| x |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|---|--------|-----------------------------------------------------------------------------------------------|

|  |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|----------|--------|------------------------------------------------------------------------------------------|

| California                                                     | 68-0450397                              |
|----------------------------------------------------------------|-----------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |

| 195 N. First Street, Dixon, California   | 95620      |
|------------------------------------------|------------|
| (Address of principal executive offices) | (Zip Code) |

| Yes  x | No   ̈ |
|------------------|----------------------|

| Yes  r | No  r |
|------------------|-----------------|

| Large accelerated filer    ̈ | Accelerated filer  x |   Non-accelerated filer   ̈ |   Smaller reporting company  ̈ |
|-------------------------------------------------|--------------------------------|-----------------------------------------------------|----------------------------------------------|

| Yes   ̈ | No  x |
|-----------------------|-----------------|

----

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| Page                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PART I   – Financial Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ITEM I    – Financial Statements (Unaudited) ..................................................................................................................................................................................................................................................... 3Condensed Consolidated Balance Sheets ....................................................................................................................................................................................................................................................3Condensed Consolidated Statements of Operations ..................................................................................................................................................................................................................................4Condensed Consolidated Statement of Stockholders' Equity and Comprehensive Income ................................................................................................................................................................5Condensed Consolidated Statements of Cash Flows .................................................................................................................................................................................................................................6Notes to Condensed Consolidated Financial Statements ..........................................................................................................................................................................................................................7ITEM 2.   – Management’s Discussion and Analysis of Financial Condition and Results of Operations ..............................................................................................................................................23ITEM 3.   – Quantitative and Qualitative Disclosures about Market Risk ....................................................................................................................................................................................................39ITEM 4.   – Controls and Procedures ..................................................................................................................................................................................................................................................................39PART II   – Other Information ..............................................................................................................................................................................................................................................................................40ITEM 1A. – Risk Factors .......................................................................................................................................................................................................................................................................................40ITEM 2.   – Unregistered Sales of Equity Securities and Use of Proceeds ...................................................................................................................................................................................................41ITEM 4.   – Submission of Matters to a Vote of Security Holders .................................................................................................................................................................................................................42ITEM 6.   – Exhibits ................................................................................................................................................................................................................................................................................................43SIGNATURES .........................................................................................................................................................................................................................................................................................................43 |

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|                                                                                                                                                   |   | June 30,    |    |   | December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|--------------|--------|
| (in thousands, except share amounts)                                                                                                                   |   | 2009        |    |   | 2008         |   |
|                                                                                                                                                   |   | (unaudited) |    |   |         |   |
| Assets                                                                                                                                                 |   |        |    |   |         |   |
|                                                                                                                                                   |   |        |    |   |         |   |
| Cash and due from banks                                                                                                                                |   | $           | 41,190  |   |         | $      | 25,150 |   |
| Federal funds sold                                                                                                                                     |   |        | 88,310  |   |         |   | 40,860 |   |
| Investment securities – available-for-sale                                                                                                       |   |        | 53,016  |   |         |   | 42,106 |   |
| Loans, net of allowance for loan losses of $14,177 at June 30, 2009                                                                                    |   |        |    |   |         |   |   |   |
|    and $14,435 at December 31, 2008                                                                                                     |   |        | 486,850 |   |         |   | 516,968 |   |
| Loans held-for-sale                                                                                                                                    |   |        | 3,776   |   |         |   | 2,192 |   |
| Stock in Federal Home Loan Bank and other equity securities, at cost                                                                                   |   |        | 2,506   |   |         |   | 2,311 |   |
| Premises and equipment, net                                                                                                                            |   |        | 7,570   |   |         |   | 7,620 |   |
| Other Real Estate Owned                                                                                                                                |   |        | 3,172   |   |         |   | 4,368 |   |
| Accrued interest receivable and other assets                                                                                                           |   |        | 28,651  |   |         |   | 29,227 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
|                  Total Assets                                     |   | $           | 715,041 |   |         | $      | 670,802 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
| Liabilities and Stockholders’ Equity                                                                                                             |   |        |    |   |         |   |   |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
| Liabilities:                                                                                                                                           |   |        |    |   |         |   |   |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
|          Demand deposits                                                                                  |   | $           | 175,513 |   |         | $      | 181,600 |   |
|          Interest-bearing transaction deposits                                                            |   |        | 129,704 |   |         |   | 123,614 |   |
|          Savings and MMDA's                                                                               |   |        | 168,882 |   |         |   | 155,656 |   |
|          Time, under $100,000                                                                             |   |        | 56,695  |   |         |   | 64,252 |   |
|          Time, $100,000 and over                                                                          |   |        | 85,824  |   |         |   | 59,596 |   |
|                  Total deposits                              |   |        | 616,618 |   |         |   | 584,718 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
|          FHLB Advances and other borrowings                                                               |   |        | 12,115  |   |         |   | 18,259 |   |
|          Accrued interest payable and other liabilities                                                   |   |        | 6,306   |   |         |   | 5,796 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
|                  Total liabilities                                |   |        | 635,039 |   |         |   | 608,773 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
| Stockholders' Equity:                                                                                                                                  |   |        |    |   |         |   |   |   |
|          Preferred stock, par value $0.01 per share; $1,000 per share liquidation                         |   |        |    |   |         |   |   |   |
| preference, 18,500 shares authorized; 17,390 shares issued and                                                                                         |   |        |    |   |         |   |   |   |
| outstanding at June 30, 2009 and none at December 31, 2008                                                                                             |   |        | 16,760  |   |         |   | — |   |
|         Common stock, no par value; 16,000,000 shares authorized;                                              |   |        |    |   |         |   |   |   |
|             8,973,645 shares issued and outstanding at June 30, 2009 and                   |   |        |    |   |         |   |   |   |
|             8,608,802 shares issued and outstanding at December 31, 2008                   |   |        | 62,092  |   |         |   | 58,983 |   |
|         Additional paid in capital                                                                             |   |        | 977     |   |         |   | 977 |   |
|         Retained earnings                                                                                      |   |        | 506     |   |         |   | 2,026 |   |
|         Accumulated other comprehensive (loss) income                                                          |   |        | (333    | )      |         |   | 43 |   |
|                  Total stockholders’ equity                 |   |        | 80,002  |   |         |   | 62,029 |   |
|                                                                                                                                                   |   |        |    |   |         |   |   |   |
|                  Total Liabilities and Stockholders’ Equity |   | $           | 715,041 |   |         | $      | 670,802 |   |

----

|                                                                                                                                       |   | Three months  |   |   | Three months  |   |    | Six months    |   |   | Six months    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|---------------|--------|---------|---------------|--------|--------|---------------|--------|
|                                                                                                                                       |   | ended         |   |   | ended         |   |    | ended         |   |   | ended         |   |
| (in thousands, except per share amounts)                                                                                                   |   | June 30, 2009 |   |   | June 30, 2008 |   |    | June 30, 2009 |   |   | June 30, 2008 |   |
| Interest and Dividend Income:                                                                                                         |   |          |   |   |          |   |    |          |   |   |          |   |
|      Loans                                                                                                        |   | $             | 7,833  |   |          | $      | 8,540   |          |   | $      | 15,770        |   |   | $ | 17,780 |   |
|      Federal funds sold                                                                                 |   |          | 20     |   |          |   | 127     |          |   |   | 39            |   |   |   | 417 |   |
|      Due from banks interest bearing accounts                                                                     |   |          | 29     |   |          |   | 144     |          |   |   | 60            |   |   |   | 412 |   |
|      Investment securities                                                                                   |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|           Taxable                                                                        |   |          | 273    |   |          |   | 342     |          |   |   | 467           |   |   |   | 840 |   |
|           Non-taxable                                                                    |   |          | 256    |   |          |   | 328     |          |   |   | 518           |   |   |   | 686 |   |
|      Other earning assets                                                                                         |   |          | 6      |   |          |   | 37      |          |   |   | 6             |   |   |   | 66 |   |
|                Total interest and dividend income     |   |          | 8,417  |   |          |   | 9,518   |          |   |   | 16,860        |   |   |   | 20,201 |   |
| Interest Expense:                                                                                                                     |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|      Deposits                                                                                                     |   |          | 1,071  |   |          |   | 1,441   |          |   |   | 2,133         |   |   |   | 3,353 |   |
|      Other borrowings                                                                                        |   |          | 123    |   |          |   | 61      |          |   |   | 281           |   |   |   | 147 |   |
|                Total interest expense                 |   |          | 1,194  |   |          |   | 1,502   |          |   |   | 2,414         |   |   |   | 3,500 |   |
| Net interest income                                                                                                              |   |          | 7,223  |   |          |   | 8,016   |          |   |   | 14,446        |   |   |   | 16,701 |   |
| Provision for  loan losses                                                                                                  |   |          | 1,161  |   |          |   | 2,763   |          |   |   | 2,267         |   |   |   | 6,422 |   |
|  Net interest income after provision    for loan losses                             |   |          | 6,062  |   |          |   | 5,253   |          |   |   | 12,179        |   |   |   | 10,279 |   |
| Other operating income:                                                                                                          |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|      Service charges on deposit accounts                                                      |   |          | 881    |   |          |   | 929     |          |   |   | 1,744         |   |   |   | 1,853 |   |
|      Gains on other real estate owned                                                                        |   |          | 2      |   |          |   | — |          |   |   | 4             |   |   |   | — |   |
|      Gains on sales of loans held-for-sale                                                    |   |          | 400    |   |          |   | 74      |          |   |   | 574           |   |   |   | 174 |   |
|      Investment and brokerage services income                                                 |   |          | 174    |   |          |   | 207     |          |   |   | 323           |   |   |   | 384 |   |
|      Mortgage brokerage income                                                                          |   |          | 28     |   |          |   | 12      |          |   |   | 43            |   |   |   | 13 |   |
|      Loan servicing income                                                                              |   |          | 263    |   |          |   | 112     |          |   |   | 359           |   |   |   | 159 |   |
|      Fiduciary activities income                                                                                  |   |          | 58     |   |          |   | 76      |          |   |   | 156           |   |   |   | 173 |   |
|      ATM fees                                                                                                |   |          | 64     |   |          |   | 69      |          |   |   | 122           |   |   |   | 138 |   |
|      Signature based transaction fees                                                                             |   |          | 164    |   |          |   | 152     |          |   |   | 303           |   |   |   | 291 |   |
|      Gains (loss) on sales of available-for-sale          securities |   |          | 264    |   |          |   | (16     | )             |   |   | 264           |   |   |   | 495 |   |
|      Other income                                                                                            |   |          | 169    |   |          |   | 188     |          |   |   | 315           |   |   |   | 395 |   |
|                Total other operating income      |   |          | 2,467  |   |          |   | 1,803   |          |   |   | 4,207         |   |   |   | 4,075 |   |
| Other operating expenses:                                                                                                        |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|      Salaries and employee benefits                                                                |   |          | 4,006  |   |          |   | 3,959   |          |   |   | 7,654         |   |   |   | 8,066 |   |
|      Occupancy and equipment                                                                            |   |          | 940    |   |          |   | 952     |          |   |   | 1,938         |   |   |   | 1,864 |   |
|      Data processing                                                                                         |   |          | 442    |   |          |   | 419     |          |   |   | 889           |   |   |   | 818 |   |
|      Stationery and supplies                                                                            |   |          | 96     |   |          |   | 171     |          |   |   | 219           |   |   |   | 287 |   |
|      Advertising                                                                                                  |   |          | 152    |   |          |   | 191     |          |   |   | 313           |   |   |   | 366 |   |
|      Directors’ fees                                                                                   |   |          | 51     |   |          |   | 53      |          |   |   | 103           |   |   |   | 105 |   |
|      Other real estate owned expense and write-downs                                                              |   |          | 605    |   |          |   | 609     |          |   |   | 1,329         |   |   |   | 687 |   |
|      Other expense                                                                                           |   |          | 1,826  |   |          |   | 1,556   |          |   |   | 3,341         |   |   |   | 2,958 |   |
|                Total other operating expenses    |   |          | 8,118  |   |          |   | 7,910   |          |   |   | 15,786        |   |   |   | 15,151 |   |
|                Income before benefit for income taxes |   |          | 411    |   |          |   | (854    | )             |   |   | 600           |   |   |   | (797 | ) |
| (Benefit) provision for income taxes                                                                                        |   |          | (165   | )      |          |   | 10      |          |   |   | (429          | )      |   |   | 7 |   |
|                                                                                                                                       |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
|                Net  income (loss)                     |   | $             | 576    |   |          | $      | (864    | )             |   | $      | 1,029         |   |   | $ | (804 | ) |
|                                                                                                                                       |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Preferred stock dividends and accretion                                                                                                    |   | $             | (244   | )      |          |   | — |          |   | $      | (295          | )      |   |   | — |   |
| Net  income (loss) available to common          shareholders                   |   | $             | 332    |   |          | $      | (864    | )             |   | $      | 734           |   |   | $ | (804 | ) |
|                                                                                                                                       |   |          |   |   |          |   |    |          |   |   |          |   |   |   |   |   |
| Basic income (loss) per share                                                                                               |   | $             | 0.04   |   |          | $      | (0.10   | )             |   | $      | 0.08          |   |   | $ | (0.09 | ) |
| Diluted income (loss) per share                                                                                             |   | $             | 0.04   |   |          | $      | (0.10   | )             |   | $      | 0.08          |   |   | $ | (0.09 | ) |

----

| (in thousands, except share amounts)                                                                 |
|------------------------------------------------------------------------------------------------------|
|                                                                                                 |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Other |   |   |   |
|                                                                                                 |   | Preferred |   |   | Common Stock |   |   | Comprehensive |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   |   |
|                                                                                                 |   | Stock |   |   | Shares |   |   | Amounts |   |   | Income |   |   | Capital |   |   | Earnings |   |   | Loss |   |   | Total |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2008                                                                         |   | $ | — |   |   |   | 8,608,802 |   |   | $ | 58,983 |   |   |   |   |   | $ | 977 |   |   | $ | 2,026 |   |   | $ | 43 |   |   | $ | 62,029 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 1,029 |   |   |   |   |   |   |   | 1,029 |   |   |   |   |   |   |   | 1,029 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income, net of tax:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized holding losses on securities arising during the current period, net of tax effect of $145 |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (218 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustment due to gains realized on sales of securities, net of tax effect of $106  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (158 | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total other comprehensive loss, net of tax effect of $251                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (376 | ) |   |   |   |   |   |   |   |   |   |   | (376 | ) |   |   | (376 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 653 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of preferred stock                                                                          |   |   | 16,726 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 16,726 |   |
| Issuance of common stock warrants                                                                    |   |   |   |   |   |   |   |   |   |   | 664 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 664 |   |
| 4% stock dividend                                                                                    |   |   |   |   |   |   | 346,011 |   |   |   | 2,249 |   |   |   |   |   |   |   |   |   |   |   | (2,249 | ) |   |   |   |   |   |   | — |   |
| Dividend on preferred stock                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (261 | ) |   |   |   |   |   |   | (261 | ) |
| Accretion of preferred stock                                                                         |   |   | 34 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (34 | ) |   |   |   |   |   |   | — |   |
| Cash in lieu of fractional shares                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (5 | ) |   |   |   |   |   |   | (5 | ) |
| Stock-based compensation and related tax benefits                                                    |   |   |   |   |   |   |   |   |   |   | 196 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 196 |   |
| Common shares issued, stock options exercised, net of swapped shares                                 |   |   |   |   |   |   | 18,832 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2009                                                                             |   | $ | 16,760 |   |   |   | 8,973,645 |   |   | $ | 62,092 |   |   |   |   |   |   | $ | 977 |   |   | $ | 506 |   |   | $ | (333 | ) |   | $ | 80,002 |   |

----

|                                                                                                                                                                                       |   | (in thousands)                      |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                                                                                                       |   | Six months ended June 30, 2009 |    |   | Six months ended June 30, 2008 |   |
| Cash Flows From Operating Activities                                                                                                                                                       |   |                                |    |   |   |   |
|           Net Income (Loss)                                                                                                              |   | $                                   | 1,029   |   |   | $ | (804 | ) |
|           Adjustments to reconcile net income (loss) to net cash provided by                     |   |                                |    |   |   |   |   |   |
|        operating activities:                                                                                                                       |   |                                |    |   |   |   |   |   |
|  Depreciation and amortization                                                                                                                                                        |   |                                | 482     |   |   |   | 530 |   |
|  Provision for loan losses                                                                                                                                                            |   |                                | 2,267   |   |   |   | 6,422 |   |
|  Stock plan accruals                                                                                                                                                                  |   |                                | 186     |   |   |   | 248 |   |
|  Tax benefit for stock options                                                                                                                                                        |   |                                | 10      |   |   |   | 20 |   |
|  Gains on sales of available-for-sale securities                                                                                                                                      |   |                                | (264    | ) |   |   | (495 | ) |
|  Gains on sales of other real estate owned                                                                                                                                            |   |                                | (4      | ) |   |   | — |   |
|  Write-downs on other real estate owned                                                                                                                                               |   |                                | 1,200   |   |   |   | 652 |   |
|  Gains on sales of loans held-for-sale                                                                                                                                                |   |                                | (574    | ) |   |   | (174 | ) |
|  Proceeds from sales of loans held-for-sale                                                                                                                                           |   |                                | 70,665  |   |   |   | 21,177 |   |
|  Originations of loans held-for-sale                                                                                                                                                  |   |                                | (71,675 | ) |   |   | (20,814 | ) |
|           Changes in assets and liabilities:                                                                                             |   |                                |    |   |   |   |   |   |
|  Increase (decrease) in accrued interest receivable and other assets                                                                                                                  |   |                                | 837     |   |   |   | (956 | ) |
|  Increase (decrease) in accrued interest payable and other liabilities                                                                                                                |   |                                | 249     |   |   |   | (1,409 | ) |
|                     Net cash provided by operating activities      |   |                                | 4,408   |   |   |   | 4,397 |   |
|                                                                                                                                                                                       |   |                                |    |   |   |   |   |   |
| Cash Flows From Investing Activities                                                                                                                                                  |   |                                |    |   |   |   |   |   |
|           Net (increase) decrease in investment securities                                                                |   |                                | (11,273 | ) |   |   | 19,739 |   |
|           Net decrease (increase) in loans                                                                                          |   |                                | 27,851  |   |   |   | (26,182 | ) |
|           Net increase in other interest earning assets                                                                             |   |                                | (195    | ) |   |   | (58 | ) |
|           Purchases of premises and equipment, net                                                              |   |                                | (432    | ) |   |   | (618 | ) |
|                     Net cash provided by (used in) investing activities |   |                                | 15,951  |   |   |   | (7,119 | ) |
|                                                                                                                                                                                       |   |                                |    |   |   |   |   |   |
| Cash Flows From Financing Activities                                                                                                                                                  |   |                                |    |   |   |   |   |   |
|           Net increase (decrease) in deposits                                                                                  |   |                                | 31,900  |   |   |   | (48,896 | ) |
| Proceeds from issuance of preferred stock                                                                                                                                                  |   |                                | 16,726  |   |   |   | — |   |
| Proceeds from issuance of common stock warrants                                                                                                                                            |   |                                | 664     |   |   |   | — |   |
|           Net (decrease) increase in FHLB advances and other borrowings                                              |   |                                | (6,144  | ) |   |   | 4,334 |   |
|           Cash dividends paid                                                                                                  |   |                                | (5      | ) |   |   | (10 | ) |
|           Tax benefit for stock options                                                                                                  |   |                                | (10     | ) |   |   | (20 | ) |
|           Repurchase of stock                                                                                                  |   |                                | — |   |   |   | (1,359 | ) |
|                     Net cash provided by (used) in financing activities |   |                                | 43,131  |   |   |   | (45,951 | ) |
|                                                                                                                                                                             |   |                                |    |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                                                                                              |   |                                | 63,490  |   |   |   | (48,673 | ) |
| Cash and Cash Equivalents, beginning of period                                                                                                                    |   |                                | 66,010  |   |   |   | 99,030 |   |
| Cash and Cash Equivalents, end of period                                                                                                                     |   | $                                   | 129,500 |   |   | $ | 50,357 |   |
|                                                                                                                                                                                       |   |                                |    |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information:                                                                                                                |   |                                |    |   |   |   |   |   |
| Cash paid during the period for:                                                                                                                                  |   |                                |    |   |   |   |   |   |
|                     Interest                                                           |   | $                                   | 2,451   |   |   | $ | 3,731 |   |
|                     Income Taxes                                                       |   | $                                   | 401     |   |   | $ | 340 |   |
|                                                                                                                                                                                       |   |                                |    |   |   |   |   |   |
| Supplemental disclosures of non-cash investing and financing activities:                                                                                |   |                                |    |   |   |   |   |   |
| Preferred stock dividend payable and accretion                                                                                                                                             |   | $                                   | 295     |   |   |   | — |   |
|    Transfer of loans held-for-investment to other real estate owned                                                                                                         |   |                                | — |   |   | $ | 5,502 |   |
|    Stock dividend distributed                                                                                                                                     |   | $                                   | 2,249   |   |   | $ | 8,642 |   |

----

| 1. | BASIS OF PRESENTATION |
|----|-----------------------|

----

----

|                         |   | (in thousands)           |   |
|------------------------------|--------|--------------------------|--------|
|                         |   |                     |   |   |   |   |
|                         |   | Six months endedJune 30, |   |   | Year ended December 31, |   |
|                         |   | 2009                     |   |   | 2008 |   |   | 2008 |   |
| Balance, beginning of period |   | $                        | 14,435 |   |   | $ | 10,876 |   |   | $ | 10,876 |   |
| Provision for loan losses    |   |                     | 2,267  |   |   |   | 6,422 |   |   |   | 16,164 |   |
| Loan charge-offs             |   |                     | (3,267 | ) |   |   | (5,529 | ) |   |   | (13,324 | ) |
| Loan recoveries              |   |                     | 742    |   |   |   | 327 |   |   |   | 719 |   |
| Balance, end of period       |   | $                        | 14,177 |   |   | $ | 12,096 |   |   | $ | 14,435 |   |

----

| 3. | MORTGAGE OPERATIONS |
|----|---------------------|

|                                                  |   | (in thousands)    |   |
|-------------------------------------------------------|--------|-------------------|--------|
|                                                  |   | December 31, 2008 |   |   | Additions |   |   | Reductions |   |   | June 30, 2009 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |
| Mortgage servicing rights                             |   | $                 | 978    |   |   | $ | 497 |   |   | $ | 122 |   |   | $ | 1,353 |   |
| Valuation allowance                                   |   |              | (85    | ) |   |   | (193 | ) |   |   | — |   |   |   | (278 | ) |
| Mortgage servicing rights, net of valuation allowance |   | $                 | 893    |   |   | $ | 304 |   |   | $ | 122 |   |   | $ | 1,075 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                |   | (in thousands, except share and earnings |      |
|-----------------------------------------------------|--------|------------------------------------------|-----------|
|                                                |   | Three months ended                       |      |   | Six months ended |   |
|                                                |   | June 30,                                 |      |   | June 30, |   |
|                                                |   | 2009                                     |      |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Basic earnings (loss) per share:                    |   |                                     |      |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                   |   | $                                        | 576       |   |   | $ | (864 | ) |   | $ | 1,029 |   |   | $ | (804 | ) |
| Preferred stock dividend and accretion              |   | $                                        | (244      | ) |   |   | — |   |   | $ | (295 | ) |   |   | — |   |
| Net income (loss) available to common shareholders  |   | $                                        | 332       |   |   | $ | (864 | ) |   | $ | 734 |   |   | $ | (804 | ) |
|                                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding          |   |                                     | 8,973,645 |   |   |   | 8,904,766 |   |   |   | 8,966,467 |   |   |   | 8,970,627 |   |
| Basic EPS                                           |   | $                                        | 0.04      |   |   | $ | (0.10 | ) |   | $ | 0.08 |   |   | $ | (0.09 | ) |
|                                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share:                  |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                   |   | $                                        | 576       |   |   | $ | (864 | ) |   | $ | 1,029 |   |   | $ | (804 | ) |
| Preferred stock dividend and accretion              |   | $                                        | (244      | ) |   |   | — |   |   | $ | (295 | ) |   |   | — |   |
| Net income (loss) available to common shareholders  |   | $                                        | 332       |   |   | $ | (864 | ) |   | $ | 734 |   |   | $ | (804 | ) |
|                                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding          |   |                                     | 8,973,645 |   |   |   | 8,904,766 |   |   |   | 8,966,467 |   |   |   | 8,970,627 |   |
|                                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of dilutive options                          |   |                                     | 7,174     |   |   |   | — |   |   |   | 26,184 |   |   |   | — |   |
|                                                |   |                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjusted weighted average common shares outstanding |   |                                     | 8,980,819 |   |   |   | 8,904,766 |   |   |   | 8,992,651 |   |   |   | 8,970,627 |   |
| Diluted EPS                                         |   | $                                        | 0.04      |   |   | $ | (0.10 | ) |   | $ | 0.08 |   |   | $ | (0.09 | ) |

----

|                                                  |   | Number of Shares |    |   | Weighted Average Exercise Price |   |    | Aggregate Intrinsic Value |   |   | Weighted Average Remaining Contractual   Term (in years) |   |
|-------------------------------------------------------|--------|------------------|---------|--------|---------------------------------|--------|---------|---------------------------|--------|--------|--------------------------------------------------------------------|--------|
| Options outstanding at Beginning of  Period |   |             | 520,336 |   |                            | $      | 11.19   |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |    |                      |   |   |                                                               |   |   |   |
|    Granted                             |   |             | — |   |                            |   | — |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |    |                      |   |   |                                                               |   |   |   |
|    Cancelled / Forfeited               |   |             | — |   |                            |   | — |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |    |                      |   |   |                                                               |   |   |   |
|    Exercised                           |   |             | — |   |                            |   | — |                      |   |   | —                                                            |   |   |   |   |
|                                                  |   |             |    |   |                            |   |    |                      |   |   |                                                               |   |   |   |   |
| Options outstanding at End of Period                  |   |             | 520,336 |   |                            | $      | 11.19   |                      |   | $      | 81,277                                                             |   |   |   | 4.54 |   |
|                                                  |   |             |    |   |                            |   |    |                      |   |   |                                                               |   |   |   |   |   |
| Exercisable (vested) at End of Period                 |   |             | 465,322 |   |                            | $      | 10.47   |                      |   | $      | 71,197                                                             |   |   |   | 4.17 |   |

|                                                  |   | Number of Shares |    |   | Weighted Average Exercise Price |   |   | Aggregate Intrinsic Value |   |   | Weighted Average Remaining Contractual   Term (in years) |   |
|-------------------------------------------------------|--------|------------------|---------|--------|---------------------------------|--------|--------|---------------------------|--------|--------|--------------------------------------------------------------------|--------|
| Options outstanding at Beginning of  Period |   |             | 555,591 |   |                            | $      | 10.71  |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |   |                      |   |   |                                                               |   |   |   |
|    Granted                             |   |             | 8,000   |   |                            | $      | 4.50   |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |   |                      |   |   |                                                               |   |   |   |
|    Cancelled / Forfeited               |   |             | (1,840  | )      |                            | $      | 3.65   |                      |   |   |                                                               |   |   |   |
|                                                  |   |             |    |   |                            |   |   |                      |   |   |                                                               |   |   |   |
|    Exercised                           |   |             | (41,415 | )      |                            | $      | 3.81   |                      |   | $      | 101,246                                                            |   |   |   |   |
|                                                  |   |             |    |   |                            |   |   |                      |   |   |                                                               |   |   |   |   |
| Options outstanding at End of Period                  |   |             | 520,336 |   |                            | $      | 11.19  |                      |   | $      | 81,277                                                             |   |   |   | 4.54 |   |
|                                                  |   |             |    |   |                            |   |   |                      |   |   |                                                               |   |   |   |   |   |
| Exercisable (vested) at End of Period                 |   |             | 465,322 |   |                            | $      | 10.47  |                      |   | $      | 71,197                                                             |   |   |   | 4.17 |   |

----

|                            | Three Months Ended |   | Six Months Ended |
|---------------------------------|--------------------|--------|------------------|
| June 30, 2009*                  | June 30, 2009      |
|  Risk Free Interest Rate   | —            |   | 2.00%            |
|                            |               |   |             |
|  Expected Dividend Yield   | —            |   | 0.00%            |
|                            |               |   |             |
|  Expected Life in Years    | —            |   | 5                |
|                            |               |   |             |
|  Expected Price Volatility | —            |   | 41.39%           |

|                                                  |   | Number of Shares |    |   | Weighted Average Grant-Date Fair Value |   |    | Aggregate Intrinsic Value |   | Weighted Average Remaining Contractual Term (in years) |
|-------------------------------------------------------|--------|------------------|---------|--------|----------------------------------------|--------|---------|---------------------------|--------|-------------------------------------------------------------|
| Options outstanding at Beginning of  Period |   |             | 35,817  |   |                                   | $      | 13.20   |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Granted                             |   |             | — |   |                                   |   | — |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Cancelled / Forfeited               |   |             | — |   |                                   |   | — |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Exercised/Released/Vested           |   |             | — |   |                                   |   | — |                      |   |                                                        | — |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |   |
| Options outstanding at End of Period                  |   |             | 35,817  |   |                                   | $      | 13.20   |                      |   | $                                                           | 206,306 |   |   8.65 |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |   |

|                                                  |   | Number of Shares |    |   | Weighted Average Grant-Date Fair Value |   |    | Aggregate Intrinsic Value |   | Weighted Average Remaining Contractual Term (in years) |
|-------------------------------------------------------|--------|------------------|---------|--------|----------------------------------------|--------|---------|---------------------------|--------|-------------------------------------------------------------|
| Options outstanding at Beginning of  Period |   |             | 31,071  |   |                                   | $      | 16.03   |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Granted                             |   |             | 9,300   |   |                                   | $      | 4.50    |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Cancelled / Forfeited               |   |             | — |   |                                   |   | — |                      |   |                                                        |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |
|    Exercised/Released/Vested           |   |             | (4,554  | )      |                                   | $      | 14.79   |                      |   | $                                                           | 22,551 |   |   |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |   |
| Options outstanding at End of Period                  |   |             | 35,817  |   |                                   | $      | 13.20   |                      |   | $                                                           | 206,306 |   |   8.65 |
|                                                  |   |             |    |   |                                   |   |    |                      |   |                                                        |   |   |   |

----

|                            | Three Months Ended      |   | Six Months Ended        |   |
|---------------------------------|-------------------------|--------|-------------------------|--------|
| June 30, 2009                   | June 30, 2009           |   |
|  Risk Free Interest Rate   |    0.95% |   |    0.95% |   |
|                            |                    |   |                    |   |
|  Expected Dividend Yield   |    0.00% |   |    0.00% |   |
|                            |                    |   |                    |   |
|  Expected Life in Years    | 1.00                    |   | 1.00                    |   |
|                            |                    |   |                    |   |
|  Expected Price Volatility | 48.13%                  |   | 48.13%                  |   |

----

|                                    |   | Three months ended June 30, |   |
|-----------------------------------------|--------|-----------------------------|--------|
|                                    |   | 2009                        |   |   | 2008 |   |
| Components of Net Periodic Benefit Cost |   |                        |   |   |   |   |
| Service Cost                            |   | $                           | 3,990  |   |   | $ | 33,232 |   |
| Interest  Cost                |   |                        | 26,418 |   |   |   | 29,684 |   |
| Amortization of Plan Gain               |   |                        | (8,180 | ) |   |   | — |   |
| Amortization of prior service cost      |   |                        | 21,821 |   |   |   | 21,821 |   |
| Net periodic benefit cost               |   | $                           | 44,049 |   |   | $ | 84,737 |   |

----

|                                    |   | Three months ended June 30, |   |
|-----------------------------------------|--------|-----------------------------|--------|
|                                    |   | 2009                        |   |   | 2008 |   |
| Components of Net Periodic Benefit Cost |   |                        |   |   |   |   |
| Service Cost                            |   | $                           | 11,088 |   |   | $ | 14,424 |   |
| Interest  Cost                |   |                        | 7,921  |   |   |   | 7,731 |   |
| Net periodic benefit cost               |   | $                           | 19,009 |   |   | $ | 22,155 |   |

|   | Level 1  |   | Valuation is based upon quoted prices for identical instruments traded in active markets.                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|---------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Level 2  |   | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data.                                                                                                                                                                   |
|   |          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Level 3  |   | Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models,discounted cash flow models, and similar techniques and include management judgment and estimation which may be significant. |

----

----

|                                     |   |           |   |   |    |   |   |    |   |   |    |   |
|------------------------------------------|--------|----------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
|                                     |   | (in thousands) |   |
| June 30, 2009                            |   | Total          |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Investment securities available-for-sale |   | $              | 53,016 |   |    | $      | 256    |    |   | $      | 52,760  |   |   | $ | — |   |
|                                     |   |           |   |   |    |   |   |    |   |   |    |   |   |   |   |   |
| Total investments at fair value          |   | $              | 53,016 |   |    | $      | 256    |    |   | $      | 52,760  |   |   | $ | — |   |
|                                     |   |           |   |   |    |   |   |    |   |   |    |   |   |   |   |   |

|                       |   | (in thousands) |   |
|----------------------------|--------|----------------|--------|
| June 30, 2009              |   | Total          |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Impaired loans             |   | $              | 9,303  |   |   | $ | — |   |   | $ | — |   |   | $ | 9,303 |   |
| Other real estate owned    |   |           | 3,172  |   |   |   | — |   |   |   | — |   |   |   | 3,172 |   |
| Loan servicing rights      |   |           | 1,075  |   |   |   | — |   |   |   | — |   |   |   | 1,075 |   |
|                       |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets at fair value |   | $              | 13,550 |   |   | $ | — |   |   | $ | — |   |   | $ | 13,550 |   |

----

----

|                                                |   | June 30, 2009   |    |   | December 31, 2008 |   |
|-----------------------------------------------------|--------|-----------------|---------|--------|-------------------|--------|
| (in thousands)                                      |   | Carrying amount |    |   | Fairvalue         |   |   | Carrying amount |   |   | Fairvalue |   |
|                                                |   |            |    |   |              |   |   |   |   |   |   |   |
| Financial assets:                                   |   |            |    |   |              |   |   |   |   |   |   |   |
| Cash and federal funds sold                         |   | $               | 129,500 |   |              | $      | 129,500 |   |   | $ | 66,010 |   |   | $ | 66,010 |   |
| Investment securities                               |   |            | 53,016  |   |              |   | 53,016 |   |   |   | 42,106 |   |   |   | 42,106 |   |
| Other equity securities                             |   |            | 2,506   |   |              |   | 2,506 |   |   |   | 2,311 |   |   |   | 2,311 |   |
| Loans:                                              |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loans                                           |   |            | 486,850 |   |              |   | 486,381 |   |   |   | 516,968 |   |   |   | 516,949 |   |
| Loans held-for-sale                                 |   |            | 3,776   |   |              |   | 3,835 |   |   |   | 2,192 |   |   |   | 2,192 |   |
| Financial liabilities:                              |   |            |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                            |   |            | 616,618 |   |              |   | 595,666 |   |   |   | 584,718 |   |   |   | 547,419 |   |
| FHLB advances and other   borrowings |   |            | 12,115  |   |              |   | 12,682 |   |   |   | 18,259 |   |   |   | 19,025 |   |

|                                |   | June 30, 2009   |    |   | December 31, 2008 |   |
|-------------------------------------|--------|-----------------|---------|--------|-------------------|--------|
| (in thousands)                      |   | Contract amount |    |   | Fairvalue         |   |   | Contract amount |   |   | Fairvalue |   |
|                                |   |            |    |   |              |   |   |   |   |   |   |   |
| Unrecognized financial instruments: |   |            |    |   |              |   |   |   |   |   |   |   |
| Commitments to extend credit        |   | $               | 186,489 |   |              | $      | 1,399 |   |   | $ | 198,615 |   |   | $ | 1,490 |   |
| Standby letters of credit           |   |            | 4,962   |   |              |   | 50 |   |   |   | 5,715 |   |   |   | 57 |   |

----

|                                                    |   | Amortized cost |    |   | Unrealized gains |   |    | Unrealized losses |   |   | Estimated market value |   |
|---------------------------------------------------------|--------|----------------|---------|--------|------------------|--------|---------|-------------------|--------|--------|------------------------|--------|
|                                                    |   |           |    |   |             |   |    |              |   |   |                   |   |
| Investment securities available-for-sale:               |   |           |    |   |             |   |    |              |   |   |                   |   |
| U.S. Treasury securities                                |   | $              | 256     |   |             | $      | — |              |   | $      | —                |   |   | $ | 256 |   |
| Securities of U.S. government agencies and corporations |   |           | — |   |             |   | — |              |   |   | —                |   |   |   | — |   |
| Obligations of states and political subdivisions        |   |           | 25,675  |   |             |   | 173     |              |   |   | (503                   | )      |   |   | 25,345 |   |
| Mortgage-backed securities                              |   |           | 27,439  |   |             |   | 58      |              |   |   | (82                    | )      |   |   | 27,415 |   |
|                                                    |   |           |    |   |             |   |    |              |   |   |                   |   |   |   |   |   |
| Total debt securities                                   |   | $              | 53,370  |   |             | $      | 231     |              |   | $      | (585                   | )      |   | $ | 53,016 |   |

|                                                    |   | Amortized cost |   |   | Unrealized gains |   |   | Unrealized losses |   |   | Estimated market value |   |
|---------------------------------------------------------|--------|----------------|--------|--------|------------------|--------|--------|-------------------|--------|--------|------------------------|--------|
|                                                    |   |           |   |   |             |   |   |              |   |   |                   |   |
| Investment securities available-for-sale:               |   |           |   |   |             |   |   |              |   |   |                   |   |
| U.S. Treasury securities                                |   | $              | 249    |   |             | $      | 25     |              |   | $      | —                |   |   | $ | 274 |   |
| Securities of U.S. government agencies and corporations |   |           | 2,018  |   |             |   | 21     |              |   |   | —                |   |   |   | 2,039 |   |
| Obligations of states and political subdivisions        |   |           | 26,345 |   |             |   | 244    |              |   |   | (358                   | )      |   |   | 26,231 |   |
| Mortgage-backed securities                              |   |           | 13,223 |   |             |   | 369    |              |   |   | (30                    | )      |   |   | 13,562 |   |
|                                                    |   |           |   |   |             |   |   |              |   |   |                   |   |   |   |   |   |
| Total debt securities                                   |   | $              | 41,835 |   |             | $      | 659    |              |   | $      | (388                   | )      |   | $ | 42,106 |   |

|                                   |   | Amortizedcost |   |   | Estimated marketvalue |   |
|----------------------------------------|--------|---------------|--------|--------|-----------------------|--------|
|                                   |   |          |   |   |                  |   |
| Due in one year or less                |   | $             | 1,416  |   |                  | $      | 1,422 |   |
| Due after one year through five years  |   |          | 30,728 |   |                  |   | 30,756 |   |
| Due after five years through ten years |   |          | 1,998  |   |                  |   | 1,991 |   |
| Due after ten years                    |   |          | 19,228 |   |                  |   | 18,847 |   |
|                                   |   |          |   |   |                  |   |   |   |
|                                   |   | $             | 53,370 |   |                  | $      | 53,016 |   |

----

|                                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total      |   |
|--------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|------------|--------|
|                                             |   | Fair Value          |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Obligations of states and political subdivisions |   |                | 858    |   |              |   | (47    | )          |   |   | 10,539 |   |   |   | (456 | ) |   |   | 11,397 |   |   |   | (503 | ) |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                       |   |                | 9,923  |   |              |   | (76    | )          |   |   | 1,549 |   |   |   | (6 | ) |   |   | 11,472 |   |   |   | (82 | ) |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                   | 10,781 |   |              | $      | (123   | )          |   | $ | 12,088 |   |   | $ | (462 | ) |   | $ | 22,869 |   |   | $ | (585 | ) |

|                                             |   | Less than 12 months |   |   | 12 months or more |   |   | Total      |   |
|--------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|------------|--------|
|                         |   | Fair Value          |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |   | Fair Value |   |   | Unrealized losses |   |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Obligations of states and political subdivisions |   |                | 4,888  |   |              |   | (197   | )          |   |   | 5,454 |   |   |   | (161 | ) |   |   | 10,342 |   |   |   | (358 | ) |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities                       |   |                | 1,638  |   |              |   | (30    | )          |   |   | 30 |   |   |   | — |   |   |   | 1,668 |   |   |   | (30 | ) |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                   | 6,526  |   |              | $      | (227   | )          |   | $ | 5,484 |   |   | $ | (161 | ) |   | $ | 12,010 |   |   | $ | (388 | ) |

----

----

----

|                                                                                 |   | (in thousands, except per share and percentage) |    |
|--------------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |
|                                                                                 |   | Three months                                    |    |   | Three months |   |   | Six months |   |   | Six months |   |
|                                                                                 |   | ended                                           |    |   | ended |   |   | ended |   |   | ended |   |
|                                                                                 |   | June 30, 2009                              |    |   | June 30, 2008 |   |   | June 30, 2009 |   |   | June 30, 2008 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |
| For the Period:                                                                      |   |                                            |    |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |
|     Net Income (loss)                                            |   | $                                               | 576     |   |   | $ | (864 | ) |   | $ | 1,029 |   |   | $ | (804 | ) |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Basic Earnings (loss) Per Common Share*                      |   | $                                               | 0.04    |   |   | $ | (0.10 | ) |   | $ | 0.08 |   |   | $ | (0.09 | ) |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Diluted Earnings (loss) Per Common Share*                    |   | $                                               | 0.04    |   |   | $ | (0.10 | ) |   | $ | 0.08 |   |   | $ | (0.09 | ) |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At Period End:                                                                       |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total Assets                                     |   |                                            | 715,041 |   |   |   | 661,375 |   |   |   | 715,041 |   |   |   | 661,375 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total Loans, Net (including loans held-for-sale) |   |                                            | 490,626 |   |   |   | 513,383 |   |   |   | 490,626 |   |   |   | 513,383 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total Investment Securities                            |   |                                            | 53,016  |   |   |   | 56,053 |   |   |   | 53,016 |   |   |   | 56,053 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total Deposits                                         |   |                                            | 616,618 |   |   |   | 573,775 |   |   |   | 616,618 |   |   |   | 573,775 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Loan-To-Deposit Ratio                            |   |                                            | 79.57   |   |   |   | 89.5 |   |   |   | 79.57 |   |   |   | 89.5 |   |
|                                                                                 |   |                                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Adjusted for stock dividends                                                        |   |                                            |    |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                  |   | Three months ended |    |   | Three months ended |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                  |   | June 30, 2009      |    |   | June 30, 2008      |   |
|                                                                                                                                                                                                                                                                                                                                                  |   | Average            |    |   |               |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                                                                                                                                                                                                                                                                                                                                  |   | Balance            |    |   | Interest           |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Assets                                                                                                                                                                                                                                                                                                                                                |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                                                                                                                                                                                                                                                              |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)                                                                                                                                                                                                                                                                                                                                             |   | $                  | 491,107 |   |               | $      | 7,833 |   |   |   | 6.40 | % |   | $ | 505,182 |   |   | $ | 8,540 |   |   |   | 6.78 | % |
| Federal funds sold                                                                                                                                                                                                                                                                                                                                    |   |               | 71,472  |   |               |   | 20 |   |   |   | 0.11 | % |   |   | 23,876 |   |   |   | 127 |   |   |   | 2.13 | % |
| Interest bearing due from banks                                                                                                                                                                                                                                                                                                                       |   |               | 2,525   |   |               |   | 29 |   |   |   | 4.61 | % |   |   | 16,571 |   |   |   | 144 |   |   |   | 3.49 | % |
| Investment securities, taxable                                                                                                                                                                                                                                                                                                                        |   |               | 30,729  |   |               |   | 273 |   |   |   | 3.56 | % |   |   | 28,043 |   |   |   | 342 |   |   |   | 4.89 | % |
| Investment securities, non-taxable  (2)                                                                                                                                                                                                                                                                                                     |   |               | 24,318  |   |               |   | 256 |   |   |   | 4.22 | % |   |   | 31,649 |   |   |   | 328 |   |   |   | 4.16 | % |
| Other interest earning assets                                                                                                                                                                                                                                                                                                                         |   |               | 2,446   |   |               |   | 6 |   |   |   | 0.98 | % |   |   | 2,241 |   |   |   | 37 |   |   |   | 6.62 | % |
| Total interest-earning assets                                                                                                                                                                                                                                                                                                                         |   |               | 622,597 |   |               |   | 8,417 |   |   |   | 5.42 | % |   |   | 607,562 |   |   |   | 9,518 |   |   |   | 6.28 | % |
| Non-interest-earning assets:                                                                                                                                                                                                                                                                                                                          |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                                                                                                                                                                                                                                                               |   |               | 40,147  |   |               |   |   |   |   |   |   |   |   |   | 22,853 |   |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                                                                                                                                                                                                                                                           |   |               | 7,687   |   |               |   |   |   |   |   |   |   |   |   | 7,978 |   |   |   |   |   |   |   |   |   |
| Other real estate owned                                                                                                                                                                                                                                                                                                                               |   |               | 3,444   |   |               |   |   |   |   |   |   |   |   |   | 3,407 |   |   |   |   |   |   |   |   |   |
| Accrued interest receivable and other assets                                                                                                                                                                                                                                                                                                          |   |               | 27,015  |   |               |   |   |   |   |   |   |   |   |   | 24,981 |   |   |   |   |   |   |   |   |   |
| Total average assets                                                                                                                                                                                                                                                                                                                                  |   |               | 700,890 |   |               |   |   |   |   |   |   |   |   |   | 666,781 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity:                                                                                                                                                                                                                                                                                                           |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                                                                                                                                                                                                                                         |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction deposits                                                                                                                                                                                                                                                                                                                 |   |               | 128,915 |   |               |   | 156 |   |   |   | 0.49 | % |   |   | 132,311 |   |   |   | 226 |   |   |   | 0.69 | % |
| Savings and MMDA’s                                                                                                                                                                                                                                                                                                                              |   |               | 163,460 |   |               |   | 306 |   |   |   | 0.75 | % |   |   | 174,489 |   |   |   | 429 |   |   |   | 0.99 | % |
| Time, under $100,000                                                                                                                                                                                                                                                                                                                                  |   |               | 72,167  |   |               |   | 261 |   |   |   | 1.45 | % |   |   | 43,073 |   |   |   | 252 |   |   |   | 2.35 | % |
| Time, $100,000 and over                                                                                                                                                                                                                                                                                                                               |   |               | 67,758  |   |               |   | 348 |   |   |   | 2.06 | % |   |   | 67,713 |   |   |   | 534 |   |   |   | 3.16 | % |
| FHLB advances and other borrowings                                                                                                                                                                                                                                                                                                                    |   |               | 13,680  |   |               |   | 123 |   |   |   | 3.61 | % |   |   | 9,093 |   |   |   | 61 |   |   |   | 2.69 | % |
| Total interest-bearing liabilities                                                                                                                                                                                                                                                                                                                    |   |               | 445,980 |   |               |   | 1,194 |   |   |   | 1.07 | % |   |   | 426,679 |   |   |   | 1,502 |   |   |   | 1.41 | % |
| Non-interest-bearing liabilities:                                                                                                                                                                                                                                                                                                                     |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing demand deposits                                                                                                                                                                                                                                                                                                                  |   |               | 170,063 |   |               |   |   |   |   |   |   |   |   |   | 171,308 |   |   |   |   |   |   |   |   |   |
| Accrued interest payable and other liabilities                                                                                                                                                                                                                                                                                                        |   |               | 6,064   |   |               |   |   |   |   |   |   |   |   |   | 5,615 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                                                                                                                                                                                                                                                                     |   |               | 622,107 |   |               |   |   |   |   |   |   |   |   |   | 603,602 |   |   |   |   |   |   |   |   |   |
| Total stockholders’ equity                                                                                                                                                                                                                                                                                                                      |   |               | 78,783  |   |               |   |   |   |   |   |   |   |   |   | 63,179 |   |   |   |   |   |   |   |   |   |
| Total average liabilities and stockholders’ equity                                                                                                                                                                                                                                                                                              |   | $                  | 700,890 |   |               |   |   |   |   |   |   |   |   | $ | 666,781 |   |   |   |   |   |   |   |   |   |
| Net interest income and net interest margin (3)                                                                                                                                                                                                                                                                                                       |   |               |    |   |               | $      | 7,223 |   |   |   | 4.65 | % |   |   |   |   |   | $ | 8,016 |   |   |   | 5.29 | % |
|                                                                                                                                                                                                                                                                                                                                                  |   |               |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1. Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is excluded.  Loan    interest income includes loan fees of approximately $567 and $382 for the three months ended June 30, 2009 and 2008, respectively. |   |
| 2. Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis.                                                                                                                                                                                                                                          |   |
| 3. Net interest margin is computed by dividing net interest income by total average interest-earning assets.                                                                                                                                                                                                                                     |   |

----

|                                                                                                                                                                                                                                                                                                                                               |   | Six months ended |    |   | Six months ended |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                                               |   | June 30, 2009    |    |   | June 30, 2008    |   |
|                                                                                                                                                                                                                                                                                                                                               |   | Average          |    |   |             |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                                                                                                                                                                                                                                                                                                                               |   | Balance          |    |   | Interest         |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| Assets                                                                                                                                                                                                                                                                                                                                             |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                                                                                                                                                                                                                                                           |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans (1)                                                                                                                                                                                                                                                                                                                                          |   | $                | 494,726 |   |             | $      | 15,770 |   |   |   | 6.43 | % |   | $ | 496,484 |   |   | $ | 17,780 |   |   |   | 7.18 | % |
| Federal funds sold                                                                                                                                                                                                                                                                                                                                 |   |             | 62,781  |   |             |   | 39 |   |   |   | 0.13 | % |   |   | 31,533 |   |   |   | 417 |   |   |   | 2.65 | % |
| Interest bearing due from banks                                                                                                                                                                                                                                                                                                                    |   |             | 2,513   |   |             |   | 60 |   |   |   | 4.81 | % |   |   | 19,690 |   |   |   | 412 |   |   |   | 4.20 | % |
| Investment securities, taxable                                                                                                                                                                                                                                                                                                                     |   |             | 23,998  |   |             |   | 467 |   |   |   | 3.92 | % |   |   | 34,356 |   |   |   | 840 |   |   |   | 4.90 | % |
| Investment securities, non-taxable  (2)                                                                                                                                                                                                                                                                                                  |   |             | 24,663  |   |             |   | 518 |   |   |   | 4.24 | % |   |   | 32,990 |   |   |   | 686 |   |   |   | 4.17 | % |
| Other interest earning assets                                                                                                                                                                                                                                                                                                                      |   |             | 2,379   |   |             |   | 6 |   |   |   | 0.51 | % |   |   | 2,221 |   |   |   | 66 |   |   |   | 5.96 | % |
| Total interest-earning assets                                                                                                                                                                                                                                                                                                                      |   |             | 611,060 |   |             |   | 16,860 |   |   |   | 5.56 | % |   |   | 617,274 |   |   |   | 20,201 |   |   |   | 6.56 | % |
| Non-interest-earning assets:                                                                                                                                                                                                                                                                                                                       |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                                                                                                                                                                                                                                                                                            |   |             | 39,667  |   |             |   |   |   |   |   |   |   |   |   | 23,996 |   |   |   |   |   |   |   |   |   |
| Premises and equipment, net                                                                                                                                                                                                                                                                                                                        |   |             | 8,024   |   |             |   |   |   |   |   |   |   |   |   | 7,970 |   |   |   |   |   |   |   |   |   |
| Other real estate owned                                                                                                                                                                                                                                                                                                                            |   |             | 3,889   |   |             |   |   |   |   |   |   |   |   |   | 2,224 |   |   |   |   |   |   |   |   |   |
| Accrued interest receivable and other assets                                                                                                                                                                                                                                                                                                       |   |             | 26,861  |   |             |   |   |   |   |   |   |   |   |   | 24,938 |   |   |   |   |   |   |   |   |   |
| Total average assets                                                                                                                                                                                                                                                                                                                               |   |             | 689,501 |   |             |   |   |   |   |   |   |   |   |   | 676,402 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                               |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity:                                                                                                                                                                                                                                                                                                        |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                                                                                                                                                                                                                                      |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing transaction deposits                                                                                                                                                                                                                                                                                                              |   |             | 126,518 |   |             |   | 332 |   |   |   | 0.53 | % |   |   | 131,532 |   |   |   | 550 |   |   |   | 0.84 | % |
| Savings and MMDA’s                                                                                                                                                                                                                                                                                                                           |   |             | 163,432 |   |             |   | 589 |   |   |   | 0.73 | % |   |   | 176,412 |   |   |   | 997 |   |   |   | 1.13 | % |
| Time, under $100,000                                                                                                                                                                                                                                                                                                                               |   |             | 69,638  |   |             |   | 528 |   |   |   | 1.53 | % |   |   | 43,941 |   |   |   | 584 |   |   |   | 2.67 | % |
| Time, $100,000 and over                                                                                                                                                                                                                                                                                                                            |   |             | 65,268  |   |             |   | 684 |   |   |   | 2.11 | % |   |   | 69,140 |   |   |   | 1,222 |   |   |   | 3.54 | % |
| FHLB advances and other borrowings                                                                                                                                                                                                                                                                                                                 |   |             | 15,502  |   |             |   | 281 |   |   |   | 3.66 | % |   |   | 9,743 |   |   |   | 147 |   |   |   | 3.03 | % |
| Total interest-bearing liabilities                                                                                                                                                                                                                                                                                                                 |   |             | 440,358 |   |             |   | 2,414 |   |   |   | 1.11 | % |   |   | 430,768 |   |   |   | 3,500 |   |   |   | 1.63 | % |
| Non-interest-bearing liabilities:                                                                                                                                                                                                                                                                                                                  |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing demand deposits                                                                                                                                                                                                                                                                                                               |   |             | 172,279 |   |             |   |   |   |   |   |   |   |   |   | 175,364 |   |   |   |   |   |   |   |   |   |
| Accrued interest payable and other liabilities                                                                                                                                                                                                                                                                                                     |   |             | 5,997   |   |             |   |   |   |   |   |   |   |   |   | 6,030 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                                                                                                                                                                                                                                                                  |   |             | 618,634 |   |             |   |   |   |   |   |   |   |   |   | 612,162 |   |   |   |   |   |   |   |   |   |
| Total stockholders’ equity                                                                                                                                                                                                                                                                                                                   |   |             | 70,867  |   |             |   |   |   |   |   |   |   |   |   | 64,240 |   |   |   |   |   |   |   |   |   |
| Total average liabilities and stockholders’ equity                                                                                                                                                                                                                                                                                           |   | $                | 689,501 |   |             |   |   |   |   |   |   |   |   | $ | 676,402 |   |   |   |   |   |   |   |   |   |
| Net interest income and net interest margin (3)                                                                                                                                                                                                                                                                                                    |   |             |    |   |             | $      | 14,446 |   |   |   | 4.77 | % |   |   |   |   |   | $ | 16,701 |   |   |   | 5.43 | % |
|                                                                                                                                                                                                                                                                                                                                               |   |             |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1. Average balances for loans include loans held-for-sale and non-accrual loans and are net of the allowance for loan losses, but non-accrued interest thereon is excluded.  Loan    interest income includes loan fees of approximately $1,057 and $1,094 for the six months ended June 30, 2009 and 2008, respectively. |   |
| 2. Interest income and yields on tax-exempt securities are not presented on a taxable equivalent basis.                                                                                                                                                                                                                                       |   |
| 3. Net interest margin is computed by dividing net interest income by total average interest-earning assets.                                                                                                                                                                                                                                  |   |

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|                                                               |   | (in thousands) |    |
|--------------------------------------------------------------------|--------|----------------|---------|
|                                                               |   |           |    |
|                                                               |   | Three          |    |   | Three |   |   | Six |   |   | Six |   |
|                                                               |   | months         |    |   | months |   |   | months |   |   | months |   |
|                                                               |   | ended          |    |   | ended |   |   | ended |   |   | ended |   |
|                                                               |   | June 30,       |    |   | June 30, |   |   | June 30, |   |   | June 30, |   |
|                                                               |   | 2009           |    |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Other miscellaneous operating expenses                             |   |           |    |   |   |   |   |   |   |   |   |   |
| Provision (recovery of provision) for unfunded lending commitments |   | $              | — |   |   | $ | 37 |   |   | $ | — |   |   | $ | (4 | ) |
| FDIC assessments                                                   |   |           | 536     |   |   |   | 105 |   |   |   | 752 |   |   |   | 225 |   |
| Contributions                                                      |   |           | 19      |   |   |   | 47 |   |   |   | 39 |   |   |   | 70 |   |
| Legal fees                                                         |   |           | 76      |   |   |   | 108 |   |   |   | 185 |   |   |   | 178 |   |
| Accounting and audit fees                                          |   |           | 115     |   |   |   | 106 |   |   |   | 239 |   |   |   | 365 |   |
| Consulting fees                                                    |   |           | 70      |   |   |   | 127 |   |   |   | 122 |   |   |   | 232 |   |
| Postage expense                                                    |   |           | 91      |   |   |   | 103 |   |   |   | 188 |   |   |   | 171 |   |
| Telephone expense                                                  |   |           | 81      |   |   |   | 72 |   |   |   | 149 |   |   |   | 136 |   |
| Public relations                                                   |   |           | 71      |   |   |   | 95 |   |   |   | 109 |   |   |   | 199 |   |
| Training expense                                                   |   |           | 25      |   |   |   | 62 |   |   |   | 45 |   |   |   | 123 |   |
| Loan origination expense                                           |   |           | 206     |   |   |   | 164 |   |   |   | 467 |   |   |   | 264 |   |
| Computer software depreciation                                     |   |           | 53      |   |   |   | 61 |   |   |   | 106 |   |   |   | 122 |   |
| Sundry losses                                                      |   |           | 65      |   |   |   | 123 |   |   |   | 125 |   |   |   | 158 |   |
| Loan collection expense                                            |   |           | 99      |   |   |   | 34 |   |   |   | 205 |   |   |   | 70 |   |
| Other miscellaneous expense                                        |   |           | 319     |   |   |   | 312 |   |   |   | 610 |   |   |   | 649 |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total other miscellaneous operating expenses                       |   | $              | 1,826   |   |   | $ | 1,556 |   |   | $ | 3,341 |   |   | $ | 2,958 |   |
|                                                               |   |           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                         | (in thousands) |          |
|------------------------------|----------------|---------------|
|                         |           |          |   |   |   |   |
|                         |           | June 30, 2009 |   |   | December 31, 2008 |   |
|                         |           |          |   |   |   |   |
| Undisbursed loan commitments |           | $             | 186,489 |   |   | $ | 198,615 |   |
| Standby letters of credit    |           |          | 4,962 |   |   |   | 5,715 |   |
|                         |           | $             | 191,451 |   |   | $ | 204,330 |   |

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| Analysis of the Allowance for Loan Losses         |   |
|---------------------------------------------------|--------|
| (Amounts in thousands, except percentage amounts) |   |
|                                              |   |   |   |   |   |   |
|                                              |   | Six months endedJune 30, |   |   | Year endedDecember 31, |   |
|                                              |   | 2009 |   |   | 2008 |   |   | 2008 |   |
|                                              |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                    |   | $ | 14,435 |   |   | $ | 10,876 |   |   | $ | 10,876 |   |
| Provision for loan losses                         |   |   | 2,267 |   |   |   | 6,422 |   |   |   | 16,164 |   |
| Loans charged-off:                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                        |   |   | (656 | ) |   |   | (279 | ) |   |   | (2,224 | ) |
| Agriculture                                       |   |   | — |   |   |   | — |   |   |   | (88 | ) |
| Real estate mortgage                              |   |   | (712 | ) |   |   | (1,090 | ) |   |   | (299 | ) |
| Real estate construction                          |   |   | (1,730 | ) |   |   | (3,973 | ) |   |   | (10,265 | ) |
| Consumer loans to individuals                     |   |   | (169 | ) |   |   | (187 | ) |   |   | (448 | ) |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total charged-off                                 |   |   | (3,267 | ) |   |   | (5,529 | ) |   |   | (13,324 | ) |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                        |   |   | 11 |   |   |   | 62 |   |   |   | 153 |   |
| Agriculture                                       |   |   | — |   |   |   | 51 |   |   |   | 56 |   |
| Real estate mortgage                              |   |   | — |   |   |   | 32 |   |   |   | 32 |   |
| Real estate construction                          |   |   | 605 |   |   |   | — |   |   |   | 159 |   |
| Consumer loans to individuals                     |   |   | 126 |   |   |   | 182 |   |   |   | 319 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Total recoveries                                  |   |   | 742 |   |   |   | 327 |   |   |   | 719 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net charge-offs                                   |   |   | (2,525 | ) |   |   | (5,202 | ) |   |   | (12,605 | ) |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at end of period                          |   | $ | 14,177 |   |   | $ | 12,096 |   |   | $ | 14,435 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of net charge-offs                          |   |   |   |   |   |   |   |   |   |   |   |   |
| To average loans outstanding during the period    |   |   | (0.50 | %) |   |   | (1.03 | %) |   |   | (2.40 | %) |
| Allowance for loan losses                         |   |   |   |   |   |   |   |   |   |   |   |   |
| To total loans at the end of the period           |   |   | 2.83 | % |   |   | 2.31 | % |   |   | 2.71 | % |
| To non-performing loans at the end of the period  |   |   | 91.44 | % |   |   | 75.52 | % |   |   | 101.24 | % |

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|                        |   | (in thousands) |   |
|-----------------------------|--------|----------------|--------|
|                        |   | June 30, 2009  |   |   | December 31, 2008 |   |
| Three months or less        |   | $              | 35,845 |   |   | $ | 27,753 |   |
| Over three to twelve months |   |           | 40,241 |   |   |   | 26,595 |   |
| Over twelve months          |   |           | 9,738  |   |   |   | 5,248 |   |
| Total                       |   | $              | 85,824 |   |   | $ | 59,596 |   |

|              |   | (amounts in thousands except percentage amounts) |   |
|-------------------|--------|--------------------------------------------------|--------|
|              |   | Actual                                           |   |   | Adequately |   |   | Well Capitalized |   |
|              |   |                                             |   |   |   |   |   | Capitalized |   |   | Ratio |   |
|              |   | Capital                                          |   |   | Ratio |   |   | Ratio |   |   | Requirement |   |
| Leverage          |   | $                                                | 75,435 |   |   |   | 10.79 | % |   |   | 4.0 | % |   |   | 5.0 | % |
| Tier 1 Risk-Based |   | $                                                | 75,435 |   |   |   | 13.69 | % |   |   | 4.0 | % |   |   | 6.0 | % |
| Total Risk-Based  |   | $                                                | 82,136 |   |   |   | 14.91 | % |   |   | 8.0 | % |   |   | 10.0 | % |

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|                           |   |                            |   |                        |   |                                                                      |   |                                                                           |
|--------------------------------|--------|---------------------------------|--------|-----------------------------|--------|---------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|
| Period                         |   | Total number of sharespurchased |   | Average pricepaid per share |   | Number of shares purchased as part of publicly announcedplans or programs |   | Maximum number of shares that may yet be purchased under the plans or programs |
| April 1 – April 30, 2009 |   | —                         |   | —                     |   | —                                                                   |   | 358,076                                                                        |
| May 1 – May 31, 2009     |   | —                         |   | —                     |   | —                                                                   |   | 358,076                                                                        |
| June 1 – June 30, 2009   |   | —                         |   | —                     |   | —                                                                   |   | —  *                                                           |
| Total                          |   | —                         |   | —                     |   | —                                                                   |   | —  *                                                           |

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|   |          (a) | The Company held its annual meeting of shareholders (the “Annual Meeting”) on May 19, 2009. |
|--------|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------|

|   |          (b) | Proxies for the Annual Meeting were solicited pursuant to the rules set forth in Regulation 14A promulgated under the Securities Exchange Act of 1934.  There was no solicitation in opposition to management’s nominees for directors as listed in the Company’s proxy statement for the Annual Meeting, and all of such nominees were elected. |
|--------|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | The vote for the nominated directors was as follows: |
|-----------------|------------------------------------------------------|

| Nominee                                                                                                                          | For                                   | Against orWithheld  |
|----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|---------------------|
|                                                                                                                             |                                  |                |
| Lori J. Aldrete                                                                                                                  | 6,560,313                             |   101,264 |
| Frank J. Andrews, Jr.                                                                                                            | 6,490,366                             |   171,211 |
| John M. Carbahal                                                                                                                 | 6,576,754                             |   84,823  |
| Gregory DuPratt                                                                                                                  | 6,594,398                             |   67,179  |
| John F. Hamel                                                                                                                    | 6,486,036                             |   175,541 |
| Diane P. Hamlyn                                                                                                                  | 6,474,907                             |   186,670 |
| Foy S. McNaughton                                                                                                                | 6,557,010                             |   104,567 |
| Owen J. Onsum                                                                                                                    | 6,591,095                             |   70,482  |
| David W. Schulze                                                                                                                 | 6,594,398                             |   67,179  |
| Andrew Wallace                                                                                                                   | 6,504,013                             |   157,564 |
|                                                                                                                             |                                  |                |
|                                                                                                                             |                                  |                |
| The vote for a non-binding advisory proposal on the compensation of the Company’s Named Executive Officers was as follows: |                                  |                |
|                                                                                                                             |                                  |                |
| For                                                                                                                              | 6,222,280                             |                |
| Against                                                                                                                          | 263,652                               |                |
| Abstain                                                                                                                          |      175,653 |                |
|                                                                                                                             |                                  |                |
| The vote for ratifying the appointment of Moss Adams LLP as the Company’s independent auditors was as follows:             |                                  |                |
|                                                                                                                             |                                  |                |
| For                                                                                                                              | 6,548,621                             |                |
| Against                                                                                                                          | 47,262                                |                |
| Abstain                                                                                                                          |      65,695  |                |

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| ExhibitNumber | Exhibit                                                                                                                                              |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                 |
| 31.1          | Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                               |
| 31.2          | Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                               |
| 32.1          | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2          | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 |
|          |                                                                                                                                                 |
|          |                                                                                                                                                 |
|          |                                                                                                                                                 |
|          |                                                                                                                                                 |
|          |                                                                                                                                                 |

|   |           |   | FIRST NORTHERN COMMUNITY BANCORP                                         |
|--------|----------------|--------|--------------------------------------------------------------------------|
|   |           |   |                                                                     |
| Date:  | August 7, 2009 | By:    | /s/  Louise A. Walker                                          |
|   |           |   |                                                                     |
|   |           |   | Louise A. Walker, Sr. Executive Vice President / Chief Financial Officer |
|   |           |   | (Principal Financial Officer and Duly Authorized Officer)                |