
    
    1,462,640
    
    
    
    151,500Total:
    
    $
    42,811,013
    
    
    $
    47,242,173
    
    
    $
    3,001,600
    22




---



##### Table of Contents



Recorded
    
    
    Unpaid PrincipalInvestment
    
    
    Balance
    
    
    Related Allowance2010With no related allowance recorded:Commercial
    
    $
    1,077,512
    
    
    $
    1,828,917
    
    
    $
    Commercial Real Estate
    
    
    12,770,033
    
    
    
    13,052,924
    
    
    
    Construction
    
    
    14,060,251
    
    
    
    15,133,253
    
    
    
    Construction to Permanent
    
    
    
    
    
    
    Residential
    
    
    24,513,106
    
    
    
    24,737,293
    
    
    
    Consumer
    
    
    1,516,977
    
    
    
    1,883,585
    
    
    
    Total:
    
    $
    53,937,879
    
    
    $
    56,635,972
    
    
    $
    With an allowance recorded:Commercial
    
    $
    137,438
    
    
    $
    151,633
    
    
    $
    76,045Commercial Real Estate
    
    
    15,696,205
    
    
    
    19,509,247
    
    
    
    2,300,199Construction
    
    
    16,825,772
    
    
    
    19,368,468
    
    
    
    1,895,326Construction to Permanent
    
    
    1,379,835
    
    
    
    1,425,000
    
    
    
    183,835Residential
    
    
    12,706,762
    
    
    
    12,826,248
    
    
    
    1,556,077Consumer
    
    
    
    
    
    
    
    
    
    
    Total:
    
    $
    46,746,012
    
    
    $
    53,280,596
    
    
    $
    6,011,482Commercial
    
    $
    1,214,950
    
    
    $
    1,980,550
    
    
    $
    76,045Commercial Real Estate
    
    
    28,466,238
    
    
    
    32,562,171
    
    
    
    2,300,199Construction
    
    
    30,886,023
    
    
    
    34,501,721
    
    
    
    1,895,326Construction to Permanent
    
    
    1,379,835
    
    
    
    1,425,000
    
    
    
    183,835Residential
    
    
    37,219,868
    
    
    
    37,563,541
    
    
    
    1,556,077Consumer
    
    
    1,516,977
    
    
    
    1,883,585
    
    
    
    Total:
    
    $
    100,683,891
    
    
    $
    109,916,568
    
    
    $
    6,011,482
   23




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Note 4: Deposits
  June 30,
    
    
    December 31,2011
    
    
    2010Non-interest bearing
    
    $
    61,585,518
    
    
    $
    51,058,373Interest bearingNOW
    
    
    25,006,997
    
    
    
    19,297,225Savings
    
    
    56,593,803
    
    
    
    57,041,943Money market
    
    
    67,450,747
    
    
    
    92,683,478Time certificates, less than $100,000
    
    
    189,787,813
    
    
    
    251,296,558Time certificates, $100,000 or more
    
    
    124,079,959
    
    
    
    175,431,252Total interest bearing
    
    
    462,919,319
    
    
    
    595,750,456Total Deposits
    
    $
    524,504,837
    
    
    $
    646,808,829
   24




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##### Table of Contents



Note 5: Loss per share
   Three months ended June 30, 2011
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (7,175,368
    )
    
    
    38,362,727
    
    
    $
    (0.19
    )
 Three months ended June 30, 2010
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (1,400,177
    )
    
    
    4,762,727
    
    
    $
    (0.29
    )
 Six months ended June 30, 2011
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (16,157,966
    )
    
    
    38,362,727
    
    
    $
    (0.42
    )
 Six months ended June 30, 2010
 Weighted AverageNet Loss
    
    
    Common Shares O/S
    
    
    AmountBasic and Diluted Loss Per ShareLoss attributable to common shareholders
    
    $
    (4,531,744
    )
    
    
    4,762,727
    
    
    $
    (0.95
    )
  25




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Note 6: Other Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJune 30, 2011
    
    
    June 30, 2011Before Tax
    
    
    
    
    
    
    Net of Tax
    
    
    Before Tax
    
    
    
    
    
    
    Net of TaxAmount
    
    
    Tax Effect
    
    
    Amount
    
    
    Amount
    
    
    Tax Effect
    
    
    AmountUnrealized holding gains
arising during the period
    
    $
    453,931
    
    
    $
    (206,410
    )
    
    $
    247,521
    
    
    $
    459,133
    
    
    $
    (208,387
    )
    
    $
    250,746Reclassification adjustment
for gains recognized in income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized holding gains
on available for sale securities,
net of taxes
    
    $
    453,931
    
    
    $
    (206,410
    )
    
    $
    247,521
    
    
    $
    459,133
    
    
    $
    (208,387
    )
    
    $
    250,746
 Three Months Ended
    
    
    Six Months EndedJune 30, 2010
    
    
    June 30, 2010Before Tax
    
    
    
    
    
    
    Net of Tax
    
    
    Before Tax
    
    
    
    
    
    
    Net of TaxAmount
    
    
    Tax Effect
    
    
    Amount
    
    
    Amount
    
    
    Tax Effect
    
    
    AmountUnrealized holding (losses) gains
arising during the period
    
    $
    (138,135
    )
    
    $
    52,492
    
    
    $
    (85,643
    )
    
    $
    417,308
    
    
    $
    (158,575
    )
    
    $
    258,733Reclassification adjustment
for gains recognized in income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized holding (losses) gains
on available for sale securities,
net of taxes
    
    $
    (138,135
    )
    
    $
    52,492
    
    
    $
    (85,643
    )
    
    $
    417,308
    
    
    $
    (158,575
    )
    
    $
    258,733
 Note 7: Financial Instruments with Off-Balance Sheet Risk
    26




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Commitments to extend credit:Future loan commitments
    
    $
    25,718,390Home equity lines of credit
    
    
    25,275,739Unused lines of credit
    
    
    17,122,105Undisbursed construction loans
    
    
    1,017,045Financial standby letters of credit
    
    
    52,000$
    69,185,279
   Note 8: Regulatory and Operational Matters
     27




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28




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##### Table of Contents



To Be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(dollars in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2011The Company:Total Capital (to Risk Weighted Assets)
    
    $
    63,217
    
    
    
    16.27
    %
    
    $
    31,084
    
    
    
    8.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Risk Weighted Assets)
    
    
    57,671
    
    
    
    14.85
    %
    
    
    15,534
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/ATier 1 Capital (to Average Assets)
    
    
    57,671
    
    
    
    8.53
    %
    
    
    27,044
    
    
    
    4.00
    %
    
    
    N/A
    
    
    
    N/AThe Bank:Total Capital (to Risk Weighted Assets)
    
    $
    60,847
    
    
    
    15.68
    %
    
    $
    31,044
    
    
    
    8.00
    %
    
    $
    38,805
    
    
    
    10.00
    %Tier 1 Capital (to Risk Weighted Assets)
    
    
    55,305
    
    
    
    14.25
    %
    
    
    15,524
    
    
    
    4.00
    %
    
    
    23,286
    
    
    
    6.00
    %Tier 1 Capital (to Average Assets)
    
    
    55,305
    
    
    
    8.18
    %
    
    
    27,044
    
    
    
    4.00
    %
    
    
    33,805
    
    
    
    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
    %
 Restrictions on dividends, loans and advances
   29




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##### Table of Contents



Recent Legislative Developments
     Note 9: Income Taxes
   30




---



##### Table of Contents



Note 10: Fair Value and Interest Rate Risk
    
    
    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.
 
    
    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.
 
    
    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.
  31




---



##### Table of Contents



Cash and due from banks, federal funds sold, short-term investments and accrued interest receivable
and payable:
 Available-for-Sale Securities:
 Other Investments:
 Loans:
 Other Real Estate Owned:
 Deposits:
 Short-term borrowings:
  32




---



##### 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 ofJune 30, 2011
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    June 30, 2011Securities available for sale
    
    $
    
    
    
    $
    88,926,471
    
    
    $
    
    
    
    $
    88,926,471
 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
   33




---



##### Table of Contents



Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Observable
    
    
    Unobservablefor Identical Assets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    BalanceJune 30, 2011Impaired Loans(1)
    
    $
    
    
    
    $
    
    
    
    $
    19,051,605
    
    
    $
    19,051,605Other real estate owned(2)
    
    $
    
    
    
    $
    
    
    
    $
    3,611,330
    
    
    $
    3,611,330December 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.     34




---



##### Table of Contents



June 30, 2011
    
    
    December 31, 2010Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and noninterest bearing balances due from banks
    
    $
    6,242
    
    
    $
    6,242
    
    
    $
    4,613
    
    
    $
    4,613Interest-bearing deposits due from banks
    
    
    52,760
    
    
    
    52,760
    
    
    
    131,711
    
    
    
    131,711Federal funds sold
    
    
    5,000
    
    
    
    5,000
    
    
    
    10,000
    
    
    
    10,000Short-term investments
    
    
    547
    
    
    
    547
    
    
    
    453
    
    
    
    453Other investments
    
    
    3,500
    
    
    
    3,500
    
    
    
    3,500
    
    
    
    3,500Available-for-sale securities
    
    
    88,926
    
    
    
    88,926
    
    
    
    40,565
    
    
    
    40,565Federal Reserve Bank stock
    
    
    1,911
    
    
    
    1,911
    
    
    
    1,192
    
    
    
    1,192Federal Home Loan Bank stock
    
    
    4,508
    
    
    
    4,508
    
    
    
    4,508
    
    
    
    4,508Loans receivable, net
    
    
    451,981
    
    
    
    462,781
    
    
    
    534,531
    
    
    
    542,360Accrued interest receivable
    
    
    2,329
    
    
    
    2,329
    
    
    
    2,512
    
    
    
    2,512Financial Liabilities:Demand deposits
    
    $
    61,586
    
    
    $
    61,586
    
    
    $
    51,058
    
    
    $
    51,058Savings deposits
    
    
    56,594
    
    
    
    56,594
    
    
    
    57,042
    
    
    
    57,042Money market deposits
    
    
    67,451
    
    
    
    67,451
    
    
    
    92,683
    
    
    
    92,683NOW accounts
    
    
    25,007
    
    
    
    25,007
    
    
    
    19,297
    
    
    
    19,297Time deposits
    
    
    313,867
    
    
    
    317,927
    
    
    
    426,728
    
    
    
    432,466FHLB Borrowings
    
    
    50,000
    
    
    
    51,323
    
    
    
    50,000
    
    
    
    51,195Securities sold under repurchase agreements
    
    
    7,000
    
    
    
    7,796
    
    
    
    7,000
    
    
    
    7,796Subordinated debentures
    
    
    8,248
    
    
    
    8,248
    
    
    
    8,248
    
    
    
    8,248Accrued interest payable
    
    
    852
    
    
    
    852
    
    
    
    729
    
    
    
    729
  Off-balance sheet instruments
   35




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##### Table of Contents



Note 11: Restructuring Charges and Asset Disposals
      Cash
    
    
    Non-cash
    
    
    Balance atExpenses
    
    
    payments
    
    
    charges
    
    
    June 30, 2011Severance and benefit costs
    
    $
    756,727
    
    
    $
    
    
    
    $
    
    
    
    $
    756,727Lease termination costs
    
    
    1,659,995
    
    
    
    (990,000
    )
    
    
    
    
    
    
    669,995Asset disposals
    
    
    569,719
    
    
    
    
    
    
    
    (569,719
    )
    
    
    Total
    
    $
    2,986,441
    
    
    $
    (990,000
    )
    
    $
    (569,719
    )
    
    $
    1,426,722
  Note 12: 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).
  36




---



##### Table of Contents




    
    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
 A Creditors Determination of Whether a
Restructuring Is a Troubled Debt Restructuring. Receivables  Troubled Debt Restructurings by Creditors
  37




---



##### 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
    38




---



##### Table of Contents



Financial Condition
 Cash and Cash Equivalents
  Investments
  June 30,
    
    
    December 312011
    
    
    2010U. S. Government agency mortgage-backed
securities
    
    $
    76,732,887
    
    
    $
    37,471,878Corporate bonds
    
    
    8,938,689
    
    
    
    Auction rate preferred equity securities
    
    
    3,254,895
    
    
    
    3,092,822Total Available-for-Sale Securities
    
    $
    88,926,471
    
    
    $
    40,564,700
   39




---



##### Table of Contents



Loans
  June 30,
    
    
    December 31,2011
    
    
    2010Real EstateCommercial
    
    $
    203,889,507
    
    
    $
    228,842,489Residential
    
    
    154,301,727
    
    
    
    187,058,318Construction
    
    
    26,479,881
    
    
    
    63,889,083Construction to permanent
    
    
    10,300,425
    
    
    
    10,331,043Commercial
    
    
    23,512,120
    
    
    
    14,573,790Consumer home equity
    
    
    42,600,664
    
    
    
    42,884,962Consumer installment
    
    
    2,009,548
    
    
    
    1,932,763Total Loans
    
    
    463,093,872
    
    
    
    549,512,448Premiums on purchased loans
    
    
    237,398
    
    
    
    242,426Net deferred costs
    
    
    49,482
    
    
    
    150,440Allowance for loan losses
    
    
    (11,399,727
    )
    
    
    (15,374,101
    )Loans receivable, net
    
    $
    451,981,025
    
    
    $
    534,531,213
    Allowance for Loan Losses
    40




---



##### Table of Contents



41




---



##### Table of Contents



Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,(Thousands of dollars)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Balance at beginning of period
    
    $
    12,208
    
    
    $
    15,062
    
    
    $
    15,374
    
    
    $
    15,794Charge-offs
    
    
    (3,034
    )
    
    
    (1,594
    )
    
    
    (7,188
    )
    
    
    (3,177
    )Recoveries
    
    
    743
    
    
    
    9
    
    
    
    764
    
    
    
    133Net Charge-offs
    
    
    (2,291
    )
    
    
    (1,585
    )
    
    
    (6,424
    )
    
    
    (3,044
    )Transferred to loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    (6,014
    )
    
    
    Provision charged to operations
    
    
    1,483
    
    
    
    512
    
    
    
    8,464
    
    
    
    1,239Balance at end of period
    
    $
    11,400
    
    
    $
    13,989
    
    
    $
    11,400
    
    
    $
    13,989Ratio of net charge-offs during
the period to average loans
outstanding during the period
    
    
    0.48
    %
    
    
    0.25
    %
    
    
    1.28
    %
    
    
    0.47
    %Ratio of ALLL / Gross Loans
    
    
    2.46
    %
    
    
    2.26
    %
    
    
    2.46
    %
    
    
    2.26
    %
   42




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##### Table of Contents



Non-Accrual, Past Due and Restructured Loans
  June 30,
    
    
    December 31,(Thousands of dollars)
    
    2011
    
    
    2010Loans past due over 90 days
still accruing
    
    $
    907
    
    
    $
    3,374Non accruing loans
    
    
    26,733
    
    
    
    89,150Total
    
    $
    27,640
    
    
    $
    92,524% of Total Loans
    
    
    5.96
    %
    
    
    16.83
    %% of Total Assets
    
    
    4.26
    %
    
    
    11.80
    %
   Potential Problem Loans
   43




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##### Table of Contents



Other Real Estate Owned
  June 30,
    
    
    December 31,2011
    
    
    2010Residential construction
    
    $
    2,661,330
    
    
    $
    15,774,187Land
    
    
    950,000
    
    
    
    634,600Other real estate owned
    
    $
    3,611,330
    
    
    $
    16,408,787
  Deferred Taxes
   44




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##### Table of Contents



Deposits
  June 30,
    
    
    December 31,2011
    
    
    2010Non-interest bearing
    
    $
    61,585,518
    
    
    $
    51,058,373Interest bearingNOW
    
    
    25,006,997
    
    
    
    19,297,225Savings
    
    
    56,593,803
    
    
    
    57,041,943Money market
    
    
    67,450,747
    
    
    
    92,683,478Time certificates, less than $100,000
    
    
    189,787,813
    
    
    
    251,296,558Time certificates, $100,000 or more
    
    
    124,079,959
    
    
    
    175,431,252Total interest bearing
    
    
    462,919,319
    
    
    
    595,750,456Total Deposits
    
    $
    524,504,837
    
    
    $
    646,808,829
  Borrowings
   45




---



##### Table of Contents



Capital
  Off-Balance Sheet Arrangements
   46




---



##### Table of Contents



Results of Operations
 Interest and dividend income and expense
  Three months ended June 30,2011
    
    
    2010Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(dollars in thousands)Interest earning assets:Loans
    
    $
    472,761
    
    
    $
    6,539
    
    
    
    5.53
    %
    
    $
    634,250
    
    
    $
    8,938
    
    
    
    5.64
    %Investments
    
    
    77,569
    
    
    
    568
    
    
    
    2.93
    %
    
    
    69,458
    
    
    
    444
    
    
    
    2.56
    %Interest bearing deposits in banks
    
    
    77,734
    
    
    
    58
    
    
    
    0.30
    %
    
    
    41,761
    
    
    
    21
    
    
    
    0.20
    %Federal funds sold
    
    
    9,890
    
    
    
    2
    
    
    
    0.08
    %
    
    
    10,000
    
    
    
    4
    
    
    
    0.16
    %Total interest
earning assets
    
    
    637,954
    
    
    
    7,167
    
    
    
    4.49
    %
    
    
    755,469
    
    
    
    9,407
    
    
    
    4.98
    %Cash and due from banks
    
    
    19,977
    
    
    
    
    
    
    
    
    
    
    
    20,826Premises and equipment, net
    
    
    4,681
    
    
    
    
    
    
    
    
    
    
    
    5,929Allowance for loan losses
    
    
    (11,746
    )
    
    
    
    
    
    
    
    
    
    
    (14,997
    )Other assets
    
    
    27,842
    
    
    
    
    
    
    
    
    
    
    
    46,492Total Assets
    
    $
    678,708
    
    
    
    
    
    
    
    
    
    
    $
    813,719Interest bearing liabilities:Deposits
    
    $
    492,060
    
    
    $
    1,554
    
    
    
    1.26
    %
    
    $
    662,308
    
    
    $
    2,949
    
    
    
    1.78
    %FHLB advances
    
    
    50,000
    
    
    
    424
    
    
    
    3.39
    %
    
    
    50,000
    
    
    
    424
    
    
    
    3.39
    %Subordinated debt
    
    
    8,248
    
    
    
    71
    
    
    
    3.44
    %
    
    
    8,248
    
    
    
    70
    
    
    
    3.39
    %Other borrowings
    
    
    7,000
    
    
    
    77
    
    
    
    4.42
    %
    
    
    7,000
    
    
    
    77
    
    
    
    4.40
    %Total interest
bearing liabilities
    
    
    557,308
    
    
    
    2,126
    
    
    
    1.53
    %
    
    
    727,556
    
    
    
    3,520
    
    
    
    1.94
    %Demand deposits
    
    
    59,022
    
    
    
    
    
    
    
    
    
    
    
    48,640Accrued expenses and
other liabilities
    
    
    5,629
    
    
    
    
    
    
    
    
    
    
    
    4,858Shareholders equity
    
    
    56,749
    
    
    
    
    
    
    
    
    
    
    
    32,665Total liabilities and equity
    
    $
    678,708
    
    
    
    
    
    
    
    
    
    
    $
    813,719Net interest income
    
    
    
    
    
    $
    5,041
    
    
    
    
    
    
    
    
    
    
    $
    5,887Interest margin
    
    
    
    
    
    
    
    
    
    
    3.16
    %
    
    
    
    
    
    
    
    
    
    
    3.12
    %Interest spread
    
    
    
    
    
    
    
    
    
    
    2.96
    %
    
    
    
    
    
    
    
    
    
    
    3.04
    %
  47




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##### Table of Contents



Six months ended June 30,2011
    
    
    2010Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Rate
    
    
    Balance
    
    
    Expense
    
    
    Rate(dollars in thousands)Interest earning assets:Loans
    
    $
    502,707
    
    
    $
    13,495
    
    
    
    5.37
    %
    
    $
    644,093
    
    
    $
    18,034
    
    
    
    5.60
    %Investments
    
    
    63,366
    
    
    
    912
    
    
    
    2.88
    %
    
    
    68,077
    
    
    
    1,003
    
    
    
    2.95
    %Interest bearing deposits in banks
    
    
    88,443
    
    
    
    120
    
    
    
    0.27
    %
    
    
    42,171
    
    
    
    53
    
    
    
    0.25
    %Federal funds sold
    
    
    9,945
    
    
    
    6
    
    
    
    0.12
    %
    
    
    10,000
    
    
    
    8
    
    
    
    0.16
    %Total interest
earning assets
    
    
    664,461
    
    
    
    14,533
    
    
    
    4.37
    %
    
    
    764,341
    
    
    
    19,098
    
    
    
    5.00
    %Cash and due from banks
    
    
    20,038
    
    
    
    
    
    
    
    
    
    
    
    21,088Premises and equipment, net
    
    
    4,824
    
    
    
    
    
    
    
    
    
    
    
    6,086Allowance for loan losses
    
    
    (13,615
    )
    
    
    
    
    
    
    
    
    
    
    (15,456
    )Other assets
    
    
    36,815
    
    
    
    
    
    
    
    
    
    
    
    48,039Total Assets
    
    $
    712,523
    
    
    
    
    
    
    
    
    
    
    $
    824,098Interest bearing liabilities:Deposits
    
    $
    524,418
    
    
    $
    3,419
    
    
    
    1.30
    %
    
    $
    670,832
    
    
    $
    6,066
    
    
    
    1.81
    %FHLB advances
    
    
    50,000
    
    
    
    842
    
    
    
    3.37
    %
    
    
    50,000
    
    
    
    843
    
    
    
    3.37
    %Subordinated debt
    
    
    8,248
    
    
    
    142
    
    
    
    3.44
    %
    
    
    8,248
    
    
    
    140
    
    
    
    3.39
    %Other borrowings
    
    
    7,000
    
    
    
    153
    
    
    
    4.39
    %
    
    
    7,000
    
    
    
    153
    
    
    
    4.37
    %Total interest
bearing liabilities
    
    
    589,666
    
    
    
    4,556
    
    
    
    1.55
    %
    
    
    736,080
    
    
    
    7,202
    
    
    
    1.96
    %Demand deposits
    
    
    55,977
    
    
    
    
    
    
    
    
    
    
    
    49,280Accrued expenses and
other liabilities
    
    
    5,811
    
    
    
    
    
    
    
    
    
    
    
    4,770Shareholders equity
    
    
    61,069
    
    
    
    
    
    
    
    
    
    
    
    33,968Total liabilities and equity
    
    $
    712,523
    
    
    
    
    
    
    
    
    
    
    $
    824,098Net interest income
    
    
    
    
    
    $
    9,977
    
    
    
    
    
    
    
    
    
    
    $
    11,896Interest margin
    
    
    
    
    
    
    
    
    
    
    3.00
    %
    
    
    
    
    
    
    
    
    
    
    3.11
    %Interest spread
    
    
    
    
    
    
    
    
    
    
    2.82
    %
    
    
    
    
    
    
    
    
    
    
    3.04
    %
  48




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##### Table of Contents



Three months ended June 30,
    
    
    Six months ended June 30,2011 vs 2010
    
    
    2011 vs 2010Increase (decrease) in Interest
    
    
    Increase (decrease) in InterestIncome/Expense
    
    
    Income/ExpenseDue to change in:
    
    
    Due to change in:Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    Total(dollars in thousands)
    
    
    (dollars in thousands)Interest earning assets:Loans
    
    $
    (2,228
    )
    
    $
    (171
    )
    
    $
    (2,399
    )
    
    $
    (3,793
    )
    
    $
    (746
    )
    
    $
    (4,539
    )Investments
    
    
    49
    
    
    
    75
    
    
    
    124
    
    
    
    (68
    )
    
    
    (23
    )
    
    
    (91
    )Interest bearing deposits in banks
    
    
    13
    
    
    
    24
    
    
    
    37
    
    
    
    57
    
    
    
    10
    
    
    
    67Federal funds sold
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    (6
    )
    
    
    4
    
    
    
    (2
    )Total interest
earning assets
    
    
    (2,166
    )
    
    
    (74
    )
    
    
    (2,240
    )
    
    
    (3,810
    )
    
    
    (755
    )
    
    
    (4,565
    )Interest bearing liabilities:Deposits
    
    $
    (653
    )
    
    $
    (742
    )
    
    $
    (1,395
    )
    
    $
    (870
    )
    
    $
    (1,777
    )
    
    $
    (2,647
    )FHLB advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Subordinated debt
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    2Other borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest
bearing liabilities
    
    
    (653
    )
    
    
    (741
    )
    
    
    (1,394
    )
    
    
    (870
    )
    
    
    (1,776
    )
    
    
    (2,646
    )Net interest income
    
    $
    (1,513
    )
    
    $
    667
    
    
    $
    (846
    )
    
    $
    (2,940
    )
    
    $
    1,021
    
    
    $
    (1,919
    )
    49




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##### Table of Contents



Provision for Loan Losses
   Non-interest income
    50




---



##### Table of Contents



Non-interest expenses
   Liquidity
  Capital
  June 30, 2011
    
    
    December 31, 2010Tier 1 Leverage Capital
    
    
    8.53
    %
    
    
    9.16
    %Tier 1 Risk-based Capital
    
    
    14.85
    %
    
    
    15.69
    %Total Risk-based Capital
    
    
    16.27
    %
    
    
    17.08
    %
  June 30, 2011
    
    
    December 31, 2010Tier 1 Leverage Capital
    
    
    8.18
    %
    
    
    8.84
    %Tier 1 Risk-based Capital
    
    
    14.25
    %
    
    
    15.15
    %Total Risk-based Capital
    
    
    15.68
    %
    
    
    16.54
    %
    51




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##### Table of Contents



IMPACT OF INFLATION AND CHANGING PRICES
  
 Item 3:
    
    Quantitative and Qualitative Disclosures about Market Risk
  Qualitative Aspects of Market Risk
   Quantitative Aspects of Market Risk
    52




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##### Table of Contents



June 30, 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
    
    
    22,420
    
    
    
    (36
    )
    
    
    -0.16
    %
    
    
    49,706
    
    
    
    (8,550
    )
    
    
    -14.68
    %+ 100
    
    
    22,495
    
    
    
    39
    
    
    
    0.17
    %
    
    
    54,023
    
    
    
    (4,233
    )
    
    
    -7.27
    %BASE
    
    
    22,456
    
    
    
    
    
    
    
    
    
    
    
    58,256- 100
    
    
    21,833
    
    
    
    (623
    )
    
    
    -2.78
    %
    
    
    62,396
    
    
    
    4,140
    
    
    
    7.11
    %- 200
    
    
    20,913
    
    
    
    (1,543
    )
    
    
    -6.87
    %
    
    
    67,379
    
    
    
    9,123
    
    
    
    15.66
    %
 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
    %
  53




---



##### Table of Contents



Item 4:
    
    Controls and Procedures
     54




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##### 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)).
  55




---



##### 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(ii) to Bancorps Current Report on Form 8-K dated
November 1, 2010 (Commission File No. 000-29599)).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)).
  56




---



##### 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)).
  57




---



##### 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
  58




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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)   59