----

| For      the Quarter Ended June 30, 2008 | Commission      file number 000-29599 |
|------------------------------------------|---------------------------------------|

| Connecticut                   | 06-1559137                                   |
|-------------------------------|----------------------------------------------|
| (State      of incorporation) | (I.R.S.      Employer Identification Number) |

----

|          |                                                             | Page   |
|---------------|------------------------------------------------------------------|--------|
|          |                                                             |   |
| Part I        | FINANCIAL      INFORMATION                                       |   |
|          |                                                             |   |
| Item      1.  | Consolidated      Financial Statements                           | 3      |
|          |                                                             |   |
| Item      2.  | Management’s      Discussion and Analysis of               |   |
|          | Financial      Condition and Results of Operations               | 17     |
|          |                                                             |   |
| Item      3.  | Quantitative      and Qualitative Disclosures about Market Risk  | 34     |
|          |                                                             |   |
| Item      4.  | Controls      and Procedures                                     | 37     |
|          |                                                             |   |
| Part      II  | OTHER      INFORMATION                                           |   |
|          |                                                             |   |
| Item      1A. | Risk      Factors                                                | 37     |
|          |                                                             |   |
| Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds | 37     |
|          |                                                             |   |
| Item      4.  | Submission      of Matters to a Vote of Security Holders         | 38     |
|          |                                                             |   |
| Item      6.  | Exhibits                                                         | 39     |

----

|                                                                                                                                      | June      30, 2008                                                                                                                                                        |   | December      31, 2007                                                                                                                                                                |
|-------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                      | (Unaudited)                                                                                                                                                               |   |                                                                                                                                                                                  |
| ASSETS                                                                                                                                    |                                                                                                                                                                      |   |                                                                                                                                                                                  |
| Cash      and due from banks                                                                                                              |  $            2,417,604                                                                                  |   |  $               2,760,246                                                                            |
| Federal      funds sold                                                                                                                   |              29,700,000                                                                                  |   |                 11,000,000                                                                            |
| Short      term investments                                                                                                               |                1,307,933                                                                       |   |                      251,668                                                 |
|      Cash      and cash equivalents                                                                              |            33,425,537                                                                                              |   |              14,011,914                                                                                              |
|                                                                                                                                      |                                                                                                                                                                      |   |                                                                                                                                                                                  |
| Available      for sale securities (at fair value)                                                                                        |              51,224,294                                                                                  |   |                 67,290,040                                                                            |
| Federal      Reserve Bank stock                                                                                                           |                1,913,200                                                                       |   |                   1,911,700                                                                 |
| Federal      Home Loan Bank stock                                                                                                         |                4,199,300                                                                       |   |                   2,656,100                                                                 |
| Loans      receivable (net of allowance for loan losses:  2008      $7,217,620;                                                 |                                                                                                                                                                      |   |                                                                                                                                                                                  |
|      2007      $5,672,620)                                                                                       |            776,298,982                                                                                             |   |               685,885,990                                                                                       |
| Accrued      interest receivable                                                                                                          |                5,167,816                                                                       |   |                   4,576,018                                                                 |
| Premises      and equipment                                                                                                               |                7,883,531                                                                       |   |                   7,805,565                                                                 |
| Deferred      tax asset, net                                                                                                              |                2,737,267                                                                       |   |                   2,788,024                                                                 |
| Goodwill      and other intangible assets                                                                                                 |                1,460,231                                                                       |   |                   1,469,075                                                                 |
| Cash      surrender value of life insurance                                                                                               |              18,683,417                                                                                  |   |                 18,193,684                                                                            |
| Other      assets                                                                                                                         |                1,433,438                                                                       |   |                      942,144                                                 |
|           Total      assets                                                             |  $     904,427,013                                                                                                                          |   |  $       807,530,254                                                                                                                          |
|                                                                                                                                      |                                                                                                                                                                      |   |                                                                                                                                                                                  |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                 |                                                                                                                                                                      |   |                                                                                                                                                                                  |
| Liabilities                                                                                                                               |                                                                                                                                                                      |   |                                                                                                                                                                                  |
|      Deposits:                                                                                                   |                                                                                                                                                                      |   |                                                                                                                                                                                  |
|           Noninterest      bearing deposits                                             |  $          66,295,842                                                                                             |   |  $             51,925,991                                                                                       |
|           Interest      bearing deposits                                                |            661,051,725                                                                                             |   |               620,473,418                                                                                       |
|                Total      deposits                             |         727,347,567                                                                                                               |   |            672,399,409                                                                                                         |
|      Repurchase      agreements                                                                                  |                7,000,000                                                                       |   |                   7,000,000                                                                 |
|      Federal      Home Loan Bank borrowings                                                                      |              88,446,000                                                                                  |   |                 47,500,000                                                                            |
|      Junior      subordinated debt owed to unconsolidated trust                                                  |                8,248,000                                                                       |   |                   8,248,000                                                                 |
|      Accrued      expenses and other liabilities                                                                 |                6,288,150                                                                       |   |                   5,547,478                                                                 |
|                Total      liabilities                          |         837,329,717                                                                                                               |   |            740,694,887                                                                                                         |
|                                                                                                                                      |                                                                                                                                                                      |   |                                                                                                                                                                                  |
| Shareholders'      equity                                                                                                                 |                                                                                                                                                                      |   |                                                                                                                                                                                  |
|      Preferred      stock:  1,000,000 shares authorized; no shares      issued                         |                             - |   |                               - |
|      Common      stock, $2 par value: 60,000,000 shares    authorized; shares                               |                                                                                                                                                                      |   |
|      issued 2008      - 4,755,114; outstanding 4,752,530; 2007 issued      and                    |                                                                                                |   |                                                                                             |
|  outstanding:       2007 - 4,746,844                                                                                            | 9,510,228                                                                                                                                                                 |   | 9,493,688                                                                                                                                                                             |
|      Additional      paid in capital                                                                             |              49,633,062                                                                                  |   |                 49,549,119                                                                            |
|      Retained      earnings                                                                                      |                7,965,383                                                                       |   |                   7,846,060                                                                 |
|      Less      Treasury stock at cost:  2008 - 2,744 shares                                            |                    (40,692)                                                |   |                               - |
|      Accumulated      other comprehensive income - net unrealized gain                                           |                                                                                                                                                                      |   |                                                                                                                                                                                  |
|           (loss)      on available for sale securities, net of taxes                    |                     29,315                                            |   |                      (53,500)                                                |
|                Total      shareholders' equity                 |            67,097,296                                                                                              |   |              66,835,367                                                                                              |
|                Total      liabilities and shareholders' equity |  $     904,427,013                                                                                                                          |   |  $       807,530,254                                                                                                                          |

----

|                              |                                                                                                               |                                                                                                                                                                      | Three      Months Ended                                                                                                                                                   | Six      Months Ended                                                                                                                                                     |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |                                                                                                               |                                                                                                                                                                      | June      30,                                                                                                                                                             | June      30,                                                                                                                                                             |
|                              |                                                                                                               |                                                                                                                                                                      | 2008                                                                                                                                                                      | 2007                                                                                                                                                                      | 2008 | 2007 |
| Interest      and Dividend Income |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |
|                              | Interest      and fees on loans                                                                                    |  $        13,775,210                                                                                                         |  $        11,270,743                                                                                                         |  $        27,097,371                                                                                                         |  $        21,606,864 |
|                              | Interest      and dividends on investment securities                                                               |                 706,199                                                                   |              1,155,542                                                                                   |              1,628,304                                                                                   |              2,170,801 |
|                              | Interest      on federal funds sold                                                                                |                   42,836                                                        |                 567,730                                                                   |                   97,247                                                        |                 780,958 |
|                              |                                                                                                               | Total      interest and dividend income                                                                                                                                   |          14,524,245                                                                                                          |          12,994,015                                                                                                          |          28,822,922 |          24,558,623 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
| Interest      Expense             |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |
|                              | Interest      on deposits                                                                                          |              6,824,965                                                                                   |              6,897,473                                                                                   |            14,434,621                                                                                              |            12,590,716 |
|                              | Interest      on Federal Home Loan Bank borrowings                                                                 |                 380,516                                                                   |                   22,598                                                        |                 681,786                                                                   |                 121,047 |
|                              | Interest      on subordinated debt                                                                                 |                 117,806                                                                   |                 172,953                                                                   |                 277,897                                                                   |                 344,351 |
|                              | Interest      on other borrowings                                                                                  |                   74,391                                                        |                             - |                 154,040                                                                   |                             - |
|                              |                                                                                                               | Total      interest expense                                                                                                                                               |            7,397,678                                                                                               |            7,093,024                                                                                               |          15,548,344 |          13,056,114 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Net      interest income                                                                                                                                                  |            7,126,567                                                                                               |            5,900,991                                                                                               |          13,274,578 |          11,502,509 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
| Provision      for Loan Losses    |              1,068,000                            |                             - |              1,545,000                                                                                   |                             - |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Net      interest income after                                                                                                                                            |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               |      provision      for loan losses                                                                                                              |            6,058,567                                                                                               |            5,900,991                                                                                               |          11,729,578 |          11,502,509 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
| Noninterest      Income           |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |
|                              | Mortgage      brokerage referral fees                                                                              |                   96,445                                                        |                 216,377                                                                   |                 150,559                                                                   |                 504,711 |
|                              | Loan      origination & processing fees                                                                        |                   65,099                                                        |                   57,642                                                        |                 171,123                                                                   |                 106,244 |
|                              | Fees      and service charges                                                                                      |                 254,042                                                                   |                 194,038                                                                   |                 504,898                                                                   |                 375,381 |
|                              | Gain      on redemption of investment securities                                                                   |                             - |                     5,000                                             |                             - |                     5,000 |
|                              | Earnings      on cash surrender value of life insurance                                                            |                 258,491                                                                   |                             - |                 489,733                                                                   |                             - |
|                              | Other      income                                                                                                  |                   86,937                                                        |                   53,321                                                        |                 198,439                                                                   |                 120,056 |
|                              |                                                                                                               | Total      noninterest income                                                                                                                                             |               761,014                                                                               |               526,378                                                                               |            1,514,752 |            1,111,392 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
| Noninterest      Expenses         |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |
|                              | Salaries      and benefits                                                                                         |              3,352,789                                                                                   |              3,083,862                                                                                   |              6,663,840                                                                                   |              6,175,817 |
|                              | Occupancy      and equipment expense, net                                                                          |              1,306,448                                                                                   |              1,013,192                                                                                   |              2,603,367                                                                                   |              1,960,256 |
|                              | Data      processing and other outside services                                                                    |                 457,878                                                                   |                 486,788                                                                   |                 924,227                                                                   |                 898,004 |
|                              | Professional      services                                                                                         |                 229,769                                                                   |                   89,870                                                        |                 453,145                                                                   |                 226,205 |
|                              | Advertising      and promotional expenses                                                                          |                 242,175                                                                   |                 208,376                                                                   |                 429,170                                                                   |                 407,678 |
|                              | Loan      administration and processing expenses                                                                   |                   60,798                                                        |                   52,155                                                        |                 120,317                                                                   |                   90,974 |
|                              | Regulatory      assessments                                                                                        |                 194,395                                                                   |                 179,212                                                                   |                 363,805                                                                   |                 243,667 |
|                              | Other      real estate operations                                                                                  |                             - |                  (10,594)                                                            |                             - |                  (17,556) |
|                              | Other      noninterest expenses                                                                                    |                 526,090                                                                   |                 450,159                                                                   |              1,034,553                                                                                   |                 911,088 |
|                              |                                                                                                               | Total      noninterest expenses                                                                                                                                           |            6,370,342                                                                                               |            5,553,020                                                                                               |          12,592,424 |          10,896,133 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Income      before income taxes                                                                                                                                           |               449,239                                                                               |               874,349                                                                               |               651,906 |            1,717,768 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
| Provision      for Income Taxes   |                   53,000 |                 340,000                                                                   |                 105,000                                                                   |                 667,000                                                                   |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Net      income                                                                                                                                                           |  $           396,239                                                                                          |  $           534,349                                                                                          |  $           546,906 |  $        1,050,768 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Basic      income Per Share                                                                                                                                               |  $                  0.08                                                   |  $                  0.11                                                   |  $                  0.12 |  $                  0.22 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Diluted      income Per Share                                                                                                                                             |  $                  0.08                                                   |  $                  0.11                                                   |  $                  0.11 |  $                  0.22 |
|                              |                                                                                                               |                                                                                                                                                                      |                                                                                                                                                                      |                                                                                                                                                                      |   |   |
|                              |                                                                                                               | Dividends      per share                                                                                                                                                  |  $                0.045                                                              |  $                0.045                                                              |  $                0.090 |  $                0.090 |

----

|                                                                         |                                                                                                | Three      Months Ended                                                                      |                                                                                                           | Six      Months Ended                                                                        |
|------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|                                                                         |                                                                                                | June      30,                                                                                |                                                                                                           | June      30,                                                                                |
|                                                                         |                                                                                                | 2008                                                                                         |                                                                                                           | 2007                                                                                         |   | 2008 |   | 2007 |
|                                                                         |                                                                                                |                                                                                         |                                                                                                           |                                                                                         |   |   |   |   |
| Net      income                                                              |                                                                                                |  $             396,239 |                                                                                                           |  $             534,349 |   |  $          546,906 |   |  $       1,050,768 |
|                                                                         |                                                                                                |                                                                                         |                                                                                                           |                                                                                         |   |   |   |   |
| Unrealized      holding gains (losses) on securities:                        |                                                                                                |                                                                                         |                                                                                                           |                                                                                         |   |   |   |
|      Unrealized      holding gains (losses) arising |                                                                                                |                                                                                         |                                                                                                           |                                                                                         |   |   |   |
|      during      the period, net of taxes           |                (180,723) |                                                                                         |                  (59,738) |                                                                                         |                82,815 |   |              162,372 |
|                                                                         |                                                                                                |                                                                                         |                                                                                                           |                                                                                         |   |   |   |   |
| Comprehensive      income                                                    |  $           215,516                    |                                                                                         |  $           474,611                               |                                                                                         |  $        629,721 |   |  $     1,213,140 |

----

|                                                                                                                 |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |  Accumulated                                                                                |                                                                                             |
|---------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|---------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |  Other                                                                                      |                                                                                             |
|                                                                                                                      |  Number      of                                                    |  Common                                                                              |  Paid-In                                                                              |  Retained                                                |  Treasury                                                                                         |  Comprehensive                                                                              |                                                                                             |
|                                                                                                                      |  Shares                                                            |  Stock                                                                               |  Capital                                                                              |  Earnings                                                |  Stock                                                                                            |  Gain      (Loss)                                                                           |  Total                                                                                      |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Six      months ended June 30, 2007                                                                                       |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Balance      at December 31, 2006                                                                                         |     4,739,494                                       |  $    9,478,988                                                  |  $    49,463,307                                                  |  $   6,022,012                            |  $            -                       |  $         (680,962)                           |  $     64,283,345                                                  |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Comprehensive      income                                                                                                 |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|   Net      income                                                                                               |                                                                    |                                                                                      |                                                                                       |       1,050,768                 |                                                                                                   |                                                                                             |           1,050,768                            |
|   Unrealized      holding gain on available for                                                                 |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |
|      sale      securities, net of taxes                                                          |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |               162,372      |              162,372            |
|                Total      comprehensive income |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |           1,213,140                            |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Issuance      of common stock                                                                                             |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|    Stock      issued to directors                                                                          |            2,350 |               4,700 |               45,261 |                                                          |                                                                                                   |                                                                                             |                49,961 |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Dividends                                                                                                                 |                                                                    |                                                                                      |                                                                                       |         (426,661)     |                                                                                                   |                                                                                             |            (426,661)                      |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Balance,      June 30, 2007                                                                                               |     4,741,844                                       |  $    9,483,688                                                  |  $    49,508,568                                                  |  $   6,646,119                            |  $            -                       |  $         (518,590)                           |  $     65,119,785                                                  |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Six      months ended June 30, 2008                                                                                       |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Balance      at December 31, 2007                                                                                         |     4,746,844                                       |  $    9,493,688                                                  |  $    49,549,119                                                  |  $   7,846,060                            |  $            -                       |  $           (53,500)                |  $     66,835,367                                                  |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Comprehensive      income                                                                                                 |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|   Net      income                                                                                               |                                                                    |                                                                                      |                                                                                       |          546,906 |                                                                                                   |                                                                                             |              546,906            |
|   Unrealized      holding gain on available for                                                                 |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |
|      sale      securities, net of taxes                                                          |                                                                    |                                                                                      |                                                                                       |                                                          |                 82,815 |                82,815 |
|                Total      comprehensive income |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |              629,721            |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Issuance      of common stock                                                                                             |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|    Stock      options exercised                                                                            |            5,000 |             10,000            |               40,550 |                                                          |                                                                                                   |                                                                                             |                50,550 |
|    Stock      issued to directors                                                                          |            3,270 |               6,540 |               43,393 |                                                          |                                                                                                   |                                                                                             |                49,933 |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |              100,483            |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Treasury      Stock                                                                                                       |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
|    Stock      purchased under buyback                                                                      |                                      |                                                                                      |                                |                                                          |       (40,692)                                                           |                                                                                             |              (40,692)           |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Dividends                                                                                                                 |                                                                    |                                                                                      |                                                                                       |         (427,583)     |                                                                                                   |                                                                                             |            (427,583)                      |
|                                                                                                                      |                                                                    |                                                                                      |                                                                                       |                                                          |                                                                                                   |                                                                                             |                                                                                             |
| Balance,      June 30, 2008                                                                                               |     4,755,114                                       |  $    9,510,228                                                  |  $    49,633,062                                                  |  $   7,965,383                            |  $   (40,692)                                                                      |  $             29,315      |  $     67,097,296                                                  |

----

|                                       |                                                                                             | Six      Months Ended                                                                                                                        |
|--------------------------------------------|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |                                                                                             | June      30,                                                                                                                                |
|                                       |                                                                                             | 2008                                                                                                                                         | 2007 |
|                                       |                                                                                             |                                                                                                                                         |   |
| Cash      Flows from Operating Activities: |                                                                                             |                                                                                                                                         |
|                                       | Net      income                                                                                  |  $           546,906                                                             |  $       1,050,768 |
|                                       | Adjustments      to reconcile net income to net cash                                             |                                                                                                                                         |   |
|                                       | provided      by operating activities:                                                           |                                                                                                                                         |   |
|                                       | Amortization      and accretion of investment premiums and discounts, net                        |                 92,541                                       |                92,662 |
|                                       | Provision      for loan losses                                                                   |            1,545,000                                                                  |                       - |
|                                       | Gain      on redemption of investment security                                                   |                        -  |                (5,000) |
|                                       | Amortization      of core deposit intangible                                                     |                   8,844                            |                  9,288 |
|                                       | Earnings      on cash surrender value of life insurance                                          |             (489,733)                                                            |                       - |
|                                       | Depreciation      and amortization                                                               |               777,602                                                  |              537,925 |
|                                       | Loss      on disposal of bank premises and equipment                                             |                        46 |                     633 |
|                                       | Payment      of fees to directors in common stock                                                |                 49,933                                       |                49,961 |
|                                       | Changes      in assets and liabilities:                                                          |                                                                                                                                         |   |
|                                       |      (Decrease)      increase in deferred loan fees                     |             (230,322)                                                            |              157,304 |
|                                       |      Increase      in accrued interest receivable                       |             (591,798)                                                            |            (493,597) |
|                                       |      Increase      in other assets                                      |             (491,294)                                                            |              (78,569) |
|                                       |      Increase      (decrease) in accrued expenses and other liabilities |               740,530                                                  |            (726,655) |
|                                       |      Net      cash provided by operating activities                     |         1,958,255                                                                                    |            594,720 |
|                                       |                                                                                             |                                                                                                                                         |   |
| Cash      Flows from Investing Activities: |                                                                                             |                                                                                                                                         |
|                                       | Purchases      of available for sale securities                                                  |          (8,366,036)                                                                            |         (4,994,283) |
|                                       | Principal      repayments on available for sale securities                                       |          15,472,814                                                                             |           6,623,301 |
|                                       | Proceeds      from redemptions of available for sale securities                                  |            9,000,000                                                                  |           2,005,000 |
|                                       | Purchases      of Federal Reserve Bank Stock                                                     |                 (1,500)                                      |                       - |
|                                       | Purchases      of Federal Home Loan Bank Stock                                                   |          (1,543,200)                                                                            |                       - |
|                                       | Net      increase in loans                                                                       |        (91,727,670)                                                                                       |       (85,346,520) |
|                                       | Purchase      of bank premises and equipment                                                     |             (855,614)                                                            |         (3,471,278) |
|                                       |      Net      cash used in investing activities                         |     (78,021,206)                                                                                                         |    (85,183,780) |
|                                       |                                                                                             |                                                                                                                                         |   |
| Cash      Flows from Financing Activities: |                                                                                             |                                                                                                                                         |
|                                       | Net      increase in demand, savings and money market deposits                                   |          56,280,924                                                                             |         20,964,306 |
|                                       | Net      (decrease) increase in time certificates of deposits                                    |          (1,332,766)                                                                            |         96,847,045 |
|                                       | Net      proceeds(repayments) from(of) FHLB borrowings                                           |          40,946,000                                                                             |         (8,000,000) |
|                                       | Proceeds      from issuance of common stock                                                      |                 50,550                                       |                       - |
|                                       | Payments      under stock buyback program                                                        |               (40,692)                                                 |   |
|                                       | Dividends      paid on common stock                                                              |             (427,442)                                                            |            (426,556) |
|                                       |      Net      cash provided by financing activities                     |       95,476,574                                                                                               |    109,384,795 |
|                                       |                                                                                             |                                                                                                                                         |   |
|                                       |      Net      increase in cash and cash equivalents                     |       19,413,623                                                                                               |      24,795,735 |
|                                       |                                                                                             |                                                                                                                                         |   |
| Cash      and Cash Equivalents:            |                                                                                             |                                                                                                                                         |
|                                       | Beginning                                                                                        |          14,011,914                                                                             |         55,474,539 |
|                                       |                                                                                             |                                                                                                                                         |   |
|                                       | Ending                                                                                           |  $      33,425,537                                                                                        |  $     80,270,274 |

----

|                                                                         |                                               | Six      Months Ended                                                            |
|------------------------------------------------------------------------------|----------------------------------------------------|----------------------------------------------------------------------------------|
|                                                                         |                                               | June      30,                                                                    |
|                                                                         |                                               | 2008                                                                             | 2007 |
|                                                                         |                                               |                                                                             |   |
| Supplemental      Disclosures of Cash Flow Information                       |                                               |                                                                             |
|                                                                         | Cash      paid for:                                |                                                                             |   |
|                                                                         |      Interest             |  $      15,430,085                            |  $     13,068,208 |
|                                                                         |                                               |                                                                             |   |
|                                                                         |      Income      taxes    |  $           855,935 |  $          820,000 |
|                                                                         |                                               |                                                                             |   |
| Supplemental      disclosures of noncash investing and financing activities: |                                               |                                                                             |
|                                                                         |                                               |                                                                             |   |
|                                                                         | Unrealized      holding gain on available for sale |                                                                             |   |
|                                                                         | securities      arising during the period          |  $           133,572 |  $          261,889 |
|                                                                         |                                               |                                                                             |   |
|                                                                         | Dividends      declared on common stock            |  $           213,749 |  $          213,383 |

----

----

| Three      months ended June 30, 2008                                          |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------|
|                                                                           | Net      Income                                                                                                                                                                             | Shares                                                                                                             |    | Amount                                                  |
| Basic      Income Per Share                                                    |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |  $                 396,239                                                                        |              4,751,209                            |  $ | 0.08                                                    |
|      Effect      of Dilutive Securities               |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|         Stock      Options outstanding |                                - |                   18,119 |    |          - |
| Diluted      Income Per Share                                                  |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    plus      assumed conversions                                |  $                 396,239                                                                        |              4,769,328                            |  $ | 0.08                                                    |
|                                                                           |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
| Three      months ended June 30, 2007                                          |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|                                                                           | Net      Income                                                                                                                                                                             | Shares                                                                                                             |    | Amount                                                  |
| Basic      Income Per Share                                                    |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |  $                 534,349                                                                        |              4,739,546                            |  $ | 0.11                                                    |
|      Effect      of Dilutive Securities               |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|         Stock      Options outstanding |                                - |                   35,504 |    |          - |
| Diluted      Income Per Share                                                  |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    plus      assumed conversions                                |  $                 534,349                                                                        |              4,775,050                            |  $ | 0.11                                                    |
|                                                                           |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
| Six      months ended June 30, 2008                                            |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|                                                                           | Net      Income                                                                                                                                                                             | Shares                                                                                                             |    | Amount                                                  |
| Basic      Income Per Share                                                    |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |  $                 546,906                                                                        |              4,751,114                            |  $ | 0.12                                                    |
|      Effect      of Dilutive Securities               |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|         Stock      Options outstanding |                                - |                   18,787 |    |     (0.01)                          |
| Diluted      Income Per Share                                                  |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    plus      assumed conversions                                |  $                 546,906                                                                        |              4,769,901                            |  $ | 0.11                                                    |
|                                                                           |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
| Six      months ended June 30, 2007                                            |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|                                                                           | Net      Income                                                                                                                                                                             | Shares                                                                                                             |    | Amount                                                  |
| Basic      Income Per Share                                                    |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |  $              1,050,768                                                                                        |              4,739,520                            |  $ | 0.22                                                    |
|      Effect      of Dilutive Securities               |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|         Stock      Options outstanding |                                - |                   36,627 |    |          - |
| Diluted      Income Per Share                                                  |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    Income      available to common shareholders                 |                                                                                                                                                                                        |                                                                                                               |    |                                                    |
|    plus      assumed conversions                                |  $              1,050,768                                                                                        |              4,776,147                            |  $ | 0.22                                                    |
|                                                                           |                                                                                                                                                                                        |                                                                                                               |    |                                                    |

----

|                                   | Three      Months Ended                                                                                                   |                                                                                                                      | Six      Months Ended                                                                                                     |
|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                                   | June      30, 2008                                                                                                        |                                                                                                                      | June      30, 2008                                                                                                        |
|                                   | Before      Tax                                                                                                           |                                                                                                                      | Net      of Tax                                                                                                           |   |  Before      Tax |   |  Net      of Tax |
|                                   | Amount                                                                                                                    | Tax      Effect                                                                                                           | Amount                                                                                                                    |   |  Amount |  Tax      Effect |  Amount |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Unrealized      holding gain (loss)    |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| arising      during the period         |  $     (291,489)                                                                            |  $       110,766                                                                  |  $     (180,723)                                                                            |   |  $       133,572 |  $       (50,757) |  $         82,815 |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Reclassification      adjustment       |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| for      gains recognized in income    |                     - |                     - |                     - |   |                       - |                       - |                       - |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Unrealized      holding gain (loss)    |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| on      available for sale securities, |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| net      of taxes                      |  $     (291,489)                                                                            |  $       110,766                                                                  |  $     (180,723)                                                                            |   |  $       133,572 |  $       (50,757) |  $         82,815 |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
|                                   | Three      Months Ended                                                                                                   |                                                                                                                      | Six      Months Ended                                                                                                     |
|                                   | June      30, 2007                                                                                                        |                                                                                                                      | June      30, 2007                                                                                                        |
|                                   | Before      Tax                                                                                                           |                                                                                                                      | Net      of Tax                                                                                                           |   |  Before      Tax |   |  Net      of Tax |
|                                   | Amount                                                                                                                    | Tax      Effect                                                                                                           | Amount                                                                                                                    |   |  Amount |  Tax      Effect |  Amount |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Unrealized      holding gain (loss)    |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| arising      during the period         |  $       (96,352)                                                                 |  $         36,614                                                       |  $       (59,738)                                                                 |   |  $       261,889 |  $       (99,517) |  $       162,372 |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Reclassification      adjustment       |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| for      gains recognized in income    |                     - |                     - |                     - |   |                       - |                       - |                       - |
|                                   |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| Unrealized      holding gain (loss)    |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| on      available for sale securities, |                                                                                                                      |                                                                                                                      |                                                                                                                      |   |   |   |   |
| net      of taxes                      |  $       (96,352)                                                                 |  $         36,614                                                       |  $       (59,738)                                                                 |   |  $       261,889 |  $       (99,517) |  $       162,372 |

----

|   | Commitments      to extend credit:       |                                                                        |                                                             |
|--------|------------------------------------------|-----------------------------------------------------------------------------|------------------------------------------------------------------|
|   |                                     | Future      loan commitments                                                |  $      97,748,935            |   |
|   |                                     | Unused      lines of credit                                                 |          61,609,727 |   |
|   |                                     | Undisbursed      construction loans                                         |        108,932,691            |   |
|   | Financial      standby letters of credit |            1,611,733 |                                                             |
|   |                                     |                                                                        |  $    269,903,086                       |   |

----

----

|   | o | Level 1 Inputs -      Unadjusted quoted prices in active markets for identical assets or      liabilities that the reporting entity has the ability to access at the      measurement date. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | o | Level 2 Inputs -      Inputs other than quoted prices included in Level 1 that are      observable for the asset or liability, either directly or indirectly.      These might include quoted prices for similar assets or liabilities in      active markets, quoted prices for identical or similar assets or      liabilities in markets that are not active, inputs other than quoted      prices that are observable for the asset or liability (such as interest      rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that      are derived principally from or corroborated by market data by correlation      or other means. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | Level 3 Inputs -      Unobservable inputs for determining the fair values of assets or      liabilities that reflect an entity's own assumptions about the assumptions      that market participants would use in pricing the assets or      liabilities. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                               |  Level      1                                                                                                               | Level      2                        | Level      3                                                                                                                     | Total                               |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
|                               | Inputs                                                                                                                           | Inputs                              | Inputs                                                                                                                           | Fair      Value                     |
|                               |                                                                                                                             |                                |                                                                                                                             |                                |
| Securities      available for sale |  $                    - |  $   51,224,294 |  $                    - |  $   51,224,294 |

----

----

----

----

|                                                     |   |            June 30,                                                              |   |            December 31,                                                          |
|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------|
|                                                     |   |           2008                                                                        |   |            2007                                                                  |
|                                                     |   |                                                                                                      |   |                                                                                                      |
| U.      S. Government sponsored                          |   |                                                                                                      |   |                                                                                                      |
|   agency      obligations                      |   |  $             2,000,000            |   |  $           16,924,648                       |
| U.      S. Government Agency and sponsored               |   |                                                                                                      |   |                                                                                                      |
|    agency      mortgage-backed securities |   |               42,181,527            |   |               41,325,870            |
| Money      market preferred                              |   |                                                                                                      |   |                                                                                                      |
|   equity      securities                       |   |                 7,042,767 |   |                 9,039,522 |
| Total      Available for Sale Securities                 |   |  $           51,224,294                       |   |  $           67,290,040                       |

|                                                     |                                                                                    | Gross                                                                                                                           | Gross                                                                                                                           |                                                                                    |
|----------------------------------------------------------|-----------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|
|                                                     | Amortized                                                                               | Unrealized                                                                                                                      | Unrealized                                                                                                                      | Fair                                                                                    |
|                                                     | Cost                                                                                    | Gains                                                                                                                           | Losses                                                                                                                          | Value                                                                                   |
| U.      S. Government sponsored                          |                                                                                    |                                                                                                                            |                                                                                                                            |                                                                                    |
|    agency      obligations                |  $          2,000,000            |  $                  -            |  $                  -            |  $          2,000,000            |
| U.      S. Government Agency and sponsored               |                                                                                    |                                                                                                                            |                                                                                                                            |                                                                                    |
|    agency      mortgage-backed securities |            42,134,244            |           169,052                                                             |         (121,769)                                                                       |            42,181,527            |
| Money      market preferred                              |                                                                                    |                                                                                                                            |                                                                                                                            |                                                                                    |
|   equity      securities                       |              7,042,767 |                      - |                      - |              7,042,767 |
| Total      Available For Sale Securities                 |  $        51,177,011                       |  $       169,052                                                                        |  $     (121,769)                                                                                  |  $        51,224,294                       |

----

|                                             | June      30,                                                                                                                         |   | December      31,                                                                                                                     |
|--------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                             | 2008                                                                                                                                  |   | 2007                                                                                                                                  |
| Real      Estate                                 |                                                                                                                                  |   |                                                                                                                                  |
|    Commercial                     |  $           265,218,072                                                  |   |  $           233,121,685                                                  |
|    Residential                    |               147,403,070                                       |   |               110,154,838                                       |
|    Construction                   |               251,533,271                                       |   |               254,296,326                                       |
|    Construction      to permanent |                 40,244,006                            |   |                 37,701,509                            |
| Commercial                                       |                 38,411,924                            |   |                 27,494,531                            |
| Consumer      installment                        |                   1,027,587                 |   |                   1,270,360                 |
| Consumer      home equity                        |                 41,099,412                            |   |                 29,154,498                            |
| Total      Loans                                 |               784,937,342                                       |   |               693,193,747                                       |
| Premiums      on purchased loans                 |                      179,880 |   |                      195,805 |
| Net      deferred fees                           |                  (1,600,620)                     |   |                  (1,830,942)                     |
| Allowance      for loan losses                   |                  (7,217,620)                     |   |                  (5,672,620)                     |
| Loans      receivable, net                       |  $           776,298,982                                                  |   |  $           685,885,990                                                  |

----

|   |                                              |                    June 30,                                  | December      31,                                                                                                             |   |
|--------|---------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|--------|
|   | (Thousands      of dollars)                       |                 2008                                                        | 2007                                                                                                                          |   |
|   |                                              |                                                                                                                          |                                                                                                                          |   |
|   | Loans      delinquent over 90 days                |  $       1,468                                                                        |  $        112                                                                    |   |
|   |      still      accruing |                                                                                                                          |                                                                                                                          |   |
|   | Non      accruing loans                           |                     3,562 |                     3,832 |   |
|   |      Total               |  $       5,030                                                                        |  $     3,944                                                                                    |   |
|   | % of      Total Loans                             | 0.64%                                                                                                                         | 0.57%                                                                                                                         |   |
|   | % of      Total Assets                            | 0.56%                                                                                                                         | 0.49%                                                                                                                         |   |

----

|                                                                  | Three      months ending                                                                                      |                                                                                                          | Six      months ending |
|-----------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                  |  June      30,                                                                                           |                                                                                                          |  June      30,    |
| (Thousands      of dollars)                                           |           2008                                                                            |           2007                                                                            |                   |           2008 |           2007 |
|                                                                  |                                                                                                          |                                                                                                          |                   |   |   |
| Balance      at beginning of period                                   |  $   6,150                                                                                |  $   5,630                                                                                |                   |  $    5,673 |  $  5,630 |
| Charge-offs                                                           |                   - |               (32)                      |                   |                   - |               (32) |
| Recoveries                                                            |                   - |                   - |                   |                   - |                   - |
| Net      (charge-offs) recoveries                                     |                   - |               (32)                      |                   |                   - |               (32) |
| Provision      charged to operations                                  |           1,068                                             |                   - |                   |           1,545 |                   - |
| Balance      at end of period                                         |  $   7,218                                                                                |  $   5,598                                                                                |                   |  $   7,218 |  $  5,598 |
|                                                                  |                                                                                                          |                                                                                                          |                   |   |   |
| Ratio      of net (charge-offs) recoveries                            |                                                                                                          |                                                                                                          |                   |   |   |
|      during      the period to average loans |                                                                                                          |                                                                                                          |                   |   |   |
|      outstanding      during the period.     | 0.00%                                                                                                         | 0.00%                                                                                                         |                   | 0.00% | 0.00% |
|                                                                  |                                                                                                          |                                                                                                          |                   |   |   |

----

|                                                                     | June      30,                                                                                              | December      31,                                                                                          |
|--------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
|                                                                     | 2008                                                                                                       | 2007                                                                                                       |
|                                                                     |                                                                                                       |                                                                                                       |
| Non-interest      bearing                                                |  $         66,295,842                                    |  $      51,925,991                                                      |
|                                                                     |                                                                                                       |                                                                                                       |
| Interest      bearing                                                    |                                                                                                       |                                                                                                       |
|      NOW                                        |                 22,413,423 |                 19,462,123 |
|      Savings                                    |                 42,695,319 |                 34,261,389 |
|      Money      market                          |                 65,406,680 |                 34,880,837 |
|      Time      certificates, less than $100,000 |               328,635,905            |               300,502,281            |
|      Time      certificates, $100,000 or more   |               201,900,398            |               231,366,788            |
| Total      interest bearing                                              |               661,051,725            |               620,473,418            |
| Total      Deposits                                                      |  $       727,347,567                                               |  $    672,399,409                                                                 |

----

----

|                                    | Three months ended June      30,                            |
|-----------------------------------------|-------------------------------------------------------------|
|                                    |                                                        | 2008 |   |   |   | 2007 |   |
|                                    |                                                        | Interest |   |   |   | Interest |   |
|                                    | Average                                                     | Income/ | Average |   | Average | Income/ | Average |
|                                    | Balance                                                     | Expense | Rate |   | Balance | Expense | Rate |
|                                    | (dollars      in thousands)                                 |
| Interest      earning assets:           |                                                        |   |   |   |   |   |   |
| Loans                                   |  $   772,634                            |  $    13,775 | 7.13% |   |  $   573,079 |  $   11,271 | 7.87% |
| Federal      funds sold and             |                                                        |   |   |   |   |   |   |
|   other      cash equivalents |        12,500            |              68 | 2.18% |   |        78,482 |         1,020 | 5.20% |
| Investments                             |        60,645            |            681 | 4.49% |   |        68,175 |           703 | 4.12% |
| Total      interest                     |                                                        |   |   |   |   |   |   |
|   earning      assets         |      845,779                       |        14,524 | 6.87% |   |      719,736 |       12,994 | 7.22% |
|                                    |                                                        |   |   |   |   |   |   |
| Cash      and due from banks            |          6,354 |   |   |   |          4,158 |   |   |
| Premises      and equipment, net        |          7,755 |   |   |   |          6,201 |   |   |
| Allowance      for loan losses          |        (6,329)           |   |   |   |        (5,627) |   |   |
| Other      assets                       |        29,352            |   |   |   |          9,992 |   |   |
| Total      Assets                       |  $   882,911                            |   |   |   |  $   734,460 |   |   |
|                                    |                                                        |   |   |   |   |   |   |
| Interest      bearing liabilities:      |                                                        |   |   |   |   |   |   |
| Deposits                                |  $   692,331                            |  $      6,825 | 3.94% |   |  $   600,651 |  $     6,897 | 4.59% |
| FHLB      advances                      |        47,152            |            381 | 3.23% |   |          1,868 |             23 | 4.93% |
| Subordinated      debt                  |          8,248 |            118 | 5.72% |   |          8,248 |           173 | 8.39% |
| Other      borrowings                   |          7,000 |              74 | 4.23% |   |                - |               - | 0.00% |
| Total      interest                     |                                                        |   |   |   |   |   |   |
|   bearing      liabilities    |      754,731                       |          7,398 | 3.92% |   |      610,767 |         7,093 | 4.65% |
|                                    |                                                        |   |   |   |   |   |   |
| Demand      deposits                    |        56,136            |   |   |   |        53,483 |   |   |
| Accrued      expenses and               |                                                        |   |   |   |   |   |   |
|   other      liabilities      |          4,455 |   |   |   |          4,847 |   |   |
| Shareholders'      equity               |        67,589            |   |   |   |        65,363 |   |   |
| Total      liabilities and equity       |  $   882,911                            |   |   |   |  $   734,460 |   |   |
|                                    |                                                        |   |   |   |   |   |   |
| Net      interest income                |                                                        |  $      7,126 |   |   |   |  $     5,901 |   |
| Interest      margin                    |                                                        |   | 3.37% |   |   |   | 3.28% |
| Interest      spread                    |                                                        |   | 2.95% |   |   |   | 2.57% |

----

|                                    | Six months ended June      30,                              |
|-----------------------------------------|-------------------------------------------------------------|
|                                    |                                                        | 2008 |   |   |   | 2007 |   |
|                                    |                                                        | Interest |   |   |   | Interest |   |
|                                    | Average                                                     | Income/ | Average |   | Average | Income/ | Average |
|                                    | Balance                                                     | Expense | Rate |   | Balance | Expense | Rate |
|                                    | (dollars      in thousands)                                 |
| Interest      earning assets:           |                                                        |   |   |   |   |   |   |
| Loans                                   |  $   747,691                            |  $    27,097 | 7.25% |   |  $   552,027 |  $   21,607 | 7.83% |
| Federal      funds sold and             |                                                        |   |   |   |   |   |   |
|   other      cash equivalents |        63,274            |          1,447 | 4.57% |   |        68,750 |         1,404 | 4.08% |
| Investments                             |        17,884            |            279 | 3.12% |   |        59,881 |         1,548 | 5.17% |
| Total      interest                     |                                                        |   |   |   |   |   |   |
|   earning      assets         |      828,849                       |        28,823 | 6.95% |   |      680,658 |       24,559 | 7.22% |
|                                    |                                                        |   |   |   |   |   |   |
| Cash      and due from banks            |          6,158 |   |   |   |          4,367 |   |   |
| Premises      and equipment, net        |          7,701 |   |   |   |          5,553 |   |   |
| Allowance      for loan losses          |        (6,083)           |   |   |   |        (5,629) |   |   |
| Other      assets                       |        29,074            |   |   |   |          9,739 |   |   |
| Total      Assets                       |  $   865,699                            |   |   |   |  $   694,688 |   |   |
|                                    |                                                        |   |   |   |   |   |   |
| Interest      bearing liabilities:      |                                                        |   |   |   |   |   |   |
| Deposits                                |  $   683,302                            |  $    14,434 | 4.22% |   |  $   559,702 |  $   12,591 | 4.50% |
| FHLB      advances                      |        40,911            |            682 | 3.33% |   |          4,917 |           121 | 4.92% |
| Subordinated      debt                  |          8,248 |            278 | 6.74% |   |          8,248 |           344 | 8.34% |
| Other      borrowings                   |          7,008 |            154 | 4.39% |   |                - |               - | 0.00% |
| Total      interest                     |                                                        |   |   |   |   |   |   |
|   bearing      liabilities    |      739,469                       |        15,548 | 4.21% |   |      572,867 |       13,056 | 4.56% |
|                                    |                                                        |   |   |   |   |   |   |
| Demand      deposits                    |        53,548            |   |   |   |        51,578 |   |   |
| Accrued      expenses and               |                                                        |   |   |   |   |   |   |
|   other      liabilities      |          5,134 |   |   |   |          5,124 |   |   |
| Shareholders'      equity               |        67,548            |   |   |   |        65,119 |   |   |
| Total      liabilities and equity       |  $   865,699                            |   |   |   |  $   694,688 |   |   |
|                                    |                                                        |   |   |   |   |   |   |
| Net      interest income                |                                                        |  $    13,275 |   |   |   |  $   11,503 |   |
| Interest      margin                    |                                                        |   | 3.20% |   |   |   | 3.38% |
| Interest      spread                    |                                                        |   | 2.74% |   |   |   | 2.66% |
|                                    |                                                        |   |   |   |   |   |   |

----

|                                    | Three months ended June      30,                                                            |                                                                                        | Six months ended June      30,                                                   |
|-----------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------|
|                                    | 2008 vs      2007                                                                           |                                                                                        | 2008 vs      2007                                                                |
|                                    | Increase(decrease)      in Interest                                                         |                                                                                        | Increase(decrease)      in Interest                                              |
|                                    | Income/Expense                                                                              |                                                                                        | Income/Expense                                                                   |
|                                    | Due      to change in:                                                                      |                                                                                        | Due      to change in:                                                           |
|                                    | Volume                                                                                      | Rate                                                                                        | Total                                                                            |   | Volume | Rate | Total |
|                                    | (dollars      in thousands)                                                                 |                                                                                        | (dollars      in thousands)                                                      |
| Interest      earning assets:           |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
| Loans                                   |  $      3,641                                            |  $    (1,137)                                                      |  $      2,504                                 |   |  $         7,189 |  $       (1,699) |  $         5,490 |
| Federal      funds sold and             |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
|   other      cash equivalents |          (563)                                 |          (389)                                 |          (952)                      |   |              (811) |              (458) |           (1,269) |
| Investments                             |            (74)                      |              52            |            (22)           |   |              (107) |               150 |                 43 |
| Total      interest                     |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
|   earning      assets         |         3,004                                       |        (1,474)                                           |         1,530                            |   |             6,271 |           (2,007) |             4,264 |
|                                    |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
| Interest      bearing liabilities:      |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
| Deposits                                |  $        975                                  |  $    (1,047)                                                      |  $        (72)                      |   |  $         2,660 |  $          (817) |  $         1,843 |
| FHLB      advances                      |            369                       |            (11)                      |            358            |   |               612 |               (51) |               561 |
| Subordinated      debt                  |                - |            (55)                      |            (55)           |   |                   - |               (66) |               (66) |
| Other      borrowings                   |              74            |                - |              74 |   |               154 |                   - |               154 |
| Total      interest                     |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
|   bearing      liabilities    |         1,418                                       |        (1,113)                                           |            305            |   |             3,426 |              (934) |             2,492 |
|                                    |                                                                                        |                                                                                        |                                                                             |   |   |   |   |
| Net      interest income                |  $      1,586                                            |  $       (361)                                      |  $      1,225                                 |   |  $         2,845 |  $       (1,073) |  $         1,772 |

----

----

----

----

|   |                           | June      30, 2008 |   |  December 31,      2007  |       |
|--------|--------------------------------|--------------------|--------|------------------------------------|--------------------------------|
|   | Total      Risk-based Capital  | 11.30%             |   | 12.17%                             |                           |
|   | Tier      1 Risk-based Capital | 10.29%             |   | 11.30%                             |                           |
|   | Leverage      Capital          | 8.35%              |   | 9.42%                              |                           |

|   |                           | June      30, 2008 |   |  December      31, 2007  |        |
|--------|--------------------------------|--------------------|--------|------------------------------------|--------------------------------------|
|   | Total      Risk-based Capital  | 11.20%             |   | 12.03%                             |                                 |
|   | Tier      1 Risk-based Capital | 10.19%             |   | 11.15%                             |                                 |
|   | Leverage      Capital          | 8.27%              |   | 9.30%                              |                                      |

----

----

----

|                      | Basis  | Interest      Rate   | June      30,    | December      31,       |
|---------------------------|--------|----------------------|------------------|-------------------------|
|                      | Points | Risk      Guidelines | 2008   | 2007                    |
|                      |   |                 |             |                    |
| GAP      percentage total |   | +/-      15%         |  5.35%      |  -8.33%            |
| Net      interest income  | 200    | +/-      15%         |  0.85%      |  -1.05%            |
|                      | -200   | +/-      15%         | -4.76%           |  -0.59%            |
| Net      portfolio value  | 200    | +/-      25%         | -2.48%           | -12.60%                 |
|                      | -200   | +/-      25%         | -4.68%           |         7.35% |

----

| Net      Interest Income and Economic Value |
|---------------------------------------------|
| Summary      Performance                    |
|                                        |   |   |   |   |   |   |   |
| June      30, 2008                          |
|                                        | Net      Interest Income  |   | Net      Portfolio Value  |
| Projected      Interest                     | Estimated | $      Change | %      Change |   | Estimated | $      Change | %      Change |
| Rate      Scenario                          | Value | from      Base | from      Base |   | Value | from      Base | from      Base |
| +      200                                  |       27,841 |            236 | 0.85% |   |     104,797 |       (2,668) | -2.48% |
| +      100                                  |       27,720 |            115 | 0.42% |   |     107,142 |          (323) | -0.30% |
| BASE                                        |       27,605 |   |   |   |     107,465 |   |   |
| -      100                                  |       26,974 |          (631) | -2.29% |   |     105,010 |       (2,455) | -2.28% |
| -      200                                  |       26,291 |       (1,314) | -4.76% |   |     102,437 |       (5,028) | -4.68% |
|                                        |   |   |   |   |   |   |   |
| December      31, 2007                      |
|                                        | Net      Interest Income  |   | Net      Portfolio Value  |
| Projected      Interest                     | Estimated | $      Change | %      Change |   | Estimated | $      Change | %      Change |
| Rate      Scenario                          | Value | from      Base | from      Base |   | Value | from      Base | from      Base |
| +      200                                  |       24,969 |          (265) | -1.05% |   |       69,103 |       (9,966) | -12.60% |
| +      100                                  |       25,138 |            (96) | -0.38% |   |       73,971 |       (5,098) | -6.45% |
| BASE                                        |       25,234 |   |   |   |       79,069 |   |   |
| -      100                                  |       25,316 |              82 | 0.32% |   |       83,213 |         4,144 | 5.24% |
| -      200                                  |       25,084 |          (150) | -0.59% |   |       84,881 |         5,812 | 7.35% |

----

|  Item      2:   | Unregistered Sales of Equity      Securities and Use of Proceeds |
|--------------------------------|------------------------------------------------------------------|
|                           |                                                             |   |
|                           | (a)                                                              | On      June 25, 2008, the Company issued 3,270 shares of its common stock to its      five outside directors. Pursuant to a policy adopted by the Board of      Directors, outside directors serving on the board receive an annual award      of the Company’s common stock at each year’s annual meeting valued at      $10,000 based on the last reported sale price on the trading day      immediately preceding the Annual Meeting.  The award is prorated      for directors who have served less than a full year.  The shares      have not been registered under the Securities Act of 1933 and therefore      were issued in a private placement transaction exempt from registration      under Section 4(2) of the Securities Act. |

----

|   |   | For      purposes of this transaction, the Company shares were valued at $15.27 per      share, for a total value of $49,933. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|
|   | (b)    | Not      applicable                                                                                                           |
|   |   |                                                                                                                          |
|   | (c)    | Not      applicable                                                                                                           |
|   |   |                                                                                                                          |
|   | (d)    | Not      applicable                                                                                                           |

|   | (a)    | The      Annual Meeting of Shareholders (the “Annual Meeting”) of Patriot National      Bancorp, Inc was held on June 18, 2008.                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                               |
|   | (b)    | Not      applicable pursuant to Instruction 3 to Item 4 of Part II of      Form 10-Q.                                                                                                                         |
|   |   |                                                                                                                                                                                                               |
|   | (c)    | The      following is a brief description of the matters voted upon at the Annual      Meeting and the number of votes cast for, against or withheld as well as      the number of abstentions to each suchmatter: |

|   |   | (i) | The      election of nine directors for the ensuingyear: |
|--------|--------|-----|----------------------------------------------------------|

|   |                           |      | Withheld          |
|--------|--------------------------------|-----------|-------------------|
|   |                           |      | Authority      to |
|   |                           | For       | Vote  For         |
|   | Angelo      De Caro            | 4,089,917 | 356,173           |
|   | John      J. Ferguson          | 4,320,517 | 125,513           |
|   | Brian      A. Fitzgerald       | 4,368,813 | 77,277            |
|   | John      A. Geoghegan         | 4,319,077 | 127,013           |
|   | L.      Morris Glucksman       | 4,371,283 | 74,807            |
|   | Charles      F. Howell         | 4,088,417 | 357,673           |
|   | Michael      F. Intrieri       | 4,368,028 | 78,062            |
|   | Robert      F. O’Connell | 4,088,417 | 357,673           |
|   | Philip      W. Wolford         | 4,082,597 | 363,493           |

|   | There      were no abstentions or broker non-votes for any of the      nominees. |
|--------|----------------------------------------------------------------------------------|
|   |
|   | (ii)                                                                             | The      consideration of a proposal to ratify the appointment of      McGladrey & Pullen, LLP as independent auditors for Bancorp      for the year ending December 31,2008. |

|   | For       | Against | Abstain |   |
|--------|-----------|---------|---------|--------|
|   | 4,258,279 | 185,411 | 2,400   |   |

|   | (d) | Not      applicable. |
|--------|-----|----------------------|

----

| Item      6: | Exhibits |
|--------------|----------|
|         |     |   |
|         | No.      | Description |
|         |     |   |
|         | 2        | 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)). |
|         |     |   |
|         | 3(ii)    | Amended      and Restated By-laws of Bancorp (incorporated by reference to Exhibit 3.2      to Bancorp’s Current Report on Form 8-K dated December 26, 2007      (Commission File No. 1-32007)) |
|         |     |   |
|         | 4        | Reference      is made to the Rights Agreement dated April 19, 2004 by and between      Patriot National Bancorp, Inc. and Registrar and Transfer Company filed as      Exhibit 99.2 to Bancorp’s Report on Form 8-K filed on April 19, 2004, and      the First Amendment to the Rights Agreement dated      January 23, 2008 filed as Exhibit 4.1 to Bancorp’s Report on      Form 8-K dated January 24, 2008 which are incorporated herein by      reference. |
|         |     |   |
|         | 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)). |

----

|   | No.       | Description                                                                                                                                                                                                                                                                                                                                                   |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                                                                                                                                                                                                                          |
|   | 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)).                             |
|   |      |                                                                                                                                                                                                                                                                                                                                                          |
|   | 10(a)(6)  | Change      of Control Agreement, dated as of January 1, 2007 among Robert F.      O’Connell and 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)(8)  | Employment      Agreement dated as of January 1, 2008 between Patriot National Bank and      Marcus Zavattaro (incorporated by reference to Exhibit 10(a)(8) to      Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2007      (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)).                                                      |

----

|   | No.       | Description                                                                                                                                                                                                                                                                                                       |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                                                                                                                                                                              |
|   | 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)).  |
|   |      |                                                                                                                                                                                                                                                                                                              |
|   | 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    Officer                                                                                                                                                                                                                                         |
|   |      |                                                                                                                                                                                                                                                                                                              |
|   | 31(2)     | Rule      13a-14(a)/15d-14(a) Certification of Chief Financial    Officer                                                                                                                                                                                                                                         |
|   |      |                                                                                                                                                                                                                                                                                                              |
|   | 32        | Section      1350 Certifications                                                                                                                                                                                                                                                                                  |

----

|   | By:  /s/ Robert F.      O’Connell |
|--------|---------------------------------------------------|
|   | Robert      F. O’Connell,                   |
|   | Senior      Executive Vice President              |
|   | Chief      Financial Officer                      |
|   |                                              |
|   | (On      behalf of the registrant and as          |
|   | chief      financial officer)                     |

----