----

----

|   | (Mark One)                                                                                                                                                                                                                                                                                                      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                            |
| ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                            |
| o      | 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.) |
|                                                           |                                 |
| 701 W. Main StreetVisalia, California  93291         |
| (Address of principal executive offices)                  |
|                                                           |                                 |
| (559) 622-9000(Issuer’s telephone number)                |

| Large Accelerated Filer      | o | Accelerated Filer                           | o |
|-----------------------------------|---|---------------------------------------------|---|
| Non-Accelerated Filer   | o | Smaller Reporting Company    | x |

----

----

----

INDEX

| PART I - FINANCIAL INFORMATION                                                                      | 3      |
|-----------------------------------------------------------------------------------------------------|--------|
|                                                                                                |   |
| ITEM 1 - FINANCIAL STATEMENTS                                                                       | 4      |
|                                                                                                |   |
| ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATONS | 27     |
|                                                                                                |   |
| ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           | 39     |
|                                                                                                |   |
| ITEM 4 – CONTROLS AND PROCEDURES                                                              | 39     |
|                                                                                                |   |
| PART II - OTHER INFORMATION                                                                         | 40     |
|                                                                                                |   |
| ITEM 1 LEGAL PROCEEDINGS                                                                            | 40     |
|                                                                                                |   |
| ITEM 1A  RISK FACTORS                                                                     | 40     |
|                                                                                                |   |
| ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                  | 40     |
|                                                                                                |   |
| ITEM 3 DEFAULTS UPON SENIOR SECURITIES                                                              | 40     |
|                                                                                                |   |
| ITEM 4 RESERVED                                                                                     | 41     |
|                                                                                                |   |
| ITEM 5 OTHER INFORMATION                                                                            | 41     |
|                                                                                                |   |
| ITEM 6 EXHIBITS                                                                                     | 41     |
|                                                                                                |   |
| SIGNATURES                                                                                          | 42     |
|                                                                                                |   |
| EXHIBIT INDEX                                                                                       | 43     |

----

PART 

----

Index

PART 

|                                                                                                                                                                                              |   | March 31,2011 |        |   | December 31,2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|------------------|--------|
|                                                                                                                                                                                              |   |          |        |   |             |   |
| Assets                                                                                                                                                                                            |   |          |        |   |             |   |
| Cash and due from banks                                                                                                                                                                           |   | $             | 41,741,484  |   |             | $      | 32,667,967 |   |
| Available-for-sale investment securities, at fair value (Notes 3 and 13)                                                                                                                          |   |          | 57,593,000  |   |             |   | 50,823,000 |   |
| Loans, less allowance for loan and lease losses of $6,930,851 at March 31, 2011 and $6,698,952 at December 31, 2010 (Notes 4, 5 and 13)                                                           |   |          | 221,872,154 |   |             |   | 234,304,310 |   |
| Bank premises and equipment, net (Note 6)                                                                                                                                                         |   |          | 8,420,036   |   |             |   | 8,510,688 |   |
| Cash surrender value of bank-owned life insurance                                                                                                                                                 |   |          | 6,693,126   |   |             |   | 6,627,060 |   |
| Accrued interest receivable and other assets                                                                                                                                                      |   |          | 8,135,790   |   |             |   | 8,487,803 |   |
| Total assets                                                                                                                                                                                      |   | $             | 344,455,590 |   |             | $      | 341,420,828 |   |
|                                                                                                                                                                                              |   |          |        |   |             |   |   |   |
| Liabilities and Shareholders’ Equity                                                                                                                                                        |   |          |        |   |             |   |   |   |
| Deposits:                                                                                                                                                                                         |   |          |        |   |             |   |   |   |
| Noninterest-bearing                                                                                                                                                                               |   | $             | 88,266,305  |   |             | $      | 91,202,570 |   |
| Interest-bearing                                                                                                                                                                                  |   |          | 208,405,307 |   |             |   | 203,075,230 |   |
| Total deposits                                                                                                                                                                                    |   |          | 296,671,612 |   |             |   | 294,277,800 |   |
| Accrued interest payable and other liabilities                                                                                                                                                    |   |          | 2,839,876   |   |             |   | 2,738,686 |   |
| FHLB term borrowing                                                                                                                                                                               |   |          | 2,509,626   |   |             |   | 2,561,650 |   |
| Junior subordinated deferrable interest debentures                                                                                                                                                |   |          | 3,093,000   |   |             |   | 3,093,000 |   |
| Total liabilities                                                                                                                                                                                 |   |          | 305,114,114 |   |             |   | 302,671,136 |   |
|                                                                                                                                                                                              |   |          |        |   |             |   |   |   |
| Commitments and contingencies (Note 7)                                                                                                                                                            |   |          |        |   |             |   |   |   |
|                                                                                                                                                                                              |   |          |        |   |             |   |   |   |
| 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 March 31, 2011 and December 31, 2010 (Note 12) |   |          | 7,841,050   |   |             |   | 7,821,800 |   |
| Common stock - no par value; 30,000,000 shares authorized; issued and outstanding – 2,631,480 shares at March 31, 2011 and 2,630,480 shares at December 31, 2010                            |   |          | 26,212,864  |   |             |   | 26,137,158 |   |
| Retained earnings                                                                                                                                                                                 |   |          | 5,336,130   |   |             |   | 4,831,883 |   |
| Accumulated other comprehensive loss, net of taxes (Notes 3 and 10)                                                                                                                               |   |          | (48,568     | )      |             |   | (41,149 | ) |
| Total shareholders’ equity                                                                                                                                                                  |   |          | 39,341,476  |   |             |   | 38,749,692 |   |
| Total liabilities and shareholders’ equity                                                                                                                                                  |   | $             | 344,455,590 |   |             | $      | 341,420,828 |   |

----

Index

|                                                                  |   | For the Three MonthsEnded March 31, |      |
|-----------------------------------------------------------------------|--------|-------------------------------------|-----------|
|                                                                  |   | 2011                                |      |   | 2010 |   |
| Interest Income:                                                      |   |                                |      |   |   |   |
| Interest and fees on loans                                            |   | $                                   | 3,511,752 |   |   | $ | 3,617,825 |   |
| Interest on investment securities:                                    |   |                                |      |   |   |   |   |   |
| Taxable                                                               |   |                                | 207,462   |   |   |   | 182,836 |   |
| Exempt from Federal income taxes                                      |   |                                | 153,141   |   |   |   | 156,446 |   |
| Interest on deposits in banks                                         |   |                                | 20,299    |   |   |   | 14,340 |   |
| Total interest income                                                 |   |                                | 3,892,654 |   |   |   | 3,971,447 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Interest Expense:                                                     |   |                                |      |   |   |   |   |   |
| Interest on deposits                                                  |   |                                | 397,568   |   |   |   | 661,632 |   |
| Interest on term borrowings                                           |   |                                | 31,793    |   |   |   | 46,279 |   |
| Interest on junior subordinated deferrable interest debentures        |   |                                | 27,853    |   |   |   | 27,480 |   |
| Total interest expense                                                |   |                                | 457,214   |   |   |   | 735,391 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Net interest income before provision for loan losses                  |   |                                | 3,435,440 |   |   |   | 3,236,056 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Provision for loan losses                                             |   |                                | 225,000   |   |   |   | 600,000 |   |
| Net interest income after provision for loan losses                   |   |                                | 3,210,440 |   |   |   | 2,636,056 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Non-Interest Income:                                                  |   |                                |      |   |   |   |   |   |
| Service charges                                                       |   |                                | 169,095   |   |   |   | 184,901 |   |
| Gain on sale of available-for-sale investment securities              |   |                                | 13,620    |   |   |   | - |   |
| Mortgage loan brokerage fees                                          |   |                                | 21,783    |   |   |   | 5,997 |   |
| Earnings on cash surrender value of life insurance policies           |   |                                | 72,451    |   |   |   | 67,507 |   |
| Other                                                                 |   |                                | 49,830    |   |   |   | 38,036 |   |
| Total non-interest income                                             |   |                                | 326,779   |   |   |   | 296,441 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Non-Interest Expense:                                                 |   |                                |      |   |   |   |   |   |
| Salaries and employee benefits                                        |   |                                | 1,450,155 |   |   |   | 1,403,901 |   |
| Occupancy and equipment                                               |   |                                | 321,463   |   |   |   | 339,610 |   |
| Other                                                                 |   |                                | 803,891   |   |   |   | 882,471 |   |
| Total non-interest expense                                            |   |                                | 2,575,509 |   |   |   | 2,625,982 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Income before provision for income taxes                              |   |                                | 961,710   |   |   |   | 306,515 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Provision for income taxes                                            |   |                                | 336,746   |   |   |   | 56,000 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Net income                                                            |   | $                                   | 624,964   |   |   | $ | 250,515 |   |
| Dividends accrued and discount accreted on preferred shares (Note 12) |   |                                | (101,467  | ) |   |   | (103,749 | ) |
| Net income available to common shareholders                           |   | $                                   | 523,497   |   |   | $ | 146,766 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Basic earnings per share (Notes 9)                                    |   | $                                   | 0.20      |   |   | $ | 0.06 |   |
|                                                                  |   |                                |      |   |   |   |   |   |
| Diluted earnings per share (Notes 9)                                  |   | $                                   | 0.20      |   |   | $ | 0.06 |   |

----

Index

|                                                                                  |   | For the Three MonthsEnded March 31, |       |
|---------------------------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                                                  |   | 2011                                |       |   | 2010 |   |
|                                                                                  |   |                                |       |   |   |   |
| Cash Flows from Operating Activities:                                                 |   |                                |       |   |   |   |
| Net income                                                                            |   | $                                   | 624,964    |   |   | $ | 250,515 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:     |   |                                |       |   |   |   |   |   |
| Provision for loan and lease losses                                                   |   |                                | 225,000    |   |   |   | 600,000 |   |
| Decrease in deferred loan origination fees, net                                       |   |                                | (51,408    | ) |   |   | (20,300 | ) |
| Depreciation                                                                          |   |                                | 135,534    |   |   |   | 118,396 |   |
| Gain on sale of available-for-sale investment securities                              |   |                                | (13,620    | ) |   |   | - |   |
| Loss on disposition of premises and equipment                                         |   |                                | -          |   |   |   | 5,544 |   |
| Amortization of premiums on investment securities, net                                |   |                                | 98,276     |   |   |   | 71,865 |   |
| Increase in cash surrender value of bank-owned life insurance                         |   |                                | (66,066    | ) |   |   | (62,377 | ) |
| Stock-based compensation expense                                                      |   |                                | 75,707     |   |   |   | 14,056 |   |
| Provision for deferred income taxes                                                   |   |                                | (469,558   | ) |   |   | - |   |
| Decrease in accrued interest receivable and other assets                              |   |                                | 826,759    |   |   |   | 94,693 |   |
| Increase in accrued interest payable and other liabilities                            |   |                                | 101,190    |   |   |   | 138,518 |   |
| Net cash provided by operating activities                                             |   |                                | 1,486,778  |   |   |   | 1,210,910 |   |
|                                                                                  |   |                                |       |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                 |   |                                |       |   |   |   |   |   |
| Proceeds from sales of available-for-sale investment securities                       |   |                                | 943,500    |   |   |   | - |   |
| Purchases of available-for-sale investment securities                                 |   |                                | (9,230,699 | ) |   |   | - |   |
| Proceeds from principal repayments from available-for-sale mortgage-backed securities |   |                                | 1,419,936  |   |   |   | 1,518,302 |   |
| Net decrease (increase) in loans                                                      |   |                                | 12,258,565 |   |   |   | (874,606 | ) |
| Purchase of premises and equipment                                                    |   |                                | (44,883    | ) |   |   | (734,766 | ) |
| Net cash provided by (used in) investing activities                                   |   |                                | 5,346,419  |   |   |   | (91,070 | ) |

----

Index

|                                                                                    |   | For the Three MonthsEnded March 31, |       |
|-----------------------------------------------------------------------------------------|--------|-------------------------------------|------------|
|                                                                                    |   | 2011                                |       |   | 2010 |   |
|                                                                                    |   |                                |       |   |   |   |
| Cash Flows from Financing Activities:                                                   |   |                                |       |   |   |   |
| Net (decrease)  increase in noninterest-bearing and interest-bearing deposits |   | $                                   | (1,092,800 | ) |   | $ | 851,139 |   |
| Net increase in time deposits                                                           |   |                                | 3,486,611  |   |   |   | 3,202,227 |   |
| Cash dividends paid on preferred stock                                                  |   |                                | (101,467   | ) |   |   | (103,749 | ) |
| Principal payments on long-term debt                                                    |   |                                | (52,024    | ) |   |   | (57,316 | ) |
| Net cash provided by financing activities                                               |   |                                | 2,240,320  |   |   |   | 3,892,301 |   |
|                                                                                    |   |                                |       |   |   |   |   |   |
| Increase in cash and cash equivalents                                                   |   |                                | 9,073,517  |   |   |   | 5,012,141 |   |
| Cash and Cash Equivalents at Beginning of Year                                          |   |                                | 32,667,967 |   |   |   | 39,077,786 |   |
| Cash and Cash Equivalents at End of Period                                              |   | $                                   | 41,741,484 |   |   | $ | 44,089,927 |   |
|                                                                                    |   |                                |       |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                                       |   |                                |       |   |   |   |   |   |
| Cash paid during the period for:                                                        |   |                                |       |   |   |   |   |   |
| Interest expense                                                                        |   | $                                   | 470,259    |   |   | $ | 745,232 |   |
| Income taxes                                                                            |   | $                                   | -          |   |   | $ | - |   |
|                                                                                    |   |                                |       |   |   |   |   |   |
| Non-Cash Investing Activities:                                                          |   |                                |       |   |   |   |   |   |
| Net change in unrealized loss on available-for-sale securities                          |   | $                                   | (12,607    | ) |   | $ | (166,167 | ) |
| Non-cash Financing Activities:                                                          |   |                                |       |   |   |   |   |   |
| Accrued dividends on preferred stock                                                    |   | $                                   | 101,467    |   |   | $ | 103,749 |   |

----

Index

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

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

----

Index

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

|                          |   | March 31, 2011 |            |
|-------------------------------|--------|----------------|-----------------|
|                          |   | Amortized Cost |            |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Estimated Fair Value |   |
| Debt securities:              |   |           |            |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities      |   | $              |  2,915,316 |   |   | $ | - |   |   | $ | (70,316 | ) |   | $ | 2,845,000 |   |
| U.S. Government agencies      |   |           | 10,584,224      |   |   |   | 68,944 |   |   |   | (82,168 | ) |   |   | 10,571,000 |   |
| Mortgage-backed securities:   |   |           |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies      |   |           | 14,937,812      |   |   |   | 248,302 |   |   |   | (77,114 | ) |   |   | 15,109,000 |   |
| Small Business Administration |   |           | 13,715,502      |   |   |   | 201,498 |   |   |   | - |   |   |   | 13,917,000 |   |
| Municipal securities          |   |           | 15,522,675      |   |   |   | 65,464 |   |   |   | (437,139 | ) |   |   | 15,151,000 |   |
|                          |   |           |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | $              | 57,675,529      |   |   | $ | 584,208 |   |   | $ | (666,737 | ) |   | $ | 57,593,000 |   |

|                          |   | December 31, 2010 |            |
|-------------------------------|--------|-------------------|-----------------|
|                          |   | Amortized Cost    |            |   | Gross Unrealized Gains |   |   | Gross Unrealized Losses |   |   | Estimated Fair Value |   |
|                          |   |              |            |   |   |   |   |   |   |   |   |   |
| Debt securities:              |   |              |            |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities      |   | $                 |  3,841,257 |   |   | $ | 14,597 |   |   | $ | (55,854 | ) |   | $ | 3,800,000 |   |
| U.S. Government agencies      |   |              | 5,538,062       |   |   |   | 56,069 |   |   |   | (61,131 | ) |   |   | 5,533,000 |   |
| Mortgage-backed securities:   |   |              |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies      |   |              | 12,576,534      |   |   |   | 260,768 |   |   |   | (67,302 | ) |   |   | 12,770,000 |   |
| Small Business Administration |   |              | 14,387,246      |   |   |   | 201,758 |   |   |   | (12,004 | ) |   |   | 14,577,000 |   |
| Municipal securities          |   |              | 14,549,823      |   |   |   | 22,643 |   |   |   | (429,466 | ) |   |   | 14,143,000 |   |
|                          |   |              |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   | $                 | 50,892,922      |   |   | $ | 555,835 |   |   | $ | (625,757 | ) |   | $ | 50,823,000 |   |

----

Index

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

|                 |   | Less than 12 Months |       |   | 12 Months or More |   |           | Total     |   |
|----------------------|--------|---------------------|------------|--------|-------------------|--------|----------------|-----------|--------|
|                 |   | FairValue           |       |   | UnrealizedLosses  |   |           | FairValue |   |   | Unrealized Losses |   |   | FairValue |   |   | UnrealizedLosses |   |
| Debt securities:     |   |                |       |   |              |   |           |      |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasuries      |   | $                   | 2,845,000  |   |              | $      |   (70,316 | )         |   | $ | - |   |   | $ |  - |   |   | $ | 2,845,000 |   |   | $ | (70,316 | ) |
| U.S. Agencies        |   |                | 7,110,000  |   |              |   | (82,168        | )         |   |   |   |   |   |   | - |   |   |   |  7,110,000 |   |   |   | (82,168 | ) |
| Mortgage-backed      |   |                |       |   |              |   |           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities:          |   |                |       |   |              |   |           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency               |   |                | 4,819,000  |   |              |   |  (77,114  | )    |   |   | - |   |   |   |  - |   |   |   |  4,819,000 |   |   |   |  (77,114 | )  |
| Municipal securities |   |                | 7,600,000  |   |              |   | (189,462       | )         |   |   | 2,189,000 |   |   |   | (247,677 | ) |   |   | 9,789,000 |   |   |   | (437,139 | ) |
|                 |   | $                   | 22,374,000 |   |              | $      | (419,060       | )         |   | $ |  2,189,000 |   |   | $ | (247,677 | ) |   | $ |  24,563,000 |   |   | $ |    (666,737 | ) |

|                 |   | Less than 12 Months |            |   | 12 Months or More      |   |          | Total               |   |
|----------------------|--------|--------------------------|-----------------|--------|------------------------|--------|---------------|---------------------|--------|
|                 |   | FairValue                |            |   | Unrealized Losses |   |          | FairValue           |   |   | Unrealized Losses |   |   | Fair Value |   |   | UnrealizedLosses |   |
|                 |   |                     |            |   |                   |   |          |                |   |   |   |   |   |   |   |   |   |   |
| Debt securities:     |   |                     |            |   |                   |   |          |                |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasuries      |   | $                        |  2,857,000 |   |                   | $      |  (55,854 | )                   |   | $ | - |   |   | $ | - |   |   | $ |  2,857,000 |   |   | $ | (55,854 | ) |
| U.S. Agencies        |   |                     | 2,079,000       |   |                   |   | (61,131       | )                   |   |   | - |   |   |   | - |   |   |   | 2,079,000 |   |   |   | (61,131 | ) |
| Mortgage-backed      |   |                     |            |   |                   |   |          |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| securities:          |   |                     |            |   |                   |   |          |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Agency MBS           |   |                     | 5,007,000       |   |                   |   | (67,302       | )                   |   |   | - |   |   |   | - |   |   |   | 5,007,000 |   |   |   | (67,302 | ) |
| Agency SBA           |   |                     | 1,936,000       |   |                   |   | (10,413       | )                   |   |   | 821,000 |   |   |   | (1,591 | ) |   |   | 2,757,000 |   |   |   | (12,004 | ) |
| Municipal securities |   |                     | 8,712,000       |   |                   |   | (172,566      | )                   |   |   | 2,174,000 |   |   |   | ( 256,900 | ) |   |   | 10,886,000 |   |   |   | (429,466 | ) |
|                 |   | $                        | 20,591,000      |   |                   | $      | (367,266      | )    |   | $ | 3,995,000 |   |   | $ |   (258,491 | ) |   | $ | 23,586,000 |   |   | $ | (625,757 | ) |

----

Index

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

|                                      |   | AmortizedCost |       |   | Estimated FairValue |   |
|-------------------------------------------|--------|---------------|------------|--------|---------------------|--------|
|                                      |   |          |       |   |                |   |
| Within one year                           |   | $             | 1,024,694  |   |                | $      | 1,034,000 |   |
| After one year through five years         |   |          | 7,285,382  |   |                |   | 7,230,000 |   |
| After five years through ten years        |   |          | 6,109,883  |   |                |   | 5,974,000 |   |
| After ten years                           |   |          | 14,602,256 |   |                |   | 14,329,000 |   |
|                                      |   |          | 29,022,215 |   |                |   | 28,567,000 |   |
|                                      |   |          |       |   |                |   |   |   |
| Investment securities not due at a single |   |          |       |   |                |   |   |   |
| maturity date:                            |   |          | 28,653,314 |   |                |   | 29,026,000 |   |
| Mortgage-backed securities                |   | $             | 57,675,529 |   |                | $      | 57,593,000 |   |

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

|                                |   | March 31, 2011 |        |   | December 31,2010 |   |
|-------------------------------------|--------|---------------------|-------------|--------|------------------|--------|
| Commercial                          |   | $                   | 41,636,258  |   |             | $      | 46,293,872 |   |
| Real estate – mortgage        |   |                | 161,403,153 |   |             |   | 165,202,316 |   |
| Real estate – construction    |   |                | 19,837,702  |   |             |   | 23,437,082 |   |
| Agricultural                        |   |                | 3,861,030   |   |             |   | 4,303,655 |   |
| Consumer and other                  |   |                | 2,399,883   |   |             |   | 2,152,766 |   |
|                                |   |                | 229,138,026 |   |             |   | 241,389,691 |   |
|                                |   |                |        |   |             |   |   |   |
| Deferred loan fees,  net  |   |                | (335,021    | )      |             |   | (386,429 | ) |
| Allowance for loan and lease losses |   |                | (6,930,851  | )      |             |   | (6,698,952 | ) |
|                                |   | $                   | 221,872,154 |   |             | $      | 234,304,310 |   |

----

Index

| 5.  | ALLOWANCE FOR LOAN AND LEASE LOSSES |
|----------|-------------------------------------|

|                            |   | March 31, 2011 |      |   | March 31,2010 |   |
|---------------------------------|--------|---------------------|-----------|--------|---------------|--------|
| Balance, beginning of period    |   | $                   | 6,698,952 |   |          | $      | 6,231,065 |   |
| Provision charged to operations |   |                | 225,000   |   |          |   | 600,000 |   |
| Losses charged to allowance     |   |                | -         |   |          |   | (12,355 | ) |
| Recoveries                      |   |                | 6,899     |   |          |   | 3,640 |   |
| Balance, end of period          |   | $                   | 6,930,851 |   |          | $      | 6,822,350 |   |

| As of and for the period ended March 31, 2011 |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |
|-----------------------------------------------|--------|------------|------------|--------|----------------------|--------|-------------|--------------------------|--------|--------|---------------------|--------|--------|--------------|-----------|--------|-------------|--------|-----------|--------|--------|
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |
|                                          |   | Commercial |       |   | RealEstate -Mortgage |   |        | RealEstate -Construction |   |   | ConsumerAndOther    |   |   | Agricultural |      |   | Unallocated |   |      | Total  |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |
| Allowance for Loan and Lease Losses           |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |
| Balance, beginning of period                  |   | $          | 2,641,107  |   |                 | $      | 608,792     |                     |   | $      | 3,327,863           |   |   | $            | 40,409    |   |        | $      | 80,781    |   |   | $ | - |   |   | $ | 6,698,952 |   |
| Losses charged to the allowance               |   |       | -          |   |                 |   | -           |                     |   |   | -                   |   |   |         | -         |   |        |   | -         |   |   |   | - |   |   |   | - |   |
| Recoveries on loans and leases                |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| previously charged-off                        |   |       | 6,899      |   |                 |   | -           |                     |   |   | -                   |   |   |         | -         |   |        |   | -         |   |   |   | - |   |   |   | 6,899 |   |
| Provision charged to operations               |   |       | 125,467    |   |                 |   | 89,277      |                     |   |   | 13,213              |   |   |         | 4,911     |   |        |   | (7,868    | )      |   |   |   |   |   |   | 225,000 |   |
| Balance, end of period                        |   | $          | 2,773,473  |   |                 | $      | 698,069     |                     |   | $      | 3,341,076           |   |   | $            | 45,320    |   |        | $      | 72,913    |   |   | $ | - |   |   | $ | 6,930,851 |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Individually evaluated                        |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| for impairment                                |   | $          | 1,191,834  |   |                 | $      | 488,488     |                     |   | $      |   323,451 |   |   | $            | -         |   |        | $      | -         |   |   | $ | - |   |   | $ | 2,003,773 |   |
| Collectively evaluated                        |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| for impairment                                |   |       | 1,581,639  |   |                 |   | 209,581     |                     |   |   | 3,017,625           |   |   |         | 45,320    |   |        |   | 72,913    |   |   |   | - |   |   |   | 4,927,078 |   |
| Total                                         |   | $          | 2,773,473  |   |                 | $      | 698,069     |                     |   | $      | 3,341,076           |   |   | $            | 45,320    |   |        | $      | 72,913    |   |   | $ | - |   |   | $ | 6,930,851 |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Loans                                         |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
|                                          |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Individually evaluated                        |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| for impairment                                |   | $          | 2,404,831  |   |                 | $      | 6,541,640   |                     |   | $      | 2,932,310           |   |   | $            | -         |   |        | $      | -         |   |   | $ | - |   |   | $ | 11,878,781 |   |
| Collectively evaluated                        |   |       |       |   |                 |   |        |                     |   |   |                |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| For impairment                                |   |       | 39,231,427 |   |                 |   | 154,861,513 |                     |   |   | 16,905,392          |   |   |         | 2,399,883 |   |        |   | 3,861,030 |   |   |   | - |   |   |   | 217,259,245 |   |
| Total                                         |   | $          | 41,636,258 |   |                 | $      | 161,403,153 |                     |   | $      | 19,837,702          |   |   | $            | 2,399,883 |   |        | $      | 3,861,030 |   |   | $ | - |   |   | $ | 229,138,026 |   |

----

Index

| 5.  | ALLOWANCE FOR LOAN AND LEASE LOSSES (continued) |
|----------|-------------------------------------------------|

| As of December 31, 2010      |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
|------------------------------|--------|------------|------------|--------|----------------------|--------|-------------|--------------------------|--------|--------|------------------|--------|--------|--------------|-----------|--------|-------------|--------|-----------|--------|--------|
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
|                         |   | Commercial |       |   | RealEstate -Mortgage |   |        | RealEstate -Construction |   |   | ConsumerAndOther |   |   | Agricultural |      |   | Unallocated |   |      | Total  |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
| Allowance for Credit Losses  |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
| Ending balance allocated     |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |
| to portfolio segments        |   | $          | 2,641,107  |   |                 | $      | 608,792     |                     |   | $      | 3,327,863        |   |   | $            | 40,409    |   |        | $      | 80,782    |   |   | $ | - |   |   | $ | 6,698,952 |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $          | 1,430,562  |   |                 | $      | 92,658      |                     |   | $      | 260,283          |   |   | $            | -         |   |        | $      | -         |   |   | $ | - |   |   | $ | 1,783,503 |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $          | 1,210,545  |   |                 | $      | 516,134     |                     |   | $      | 3,067,580        |   |   | $            | 40,409    |   |        | $      | 80,782    |   |   | $ | - |   |   | $ | 4,915,449 |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Loans                        |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance               |   | $          | 46,293,872 |   |                 | $      | 165,202,316 |                     |   | $      | 23,437,082       |   |   | $            | 2,152,766 |   |        | $      | 4,303,655 |   |   | $ | - |   |   | $ | 241,389,691 |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: individually |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $          | 3,112,068  |   |                 | $      | 1,776,842   |                     |   | $      | 6,595,040        |   |   | $            | -         |   |        | $      | -         |   |   | $ | - |   |   | $ | 11,483,950 |   |
|                         |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| Ending balance: collectively |   |       |       |   |                 |   |        |                     |   |   |             |   |   |         |      |   |        |   |      |   |   |   |   |   |   |   |   |   |
| evaluated for impairment     |   | $          | 43,181,804 |   |                 | $      | 163,425,474 |                     |   | $      | 16,842,042       |   |   | $            | 2,152,766 |   |        | $      | 4,303,655 |   |   | $ | - |   |   | $ | 229,905,741 |   |

----

Index

| 5.  | ALLOWANCE FOR LOAN AND LEASE LOSSES (continued) |
|----------|-------------------------------------------------|

|                 |   | Commercial Credit ExposureCredit Risk Profile by Internally Assigned Grade |       |
|----------------------|--------|----------------------------------------------------------------------------|------------|
| As of March 31, 2011 |   | Commercial                                                                 |       |   | Real Estate -Mortgage |   |   | Real Estate -Construction |   |   | Consumer and Other |   |   | Agriculture |   |   | Total |   |
|                 |   |                                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Grade:               |   |                                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                 |   | $                                                                          | 28,139,838 |   |   | $ | 128,611,309 |   |   | $ | 4,089,151 |   |   | $ | 2,363,492 |   |   | $ | 3,680,919 |   |   | $ | 166,884,709 |   |
| Watch                |   |                                                                       | 1,331,899  |   |   |   | 7,194,713 |   |   |   | 9,858,906 |   |   |   | - |   |   |   | - |   |   |   | 18,385,518 |   |
| Special Mention      |   |                                                                       | 7,329,342  |   |   |   | 8,057,687 |   |   |   | 1,343,667 |   |   |   | - |   |   |   | 180,111 |   |   |   | 16,910,807 |   |
| Substandard          |   |                                                                       | 4,835,179  |   |   |   | 17,539,444 |   |   |   | 4,545,978 |   |   |   | 36,391 |   |   |   | - |   |   |   | 26,956,992 |   |
| Doubtful             |   |                                                                       | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                |   | $                                                                          | 41,636,258 |   |   | $ | 161,403,153 |   |   | $ | 19,837,702 |   |   | $ | 2,399,883 |   |   | $ | 3,861,030 |   |   | $ | 229,138,026 |   |

|                    |   | Commercial Credit ExposureCredit Risk Profile by Internally Assigned Grade |       |
|-------------------------|--------|----------------------------------------------------------------------------|------------|
| As of December 31, 2010 |   | Commercial                                                                 |       |   | Real Estate -Mortgage |   |   | Real Estate -Construction |   |   | Consumer and Other |   |   | Agriculture |   |   | Total |   |
|                    |   |                                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Grade:                  |   |                                                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                    |   | $                                                                          | 31,512,542 |   |   | $ | 132,778,115 |   |   | $ | 7,246,462 |   |   | $ | 1,967,364 |   |   | $ | 4,116,617 |   |   | $ | 177,621,100 |   |
| Watch                   |   |                                                                       | 3,908,958  |   |   |   | 6,672,747 |   |   |   | 7,052,354 |   |   |   | 148,659 |   |   |   | 187,038 |   |   |   | 17,969,756 |   |
| Special Mention         |   |                                                                       | 5,240,543  |   |   |   | 8,589,322 |   |   |   | 1,439,667 |   |   |   | - |   |   |   | - |   |   |   | 15,269,532 |   |
| Substandard             |   |                                                                       | 5,631,829  |   |   |   | 17,162,132 |   |   |   | 7,698,599 |   |   |   | 36,743 |   |   |   | - |   |   |   | 30,529,303 |   |
| Doubtful                |   |                                                                       | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                   |   | $                                                                          | 46,293,872 |   |   | $ | 165,202,316 |   |   | $ | 23,437,082 |   |   | $ | 2,152,766 |   |   | $ | 4,303,655 |   |   | $ | 241,389,691 |   |

----

Index

| 5.  | ALLOWANCE FOR LOAN AND LEASE LOSSES (continued) |
|----------|-------------------------------------------------|

|                                               |   | 30-89 DaysPast Due |       |   | 90 Days andStill Accruing |   |   | Nonaccrual |   |   | TotalPast Due |   |   | Current |       |   | Total  |   |
|----------------------------------------------------|--------|--------------------|------------|--------|---------------------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------|------------|--------|--------|--------|
| As of March 31, 2011                               |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |
|  Commercial:                                  |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |
| Commercial and  industrial               |   | $                  | 1,196,2877 |   |                      | $      | -      |       |   | $      |          |   |   | $       | 1,196,287  |   |   | $      | 19,288,490 |   |   | $ | 20,484,777 |   |
| Commercial lines                                   |   |               | -          |   |                      |   | -      |       |   |   | 795           |   |   |    | 795        |   |   |   | 19,907,280 |   |   |   | 19,908,075 |   |
| Commercial guaranteed                              |   |               |       |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 1,243,406 |   |   |   | 1,243,406 |   |
| Agricultural:                                      |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |   |   |   |   |   |   |
| Agricultural                                       |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 3,233,927 |   |   |   | 3,233,927 |   |
| Agricultural Capital    assets |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 627,103 |   |   |   | 627,103 |   |
| Real Estate-Construction:                          |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |   |   |   |   |   |   |
| Construction                                       |   |               | -          |   |                      |   | -      |       |   |   | 2,060,714     |   |   |    | 2,060,714  |   |   |   | 10,582,296 |   |   |   | 12,643,010 |   |
| Construction 1-4 family                            |   |               | 233,148    |   |                      |   | -      |       |   |   | -             |   |   |    | 233,148    |   |   |   | 2,705,852 |   |   |   | 2,939,000 |   |
| Construction loan others                           |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 4,255,692 |   |   |   | 4,255,692 |   |
| Real Estate-Mortgage:                              |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |   |   |   |   |   |   |
| Mortgage 1-4 family                                |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 11,572,559 |   |   |   | 11,572,559 |   |
| Real Estate                                        |   |               | 2,043,417  |   |                      |   | -      |       |   |   | 5,123,599     |   |   |    | 7,167,016  |   |   |   | 137,801,077 |   |   |   | 144,968,093 |   |
| Real Estate - Ag                                   |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 1,606,656 |   |   |   | 1,606,656 |   |
| Home Equity loans                                  |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 3,255,845 |   |   |   | 3,255,845 |   |
| Consumer:                                          |   |               |       |   |                      |   |   |       |   |   |          |   |   |    |       |   |   |   |   |   |   |   |   |   |
| Auto                                               |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 121,373 |   |   |   | 121,373 |   |
| Consumer                                           |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 445,287 |   |   |   | 445,287 |   |
| Other                                              |   |               | -          |   |                      |   | -      |       |   |   | -             |   |   |    | -          |   |   |   | 1,833,223 |   |   |   | 1,833,223 |   |
| Total                                              |   | $                  | 3,472,852  |   |                      | $      | -      |       |   | $      | 7,185,108     |   |   | $       | 10,657,960 |   |   | $      | 218,480,066 |   |   | $ | 229,138,026 |   |

|                                               |   | 30-89 DaysPast Due |    |   | 90 Days andStill Accruing |   |   | Nonaccrual |   |   | TotalPast Due |   |   | Current |      |   | Total  |   |
|----------------------------------------------------|--------|--------------------|---------|--------|---------------------------|--------|--------|------------|--------|--------|---------------|--------|--------|---------|-----------|--------|--------|--------|
| As of December 31, 2010                            |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   |
|  Commercial:                                  |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   |
| Commercial and  industrial               |   | $                  | 51,135  |   |                      | $      | -      |       |   | $      | -             |   |   | $       | 51,135    |   |   | $      | 22,283,620 |   |   | $ | 22,334,755 |   |
| Commercial lines                                   |   |               | -       |   |                      |   | -      |       |   |   | 747,054       |   |   |    | 747,054   |   |   |   | 21,806,591 |   |   |   | 22,553,645 |   |
| Commercial guaranteed                              |   |               | 556     |   |                      |   | -      |       |   |   | -             |   |   |    | 556       |   |   |   | 1,404,916 |   |   |   | 1,405,472 |   |
| Agricultural:                                      |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   |   |   |   |   |   |   |
| Agricultural                                       |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 3,630,210 |   |   |   | 3,630,210 |   |
| Agricultural Capital    assets |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 673,445 |   |   |   | 673,445 |   |
| Real Estate-Construction:                          |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   | - |   |   |   | - |   |
| Construction                                       |   |               | -       |   |                      |   | -      |       |   |   | 905,246       |   |   |    | 905,246   |   |   |   | 13,298,945 |   |   |   | 14,204,191 |   |
| Construction 1-4 family                            |   |               | 197,544 |   |                      |   | -      |       |   |   | -             |   |   |    | 197,544   |   |   |   | 3,441,631 |   |   |   | 3,639,175 |   |
| Construction loan others                           |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 5,593,716 |   |   |   | 5,593,716 |   |
| Real Estate-Mortgage:                              |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   |   |   |   |   |   |   |
| Mortgage 1-4 family                                |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 12,792,286 |   |   |   | 12,792,286 |   |
| Real Estate                                        |   |               | 4,924   |   |                      |   | -      |       |   |   | 5,170,238     |   |   |    | 5,175,162 |   |   |   | 141,864,623 |   |   |   | 147,039,785 |   |
| Real Estate - Ag                                   |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 1,726,232 |   |   |   | 1,726,232 |   |
| Home Equity loans                                  |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 3,644,013 |   |   |   | 3,644,013 |   |
| Consumer:                                          |   |               |    |   |                      |   |   |       |   |   |          |   |   |    |      |   |   |   |   |   |   |   |   |   |
| Auto                                               |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 160,201 |   |   |   | 160,201 |   |
| Consumer                                           |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 446,960 |   |   |   | 446,960 |   |
| Other                                              |   |               | -       |   |                      |   | -      |       |   |   | -             |   |   |    | -         |   |   |   | 1,545,605 |   |   |   | 1,545,605 |   |
| Total                                              |   | $                  | 254,159 |   |                      | $      | -      |       |   | $      | 6,822,538     |   |   | $       | 7,076,697 |   |   | $      | 234,312,994 |   |   | $ | 241,389,691 |   |

----

Index

| 5.  | ALLOWANCE FOR LOAN AND LEASE LOSSES (continued) |
|----------|-------------------------------------------------|

|                                      |   | RecordedInvestment |      |   | UnpaidPrincipalBalance |   |      | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |      |
|-------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|-----------|
| As of March 31, 2011                      |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |
|  With no related allowance recorded: |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |
| Commercial                                |   | $                  | 40,118    |   |                   | $      | 40,118    |             |   | $      | -                         |   |   | $                        | 41,585    |   |   | $ | 491 |   |
| Real estate - construction                |   |               | 1,930,404 |   |                   |   | 3,023,508 |             |   |   | -                         |   |   |                     | 3,024,157 |   |   |   | 25,643 |   |
| Real estate - mortgage                    |   |               | 5,529,804 |   |                   |   | 6,559,417 |             |   |   | -                         |   |   |                     | 6,569,979 |   |   |   | 2,482 |   |
|                                      |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| With an allowance recorded:               |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Commercial                                |   | $                  | 2,364,713 |   |                   | $      | 2,464,418 |             |   | $      | 1,191,834                 |   |   | $                        | 2,943,824 |   |   | $ | 44,468 |   |
| Real estate – construction          |   |               | 1,001,906 |   |                   |   | 1,049,470 |             |   |   | 323,451                   |   |   |                     | 1,050,201 |   |   |   | 3,917 |   |
| Real estate – mortgage              |   |               | 1,011,836 |   |                   |   | 1,011,836 |             |   |   | 488,488                   |   |   |                     | 1,013,385 |   |   |   | 16,168 |   |
|                                      |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Total:                                    |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Commercial                                |   | $                  | 2,404,831 |   |                   | $      | 2,504,536 |             |   | $      | 1,191,834                 |   |   | $                        | 2,985,409 |   |   | $ | 44,959 |   |
| Real estate – construction          |   |               | 2,932,310 |   |                   |   | 4,072,978 |             |   |   | 323,451                   |   |   |                     | 4,074,358 |   |   |   | 29,530 |   |
| Real estate – mortgage              |   |               | 6,541,640 |   |                   |   | 7,571,253 |             |   |   | 488,488                   |   |   |                     | 7,583,364 |   |   |   | 18,650 |   |

|                                      |   | RecordedInvestment |      |   | UnpaidPrincipalBalance |   |      | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |      |
|-------------------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|-----------|
| As of December 31, 2010                   |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |
|  With no related allowance recorded: |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |
| Commercial                                |   | $                  | 790,042   |   |                   | $      | 884,488   |             |   | $      | -                         |   |   | $                        | 981,444   |   |   | $ | 3,111 |   |
| Real estate - construction                |   |               | 764,604   |   |                   |   | 1,854,589 |             |   |   | -                         |   |   |                     | 1,857,234 |   |   |   | 103,874 |   |
| Real estate - mortgage                    |   |               | 4,219,223 |   |                   |   | 5,182,771 |             |   |   | -                         |   |   |                     | 5,226,383 |   |   |   | 119,642 |   |
|                                      |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| With an allowance recorded:               |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Commercial                                |   | $                  | 2,322,025 |   |                   | $      | 2,322,025 |             |   | $      | 1,013,683                 |   |   | $                        | 2,394,814 |   |   | $ | 139,083 |   |
| Real estate – construction          |   |               | 1,012,238 |   |                   |   | 1,050,946 |             |   |   | 260,283                   |   |   |                     | 1,077,766 |   |   |   | 24,756 |   |
| Real estate – mortgage              |   |               | 2,375,818 |   |                   |   | 2,411,734 |             |   |   | 509,537                   |   |   |                     | 2,428,367 |   |   |   | 88,045 |   |
|                                      |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Total:                                    |   |               |      |   |                   |   |      |             |   |   |                      |   |   |                     |      |   |   |   |   |   |
| Commercial                                |   | $                  | 3,112,067 |   |                   | $      | 3,206,513 |             |   | $      | 1,013,683                 |   |   | $                        | 3,376,258 |   |   | $ | 142,194 |   |
| Real estate – construction          |   |               | 1,776,842 |   |                   |   | 2,905,535 |             |   |   | 260,283                   |   |   |                     | 2,935,000 |   |   |   | 128,630 |   |
| Real estate – mortgage              |   |               | 6,595,041 |   |                   |   | 7,594,505 |             |   |   | 509,537                   |   |   |                     | 7,654,750 |   |   |   | 207,687 |   |

----

Index

| 6.  | BANK PREMISES AND EQUIPMENT |
|----------|-----------------------------|

|                                           |   | March 31, 2011 |       |   | December 31,2010 |   |
|------------------------------------------------|--------|---------------------|------------|--------|------------------|--------|
| Furniture and equipment                        |   | $                   | 2,715,427  |   |             | $      | 2,646,895 |   |
| Premises                                       |   |                | 6,555,730  |   |             |   | 6,581,465 |   |
| Leasehold improvements                         |   |                | 207,342    |   |             |   | 207,342 |   |
| Land                                           |   |                | 1,461,379  |   |             |   | 1,461,379 |   |
|                                           |   |                | 10,939,878 |   |             |   | 10,897,081 |   |
|                                           |   |                |       |   |             |   |   |   |
| Less accumulated depreciation and amortization |   |                | (2,519,842 | )      |             |   | (2,386,393 | ) |
|                                           |   | $                   | 8,420,036  |   |             | $      | 8,510,688 |   |

| 7.  | COMMITMENTS AND CONTINGENCIES |
|----------|-------------------------------|

----

Index

| 8.  | STOCK BASED COMPENSATION |
|----------|--------------------------|

|                          |   | Three Months EndedMarch 31, 2011 |   |
|-------------------------------|--------|----------------------------------|--------|
| Dividend yield                |   |                             | N/A    |   |
| Expected option life          |   | 8.83 years                       |   |
| Expected volatility           |   |                             | 46.9   | % |
| Risk-free interest rate       |   |                             | 1.23   | % |
| Weighted average              |   |                             |   |   |
| Fair value of options granted |   | $                                | 5.27   |   |

----

Index

| 8.  | STOCK BASED COMPENSATION (continued) |
|----------|--------------------------------------|

|                                                    |   | For the Three Months Ended March 31, 2011 |   |
|---------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                    |   | Shares                                    |   |   | Weighted Average Exercise Price |   | Weighted Average Remaining Contractual Term |   | Aggregate Intrinsic Value (in thousands) |   |
|                                                    |   |                                      |   |   |   |   |   |   |   |   |
| Incentive:                                              |   |                                      |   |   |   |   |    |   |   |   |
| Options outstanding at December 31, 2010                |   |                                      | 57,766 |   |   | $ | 10.37 |   |   |   |   |   |
| Options granted                                         |   |                                      | 2,000  |   |   |   | 8.20 |   |   |   |   |   |
| Options outstanding at March 31, 2011                   |   |                                      | 59,766 |   |   |   | 10.30 |   | 4.29 years |   |   | 42,197 |   |
| Options vested or expected to vest after March 31, 2011 |   |                                      | 51,250 |   |   |   | 10.03 |   | 4.35 years |   | $ | 42,197 |   |
| Options exercisable at March 31, 2011                   |   |                                      | 48,084 |   |   |   | 9.48 |   | 3.70 years |   | $ |  42,197 |   |
|                                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Nonstatutory:                                           |   |                                      |   |   |   |   |   |   |   |   |   |   |   |
| Options outstanding at December 31, 2010                |   |                                      | 63,629 |   |   | $ | 11.02 |   |   |   |   |   |   |
| Options granted                                         |   |                                      | 8,000  |   |   |   | 8.20 |   |   |   |   |   |   |
| Options outstanding at March 31, 2011                   |   |                                      | 71,629 |   |   |   | 10.71 |   | 4.06 years |   |   | 22,241 |   |
| Options vested or expected to vest after March 31, 2011 |   |                                      | 70,484 |   |   |   | 10.64 |   | 5.91 years |   |   | 22,241 |   |
| Options exercisable at March 31, 2011                   |   |                                      | 69,425 |   |   |   | 10.63 |   | 3.97 years |   |   | 22,241 |   |

----

Index

| 9.  | EARNINGS PER SHARE COMPUTATION |
|----------|--------------------------------|

|                                           |   | For the Three MonthsEnded March 31, |      |
|------------------------------------------------|--------|-------------------------------------|-----------|
|                                           |   | 2011                                |      |   | 2010 |   |
| Net Income:                                    |   |                                |      |   |   |   |
| Net income                                     |   | $                                   | 624,964   |   |   | $ | 250,515 |   |
| Dividends accrued and discounts                |   |                                |      |   |   |   |   |   |
| accreted on preferred shares                   |   |                                | (101,467  | ) |   |   | (103,749 | ) |
| Net income available to common                 |   |                                |      |   |   |   |   |   |
| shareholders                                   |   | $                                   | 523,497   |   |   | $ | 146,766 |   |
| Earnings Per Share:                            |   |                                |      |   |   |   |   |   |
| Basic earnings per share                       |   | $                                   | 0.20      |   |   | $ | 0.06 |   |
| Diluted earnings per share                     |   | $                                   | 0.20      |   |   | $ | 0.06 |   |
| Weighted Average Number of Shares Outstanding: |   |                                |      |   |   |   |   |   |
| Basic shares                                   |   |                                | 2,630,969 |   |   |   | 2,608,317 |   |
| Diluted shares                                 |   |                                | 2,637,555 |   |   |   | 2,610,362 |   |
|                                           |   |                                |      |   |   |   |   |   |

| 10. | COMPREHENSIVE INCOME |
|-----|----------------------|

|                                         |   | For the Three MonthsEnded |    |
|----------------------------------------------|--------|---------------------------|---------|
|                                         |   | March 31,2011             |    |   | March 31,2010 |   |
|                                         |   |                      |    |   |   |   |
| Net income                                   |   | $                         | 624,964 |   |   | $ | 250,515 |   |
| Other comprehensive (loss) income:           |   |                      |    |   |   |   |   |   |
| Unrealized (loss) gain on available-for-sale |   |                      | (7,419  | ) |   |   | 97,790 |   |
| investment securities, net of tax            |   |                      |    |   |   |   |   |   |
| Total other comprehensive income             |   | $                         | 617,545 |   |   | $ | 348,305 |   |

----

Index

| 11.  | INCOME TAXES |
|-----------|--------------|

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

----

Index

| 12.  | PREFERRED STOCK (continued) |
|-----------|-----------------------------|

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

----

Index

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

|                                       |   | March 31, 2011 |
|--------------------------------------------|--------|----------------|
| Description                                |   | Fair Value     |   | Level 1 |   | Level 2 |   | Level 3 |
|                                       |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| A Available-for-sale investment securities |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| D Debt securities:                         |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                   |   | $              | 2,845,000 |   |   | $ | — |   |   | $ | 2,845,000 |   |   | $ | — |   |
| U.S. Government agencies                   |   |           | 10,571,000 |   |   |   | — |   |   |   | 10,571,000 |   |   |   |                — |   |
| M Mortgage-backed securities:              |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies                   |   |           | 15,109,000 |   |   |   | — |   |   |   | 15,109,000 |   |   |   |                — |   |
| Small Business Administration              |   |           | 13,917,000 |   |   |   | — |   |   |   | 13,917,000 |   |   |   |                   — |   |
| Municipal securities                       |   |           | 15,151,000 |   |   |   | — |   |   |   | 15,151,000 |   |   |   |               — |   |
| Total assets measured at fair value        |   | $              | 57,593,000 |   |   | $ | — |   |   | $ | 57,593,000 |   |   | $  |               — |   |

|                                       |   | December 31, 2010 |
|--------------------------------------------|--------|-------------------|
| Description                                |   | Fair Value        |   | Level 1 |   | Level 2 |   | Level 3 |
|                                       |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| A Available-for-sale investment securities |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| D Debt securities:                         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Treasury securities                   |   | $                 | 3,800,000 |   |   | $ | — |   |   | $ | 3,800,000 |   |   | $ | — |   |
| U.S. Government agencies                   |   |              | 5,533,000 |   |   |   | — |   |   |   | 5,533,000 |   |   |   | — |   |
| M Mortgage-backed securities:              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government agencies                   |   |              | 12,770,000 |   |   |   | — |   |   |   | 12,770,000 |   |   |   | — |   |
| Small Business Administration              |   |              | 14,577,000 |   |   |   | — |   |   |   | 14,577,000 |   |   |   | — |   |
| Municipal securities                       |   |              | 14,143,000 |   |   |   | — |   |   |   | 14,143,000 |   |   |   | — |   |
| Total assets measured at fair value        |   | $                 | 50,823,000 |   |   | $ | — |   |   | $ | 50,823,000 |   |   | $  | — |   |

----

Index

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

|                             |   Fair Value Measurements at March 31, 2011 Using |   |                                                        |   |                                       |
|----------------------------------|--------------------------------------------------------|--------|-------------------------------------------------------------|--------|--------------------------------------------|
|                             |   Total Fair Value                                |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   |   Total Gains(Losses) |   |
| Assets:                          |                                                   |   |                                                        |   |                                       |   |   |   |   |   |   |   |
| Impaired loans at:               |                                                   |   |                                                        |   |                                       |   |   |   |   |   |   |   |
| Commercial                       |                                                   | $      | 2,274,000                                                   |   |                                       | $ | - |   |   | $ | - |   |   | $ | 2,274,000 |   |   | $ | (240,000 | ) |
| Real estate – mortgage (1) |                                                   |   | 2,514,000                                                   |   |                                       |   | - |   |   |   | 2,514,000 |   |   |   | - |   |   |   | 93,000 |   |
| Real estate - construction       |                                                   |   | 1,317,000                                                   |   |                                       |   | - |   |   |   | 1,227,000 |   |   |   | 90,000 |   |   |   | (74,000 | ) |
| Agricultural                     |                                                   |   | -                                                           |   |                                       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer and other               |                                                   |   | -                                                           |   |                                       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                             |                                                   | $      | 6,105,000                                                   |   |                                       | $ | - |   |   | $ | 3,741,000 |   |   | $ | 2,364,000 |   |   | $ | (221,000 | ) |

|                             |   |             |      |   | Fair Value Measurements at December 31, 2011 Using          |   |   |                                       |   |
|----------------------------------|--------|------------------|-----------|--------|-------------------------------------------------------------|--------|--------|--------------------------------------------|--------|
|                             |   | Total Fair Value |      |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Total Gains(Losses) |   |
| Assets:                          |   |             |      |   |                                                        |   |   |                                       |   |   |   |   |   |   |   |
| Impaired loans at:               |   |             |      |   |                                                        |   |   |                                       |   |   |   |   |   |   |   |
| Commercial                       |   | $                | 1,906,000 |   |                                                        | $      | -      |                                       |   | $ | - |   |   | $ | 1,906,000 |   |   | $ | (69,000 | ) |
| Real estate – mortgage (1) |   |             | 3,021,000 |   |                                                        |   | -      |                                       |   |   | 3,021,000 |   |   |   | - |   |   |   | 472,000 |   |
| Real estate - construction       |   |             | 2,460,000 |   |                                                        |   | -      |                                       |   |   | 2,296,000 |   |   |   | 164,000 |   |   |   | (1,099,000 | ) |
| Agricultural                     |   |             | -         |   |                                                        |   | -      |                                       |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer and other               |   |             | -         |   |                                                        |   | -      |                                       |   |   | - |   |   |   | - |   |   |   | - |   |
|                             |   | $                | 7,387,000 |   |                                                        | $      | -      |                                       |   | $ | 5,317,000 |   |   | $ | 2,070,000 |   |   | $ | (696,000 | ) |

----

Index

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

|                           |   | March 31, 2011 |        |   | December 31, 2010 |   |
|--------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                           |   | CarryingAmount |        |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
|                           |   |           |        |   |              |   |   |   |   |   |   |   |
|                           |   |           |        |   |              |   |   |   |   |   |   |   |
| Financial assets:              |   |           |        |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $              | 41,741,484  |   |              | $      | 41,741,484 |   |   | $ | 32,667,967 |   |   | $ | 32,667,967 |   |
| Available-for-sale             |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| investment securities          |   |           | 57,593,000  |   |              |   | 57,593,000 |   |   |   | 50,823,000 |   |   |   | 50,823,000 |   |
| Loans, net                     |   |           | 221,872,154 |   |              |   | 218,904,187 |   |   |   | 234,304,310 |   |   |   | 231,913,397 |   |
| Cash surrender value of life   |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| insurance policies             |   |           | 6,693,126   |   |              |   | 6,693,126 |   |   |   | 6,627,060 |   |   |   | 6,627,060 |   |
| Accrued interest receivable    |   |           | 1,194,058   |   |              |   | 1,194,058 |   |   |   | 1,209,657 |   |   |   | 1,209,657 |   |
| FHLB stock                     |   |           | 1,360,700   |   |              |   | 1,360,700 |   |   |   | 1,360,700 |   |   |   | 1,360,700 |   |
|                           |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:         |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                       |   | $              | 296,671,612 |   |              | $      | 297,008,567 |   |   | $ | 294,277,800 |   |   | $  | 294,622,852 |   |
| Long-term debt                 |   |           | 2,509,626   |   |              |   | 2,811,545 |   |   |   | 2,561,650 |   |   |   | 2,847,132 |   |
| Junior subordinated deferrable |   |           |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| interest debentures            |   |           | 3,093,000   |   |              |   | 804,180 |   |   |   | 3,093,000 |   |   |   | 804,180 |   |
| Accrued interest payable       |   |           | 84,552      |   |              |   | 84,552 |   |   |   | 97,597 |   |   |   | 97,597 |   |

----

Index

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

----

Index

ITEM 

----

Index

----

Index

|                                                         |   | Three Months ended March 31, |    |
|--------------------------------------------------------------|--------|------------------------------|---------|
|                                                         |   | 2011                         |    |   | 2010 |   |
| (dollars in thousands)                                       |   | AverageBalance               |    |   | InterestIncome/Expense |   |   | AverageYield/Cost |   |   | AverageBalance |   |   | InterestIncome/Expense |   |   | AverageYield/Cost |   |
| ASSETS                                                       |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due from banks                                               |   | $                            | 32,304  |   |   | $ | 20 |   |   |   | 0.25 | % |   | $ | 23,699 |   |   | $ | 14 |   |   |   | 0.24 | % |
| Available-for-sale investment securities:                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                      |   |                         | 36,730  |   |   |   | 208 |   |   |   | 2.30 | % |   |   | 26,555 |   |   |   | 183 |   |   |   | 2.79 | % |
| Exempt from Federal income taxes (1)                         |   |                         | 14,922  |   |   |   | 153 |   |   |   | 6.30 | % |   |   | 15,341 |   |   |   | 156 |   |   |   | 6.25 | % |
| Total securities (1)                                         |   |                         | 51,652  |   |   |   | 361 |   |   |   | 3.45 | % |   |   | 41,896 |   |   |   | 339 |   |   |   | 4.06 | % |
| Loans (2) (3)                                                |   |                         | 233,277 |   |   |   | 3,512 |   |   |   | 6.11 | % |   |   | 240,645 |   |   |   | 3,618 |   |   |   | 6.10 | % |
| Total interest-earning assets (1)                            |   |                         | 317,233 |   |   |   | 3,893 |   |   |   | 5.08 | % |   |   | 306,240 |   |   |   | 3,971 |   |   |   | 5.37 | % |
|                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets, net of allowance for loan losses |   |                         | 29,385  |   |   |   |   |   |   |   |   |   |   |   | 36,487 |   |   |   |   |   |   |   |   |   |
| Total assets                                                 |   | $                            | 346,618 |   |   |   |   |   |   |   |   |   |   | $ | 342,727 |   |   |   |   |   |   |   |   |   |
|                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                   |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other interest bearing                                       |   | $                            | 124,301 |   |   | $ | 153 |   |   |   | 0.50 | % |   | $ | 124,203 |   |   | $ | 210 |   |   |   | 0.69 | % |
| Time deposits less than $100,000                             |   |                         | 22,248  |   |   |   | 56 |   |   |   | 1.02 | % |   |   | 25,498 |   |   |   | 103 |   |   |   | 1.64 | % |
| Time deposits $100,000 or more                               |   |                         | 61,307  |   |   |   | 188 |   |   |   | 1.24 | % |   |   | 71,427 |   |   |   | 349 |   |   |   | 1.98 | % |
| Total interest-bearing deposits                              |   |                         | 207,856 |   |   |   | 397 |   |   |   | 0.77 | % |   |   | 221,128 |   |   |   | 662 |   |   |   | 1.21 | % |
| Long-term debt                                               |   |                         | 2,530   |   |   |   | 32 |   |   |   | 5.13 | % |   |   | 3,629 |   |   |   | 46 |   |   |   | 5.14 | % |
| Junior subordinated deferrable interest debentures           |   |                         | 3,093   |   |   |   | 28 |   |   |   | 3.67 | % |   |   | 3,093 |   |   |   | 27 |   |   |   | 3.54 | % |
| Total interest-bearing liabilities                           |   |                         | 213,479 |   |   |   | 457 |   |   |   | 0.87 | % |   |   | 227,850 |   |   |   | 735 |   |   |   | 1.31 | % |
|                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest bearing deposits                                 |   |                         | 90,373  |   |   |   |   |   |   |   |   |   |   |   | 75,319 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                            |   |                         | 3,637   |   |   |   |   |   |   |   |   |   |   |   | 2,415 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                            |   |                         | 307,489 |   |   |   |   |   |   |   |   |   |   |   | 305,584 |   |   |   |   |   |   |   |   |   |
| Shareholders’ equity                                   |   |                         | 39,129  |   |   |   |   |   |   |   |   |   |   |   | 37,143 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity             |   | $                            | 346,618 |   |   |   |   |   |   |   |   |   |   | $ | 342,727 |   |   |   |   |   |   |   |   |   |
|                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income and margin (1)                           |   |                         |    |   |   | $ | 3,436 |   |   |   | 4.49 | % |   |   |   |   |   | $ | 3,236 |   |   |   | 4.39 | % |

| (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 $233,000 and $159,000 in foregone interest on nonaccrual loans for the three-months ended March 31, 2011 and 2010, respectively and $743,000 for the twelve-month period ended December 31, 2010. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)  | Interest income on loans includes amortized loan fees, net of costs, of $123,000 and $138,000 for 2011 and 2010, respectively. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                                               |   | Three months ended March 31, 2011vs. March 31, 2010. Increase (decrease) due to change in: |   |
|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------|--------|
|                                               |   | AverageVolume                                                                              |   |   | AverageRate (1) |   |   | Total |   |
|                                               |   |                                                                                       |   |   |   |   |   |   |   |
| (In thousands)                                     |   |                                                                                       |   |   |   |   |   |   |   |
| Increase (decrease) in interest income:            |   |                                                                                       |   |   |   |   |   |   |   |
| Due from banks                                     |   | $                                                                                          | 5      |   |   | $ | 1 |   |   | $ | 6 |   |
| Investment securities                              |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Taxable                                            |   |                                                                                       | 70     |   |   |   | (45 | ) |   |   | 25 |   |
| Exempt from Federal income taxes                   |   |                                                                                       | (6     | ) |   |   | 3 |   |   |   | (3 | ) |
| Total securities                                   |   |                                                                                       | 64     |   |   |   | (42 | ) |   |   | 22 |   |
| Loans                                              |   |                                                                                       | (111   | ) |   |   | 5 |   |   |   | (106 | ) |
| Total interest income                              |   |                                                                                       | (42    | ) |   |   | (36 | ) |   |   | (78 | ) |
|                                               |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |
| (Decrease) increase in interest expense:           |   |                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Other interest-bearing deposits                    |   |                                                                                       | -      |   |   |   | (57 | ) |   |   | (57 | ) |
| Time deposits less than $100,000                   |   |                                                                                       | (13    | ) |   |   | (34 | ) |   |   | (47 | ) |
| Time deposits $100,000 or more                     |   |                                                                                       | (49    | ) |   |   | (112 | ) |   |   | (161 | ) |
| Total interest-bearing deposits                    |   |                                                                                       | (62    | ) |   |   | (203 | ) |   |   | (265 | ) |
| Long-term debt                                     |   |                                                                                       | (14    | ) |   |   | - |   |   |   | (14 | ) |
| Junior subordinated deferrable interest debentures |   |                                                                                       | -      |   |   |   | 1 |   |   |   | 1 |   |
| Total interest expense                             |   |                                                                                       | (76    | ) |   |   | (202 | ) |   |   | (278 | ) |
| Increase in net interest income                    |   | $                                                                                          | 34     |   |   | $ | 166 |   |   | $ | 200 |   |

----

Index

|                                                        |   | Three Months endedMarch 31, |   |   |   |   |
|-------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
| (in thousands)                                              |   | 2011                        |   |   | 2010   |   |   | Increase (Decrease) |   |
| Service charges                                             |   | $                           | 169    |   |   | $      | 185 |   |   | $ | (16 | ) |
| Gain on sale of available-for-sale investment securities    |   |                        | 14     |   |   |   | - |   |   |   | 14 |   |
| Mortgage loan brokerage fees                                |   |                        | 22     |   |   |   | 6 |   |   |   | 16 |   |
| Earnings on cash surrender value of life insurance policies |   |                        | 72     |   |   |   | 67 |   |   |   | 5 |   |
| Other                                                       |   |                        | 50     |   |   |   | 38 |   |   |   | 12 |   |
| Total non-interest income                                   |   | $                           | 327    |   |   | $      | 296 |   |   | $ | 31 |   |

----

Index

|                                 |   | Three Months endedMarch 31, |   |   |   |   |
|--------------------------------------|--------|-----------------------------|--------|--------|--------|--------|
| (in thousands)                       |   | 2011                        |   |   | 2010   |   |   | Increase (Decrease) |   |
| Salaries and employee benefits       |   | $                           | 1,450  |   |   | $      | 1,404 |   |   | $ | 46 |   |
| Occupancy and equipment              |   |                        | 322    |   |   |   | 340 |   |   |   | (18 | ) |
| Assessment and insurance             |   |                        | 172    |   |   |   | 253 |   |   |   | (81 | ) |
| Data processing                      |   |                        | 166    |   |   |   | 163 |   |   |   | 3 |   |
| Professional and legal               |   |                        | 103    |   |   |   | 129 |   |   |   | (26 | ) |
| Operations                           |   |                        | 98     |   |   |   | 89 |   |   |   | 9 |   |
| Telephone and postal                 |   |                        | 64     |   |   |   | 52 |   |   |   | 12 |   |
| Advertising and business development |   |                        | 51     |   |   |   | 56 |   |   |   | (5 | ) |
| Supplies                             |   |                        | 46     |   |   |   | 48 |   |   |   | (2 | ) |
| Other expenses                       |   |                        | 104    |   |   |   | 92 |   |   |   | 12 |   |
| Total non-interest expense           |   | $                           | 2,576  |   |   | $      | 2,626 |   |   | $ | (50 | ) |

----

Index

|                           |   | March 31, 2011 |   |
|--------------------------------|--------|----------------|--------|
| (in thousands)                 |   | Amortized Cost |   |   | Unrealized Gain |   |   | Unrealized Loss |   |   | Fair  Value |   |
| U.S. Treasury securities       |   | $              | 2,915  |   |   | $ | - |   |   | $ | (70 | ) |   | $ | 2,845 |   |
| U.S. Government agencies  |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities:    |   |           | 10,584 |   |   |   | 69 |   |   |   | (82 | ) |   |   | 10,571 |   |
| U.S. Government Agencies       |   |           | 14,938 |   |   |   | 248 |   |   |   | (77 | ) |   |   | 15,109 |   |
| Small Business Administration  |   |           | 13,716 |   |   |   | 201 |   |   |   | - |   |   |   | 13,917 |   |
| Municipal securities           |   |           | 15,523 |   |   |   | 65 |   |   |   | (437 | ) |   |   | 15,151 |   |
| Total                          |   | $              | 57,676 |   |   | $ | 583 |   |   | $ | (666 | ) |   | $ | 57,593 |   |

|                           |   | December 31, 2010 |   |
|--------------------------------|--------|-------------------|--------|
| (in thousands)                 |   | Amortized Cost    |   |   | Unrealized Gain |   |   | Unrealized Loss |   |   | Fair Value |   |
| U.S. Treasury securities       |   | $                 | 3,841  |   |   | $ | 15 |   |   | $ | (56 | ) |   | $ | 3,800 |   |
| U.S. Government agencies  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed securities:    |   |              | 5,538  |   |   |   | 56 |   |   |   | (61 | ) |   |   | 5,533 |   |
| U.S. Government agencies       |   |              | 12,577 |   |   |   | 261 |   |   |   | (68 | ) |   |   | 12,770 |   |
| Small Business Administration  |   |              | 14,387 |   |   |   | 202 |   |   |   | (12 | ) |   |   | 14,577 |   |
| Municipal securities           |   |              | 14,550 |   |   |   | 22 |   |   |   | (429 | ) |   |   | 14,143 |   |
| Total                          |   | $                 | 50,893 |   |   | $ | 556 |   |   | $ | (626 | ) |   | $ | 50,823 |   |

----

Index

| (dollars in  thousands)   |   | March 31, 2011 |    |   | December 31, 2010 |   |
|-------------------------------------|--------|----------------|---------|--------|-------------------|--------|
| Commercial                          |   | $              | 41,636  |   |              |   | 18 | % |   | $ | 46,294 |   |   |   | 19 | % |
| Real estate – mortgage (1)    |   |           | 161,403 |   |              |   | 69 |   |   |   | 165,202 |   |   |   | 68 |   |
| Real estate – construction    |   |           | 19,838  |   |              |   | 9 |   |   |   | 23,437 |   |   |   | 10 |   |
| Agricultural                        |   |           | 3,861   |   |              |   | 2 |   |   |   | 4,304 |   |   |   | 2 |   |
| Consumer and other                  |   |           | 2,400   |   |              |   | 1 |   |   |   | 2,153 |   |   |   | 1 |   |
| Subtotal                            |   |           | 229,138 |   |              |   | 100 | % |   |   | 241,390 |   |   |   | 100 | % |
| Deferred loan fees, net             |   |           | (335    | )      |              |   |   |   |   |   | (387 | ) |   |   |   |   |
| Allowance for loan and lease losses |   |           | (6,931  | )      |              |   |   |   |   |   | (6,699 | ) |   |   |   |   |
| Total loans, net                    |   | $              | 221,872 |   |              |   |   |   |   | $ | 234,304 |   |   |   |   |   |

----

Index

----

Index

| Changes in allowance for loan and lease losses               |   |
|--------------------------------------------------------------|--------|
|                                                         |   |   |   |   |   |   |   |   |   |
| (dollars in thousands)                                  |   |   Three Months EndedMarch 31, 2011 |   |   | Three Months EndedMarch 31, 2010 |   |   | Year EndedDecember 31, 2010 |   |
|                                                         |   |   |   |   |   |   |   |   |   |
| Ba Balance at beginning of period                            |   | $ | 6,699 |   |   | $ | 6,231 |   |   | $ | (6,231 | ) |
| Ch Charge-offs:                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Co Commercial and agricultural                               |   |   | - |   |   |   |   |   |   |   | (35 | ) |
| Re Real estate mortgage                                      |   |   | - |   |   |   |   |   |   |   | (1,530 | ) |
| Re Real estate construction                                  |   |   | - |   |   |   | - |   |   |   | - |   |
| Co Consumer                                                  |   |   | - |   |   |   | (12 | ) |   |   | (28 | ) |
| TT Total charge-offs                                         |   |   | - |   |   |   | (12 | ) |   |   | (1,593 | ) |
| Re Recoveries:                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Co Commercial and agricultural                               |   |   | 7 |   |   |   | 4 |   |   |   | 11 |   |
| Re Real estate mortgage                                      |   |   | - |   |   |   | - |   |   |   | - |   |
| Re Real estate construction                                  |   |   | - |   |   |   | - |   |   |   | - |   |
| Co Consumer                                                  |   |   | - |   |   |   | - |   |   |   | - |   |
| To Total recoveries                                          |   |   | 7 |   |   |   | 4 |   |   |   | 11 |   |
| Ne Net recoveries/(charge-offs)                              |   |   | 7 |   |   |   | (8 | ) |   |   | (1,582 | ) |
| Pr  Provision for loan and lease losses            |   |   | 225 |   |   |   | 600 |   |   |   | 2,050 |   |
| B   Balance at end of period                  |   | $ | 6,931 |   |   | $ | 6,823 |   |   | $ | 6,699 |   |
| Ne Net recoveries (charge-offs) to average loans outstanding |   |   | 0.003 | % |   |   | (0.003 | )% |   |   | (0.65 | )% |
| Average loans outstanding                                    |   | $ | 233,647 |   |   | $ | 233,277 |   |   | $ | 243,519 |   |
| En Ending allowance to total loans  outstanding    |   |   | 3.03 | % |   |   | 2.83 | % |   |   | 2.78 | % |

| (in thousands)                    |   | March 31,2011 |   |   | December 31,2010 |   |
|-----------------------------------|--------|---------------|--------|--------|------------------|--------|
|                              |   |          |   |   |             |   |
| Furniture and Equipment           |   | $             | 2,715  |   |             | $      | 2,647 |   |
| Premises                          |   |          | 6,556  |   |             |   | 6,582 |   |
| Leasehold Improvements            |   |          | 207    |   |             |   | 207 |   |
| Land                              |   |          | 1,461  |   |             |   | 1,461 |   |
|                              |   |          | 10,940 |   |             |   | 10,897 |   |
|                              |   |          |   |   |             |   |   |   |
| Less accumulated depreciation     |   |          | (2,520 | )      |             |   | (2,386 | ) |
| Total Bank Premises and Equipment |   | $             | 8,420  |   |             | $      | 8,511 |   |

----

Index

| Deposit Portfolio      |   |
|------------------------|--------|
| (dollars in thousands) |   | March 31, 2011 |   |   | December 31, 2010 |   |
| Non-interest bearing   |   | $ | 88,266 |   |   |   | 30 | % |   | $ | 91,203 |   |   |   | 31 | % |
| Interest bearing       |   |   | 121,289 |   |   |   | 41 | % |   |   | 119,446 |   |   |   | 41 | % |
| Time deposits          |   |   | 78,053 |   |   |   | 26 | % |   |   | 74,467 |   |   |   | 25 | % |
| Brokered deposits      |   |   | 9,063 |   |   |   | 3 | % |   |   | 9,162 |   |   |   | 3 | % |
| Total Deposits         |   | $ | 296,671 |   |   |   | 100 | % |   | $ | 294,278 |   |   |   | 100 | % |

----

Index

| Capital and capital adequacy ratios                                 |
|---------------------------------------------------------------------|
|                                                                |   |   |
|                                                                |   | March 31, 2011 |   | December 31, 2010 |
| (dollars in thousands)                                              |   | Amount |   | Ratio |   | Amount |   | Ratio |
| Leverage Ratio                                                      |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp and Subsidiary                              |   | $ | 42,390 |   | 12.2% |   | $ | 41,791 |   | 12.1% |
| Minimum regulatory requirement                                      |   | $ | 13,865 |   | 4.0% |   | $ | 13,859 |   | 4.0% |
|                                                                |   |   |   |   |   |   |   |   |
| Valley Business Bank                                                |   | $ | 42,143 |   | 12.2% |   | $ | 41,663 |   | 12.0% |
| Minimum requirement for “Well- Capitalized” institution |   | $ | 17,331 |   | 5.0% |   | $ | 17,324 |   | 5.0% |
| Minimum regulatory requirement                                      |   | $ | 13,860 |   | 4.0% |   | $ | 13,854 |   | 4.0% |
|                                                                |   |   |   |   |   |   |   |   |
| Tier 1 Risk-Based Capital Ratio                                     |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp and Subsidiary                              |   | $ | 42,390 |   | 17.0% |   | $ | 41,791 |   | 16.2% |
| Minimum regulatory requirement                                      |   | $ | 9,992 |   | 4.0% |   | $ | 10,323 |   | 4.0% |
|                                                                |   |   |   |   |   |   |   |   |
| Valley Business Bank                                                |   | $ | 42,143 |   | 16.9% |   | $ | 41,663 |   | 16.2% |
| Minimum requirement for “Well- Capitalized” institution |   | $ | 14,984 |   | 6.0% |   | $ | 15,479 |   | 6.0% |
| Minimum regulatory requirement                                      |   | $ | 9,989 |   | 4.0% |   | $ | 10,319 |   | 4.0% |
|                                                                |   |   |   |   |   |   |   |   |
| Total Risk-Based Capital Ratio                                      |   |   |   |   |   |   |   |   |
| Valley Commerce Bancorp and Subsidiary                              |   | $ | 45,560 |   | 18.2% |   | $ | 45,060 |   | 17.5% |
| Minimum regulatory requirement                                      |   | $ | 19,984 |   | 8.0% |   | $ | 20,645 |   | 8.0% |
|                                                                |   |   |   |   |   |   |   |   |
| Valley Business Bank                                                |   | $ | 45,312 |   | 18.1% |   | $ | 44,931 |   | 17.4% |
| Minimum requirement for “Well- Capitalized” institution |   | $ | 24,973 |   | 10.0% |   | $ | 25,798 |   | 10.0% |
| Minimum regulatory requirement                                      |   | $ | 19,978 |   | 8.0% |   | $ | 20,639 |   | 8.0% |

----

Index

ITEM 

ITEM 

----

Index

PART 

ITEM 

ITEM 

ITEM 

ITEM 

----

Index

ITEM 

ITEM 

ITEM 

----

Index

SIGNATURES

|               | VALLEY COMMERCE BANCORP |                                                                                  |
|--------------------|-------------------------|---------------------------------------------------------------------------------------|
|               |                    |                                                                                  |   |
| Date: May 16, 2011 | By:                     | /s/ Allan W. Stone                                                                    |   |
|               |                    | Allan W. Stone                                                                        |   |
|               |                    | President and Chief Executive Officer                                                 |   |
|               |                    |                                                                                  |   |
|               |                    |                                                                                  |   |
| Date: May 16, 2011 | By:                     | /s/Roy O. Estridge                                                                    |   |
|               |                    | Roy O. Estridge, Chief Financial Officer and Chief   Operating Officer |   |

----

Index

Exhibit 

| 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            |

----