----

----

| T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009 |
|---|-------------------------------------------------------------------------------------------------------------------------------------------|

| £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                                TO |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| California                                                     | 46-1981399                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

| Large Accelerated Filer | £ | Accelerated Filer         | £ |
|-------------------------|--------|---------------------------|--------|
| Non-Accelerated Filer   | £ | Smaller Reporting Company | T      |

----

----

----

INDEX

| PART I - FINANCIAL INFORMATION                                                            | 3      |
|-------------------------------------------------------------------------------------------|--------|
|                                                                                      |   |
| ITEM 1 - FINANCIAL STATEMENTS                                                             | 4      |
|                                                                                      |   |
| ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF | 20     |
| OPERATONS                                                                                 |   |
|                                                                                      |   |
| ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                 | 36     |
|                                                                                      |   |
| ITEM 4 – CONTROLS AND PROCEDURES                                                    | 36     |
|                                                                                      |   |
| PART II - OTHER INFORMATION                                                               | 37     |
|                                                                                      |   |
| ITEM 1 LEGAL PROCEEDINGS                                                                  | 37     |
|                                                                                      |   |
| ITEM 1A  RISK FACTORS                                                           | 37     |
|                                                                                      |   |
| ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                        | 37     |
|                                                                                      |   |
| ITEM 3 DEFAULTS UPON SENIOR SECURITIES                                                    | 37     |
|                                                                                      |   |
| ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                | 38     |
|                                                                                      |   |
| ITEM 5 OTHER INFORMATION                                                                  | 38     |
|                                                                                      |   |
| ITEM 6 EXHIBITS                                                                           | 38     |
|                                                                                      |   |
| SIGNATURES                                                                                | 39     |
|                                                                                      |   |
| EXHIBIT INDEX                                                                             | 40     |

----

Index

PART I

----

Index

ITEM 1 –

|                                                                                      |   | September 30,2009 |        |   | December 31,2008 |   |
|-------------------------------------------------------------------------------------------|--------|------------------------|-------------|--------|-----------------------|--------|
|                                                                                      |   |                   |        |   |                  |   |
| Assets                                                                                    |   |                   |        |   |                  |   |
| Cash and due from banks                                                                   |   | $                      | 48,310,943  |   |                  | $      | 8,755,867 |   |
| Federal funds sold                                                                        |   |                   | -           |   |                  |   | 13,390,000 |   |
| Total cash and cash equivalents                                                           |   |                   | 48,310,943  |   |                  |   | 22,145,867 |   |
| Available-for-sale investment securities, at fair value                                   |   |                   | 40,772,000  |   |                  |   | 42,018,000 |   |
| Loans, less allowance for loan losses of $5,071,390 at September 30, 2009 and             |   |                   |        |   |                  |   |   |   |
| $3,244,454 at December 31, 2008 (Note 4)                                                  |   |                   | 235,134,758 |   |                  |   | 226,696,838 |   |
| Bank premises and equipment, net                                                          |   |                   | 7,552,559   |   |                  |   | 3,974,845 |   |
| Cash surrender value of bank-owned life insurance                                         |   |                   | 6,286,369   |   |                  |   | 6,421,863 |   |
| Accrued interest receivable and other assets                                              |   |                   | 5,577,986   |   |                  |   | 4,841,565 |   |
| Total assets                                                                              |   | $                      | 343,634,615 |   |                  | $      | 306,098,978 |   |
|                                                                                      |   |                   |        |   |                  |   |   |   |
| Liabilities and Shareholders’ Equity                                                |   |                   |        |   |                  |   |   |   |
| Deposits:                                                                                 |   |                   |        |   |                  |   |   |   |
| Noninterest-bearing                                                                       |   | $                      | 66,706,560  |   |                  | $      | 77,405,517 |   |
| Interest-bearing                                                                          |   |                   | 228,148,379 |   |                  |   | 179,917,916 |   |
| Total deposits                                                                            |   |                   | 294,854,939 |   |                  |   | 257,323,433 |   |
|                                                                                      |   |                   |        |   |                  |   |   |   |
| Accrued interest payable and other liabilities                                            |   |                   | 2,513,614   |   |                  |   | 2,357,915 |   |
| Short-term debt                                                                           |   |                   | -           |   |                  |   | 8,000,000 |   |
| Long-term debt                                                                            |   |                   | 3,718,674   |   |                  |   | 5,184,346 |   |
| Junior subordinated deferrable interest debentures                                        |   |                   | 3,093,000   |   |                  |   | 3,093,000 |   |
| Total liabilities                                                                         |   |                   | 304,180,227 |   |                  |   | 275,958,694 |   |
|                                                                                      |   |                   |        |   |                  |   |   |   |
| Commitments and contingencies (Note 6)                                                    |   |                   |        |   |                  |   |   |   |
|                                                                                      |   |                   |        |   |                  |   |   |   |
| Shareholders’ equity:                                                               |   |                   |        |   |                  |   |   |   |
| Serial preferred stock - no par value; 10,000,000 shares authorized, issued and           |   |                   |        |   |                  |   |   |   |
| outstanding – 7,700 shares class B and 385 shares class C at September 30, 2009     |   |                   |        |   |                  |   |   |   |
| and none issued at December 31, 2008                                                      |   |                   | 7,725,550   |   |                  |   | - |   |
| Common stock - no par value; 30,000,000 shares authorized; issued and outstanding – |   |                   |        |   |                  |   |   |   |
| 2,608,317 shares at September 30, 2009 and 2,597,149 shares at December 31,               |   |                   |        |   |                  |   |   |   |
| 2008                                                                                      |   |                   | 25,750,901  |   |                  |   | 24,684,529 |   |
| Retained earnings                                                                         |   |                   | 5,572,072   |   |                  |   | 5,359,535 |   |
| Accumulated other comprehensive income, net of taxes (Note 9)                             |   |                   | 405,865     |   |                  |   | 96,220 |   |
| Total shareholders’ equity                                                          |   |                   | 39,454,388  |   |                  |   | 30,140,284 |   |
| Total liabilities and shareholders’ equity                                          |   | $                      | 343,634,615 |   |                  | $      | 306,098,978 |   |

----

Index

|                                                           |   | For the Three Months     |      |   | For the Nine Months      |   |
|----------------------------------------------------------------|--------|--------------------------|-----------|--------|--------------------------|--------|
|                                                           |   | Ended September 30, |      |   | Ended September 30, |   |
|                                                           |   | 2009                     |      |   | 2008                     |   |   | 2009 |   |   | 2008 |   |
| Interest Income:                                               |   |                     |      |   |                     |   |   |   |   |   |   |   |
| Interest and fees on loans                                     |   | $                        | 3,839,994 |   |                     | $      | 3,906,358 |   |   | $ | 11,215,081 |   |   | $ | 11,650,825 |   |
| Interest on investment securities:                             |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                        |   |                     | 332,501   |   |                     |   | 295,626 |   |   |   | 955,986 |   |   |   | 1,012,564 |   |
| Exempt from Federal income taxes                               |   |                     | 181,236   |   |                     |   | 202,673 |   |   |   | 577,645 |   |   |   | 596,206 |   |
| Interest on Federal funds sold                                 |   |                     | 73        |   |                     |   | 98,944 |   |   |   | 9,972 |   |   |   | 147,044 |   |
| Interest on deposits in banks                                  |   |                     | 12,620    |   |                     |   | - |   |   |   | 12,701 |   |   |   | - |   |
| Total interest income                                          |   |                     | 4,366,424 |   |                     |   | 4,503,601 |   |   |   | 12,771,385 |   |   |   | 13,406,639 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense:                                              |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest on deposits                                           |   |                     | 909,716   |   |                     |   | 1,318,806 |   |   |   | 2,847,745 |   |   |   | 3,701,771 |   |
| Interest on short-term debt                                    |   |                     | -         |   |                     |   | 51,958 |   |   |   | 27,934 |   |   |   | 245,684 |   |
| Interest on long-term debt                                     |   |                     | 47,092    |   |                     |   | 70,506 |   |   |   | 163,648 |   |   |   | 234,393 |   |
| Interest on junior subordinated deferrable interest debentures |   |                     | 30,485    |   |                     |   | 48,096 |   |   |   | 101,327 |   |   |   | 155,718 |   |
| Total interest expense                                         |   |                     | 987,293   |   |                     |   | 1,489,366 |   |   |   | 3,140,654 |   |   |   | 4,337,566 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income before provision for loan losses           |   |                     | 3,379,131 |   |                     |   | 3,014,235 |   |   |   | 9,630,731 |   |   |   | 9,069,073 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                      |   |                     | 600,000   |   |                     |   | 400,000 |   |   |   | 2,000,000 |   |   |   | 1,200,000 |   |
| Net interest income after provision for loan losses            |   |                     | 2,779,131 |   |                     |   | 2,614,235 |   |   |   | 7,630,731 |   |   |   | 7,869,073 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest Income:                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Service charges                                                |   |                     | 198,587   |   |                     |   | 192,352 |   |   |   | 567,459 |   |   |   | 528,046 |   |
| Gain on sale of available-for-sale investment securities, net  |   |                     | 164,756   |   |                     |   | - |   |   |   | 168,818 |   |   |   | 46,412 |   |
| Gain on sale of other real estate                              |   |                     | 16,055    |   |                     |   | - |   |   |   | 16,055 |   |   |   | - |   |
| Mortgage loan brokerage fees                                   |   |                     | 13,105    |   |                     |   | 8,674 |   |   |   | 40,587 |   |   |   | 42,475 |   |
| Earnings on cash surrender value of life insurance policies    |   |                     | 72,560    |   |                     |   | 68,408 |   |   |   | 214,578 |   |   |   | 201,027 |   |
| Officer life insurance benefits                                |   |                     | -         |   |                     |   | - |   |   |   | 317,488 |   |   |   | - |   |
| Other                                                          |   |                     | 43,095    |   |                     |   | 42,255 |   |   |   | 147,412 |   |   |   | 174,442 |   |
| Total non-interest income                                      |   |                     | 508,158   |   |                     |   | 311,689 |   |   |   | 1,472,397 |   |   |   | 992,402 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest Expense:                                          |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                 |   |                     | 1,200,590 |   |                     |   | 1,265,201 |   |   |   | 3,663,388 |   |   |   | 3,821,499 |   |
| Occupancy and equipment                                        |   |                     | 387,371   |   |                     |   | 334,931 |   |   |   | 1,169,813 |   |   |   | 934,215 |   |
| Other                                                          |   |                     | 775,894   |   |                     |   | 645,578 |   |   |   | 2,379,594 |   |   |   | 2,080,154 |   |
| Total non-interest expense                                     |   |                     | 2,363,855 |   |                     |   | 2,245,710 |   |   |   | 7,212,795 |   |   |   | 6,835,868 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income before provision for income taxes                       |   |                     | 923,434   |   |                     |   | 680,214 |   |   |   | 1,890,333 |   |   |   | 2,025,607 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes                                     |   |                     | 303,000   |   |                     |   | 202,000 |   |   |   | 391,000 |   |   |   | 594,000 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net income                                                     |   | $                        | 620,434   |   |                     | $      | 478,214 |   |   | $ | 1,499,333 |   |   | $ | 1,431,607 |   |
| Dividends accrued and discount accreted on preferred           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| shares                                                         |   |                     | (96,251   | )      |                     |   | - |   |   |   | (257,736 | ) |   |   | - |   |
| Net income available to common shareholders                    |   | $                        | 524,183   |   |                     | $      | 478,214 |   |   | $ | 1,241,597 |   |   | $ | 1,431,607 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per share (Notes 8)                             |   | $                        | 0.20      |   |                     | $      | 0.18 |   |   | $ | 0.48 |   |   | $ | 0.55 |   |
|                                                           |   |                     |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings per share (Notes 8)                           |   | $                        | 0.20      |   |                     | $      | 0.18 |   |   | $ | 0.48 |   |   | $ | 0.54 |   |

----

Index

|                                                                              |   | For the Nine Months      |        |
|-----------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                              |   | Ended September 30, |        |
|                                                                              |   | 2009                     |        |   | 2008 |   |
|                                                                              |   |                     |        |   |   |   |
| Cash Flows from Operating Activities:                                             |   |                     |        |   |   |   |
| Net income                                                                        |   | $                        | 1,499,333   |   |   | $ | 1,431,607 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                     |        |   |   |   |   |   |
| Provision for loan losses                                                         |   |                     | 2,000,000   |   |   |   | 1,200,000 |   |
| Increase in deferred loan origination fees, net                                   |   |                     | 112,843     |   |   |   | 69,943 |   |
| Depreciation                                                                      |   |                     | 507,982     |   |   |   | 339,685 |   |
| Amortization of intangibles                                                       |   |                     | -           |   |   |   | 7,718 |   |
| Tax benefit from exercise of stock options                                        |   |                     | (7,718      | ) |   |   | - |   |
| Gain on sale of available-for-sale investment securities, net                     |   |                     | (168,818    | ) |   |   | (46,412 | ) |
| Dividends on Federal Home Loan Bank stock                                         |   |                     | -           |   |   |   | (69,100 | ) |
| Accretion of discounts on investment securities, net                              |   |                     | (10,941     | ) |   |   | (19,501 | ) |
| Increase in cash surrender value of bank-owned life insurance                     |   |                     | (209,856    | ) |   |   | (190,033 | ) |
| Officer life insurance benefits                                                   |   |                     | (317,488    | ) |   |   | - |   |
| Stock-based compensation expense                                                  |   |                     | 46,702      |   |   |   | 45,836 |   |
| Loss on disposition of premises and equipment                                     |   |                     | 285         |   |   |   | 685 |   |
| Gain on sale of other real estate                                                 |   |                     | (16,055     | ) |   |   | - |   |
| Decrease in accrued interest receivable and other assets                          |   |                     | (713,903    | ) |   |   | (919,419 | ) |
| (Decrease) increase in accrued interest payable and other liabilities             |   |                     | (114,378    | ) |   |   | 177,670 |   |
| Net cash provided by operating activities                                         |   |                     | 2,607,988   |   |   |   | 2,028,679 |   |
|                                                                              |   |                     |        |   |   |   |   |   |
| Cash Flows from Investing Activities:                                             |   |                     |        |   |   |   |   |   |
| Proceeds from matured and called available-for-sale investment securities         |   |                     | 2,864,361   |   |   |   | 9,500,000 |   |
| Proceeds from sales of available-for-sale investment securities                   |   |                     | 7,371,531   |   |   |   | 4,546,412 |   |
| Purchases of available-for-sale investment securities                             |   |                     | (12,940,757 | ) |   |   | (2,958,048 | ) |
| Proceeds from principal repayments from available-for-sale                        |   |                     |        |   |   |   |   |   |
| mortgage-backed securities                                                        |   |                     | 4,656,784   |   |   |   | 2,673,412 |   |
| (Purchase) redemption of Federal Home Loan Bank Stock, net                        |   |                     | (14,800     | ) |   |   | 425,900 |   |
| Net increase in loans                                                             |   |                     | (11,830,797 | ) |   |   | (26,702,594 | ) |
| Purchase of premises and equipment                                                |   |                     | (4,086,031  | ) |   |   | (1,380,896 | ) |
| Proceeds from sale of equipment                                                   |   |                     | 50          |   |   |   | 2,250 |   |
| Proceeds from bank owned life insurance                                           |   |                     | 662,838     |   |   |   | - |   |
| Proceeds from sale of other real estate                                           |   |                     | 1,296,089   |   |   |   | - |   |
| Net cash used in investing activities                                             |   |                     | (12,020,732 | ) |   |   | (13,893,564 | ) |

----

Index

|                                                              |   | For the Nine Months      |       |
|-------------------------------------------------------------------|--------|--------------------------|------------|
|                                                              |   | Ended September 30, |       |
|                                                              |   | 2009                     |       |   | 2008 |   |
|                                                              |   |                     |       |   |   |   |
| Cash Flows from Financing Activities:                             |   |                     |       |   |   |   |
| Net increase in noninterest-bearing and interest-bearing deposits |   | $                        | 23,402,634 |   |   | $ | 2,835,440 |   |
| Net increase in time deposits                                     |   |                     | 14,128,872 |   |   |   | 40,271,096 |   |
| Proceeds from exercised stock options                             |   |                     | 59,998     |   |   |   | 3,975 |   |
| Benefit from exercise of stock options                            |   |                     | 7,718      |   |   |   | - |   |
|                                                              |   |                     |       |   |   |   |   |   |
| Proceeds from issuance of preferred stock                         |   |                     | 7,674,217  |   |   |   | - |   |
|                                                              |   |                     |       |   |   |   |   |   |
| Cash paid to repurchase common stock                              |   |                     | -          |   |   |   | (804,118 | ) |
| Cash dividends paid on preferred stock                            |   |                     | (227,310   | ) |   |   | - |   |
| Decrease in short-term borrowings, net                            |   |                     | (8,000,000 | ) |   |   | (13,804,000 | ) |
| Principal payments on long-term debt                              |   |                     | (1,465,732 | ) |   |   | (2,657,801 | ) |
| Cash paid to repurchase fractional shares                         |   |                     | (2,577     | ) |   |   | (3,489 | ) |
| Net cash provided by financing activities                         |   |                     | 35,577,820 |   |   |   | 25,841,103 |   |
|                                                              |   |                     |       |   |   |   |   |   |
| Increase in cash and cash equivalents                             |   |                     | 26,165,076 |   |   |   | 13,976,218 |   |
| Cash and Cash Equivalents at Beginning of Year                    |   |                     | 22,145,867 |   |   |   | 9,297,346 |   |
| Cash and Cash Equivalents at End of Period                        |   | $                        | 48,310,943 |   |   | $ | 23,273,564 |   |
|                                                              |   |                     |       |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                 |   |                     |       |   |   |   |   |   |
| Cash paid during the period for:                                  |   |                     |       |   |   |   |   |   |
| Interest expense                                                  |   | $                        | 3,293,280  |   |   | $ | 4,333,367 |   |
| Income taxes                                                      |   | $                        | 865,000    |   |   | $ | 1,435,000 |   |
|                                                              |   |                     |       |   |   |   |   |   |
| Non-Cash Investing Activities:                                    |   |                     |       |   |   |   |   |   |
| Net change in unrealized loss on available-for-sale securities    |   | $                        | 526,160    |   |   | $ | (958,137 | ) |
| Non-cash Financing Activities:                                    |   |                     |       |   |   |   |   |   |
| Accrued dividends on preferred stock                              |   | $                        | 53,621     |   |   | $ | - |   |
| Real estate owned acquired through foreclosure                    |   | $                        | 1,280,034  |   |   |   | - |   |
| Cumulative effect of adopting EITF 06-04                          |   | $                        | -          |   |   | $ | 102,115 |   |

----

Index

| 1. | GENERAL |
|----|---------|

| 2. | BASIS OF PRESENTATION |
|----|-----------------------|

----

Index

| 2. | BASIS OF PRESENTATION (Continued) |
|----|-----------------------------------|

| 3. | AVAILABLE-FOR-SALE INVESTMENT SECURITIES |
|----|------------------------------------------|

|                       |   | September 30, 2009 |       |
|----------------------------|--------|--------------------|------------|
|                       |   |               |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                       |   | Amortized          |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                       |   | Cost               |       |   | Gains |   |   | Losses |   |   | Value |   |
|                       |   |               |       |   |   |   |   |   |   |   |   |   |
| Debt securities:           |   |               |       |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies   |   | $                  | 4,939,844  |   |   | $ | 137,156 |   |   | $ | - |   |   | $ | 5,077,000 |   |
| Mortgage-backed securities |   |               | 19,805,561 |   |   |   | 634,700 |   |   |   | (3,261 | ) |   |   | 20,437,000 |   |
| Municipal securities       |   |               | 15,336,935 |   |   |   | 202,173 |   |   |   | (281,108 | ) |   |   | 15,258,000 |   |
|                       |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   | $                  | 40,082,340 |   |   | $ | 974,029 |   |   | $ | (284,369 | ) |   | $ | 40,772,000 |   |

|                       |   | December 31, 2008 |       |
|----------------------------|--------|-------------------|------------|
|                       |   |              |       |   | Gross |   |   | Gross |   |   | Estimated |   |
|                       |   | Amortized         |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                       |   | Cost              |       |   | Gains |   |   | Losses |   |   | Value |   |
|                       |   |              |       |   |   |   |   |   |   |   |   |   |
| Debt securities:           |   |              |       |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities   |   | $                 | 247,220    |   |   | $ | 32,780 |   |   | $ | - |   |   | $ | 280,000 |   |
| U.S. Government agencies   |   |              | 6,752,730  |   |   |   | 225,270 |   |   |   | - |   |   |   | 6,978,000 |   |
| Mortgage-backed securities |   |              | 15,101,739 |   |   |   | 553,862 |   |   |   | (1,601 | ) |   |   | 15,654,000 |   |
| Municipal securities       |   |              | 19,752,811 |   |   |   | 98,080 |   |   |   | (744,891 | ) |   |   | 19,106,000 |   |
|                       |   | $                 | 41,854,500 |   |   | $ | 909,992 |   |   | $ | (746,492 | ) |   | $ | 42,018,000 |   |

----

Index

| 3. | AVAILABLE-FOR-SALE INVESTMENT SECURITIES (Continued) |
|----|------------------------------------------------------|

|                 |   | Less than 12 Months |      |   | 12 Months or More |   |     | Total  |   |
|----------------------|--------|---------------------|-----------|--------|-------------------|--------|----------|--------|--------|
|                 |   | Fair                |      |   | Unrealized        |   |     | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                 |   | Value               |      |   | Losses            |   |     | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                 |   |                |      |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Debt securities:     |   |                |      |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      |   |                |      |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| securities           |   | $                   | 2,074,000 |   |              | $      | (3,484   | )      |   |   | - |   |   | $ | - |   |   | $ | 2,074,000 |   |   | $ | (3,484 | ) |
| Municipal securities |   |                | 1,032,000 |   |              |   | (104,675 | )      |   | $ | 2,855,000 |   |   |   | (176,210 | ) |   |   | 3,887,000 |   |   |   | (280,885 | ) |
|                 |   | $                   | 3,106,000 |   |              | $      | (108,159 | )      |   | $ | 2,855,000 |   |   | $ | (176,210 | ) |   | $ | 5,961,000 |   |   | $ | (284,369 | ) |

|                 |   | Less than 12 Months |       |   | 12 Months or More |   |     | Total  |   |
|----------------------|--------|---------------------|------------|--------|-------------------|--------|----------|--------|--------|
|                 |   | Fair                |       |   | Unrealized        |   |     | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                 |   | Value               |       |   | Losses            |   |     | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                 |   |                |       |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Debt securities:     |   |                |       |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      |   |                |       |   |              |   |     |   |   |   |   |   |   |   |   |   |   |   |
| securities           |   | $                   | 335,000    |   |              | $      | (1,601   | )      |   | $ | - |   |   | $ | - |   |   | $ | 335,000 |   |   | $ | (1,601 | ) |
| Municipal securities |   |                | 12,252,000 |   |              |   | (528,257 | )      |   |   | 1,906,000 |   |   |   | (216,634 | ) |   |   | 14,158,000 |   |   |   | (744,891 | ) |
|                 |   | $                   | 12,587,000 |   |              | $      | (529,858 | )      |   | $ | 1,906,000 |   |   | $ | (216,634 | ) |   | $ | 14,493,000 |   |   | $ | (746,492 | ) |

----

Index

| 3. | AVAILABLE-FOR-SALE INVESTMENT SECURITIES (Continued) |
|----|------------------------------------------------------|

|                                      |   |      |       |   | Estimated |   |
|-------------------------------------------|--------|-----------|------------|--------|-----------|--------|
|                                      |   | Amortized |       |   | Fair      |   |
|                                      |   | Cost      |       |   | Value     |   |
|                                      |   |      |       |   |      |   |
| Within one year                           |   | $         | 1,932      |   |      | $      | 2,000 |   |
| After one year through five years         |   |      | 19,789     |   |      |   | 20,000 |   |
| After five years through ten years        |   |      | 4,480,691  |   |      |   | 4,560,000 |   |
| After ten years                           |   |      | 15,774,367 |   |      |   | 15,753,000 |   |
|                                      |   |      | 20,276,779 |   |      |   | 20,335,000 |   |
| Investment securities not due at a single |   |      |       |   |      |   |   |   |
| maturity date:                            |   |      |       |   |      |   |   |   |
| Mortgage-backed securities                |   |      | 19,805,561 |   |      |   | 20,437,000 |   |
|                                      |   |      |       |   |      |   |   |   |
|                                      |   | $         | 40,082,340 |   |      | $      | 40,772,000 |   |

| 4. | LOANS |
|----|-------|

|                               |   | September 30,2009 |        |   | December 31,2008 |   |
|------------------------------------|--------|------------------------|-------------|--------|-----------------------|--------|
| Commercial                         |   | $                      | 52,030,576  |   |                  | $      | 58,324,986 |   |
| Real estate – mortgage       |   |                   | 152,757,468 |   |                  |   | 129,267,195 |   |
| Real estate – construction   |   |                   | 28,485,798  |   |                  |   | 35,113,099 |   |
| Agricultural                       |   |                   | 5,243,523   |   |                  |   | 4,010,551 |   |
| Consumer                           |   |                   | 2,142,375   |   |                  |   | 3,566,210 |   |
|                               |   |                   | 240,659,740 |   |                  |   | 230,282,041 |   |
|                               |   |                   |        |   |                  |   |   |   |
| Deferred loan fees,  net |   |                   | (453,592    | )      |                  |   | (340,749 | ) |
| Allowance for loan losses          |   |                   | (5,071,390  | )      |                  |   | (3,244,454 | ) |
|                               |   | $                      | 235,134,758 |   |                  | $      | 226,696,838 |   |

| 5. | BANK PREMISES AND EQUIPMENT |
|----|-----------------------------|

|                                           |   | September 30,2009 |       |   | December 31,2008 |   |
|------------------------------------------------|--------|------------------------|------------|--------|-----------------------|--------|
| Furniture and equipment                        |   | $                      | 2,854,799  |   |                  | $      | 2,805,728 |   |
| Premises                                       |   |                   | 2,095,490  |   |                  |   | 2,094,517 |   |
| Leasehold improvements                         |   |                   | 550,548    |   |                  |   | 550,548 |   |
| Construction in progress                       |   |                   | 3,184,658  |   |                  |   | 5,957 |   |
| Land                                           |   |                   | 1,454,745  |   |                  |   | 601,530 |   |
|                                           |   |                   | 10,140,240 |   |                  |   | 6,058,280 |   |
|                                           |   |                   |       |   |                  |   |   |   |
| Less accumulated depreciation and amortization |   |                   | (2,587,681 | )      |                  |   | (2,083,435 | ) |
|                                           |   | $                      | 7,552,559  |   |                  | $      | 3,974,845 |   |

----

Index

| 6. | COMMITMENTS AND CONTINGENCIES |
|----|-------------------------------|

| 7. | STOCK BASED COMPENSATION |
|----|--------------------------|

----

Index

| 7. | STOCK BASED COMPENSATION (Continued) |
|----|--------------------------------------|

|                                      |   | For the Nine Months Ended September 30, 2009 |    |
|-------------------------------------------|--------|----------------------------------------------|---------|
|                                      |   |                                         |    |   |   |   |   |   |   |   |
|                                      |   | Shares                                       |    |   | Weighted Average Exercise Price |   | Weighted Average Remaining Contractual Term |   | Aggregate Intrinsic Value (in thousands) |   |
|                                      |   |                                         |    |   |   |   |   |   |   |   |
| Incentive:                                |   |                                         |    |   |   |   |   |   |   |   |
| Options outstanding at January 1, 2009    |   |                                         | 74,878  |   |   | $ | 10.36 |   |   |   |   |   |
| Options granted                           |   |                                         | -       |   |   |   | - |   |   |   |   |   |
| Options exercised                         |   |                                         | -       |   |   |   | - |   |   |   |   |   |
| Options cancelled                         |   |                                         | (522    | ) |   |   | 13.15 |   |   |   |   |   |
| Options outstanding at                    |   |                                         |    |   |   |   |   |   |   |   |   |   |
| September 30, 2009                        |   |                                         | 74,356  |   |   |   | 10.34 |   | 5.59 years |   | $ | 45,706 | (1) |
| Options vested or expected to vest        |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| after September 30, 2009                  |   |                                         | 51,538  |   |   |   | 9.09 |   | 3.84 years |   |   | 31,807 | (1) |
| Options exercisable at September 30, 2009 |   |                                         | 43,926  |   |   |   | 8.40 |   | 3.76 years |   |   | 45,706 | (1) |
|                                      |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
|                                      |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| Nonstatutory:                             |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| Options outstanding at January 1, 2009    |   |                                         | 99,132  |   |   | $ | 8.68 |   |   |   |   |   |   |
| Options granted                           |   |                                         | -       |   |   |   | - |   |   |   |   |   |   |
| Options exercised                         |   |                                         | (11,168 | ) |   |   | 5.37 |   |   |   |   |   |   |
| Options cancelled                         |   |                                         | -       |   |   |   | - |   |   |   |   |   |   |
| Options outstanding at                    |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| September 30, 2009                        |   |                                         | 87,964  |   |   |   | 9.10 |   | 3.29 years |   | $ | 84,105 | (1) |
| Options vested or expected to vest        |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| after September 30, 2009                  |   |                                         | 85,647  |   |   |   | 8.89 |   | 3.29 years |   |   | 84,105 | (1) |
| Options exercisable at September 30, 2009 |   |                                         | 85,647  |   |   |   | 8.89 |   | 2.79 years |   |   | 84,105 | (1) |

----

Index

| 8. | EARNINGS PER SHARE COMPUTATION |
|----|--------------------------------|

|                                           |   | For the Three Months |      |   | For the Nine Months |   |
|------------------------------------------------|--------|----------------------|-----------|--------|---------------------|--------|
|                                           |   | Ended September 30,  |      |   | Ended September 30, |   |
|                                           |   | 2009                 |      |   | 2008                |   |   | 2009 |   |   | 2008 |   |
| Net Income:                                    |   |                 |      |   |                |   |   |   |   |   |   |   |
| Net income                                     |   | $                    | 620,434   |   |                | $      | 478,214 |   |   | $ | 1,499,333 |   |   | $ | 1,431,607 |   |
| Dividends accrued and discounts                |   |                 |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| accreted on preferred shares                   |   |                 | (96,251   | )      |                |   | - |   |   |   | (257,736 | ) |   |   | - |   |
| Net income allocated to common                 |   |                 |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| shareholders                                   |   | $                    | 524,183   |   |                | $      | 478,214 |   |   | $ | 1,241,597 |   |   | $ | 1,431,607 |   |
| Earnings Per Share:                            |   |                 |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings per share                       |   | $                    | 0.20      |   |                | $      | 0.18 |   |   | $ | 0.48 |   |   | $ | 0.55 |   |
| Diluted earnings per share                     |   | $                    | 0.20      |   |                | $      | 0.18 |   |   | $ | 0.48 |   |   | $ | 0.54 |   |
| Weighted Average Number of Shares Outstanding: |   |                 |      |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Basic shares                                   |   |                 | 2,605,646 |   |                |   | 2,583,700 |   |   |   | 2,600,176 |   |   |   | 2,594,507 |   |
| Diluted shares                                 |   |                 | 2,619,492 |   |                |   | 2,626,545 |   |   |   | 2,610,051 |   |   |   | 2,647,829 |   |

| 9. | COMPREHENSIVE INCOME |
|----|----------------------|

|                                         |   | For the Three Months   |    |   | For the Nine Months    |   |
|----------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|
|                                         |   | Ended                  |    |   | Ended                  |   |
|                                         |   | September 30,2009 |    |   | September 30,2008 |   |   | September 30,2009 |   |   | September 30,2008 |   |
|                                         |   |                   |    |   |                   |   |   |   |   |   |   |   |
| Net income                                   |   | $                      | 620,434 |   |                   | $      | 478,214 |   |   | $ | 1,499,333 |   |   | $ | 1,431,607 |   |
| Other comprehensive income (loss):           |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gain (loss) on available-for-sale |   |                   | 323,367 |   |                   |   | (364,293 | ) |   |   | 309,645 |   |   |   | (556,318 | ) |
| investment securities, net of tax            |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Total other comprehensive income             |   | $                      | 943,801 |   |                   | $      | 113,921 |   |   | $ | 1,808,978 |   |   | $ | 875,289 |   |

----

Index

| 10. | INCOME TAXES |
|-----|--------------|

| 11. | STOCK REPURCHASE |
|-----|------------------|

----

Index

| 12. | PREFERRED STOCK |
|-----|-----------------|

----

Index

| 13. | FAIR VALUE MEASUREMENT |
|-----|------------------------|

|                                     |   |                    |       |   | Fair Value Measurements           |   |
|------------------------------------------|--------|-------------------------|------------|--------|-----------------------------------|--------|
|                                     |   |                    |       |   | at September 30, 2009, Using |   |
|                                     |   |                    |       |   | Quoted Prices in                  |   |   | Other |   |   | Significant |   |
|                                     |   |                    |       |   | Active Markets for                |   |   | Observable |   |   | Unobservable |   |
|                                     |   | Fair Value              |       |   | Identical Assets                  |   |   | Inputs |   |   | Inputs |   |
|                                     |   | September 30, 2009 |       |   | (Level 1)                         |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                  |   |                    |       |   |                              |   |   |   |   |   |   |   |
|                                     |   |                    |       |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale investment securities |   | $                       | 40,772,000 |   |                              | $      | — |   |   | $ | 40,772,000 |   |   | $ | — |   |

----

Index

| 13. | FAIR VALUE MEASUREMENT (Continued) |
|-----|------------------------------------|

|           |   |                              |      |   | Fair Value Measurements                                        |   |
|----------------|--------|-----------------------------------|-----------|--------|----------------------------------------------------------------|--------|
|           |   |                              |      |   | at September 30, 2009, Using                              |   |
|           |   | Fair ValueSeptember 30, 2009 |      |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
| Assets:        |   |                              |      |   |                                                           |   |   |   |   |   |   |   |
|           |   |                              |      |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans |   | $                                 | 8,512,000 |   |                                                           | $      | — |   |   | $ | 546,000 |   |   | $ | 7,966,000 |   |

|                           |   | September 30, 2009 |        |   | December 31, 2008 |   |
|--------------------------------|--------|-------------------------|-------------|--------|------------------------|--------|
|                           |   | Carrying                |        |   | Fair                   |   |   | Carrying |   |   | Fair |   |
|                           |   | Amount                  |        |   | Value                  |   |   | Amount |   |   | Value |   |
|                           |   |                    |        |   |                   |   |   |   |   |   |   |   |
| Financial assets:              |   |                    |        |   |                   |   |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $                       | 48,310,943  |   |                   | $      | 48,310,943 |   |   | $ | 22,145,867 |   |   | $ | 22,145,867 |   |
| Available-for-sale             |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| investment securities          |   |                    | 40,772,000  |   |                   |   | 40,772,000 |   |   |   | 42,018,000 |   |   |   | 42,018,000 |   |
| Loans, net                     |   |                    | 235,134,758 |   |                   |   | 217,713,165 |   |   |   | 226,696,838 |   |   |   | 220,628,940 |   |
| Cash surrender value of life   |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| insurance policies             |   |                    | 6,286,369   |   |                   |   | 6,286,369 |   |   |   | 6,421,863 |   |   |   | 6,421,863 |   |
| Accrued interest receivable    |   |                    | 5,577,986   |   |                   |   | 5,577,986 |   |   |   | 3,737,365 |   |   |   | 3,737,365 |   |
| FHLB stock                     |   |                    | 1,119,000   |   |                   |   | 1,119,000 |   |   |   | 1,104,200 |   |   |   | 1,104,200 |   |
| Financial liabilities:         |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                       |   |                    | 294,854,939 |   |                   |   | 295,212,381 |   |   |   | 257,323,433 |   |   |   | 256,576,304 |   |
| Short-term debt                |   |                    |  -     |   |                   |   | - |   |   |   | 8,000,000 |   |   |   | 8,000,000 |   |
| Long-term debt                 |   |                    | 3,718,614   |   |                   |   | 4,420,705 |   |   |   | 5,184,346 |   |   |   | 4,976,558 |   |
| Junior subordinated deferrable |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| interest debentures            |   |                    | 3,093,000   |   |                   |   | 866,000 |   |   |   | 3,093,000 |   |   |   | 866,000 |   |
| Accrued interest payable       |   |                    | 144,153     |   |                   |   | 144,153 |   |   |   | 296,779 |   |   |   | 296,779 |   |
| Off-balance-sheet financial    |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Instruments:                   |   |                    |        |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit   |   |                    | 45,984,151  |   |                   |   | 45,984,151 |   |   |   | 47,408,997 |   |   |   | 47,408,977 |   |
| Standby letters of credit      |   |                    | 85,225      |   |                   |   | 85,225 |   |   |   | 337,330 |   |   |   | 337,330 |   |

----

Index

| 14. | RECENT ACCOUNTING DEVELOPMENTS |
|-----|--------------------------------|

----

Index

 2 

----

Index

----

Index

|                                                         |   | Average balances and weighted average yields and costs |    |
|--------------------------------------------------------------|--------|--------------------------------------------------------|---------|
|                                                         |   | Nine Months ended September 30,                        |    |
|                                                         |   | 2009                                                   |    |   | 2008 |   |
|                                                         |   |                                                   |    |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |
|                                                         |   | Average                                                |    |   | income/ |   |   | yield/ |   |   | Average |   |   | income/ |   |   | yield/ |   |
| (dollars in thousands)                                       |   | Balance                                                |    |   | Expense |   |   | Cost |   |   | Balance |   |   | Expense |   |   | Cost |   |
| ASSETS                                                       |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due from banks                                               |   | $                                                      | 6,251   |   |   | $ | 13 |   |   |   | 0.28 | % |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Federal funds sold                                           |   |                                                   | 5,872   |   |   |   | 9 |   |   |   | 0.20 | % |   |   | 9,988 |   |   |   | 147 |   |   |   | 1.97 | % |
| Available-for-sale investment securities:                    |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                      |   |                                                   | 26,600  |   |   |   | 956 |   |   |   | 4.81 | % |   |   | 27,452 |   |   |   | 1,013 |   |   |   | 4.93 | % |
| Exempt from Federal income taxes (1)                         |   |                                                   | 18,517  |   |   |   | 578 |   |   |   | 6.32 | % |   |   | 19,560 |   |   |   | 596 |   |   |   | 6.17 | % |
| Total securities (1)                                         |   |                                                   | 45,117  |   |   |   | 1,534 |   |   |   | 5.43 | % |   |   | 47,012 |   |   |   | 1,609 |   |   |   | 5.44 | % |
| Loans (2) (3)                                                |   |                                                   | 238,571 |   |   |   | 11,215 |   |   |   | 6.29 | % |   |   | 216,323 |   |   |   | 11,651 |   |   |   | 7.19 | % |
| Total interest-earning assets (1)                            |   |                                                   | 295,811 |   |   |   | 12,771 |   |   |   | 6.03 | % |   |   | 273,323 |   |   |   | 13,407 |   |   |   | 6.70 | % |
|                                                         |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets, net of allowance for loan losses |   |                                                   | 23,718  |   |   |   |   |   |   |   |   |   |   |   | 20,215 |   |   |   |   |   |   |   |   |   |
| Total assets                                                 |   | $                                                      | 319,529 |   |   |   |   |   |   |   |   |   |   | $ | 293,538 |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                   |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                    |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other interest bearing                                       |   | $                                                      | 108,342 |   |   | $ | 989 |   |   |   | 1.22 | % |   | $ | 91,492 |   |   | $ | 1,300 |   |   |   | 1.90 | % |
| Time deposits less than $100,000                             |   |                                                   | 24,792  |   |   |   | 451 |   |   |   | 2.43 | % |   |   | 22,551 |   |   |   | 609 |   |   |   | 3.61 | % |
| Time deposits $100,000 or more                               |   |                                                   | 68,826  |   |   |   | 1,407 |   |   |   | 2.73 | % |   |   | 60,838 |   |   |   | 1,793 |   |   |   | 3.94 | % |
| Total interest-bearing deposits                              |   |                                                   | 201,960 |   |   |   | 2,847 |   |   |   | 1.88 | % |   |   | 174,881 |   |   |   | 3,702 |   |   |   | 2.83 | % |
| Short-term debt                                              |   |                                                   | 2,640   |   |   |   | 16 |   |   |   | 0.81 | % |   |   | 11,889 |   |   |   | 246 |   |   |   | 2.76 | % |
| Long-term debt                                               |   |                                                   | 4,371   |   |   |   | 176 |   |   |   | 5.38 | % |   |   | 6,635 |   |   |   | 234 |   |   |   | 4.71 | % |
| Junior subordinated deferrable interest debentures           |   |                                                   | 3,093   |   |   |   | 101 |   |   |   | 4.37 | % |   |   | 3,093 |   |   |   | 156 |   |   |   | 6.74 | % |
| Total interest-bearing liabilities                           |   |                                                   | 212,064 |   |   |   | 3,140 |   |   |   | 1.98 | % |   |   | 196,498 |   |   |   | 4,338 |   |   |   | 2.95 | % |
|                                                         |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing deposits                                 |   |                                                   | 67,247  |   |   |   |   |   |   |   |   |   |   |   | 65,856 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                            |   |                                                   | 2,245   |   |   |   |   |   |   |   |   |   |   |   | 1,975 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                            |   |                                                   | 281,556 |   |   |   |   |   |   |   |   |   |   |   | 264,329 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                   |   |                                                   | 37,973  |   |   |   |   |   |   |   |   |   |   |   | 29,209 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity             |   | $                                                      | 319,529 |   |   |   |   |   |   |   |   |   |   | $ | 293,538 |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income and margin (1)                           |   |                                                   |    |   |   | $ | 9,631 |   |   |   | 4.58 | % |   |   |   |   |   | $ | 9,069 |   |   |   | 4.58 | % |

| (1) | Interest income is not presented on a taxable-equivalent basis, however, the average yield was calculated on a taxable- equivalent basis by using a marginal tax rate of 34%. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Nonaccrual loans are included in total loans.  Interest income is included on nonaccrual loans only to the extent cash payments have been received. There was $103,000 interest income reversed on nonaccrual loans.  Interest income reversed upon the transfer of loans to nonaccrual status totaled $36 and $8 for 2009 and 2008, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Interest income on loans includes amortized loan fees, net of costs, of $469 and $454 for 2009 and 2008, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------|

----

Index

|                                               |   | Nine months ended September 30, 2009vs. September 30, 2008 |   |
|----------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                               |   | due to change in:                                                    |   |
|                                               |   | Average                                                              |   |   | Average |   |   |   |   |
|                                               |   | Volume                                                               |   |   | Rate (1) |   |   | Total |   |
|                                               |   |                                                                 |   |   |   |   |   |   |   |
| (In thousands)                                     |   |                                                                 |   |   |   |   |   |   |   |
| Increase (decrease) in interest income:            |   |                                                                 |   |   |   |   |   |   |   |
| Due from banks                                     |   | $                                                                    | -      |   |   | $ | 13 |   |   | $ | 13 |   |
| Federal funds sold                                 |   |                                                                 | (61    | ) |   |   | (77 | ) |   |   | (138 | ) |
| Investment securities                              |   |                                                                 |   |   |   |   |   |   |   |   |   |   |
| Taxable                                            |   |                                                                 | (31    | ) |   |   | (26 | ) |   |   | (57 | ) |
| Exempt from Federal income taxes                   |   |                                                                 | (48    | ) |   |   | 30 |   |   |   | (18 | ) |
| Total securities                                   |   |                                                                 | (79    | ) |   |   | 4 |   |   |   | (75 | ) |
| Loans                                              |   |                                                                 | 1,197  |   |   |   | (1,633 | ) |   |   | (436 | ) |
| Total interest income                              |   |                                                                 | 1,057  |   |   |   | (1,693 | ) |   |   | (636 | ) |
|                                               |   |                                                                 |   |   |   |   |   |   |   |   |   |   |
| (Decrease) increase in interest expense:           |   |                                                                 |   |   |   |   |   |   |   |   |   |   |
| Other interest bearing deposits                    |   |                                                                 | 239    |   |   |   | (550 | ) |   |   | (311 | ) |
| Time deposits less than $100,000                   |   |                                                                 | 60     |   |   |   | (218 | ) |   |   | (158 | ) |
| Time deposits $100,000 or more                     |   |                                                                 | 235    |   |   |   | (621 | ) |   |   | (386 | ) |
| Total interest-bearing deposits                    |   |                                                                 | 534    |   |   |   | (1,389 | ) |   |   | (855 | ) |
| Short-term debt                                    |   |                                                                 | (191   | ) |   |   | (39 | ) |   |   | (230 | ) |
| Long-term debt                                     |   |                                                                 | (80    | ) |   |   | 22 |   |   |   | (58 | ) |
| Junior subordinated deferrable interest debentures |   |                                                                 | -      |   |   |   | (55 | ) |   |   | (55 | ) |
| Total interest expense                             |   |                                                                 | 263    |   |   |   | (1,461 | ) |   |   | (1,198 | ) |
| Increase in net interest income                    |   | $                                                                    | 800    |   |   | $ | (238 | ) |   | $ | 562 |   |

|   | (1) | Factors contributing to both changes in rate and volume have been attributed to changes in rates. |
|--------|-----|---------------------------------------------------------------------------------------------------|

----

Index

| Non-interest income                                         |
|-------------------------------------------------------------|
|                                                        |   | Nine Months endedSeptember 30, |   |   |   |   |
| (in thousands)                                              |   | 2009 |   |   | 2008 |   |   | Increase(Decrease) |   |
| Service charges                                             |   | $ | 567 |   |   | $ | 528 |   |   | $ | 39 |   |
| Gain on sale of available-for-sale investment securities    |   |   | 169 |   |   |   | 46 |   |   |   | 123 |   |
| Gain on sale of other real estate                           |   |   | 16 |   |   |   | - |   |   |   | 16 |   |
| Mortgage loan brokerage fees                                |   |   | 41 |   |   |   | 42 |   |   |   | (1 | ) |
| Earnings on cash surrender value of life insurance policies |   |   | 215 |   |   |   | 201 |   |   |   | 14 |   |
| Officer life insurance benefits                             |   |   | 317 |   |   |   | - |   |   |   | 317 |   |
| Other                                                       |   |   | 147 |   |   |   | 175 |   |   |   | (28 | ) |
| Total non-interest income                                   |   | $ | 1,472 |   |   | $ | 992 |   |   | $ | 480 |   |

----

Index

| Non-interest expense                 |
|--------------------------------------|
|                                 |   | Nine Months endedSeptember 30, |   |   |   |   |
| (in thousands)                       |   | 2009 |   |   | 2008 |   |   | Increase(Decrease) |   |
| Salaries and employee benefits       |   | $ | 3,663 |   |   | $ | 3,821 |   |   | $ | (158 | ) |
| Occupancy and equipment              |   |   | 1,170 |   |   |   | 934 |   |   |   | 236 |   |
| Other real estate owned              |   |   | 14 |   |   |   | - |   |   |   | 14 |   |
| Data processing                      |   |   | 428 |   |   |   | 390 |   |   |   | 38 |   |
| Operations                           |   |   | 363 |   |   |   | 389 |   |   |   | (26 | ) |
| Professional and legal               |   |   | 372 |   |   |   | 277 |   |   |   | 95 |   |
| Advertising and business development |   |   | 164 |   |   |   | 209 |   |   |   | (45 | ) |
| Telephone and postal                 |   |   | 160 |   |   |   | 163 |   |   |   | (3 | ) |
| Supplies                             |   |   | 113 |   |   |   | 142 |   |   |   | (29 | ) |
| Assessment and insurance             |   |   | 475 |   |   |   | 188 |   |   |   | 287 |   |
| Amortization expense                 |   |   | - |   |   |   | 8 |   |   |   | (8 | ) |
| Other expenses                       |   |   | 291 |   |   |   | 315 |   |   |   | (24 | ) |
| Total non-interest expense           |   | $ | 7,213 |   |   | $ | 6,836 |   |   | $ | 377 |   |

----

Index

| Average balances and weighted average yields and costs       |
|--------------------------------------------------------------|
|                                                         |   | Three Months ended September 30, |   |
|                                                         |   | 2009 |   |   | 2008 |   |
|                                                         |   |   |   |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |
|                                                         |   | Average |   |   | income/ |   |   | yield/ |   |   | Average |   |   | income/ |   |   | yield/ |   |
| (dollars in thousands)                                       |   | Balance |   |   | Expense |   |   | Cost |   |   | Balance |   |   | Expense |   |   | Cost |   |
| ASSETS                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due from banks                                               |   | $ | 18,550 |   |   | $ | 13 |   |   |   | 0.28 | % |   | $ | - |   |   | $ | - |   |   |   | - |   |
| Federal funds sold                                           |   |   | 1,563 |   |   |   | - |   |   |   | - |   |   |   | 20,291 |   |   |   | 99 |   |   |   | 1.94 | % |
| Available-for-sale investment securities:                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                      |   |   | 28,612 |   |   |   | 332 |   |   |   | 4.60 | % |   |   | 23,340 |   |   |   | 295 |   |   |   | 5.03 | % |
| Exempt from Federal income taxes (1)                         |   |   | 17,375 |   |   |   | 181 |   |   |   | 6.26 | % |   |   | 19,742 |   |   |   | 203 |   |   |   | 6.20 | % |
| Total securities (1)                                         |   |   | 45,987 |   |   |   | 513 |   |   |   | 5.23 | % |   |   | 43,082 |   |   |   | 498 |   |   |   | 5.56 | % |
| Loans (2) (3)                                                |   |   | 243,947 |   |   |   | 3,840 |   |   |   | 6.25 | % |   |   | 224,164 |   |   |   | 3,907 |   |   |   | 6.93 | % |
| Total interest-earning assets (1)                            |   |   | 310,047 |   |   |   | 4,366 |   |   |   | 5.71 | % |   |   | 287,537 |   |   |   | 4,504 |   |   |   | 6.38 | % |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets, net of allowance for loan losses |   |   | 25,497 |   |   |   |   |   |   |   |   |   |   |   | 19,872 |   |   |   |   |   |   |   |   |   |
| Total assets                                                 |   | $ | 335,544 |   |   |   |   |   |   |   |   |   |   | $ | 307,409 |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other interest bearing                                       |   | $ | 118,133 |   |   | $ | 305 |   |   |   | 1.02 | % |   | $ | 91,362 |   |   | $ | 409 |   |   |   | 1.78 | % |
| Time deposits less than $100,000                             |   |   | 24,659 |   |   |   | 124 |   |   |   | 2.00 | % |   |   | 28,759 |   |   |   | 245 |   |   |   | 3.39 | % |
| Time deposits $100,000 or more                               |   |   | 77,486 |   |   |   | 481 |   |   |   | 2.46 | % |   |   | 74,167 |   |   |   | 665 |   |   |   | 3.57 | % |
| Total interest-bearing deposits                              |   |   | 220,278 |   |   |   | 910 |   |   |   | 1.64 | % |   |   | 194,288 |   |   |   | 1,319 |   |   |   | 2.70 | % |
| Short-term debt                                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,000 |   |   |   | 52 |   |   |   | 2.59 | % |
| Long-term debt                                               |   |   | 3,742 |   |   |   | 47 |   |   |   | 4.98 | % |   |   | 5,511 |   |   |   | 70 |   |   |   | 5.05 | % |
| Junior subordinated deferrable interest debentures           |   |   | 3,093 |   |   |   | 30 |   |   |   | 3.85 | % |   |   | 3,093 |   |   |   | 48 |   |   |   | 6.17 | % |
| Total interest-bearing liabilities                           |   |   | 227,113 |   |   |   | 987 |   |   |   | 1.72 | % |   |   | 210,892 |   |   |   | 1,489 |   |   |   | 2.81 | % |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest bearing deposits                                 |   |   | 67,722 |   |   |   |   |   |   |   |   |   |   |   | 65,754 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                            |   |   | 1,639 |   |   |   |   |   |   |   |   |   |   |   | 1,603 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                            |   |   | 296,474 |   |   |   |   |   |   |   |   |   |   |   | 278,249 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                   |   |   | 39,070 |   |   |   |   |   |   |   |   |   |   |   | 29,160 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity             |   | $ | 335,544 |   |   |   |   |   |   |   |   |   |   | $ | 307,409 |   |   |   |   |   |   |   |   |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income and margin (1)                           |   |   |   |   |   | $ | 3,379 |   |   |   | 4.44 | % |   |   |   |   |   | $ | 3,015 |   |   |   | 4.32 | % |

| (1) | Interest income is not presented on a taxable-equivalent basis, however, the average yield was calculated on a taxable- equivalent basis by using a marginal tax rate of 34%. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Nonaccrual loans are included in total loans.  Interest income is included on nonaccrual loans only to the extent cash payments have been received. There was $20,000 interest income reversed on nonaccrual loans.  Interest income reversed upon the transfer of loans to nonaccrual status totaled $20 and $8 for 2009 and 2008, respectively. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Interest income on loans includes amortized loan fees, net of costs, of $162 and $150 for 2009 and 2008, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------|

----

Index

| Changes in net interest income due to changes in volumes and rates |
|--------------------------------------------------------------------|
|                                                               |   |
|                                                               |   | Three months ended September 30, 2009vs. September 30, 2008. |   |
|                                                               |   | Increase (decrease) due to change in: |   |
|                                                               |   | Average |   |   | Average |   |   |   |   |
|                                                               |   | Volume |   |   | Rate (1) |   |   | Total |   |
|                                                               |   |   |   |   |   |   |   |   |   |
| (In thousands)                                                     |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in interest income:                            |   |   |   |   |   |   |   |   |   |
| Due from banks                                                     |   | $ | - |   |   | $ | 13 |   |   | $ | 13 |   |
| Federal funds sold                                                 |   |   | (92 | ) |   |   | (7 | ) |   |   | (99 | ) |
| Investment securities                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                            |   |   | 67 |   |   |   | (30 | ) |   |   | 37 |   |
| Exempt from Federal income taxes                                   |   |   | (37 | ) |   |   | 15 |   |   |   | (22 | ) |
| Total securities                                                   |   |   | 30 |   |   |   | (15 | ) |   |   | 15 |   |
| Loans                                                              |   |   | 346 |   |   |   | (413 | ) |   |   | (67 | ) |
| Total interest income                                              |   |   | 284 |   |   |   | (422 | ) |   |   | (138 | ) |
|                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| (Decrease) increase in interest expense:                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Other interest-bearing deposits                                    |   |   | 120 |   |   |   | (224 | ) |   |   | (104 | ) |
| Time deposits less than $100,000                                   |   |   | (35 | ) |   |   | (86 | ) |   |   | (121 | ) |
| Time deposits $100,000 or more                                     |   |   | 30 |   |   |   | (214 | ) |   |   | (184 | ) |
| Total interest-bearing deposits                                    |   |   | 115 |   |   |   | (524 | ) |   |   | (409 | ) |
| Short-term debt                                                    |   |   | (52 | ) |   |   | - |   |   |   | (52 | ) |
| Long-term debt                                                     |   |   | (23 | ) |   |   | - |   |   |   | (23 | ) |
| Junior subordinated deferrable interest debentures                 |   |   | - |   |   |   | (18 | ) |   |   | (18 | ) |
| Total interest expense                                             |   |   | 40 |   |   |   | (542 | ) |   |   | (502 | ) |
| Increase in net interest income                                    |   | $ | 244 |   |   | $ | 120 |   |   | $ | 364 |   |

|   | (1) | Factors contributing to both changes in rate and volume have been attributed to changes in rates. |
|--------|-----|---------------------------------------------------------------------------------------------------|

----

Index

| Non-interest income                                         |
|-------------------------------------------------------------|
|                                                        |   | Three Months endedSeptember 30, |   |   |   |   |
| (in thousands)                                              |   | 2009 |   |   | 2008 |   |   | Increase (Decrease) |   |
| Service charges                                             |   | $ | 198 |   |   | $ | 192 |   |   | $ | 6 |   |
| Gain on sale of available-for-sale investment securities    |   |   | 165 |   |   |   | - |   |   |   | 165 |   |
| Gain on sale of other real estate                           |   |   | 16 |   |   |   | - |   |   |   | 16 |   |
| Mortgage loan brokerage fees                                |   |   | 13 |   |   |   | 8 |   |   |   | 5 |   |
| Earnings on cash surrender value of life insurance policies |   |   | 73 |   |   |   | 68 |   |   |   | 5 |   |
| Other                                                       |   |   | 43 |   |   |   | 44 |   |   |   | (1 | ) |
| Total non-interest income                                   |   | $ | 508 |   |   | $ | 312 |   |   | $ | 196 |   |

----

Index

| Non-interest expense                 |
|--------------------------------------|
|                                 |   | Three Months ended June 30, |   |   |   |   |
| (in thousands)                       |   | 2009 |   |   | 2008 |   |   | Increase (Decrease) |   |
| Salaries and employee benefits       |   | $ | 1,200 |   |   | $ | 1,265 |   |   | $ | (65 | ) |
| Occupancy and equipment              |   |   | 388 |   |   |   | 335 |   |   |   | 53 |   |
| Other real estate owned              |   |   | 3 |   |   |   | - |   |   |   | 3 |   |
| Data processing                      |   |   | 153 |   |   |   | 130 |   |   |   | 23 |   |
| Operations                           |   |   | 121 |   |   |   | 134 |   |   |   | (13 | ) |
| Professional and legal               |   |   | 138 |   |   |   | 83 |   |   |   | 55 |   |
| Advertising and business development |   |   | 43 |   |   |   | 71 |   |   |   | (28 | ) |
| Telephone and postal                 |   |   | 54 |   |   |   | 54 |   |   |   | - |   |
| Supplies                             |   |   | 38 |   |   |   | 49 |   |   |   | (11 | ) |
| Assessment and insurance             |   |   | 142 |   |   |   | 66 |   |   |   | 76 |   |
| Other expenses                       |   |   | 84 |   |   |   | 59 |   |   |   | 25 |   |
| Total non-interest expense           |   | $ | 2,364 |   |   | $ | 2,246 |   |   | $ | 118 |   |

----

Index

| Market value of securities available for sale |
|-----------------------------------------------|
|                                          |   |
|                                          |   | September 30, 2009 |   |
| (in thousands)                                |   | Amortized Cost |   |   | Unrealized Gain |   |   | Unrealized Loss |   |   | Fair  Value |   |
| U.S. government agencies                      |   | $ | 4,940 |   |   | $ | 137 |   |   | $ | - |   |   | $ | 5,077 |   |
| Mortgage-backed securities                    |   |   | 19,805 |   |   |   | 635 |   |   |   | (3 | ) |   |   | 20,437 |   |
| Municipal securities                          |   |   | 15,337 |   |   |   | 202 |   |   |   | (281 | ) |   |   | 15,258 |   |
| Total                                         |   | $ | 40,083 |   |   | $ | 974 |   |   | $ | (284 | ) |   | $ | 40,772 |   |

|                       |   | December 31, 2008 |   |
|----------------------------|--------|-------------------|--------|
| (in thousands)             |   | Amortized Cost    |   |   | Unrealized Gain |   |   | Unrealized Loss |   |   | Fair Value |   |
| U.S. Treasury securities   |   | $                 | 247    |   |   | $ | 33 |   |   | $ | - |   |   | $ | 280 |   |
| U.S. government agencies   |   |              | 6,753  |   |   |   | 225 |   |   |   | - |   |   |   | 6,978 |   |
| Mortgage-backed securities |   |              | 15,102 |   |   |   | 554 |   |   |   | (2 | ) |   |   | 15,654 |   |
| Municipal securities       |   |              | 19,753 |   |   |   | 98 |   |   |   | (745 | ) |   |   | 19,106 |   |
| Total                      |   | $                 | 41,855 |   |   | $ | 910 |   |   | $ | (747 | ) |   | $ | 42,018 |   |

----

Index

| (dollars in  thousands) |   | September 30, 2009 |    |   | December 31, 2008 |   |
|-----------------------------------|--------|--------------------|---------|--------|-------------------|--------|
| Commercial                        |   | $                  | 52,031  |   |              |   | 22 | % |   | $ | 58,325 |   |   |   | 25 | % |
| Real estate – mortgage (1)  |   |               | 152,757 |   |              |   | 63 |   |   |   | 129,267 |   |   |   | 56 |   |
| Real estate – construction  |   |               | 28,486  |   |              |   | 12 |   |   |   | 35,113 |   |   |   | 15 |   |
| Agricultural                      |   |               | 5,244   |   |              |   | 2 |   |   |   | 4,011 |   |   |   | 2 |   |
| Consumer and other                |   |               | 2,142   |   |              |   | 1 |   |   |   | 3,566 |   |   |   | 2 |   |
| Subtotal                          |   |               | 240,660 |   |              |   | 100 | % |   |   | 230,282 |   |   |   | 100 | % |
| Deferred loan fees, net           |   |               | (454    | )      |              |   |   |   |   |   | (341 | ) |   |   |   |   |
| Allowance for loan losses         |   |               | (5,071  | )      |              |   |   |   |   |   | (3,244 | ) |   |   |   |   |
| Total loans, net                  |   | $                  | 235,135 |   |              |   |   |   |   | $ | 226,697 |   |   |   |   |   |

----

Index

| Changes in allowance for loan losses                      |
|-----------------------------------------------------------|
|                                                      |   |   |   |   |   |   |   |   |   |
|                                                      |   | Nine Months ended |   |   | Nine Months ended |   |   | Year ended |   |
|                                                      |   | September 30, 2009 |   |   | September 30, 2008 |   |   | December 31, 2008 |   |
| (dollars in thousands)                                    |   |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |
| Balance, beginning                                        |   | $ | 3,244 |   |   | $ | 1,758 |   |   | $ | 1,758 |   |
| Provision for  loan losses                      |   |   | 2,000 |   |   |   | 1,200 |   |   |   | 1,600 |   |
| Charge-offs-real estate                                   |   |   | (173 | ) |   |   | - |   |   |   | (5 | ) |
| Charge-offs-commercial                                    |   |   | - |   |   |   | (125 | ) |   |   | (125 | ) |
| Charge-offs-other                                         |   |   | - |   |   |   | (12 | ) |   |   | (12 | ) |
| Recoveries                                                |   |   | - |   |   |   | 20 |   |   |   | 28 |   |
| Balance, ending                                           |   | $ | 5,071 |   |   | $ | 2,841 |   |   | $ | 3,244 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Net charge-offs to average loans outstanding (annualized) |   |   | .10 | % |   |   | .07 | % |   |   | 0.05 | % |
| Average loans outstanding                                 |   | $ | 238,571 |   |   | $ | 216,323 |   |   | $ | 219,431 |   |
| Ending allowance to total loans outstanding               |   |   | 2.11 | % |   |   | 1.25 | % |   |   | 1.41 | % |

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Index

| Deposit Portfolio      |   |
|------------------------|--------|
| (dollars in thousands) |   | September 30, 2009 |   |   | December 31, 2008 |   |
| Non-interest bearing   |   | $ | 66,707 |   |   |   | 23 | % |   | $ | 77,406 |   |   |   | 30 | % |
| Interest bearing       |   |   | 121,839 |   |   |   | 41 | % |   |   | 87,737 |   |   |   | 34 | % |
| Time deposits          |   |   | 77,109 |   |   |   | 26 | % |   |   | 76,280 |   |   |   | 30 | % |
| Brokered deposits      |   |   | 29,100 |   |   |   | 10 | % |   |   | 15,900 |   |   |   | 6 | % |
| Total Deposits         |   | $ | 294,855 |   |   |   | 100 | % |   | $ | 257,323 |   |   |   | 100 | % |

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Index

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Index

| Capital and capital adequacy ratios  |                    |
|--------------------------------------|-------------------------|
|                                 |                    |   |
|                                 | September 30, 2009 |   | December 31, 2008 |   |
| (dollars in thousands)               | Amount                  |   |   | Ratio |   | Amount |   |   | Ratio |   |
| Leverage Ratio                       |                    |   |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp              |                    |   |   |   |   |   |   |   |   |   |   |   |
| and Subsidiary                       |                    | $ | 42,049 |   |   |   | 12.5 | % |   | $ | 33,044 |   |   |   | 10.9 | % |
| Minimum regulatory requirement       |                    | $ | 13,422 |   |   |   | 4.0 | % |   | $ | 12,150 |   |   |   | 4.0 | % |
|                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley Business Bank                 |                    | $ | 42,045 |   |   |   | 12.5 | % |   | $ | 32,751 |   |   |   | 10.8 | % |
| Minimum requirement for “Well- |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalized” institution       |                    | $ | 16,777 |   |   |   | 5.0 | % |   | $ | 15,181 |   |   |   | 5.0 | % |
| Minimum regulatory requirement       |                    | $ | 13,417 |   |   |   | 4.0 | % |   | $ | 12,145 |   |   |   | 4.0 | % |
|                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Risk-Based Capital Ratio      |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp              |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and Subsidiary                       |                    | $ | 42,049 |   |   |   | 15.6 | % |   | $ | 33,044 |   |   |   | 12.7 | % |
| Minimum regulatory requirement       |                    | $ | 10,817 |   |   |   | 4.0 | % |   | $ | 10,367 |   |   |   | 4.0 | % |
|                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley Business Bank                 |                    | $ | 42,045 |   |   |   | 15.6 | % |   | $ | 32,751 |   |   |   | 12.6 | % |
| Minimum requirement for “Well- |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalized” institution       |                    | $ | 16,220 |   |   |   | 6.0 | % |   | $ | 15,545 |   |   |   | 6.0 | % |
| Minimum regulatory requirement       |                    | $ | 10,813 |   |   |   | 4.0 | % |   | $ | 10,363 |   |   |   | 4.0 | % |
|                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Risk-Based Capital Ratio       |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp              |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and Subsidiary                       |                    | $ | 45,450 |   |   |   | 16.8 | % |   | $ | 36,284 |   |   |   | 14.0 | % |
| Minimum regulatory requirement       |                    | $ | 21,633 |   |   |   | 8.0 | % |   | $ | 20,734 |   |   |   | 8.0 | % |
|                                 |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley Business Bank                 |                    | $ | 45,444 |   |   |   | 16.8 | % |   | $ | 35,990 |   |   |   | 13.9 | % |
| Minimum requirement for “Well- |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalized” institution       |                    | $ | 27,033 |   |   |   | 10.0 | % |   | $ | 25,909 |   |   |   | 10.0 | % |
| Minimum regulatory requirement       |                    | $ | 21,627 |   |   |   | 8.0 | % |   | $ | 20,728 |   |   |   | 8.0 | % |

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Index

ITEM 3 

4 –

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Index

PART II 

1 

1A 

 2 

 3 

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Index

 4 –

 5 –

6 –

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Index

SIG

|                    | VALLEY COMMERCE BANCORP |
|-------------------------|-------------------------|
|                    |                    |
| Date: November 14, 2009 | By:                     | /s/ Donald A. Gilles |
|                    |                    | Donald A. Gilles |
|                    |                    | President and Chief Executive Officer |
|                    |                    |
| Date: November 14, 2009 | By:                     | /s/Roy O. Estridge |
|                    |                    | Roy O. Estridge, Chief Financial Officer |

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Index

Exhi

| 31.1 | Rule 13a-14(a)/15d-14(a) Certification |
|------|----------------------------------------|

| 31.2 | Rule 13a-14(a)/15d-14(a) Certification |
|------|----------------------------------------|

| 32.1 | Section 1350 Certifications |
|------|-----------------------------|

----