|   |
|--------|

| MICHIGAN                                 |   | 38-3516922                           |
|------------------------------------------|--------|--------------------------------------|
| (State of Incorporation)                 |   | (I.R.S. Employer Identification No.) |
| 102 E. Front St.                         |   |                                 |
| Monroe, Michigan                         |   | 48161                                |
| (Address of Principal Executive Offices) |   | (Zip Code)                           |

|   |
|--------|

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|   | · | operating, legal, and regulatory risks, including risks relating to further deteriorations in credit quality, our allowance for loan losses, potential losses on dispositions of non-performing assets, and impairment of goodwill; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, including the interpretation of regulatory capital or other rules; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the results of examinations of us by the Federal Reserve and our bank subsidiary by the Federal Deposit Insurance Corporation, or other regulatory authorities, who could require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | compliance with regulatory enforcement actions, including the Consent Order, legislative or regulatory changes that adversely affect our business, including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | economic, political, and competitive forces affecting our banking, securities, asset management, insurance, and credit services businesses; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the impact on net interest income from changes in monetary policy and general economic conditions; and |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | the risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

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----

|   | · | The Bank must increase its Tier 1 Leverage ratio to a minimum of 8.0 percent and its Total Risk Based Capital ratio to a minimum of 11 percent within 90 days of the effective date of the Consent Order. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank must increase its Tier 1 Leverage ratio to a minimum of 9.0 percent and its Total Risk Based Capital ratio to a minimum of 12 percent within 180 days of the effective date of the Consent Order. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank must charge off any loans classified as “Loss” in the Report of Examination (“ROE”) dated October 26, 2009. The Bank completed this prior to December 31, 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not extend additional credit to any borrower who has uncollected debt to the Bank that has been charged off or is classified as “Loss” in the ROE. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not extend additional credit to any borrower who has uncollected debt to the Bank  that is classified as “Substandard” or “Doubtful” in the ROE without prior approval of the Bank’s board of directors. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank is required to adopt a written plan to reduce the Bank’s risk position in each asset in excess of $1,000,000 which is more than 90 days delinquent or classified “Substandard” or “Doubtful” in the ROE. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not declare or pay any dividend without the prior written consent of the Regional Director of the FDIC and the Chief Deputy Commissioner of OFIR. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prior to the submission of all Reports of Condition and Income required by the FDIC, the Bank’s board must review the adequacy of the allowance for loan and lease losses. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Within 60 days of the effective date of the Consent Order, the Bank is to adopt a written profit plan and comprehensive budget for 2010 and 2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank is required to provide its shareholder with a copy of the Consent Order. The Bank’s sole shareholder is the Registrant. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Within 30 days of the effective date of the Consent Order, the Bank’s board of directors shall have in place a program for monitoring compliance with the Consent Order. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | While the Consent Order is in effect, the Bank shall furnish quarterly progress reports detailing the actions taken to secure compliance with the Consent Order and the results thereof to the FDIC and OFIR. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | the federal "Truth-In-Lending Act," governing disclosures of credit terms to consumer borrowers; |
|--------|---------|--------------------------------------------------------------------------------------------------|

|   | • | the "Home Mortgage Disclosure Act of 1975," requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the "Equal Credit Opportunity Act," prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the "Fair Credit Reporting Act of 1978," governing the use and provision of information to credit reporting agencies; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------|

|   | • | the "Fair Debt Collection Act," governing the manner in which consumer debts may be collected by collection agencies; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------|

|   | • | the rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------|

|   | • | the "Right to Financial Privacy Act," which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | the "Electronic Funds Transfer Act" and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| NAME               |   | AGE |   | POSITION                                                                                                                   |
|--------------------|--------|-----|--------|----------------------------------------------------------------------------------------------------------------------------|
| H. Douglas Chaffin |   | 55  |   | President & Chief Executive Officer                                                                                    |
| Donald M. Lieto    |   | 55  |   | Executive Vice President, Senior Administration Manager, Monroe Bank & Trust                                           |
| Scott E. McKelvey  |   | 51  |   | Executive Vice President, Senior Wealth Management Officer, Monroe Bank & Trust                                        |
| James E. Morr      |   | 64  |   | Executive Vice President, General Counsel, and Chief Risk Officer, Monroe Bank & Trust; Secretary, MBT Financial Corp. |
| Thomas G. Myers    |   | 54  |   | Executive Vice President & Chief Lending Manager, Monroe Bank & Trust                                              |
| John L. Skibski    |   | 46  |   | Executive Vice President & Chief Financial Officer, Monroe Bank & Trust; Treasurer, MBT Financial Corp.            |

----

----

|   | · | The Bank must increase its Tier 1 Leverage ratio to a minimum of 8.0 percent and its Total Risk Based Capital ratio to a minimum of 11 percent within 90 days of the effective date of the Consent Order. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank must increase its Tier 1 Leverage ratio to a minimum of 9.0 percent and its Total Risk Based Capital ratio to a minimum of 12 percent within 180 days of the effective date of the Consent Order. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank must charge off any loans classified as “Loss” in the Report of Examination (“ROE”) dated October 26, 2009. The Bank completed this prior to December 31, 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not extend additional credit to any borrower who has uncollected debt to the Bank that has been charged off or is classified as “Loss” in the ROE. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not extend additional credit to any borrower who has uncollected debt to the Bank  that is classified as “Substandard” or “Doubtful” in the ROE without prior approval of the Bank’s board of directors. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank is required to adopt a written plan to reduce the Bank’s risk position in each asset in excess of $1,000,000 which is more than 90 days delinquent or classified “Substandard” or “Doubtful” in the ROE. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank may not declare or pay any dividend without the prior written consent of the Regional Director of the FDIC and the Chief Deputy Commissioner of OFIR. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prior to the submission of all Reports of Condition and Income required by the FDIC, the Bank’s board must review the adequacy of the allowance for loan and lease losses. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Within 60 days of the effective date of the Consent Order, the Bank is to adopt a written profit plan and comprehensive budget for 2010 and 2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Bank is required to provide its shareholder with a copy of the Consent Order. The Bank’s sole shareholder is the Registrant. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Within 30 days of the effective date of the Consent Order, the Bank’s board of directors shall have in place a program for monitoring compliance with the Consent Order. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | While the Consent Order is in effect, the Bank shall furnish quarterly progress reports detailing the actions taken to secure compliance with the Consent Order and the results thereof to the FDIC and OFIR. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | The duration of the loan; |
|--------|--------|---------------------------|

|   | · | Credit risks of a particular borrower; |
|--------|--------|----------------------------------------|

|   | · | Changes in unemployment, economic and industry conditions; and |
|--------|--------|----------------------------------------------------------------|

|   | · | in the case of a collateralized loan, the potential inadequacy of the value of the collateral in the event of default, such as has resulted from the deterioration in commercial and residential real estate values. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Actual or anticipated variations in quarterly results of operations; |
|--------|--------|----------------------------------------------------------------------|

|   | · | Recommendations by securities analysts; |
|--------|--------|-----------------------------------------|

|   | · | Operating and stock price performance of other companies that investors deem comparable to the Corporation; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | News reports relating to trends, concerns, and other issues in the financial services industry; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Perceptions in the marketplace regarding the Corporation and/or its competitors; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | New technology used or services offered by competitors; |
|--------|--------|---------------------------------------------------------|

|   | · | Significant acquisitions or business combinations, strategic partnerships, joint venture, or capital commitments by or involving the Corporation or its competitors; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Failure to integrate acquisitions or realize anticipated benefits from acquisitions; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Changes in government regulations; and |
|--------|--------|----------------------------------------|

|   | · | Geopolitical conditions such as acts or threats of terrorism or military conflicts. |
|--------|--------|-------------------------------------------------------------------------------------|

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|        |   | 2010 |   |   | 2009   |   |
|-------------|--------|------|--------|--------|--------|--------|
|        |   | High |   |   | Low    |   |   | High |   |   | Low |   |
| 1st quarter |   | $    | 2.15   |   |   | $      | 1.35 |   |   | $ | 3.15 |   |   | $ | 1.32 |   |
| 2nd quarter |   | $    | 4.30   |   |   | $      | 1.24 |   |   | $ | 3.05 |   |   | $ | 1.83 |   |
| 3rd quarter |   | $    | 2.33   |   |   | $      | 1.26 |   |   | $ | 2.40 |   |   | $ | 2.00 |   |
| 4th quarter |   | $    | 2.10   |   |   | $      | 1.42 |   |   | $ | 2.11 |   |   | $ | 1.25 |   |

|        |   | 2010 |   |   | 2009   |   |   | 2008   |   |
|-------------|--------|------|--------|--------|--------|--------|--------|--------|--------|
| 1st quarter |   | $    | -      |   |   | $      | 0.01   |   |   | $ | 0.18 |   |
| 2nd quarter |   | $    | -      |   |   | $      | 0.01   |   |   | $ | 0.18 |   |
| 3rd quarter |   | $    | -      |   |   | $      | -      |   |   | $ | 0.09 |   |
| 4th quarter |   | $    | -      |   |   | $      | -      |   |   | $ | 0.09 |   |

----

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| Dollar amounts are in thousands,                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |
|---------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|
| except per share data                             |   | 2010   |       |   | 2009   |   |       | 2008   |   |   | 2007       |   |   | 2006   |       |
| Consolidated Statements of Income                 |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |
| Interest Income                                   |   | $      | 56,586     |   |   | $      | 71,004     |   |   | $      | 84,903     |   |   | $      | 93,551     |   |   | $ | 95,923 |   |
| Interest Expense                                  |   |   | 19,758     |   |   |   | 29,989     |   |   |   | 42,514     |   |   |   | 50,782     |   |   |   | 49,288 |   |
| Net Interest Income                               |   |   | 36,828     |   |   |   | 41,015     |   |   |   | 42,389     |   |   |   | 42,769     |   |   |   | 46,635 |   |
| Provision for Loan Losses                         |   |   | 20,500     |   |   |   | 36,000     |   |   |   | 18,000     |   |   |   | 11,407     |   |   |   | 16,475 |   |
| Net Interest Income after                         |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Provision for Loan Losses                         |   |   | 16,328     |   |   |   | 5,015      |   |   |   | 24,389     |   |   |   | 31,362     |   |   |   | 30,160 |   |
| Other Income                                      |   |   | 19,436     |   |   |   | 10,480     |   |   |   | 15,985     |   |   |   | 15,634     |   |   |   | 9,542 |   |
| Other Expenses                                    |   |   | 44,480     |   |   |   | 49,774     |   |   |   | 39,999     |   |   |   | 37,234     |   |   |   | 36,308 |   |
| Income before Provision for Income Taxes          |   |   | (8,716     | )      |   |   | (34,279    | )      |   |   | 375        |   |   |   | 9,762      |   |   |   | 3,394 |   |
| Provision for Income Taxes                        |   |   | 3,183      |   |   |   | (102       | )      |   |   | (1,317     | )      |   |   | 2,049      |   |   |   | (379 | ) |
| Net Income                                        |   | $      | (11,899    | )      |   | $      | (34,177    | )      |   | $      | 1,692      |   |   | $      | 7,713      |   |   | $ | 3,773 |   |
| Net Income available to Common Shareholders       |   | $      | (11,899    | )      |   | $      | (34,177    | )      |   | $      | 1,692      |   |   | $      | 7,713      |   |   | $ | 3,773 |   |
|                                              |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Per Common Share                                  |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic Net Income                                  |   | $      | (0.72      | )      |   | $      | (2.11      | )      |   | $      | 0.10       |   |   | $      | 0.47       |   |   | $ | 0.22 |   |
| Diluted Net Income                                |   |   | (0.72      | )      |   |   | (2.11      | )      |   |   | 0.10       |   |   |   | 0.47       |   |   |   | 0.22 |   |
| Cash Dividends Declared                           |   |   | -          |   |   |   | 0.02       |   |   |   | 0.54       |   |   |   | 0.72       |   |   |   | 0.70 |   |
| Book Value at Year End                            |   |   | 4.29       |   |   |   | 5.04       |   |   |   | 7.49       |   |   |   | 7.90       |   |   |   | 8.14 |   |
| Average Common Shares Outstanding                 |   |   | 16,498,734 |   |   |   | 16,186,478 |   |   |   | 16,134,570 |   |   |   | 16,415,425 |   |   |   | 16,941,432 |   |
|                                              |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Consolidated Balance Sheets (Year End)            |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Total Assets                                      |   | $      | 1,259,377  |   |   | $      | 1,383,369  |   |   | $      | 1,562,401  |   |   | $      | 1,556,806  |   |   | $ | 1,566,819 |   |
| Total Securities                                  |   |   | 325,000    |   |   |   | 356,865    |   |   |   | 466,043    |   |   |   | 438,058    |   |   |   | 439,025 |   |
| Loans, Net of Deferred Loan Fees                  |   |   | 753,860    |   |   |   | 849,910    |   |   |   | 941,732    |   |   |   | 1,002,259  |   |   |   | 998,998 |   |
| Allowance for Loan Losses                         |   |   | 21,223     |   |   |   | 24,063     |   |   |   | 18,528     |   |   |   | 20,222     |   |   |   | 13,764 |   |
| Deposits                                          |   |   | 1,031,893  |   |   |   | 1,031,791  |   |   |   | 1,136,078  |   |   |   | 1,109,980  |   |   |   | 1,116,057 |   |
| Borrowings                                        |   |   | 143,635    |   |   |   | 258,500    |   |   |   | 291,500    |   |   |   | 304,800    |   |   |   | 300,000 |   |
| Total Shareholders' Equity                        |   |   | 73,998     |   |   |   | 81,764     |   |   |   | 120,977    |   |   |   | 127,447    |   |   |   | 136,062 |   |
|                                              |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Selected Financial Ratios                         |   |   |       |   |   |   |       |   |   |   |       |   |   |   |       |   |   |   |   |   |
| Return on Average Assets                          |   |   | -0.92      | %      |   |   | -2.36      | %      |   |   | 0.11       | %      |   |   | 0.50       | % |   |   | 0.24 | % |
| Return on Average Equity                          |   |   | -14.06     | %      |   |   | -29.53     | %      |   |   | 1.36       | %      |   |   | 5.77       | % |   |   | 2.60 | % |
| Net Interest Margin                               |   |   | 3.10       | %      |   |   | 3.06       | %      |   |   | 2.96       | %      |   |   | 2.99       | % |   |   | 3.12 | % |
| Dividend Payout Ratio                             |   |   | 0.00       | %      |   |   | -0.95      | %      |   |   | 514.78     | %      |   |   | 152.40     | % |   |   | 313.16 | % |
| Allowance for Loan Losses to Period End Loans     |   |   | 2.82       | %      |   |   | 2.83       | %      |   |   | 1.97       | %      |   |   | 2.02       | % |   |   | 1.38 | % |
| Allowance for Loan Losses to Non Performing Loans |   |   | 25.98      | %      |   |   | 27.94      | %      |   |   | 34.45      | %      |   |   | 59.60      | % |   |   | 61.06 | % |
| Non Performing Loans to Period End Loans          |   |   | 10.84      | %      |   |   | 10.13      | %      |   |   | 5.71       | %      |   |   | 3.39       | % |   |   | 2.26 | % |
| Net Charge Offs to Average Loans                  |   |   | 2.89       | %      |   |   | 3.36       | %      |   |   | 2.00       | %      |   |   | 0.49       | % |   |   | 1.62 | % |

----

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----

----

|                             |   | 2010   |   |   | 2009   |   |   | 2008 |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|------|--------|
| Return on Average Assets         |   |   | -0.92  | %      |   |   | -2.36  | %    |   |   | 0.11 | % |
| Return on Average Equity         |   |   | -14.06 | %      |   |   | -29.53 | %    |   |   | 1.36 | % |
| Dividend Payout Ratio            |   |   | 0.00   | %      |   |   | -0.95  | %    |   |   | 514.78 | % |
| Average Equity to Average Assets |   |   | 6.54   | %      |   |   | 8.00   | %    |   |   | 8.07 | % |

----

----

|                      |   | December 31, 2010 |   |   | December 31, 2009 |   |   | Minimum to be WellCapitalized |   |
|---------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|----------------------------------------------|--------|
| Tier 1 Leverage Ratio     |   |                        | 6.24   | %      |                        |   | 6.27   | %                                            |   |   | 5 | % |
| Tier 1 Risk based Capital |   |                        | 8.97   | %      |                        |   | 8.95   | %                                            |   |   | 6 | % |
| Total Risk Based Capital  |   |                        | 10.24  | %      |                        |   | 10.21  | %                                            |   |   | 10 | % |

|                                                               |   | Held to Maturity  |   |
|--------------------------------------------------------------------|--------|-------------------|--------|
|                                                               |   | December 31, 2010 |   |   | December 31, 2009 |   |   | December 31, 2008 |   |
|                                                               |   |              |   |   | Estimated |   |   |   |   |   | Estimated |   |   |   |   |   | Estimated |   |
|                                                               |   | Amortized         |   |   | Market |   |   | Amortized |   |   | Market |   |   | Amortized |   |   | Market |   |
|                                                               |   | Cost              |   |   | Value |   |   | Cost |   |   | Value |   |   | Cost |   |   | Value |   |
| U.S. Government agency and corporation obligations                 |   | $                 | 6      |   |   | $ | 6 |   |   | $ | 6 |   |   | $ | 6 |   |   | $ | 7 |   |   | $ | 7 |   |
|                                                               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities issued by states and political subdivisions in the U.S. |   |              | 23,798 |   |   |   | 23,836 |   |   |   | 36,427 |   |   |   | 36,411 |   |   |   | 46,833 |   |   |   | 46,036 |   |
|                                                               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                              |   | $                 | 23,804 |   |   | $ | 23,842 |   |   | $ | 36,433 |   |   | $ | 36,417 |   |   | $ | 46,840 |   |   | $ | 46,043 |   |
|                                                               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pledged securities                                                 |   | $                 | 4,502  |   |   | $ | 4,544 |   |   | $ | 5,089 |   |   | $ | 5,129 |   |   | $ | 6,406 |   |   | $ | 6,405 |   |

|                                                                                      |   | Available for Sale |    |
|-------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                      |   | December 31, 2010  |    |   | December 31, 2009 |   |   | December 31, 2008 |   |
|                                                                                      |   |               |    |   | Estimated |   |   |   |   |   | Estimated |   |   |   |   |   | Estimated |   |
|                                                                                      |   | Amortized          |    |   | Market |   |   | Amortized |   |   | Market |   |   | Amortized |   |   | Market |   |
|                                                                                      |   | Cost               |    |   | Value |   |   | Cost |   |   | Value |   |   | Cost |   |   | Value |   |
| U.S. Government agency and corporation obligations (excluding mortgage-backed securities) |   | $                  | 266,773 |   |   | $ | 267,035 |   |   | $ | 256,483 |   |   | $ | 254,628 |   |   | $ | 322,767 |   |   | $ | 329,671 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities issued by states and political subdivisions in the U.S.                        |   |               | 14,881  |   |   |   | 14,725 |   |   |   | 35,117 |   |   |   | 35,637 |   |   |   | 40,999 |   |   |   | 41,114 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trust Preferred CDO Securities                                                            |   |               | 9,563   |   |   |   | 5,188 |   |   |   | 13,485 |   |   |   | 7,215 |   |   |   | 25,132 |   |   |   | 19,371 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate Debt Securities                                                                 |   |               | -       |   |   |   | - |   |   |   | 8,383 |   |   |   | 7,509 |   |   |   | 15,170 |   |   |   | 13,516 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other domestic securities (debt and equity)                                               |   |               | 2,553   |   |   |   | 2,417 |   |   |   | 2,553 |   |   |   | 2,357 |   |   |   | 2,386 |   |   |   | 2,445 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                     |   | $                  | 293,770 |   |   | $ | 289,365 |   |   | $ | 316,021 |   |   | $ | 307,346 |   |   | $ | 406,454 |   |   | $ | 406,117 |   |
|                                                                                      |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pledged securities                                                                        |   | $                  | 139,278 |   |   | $ | 140,032 |   |   | $ | 232,220 |   |   | $ | 231,182 |   |   | $ | 251,525 |   |   | $ | 257,054 |   |

----

|                                                  |   | Years Ended December 31, |      |
|------------------------------------------------------------|--------|-----------------------------------------|-----------|
|                                                       |   | 2010                                    |      |   | 2009 |   |   | 2008 |   |
|                                                       |   | Average                                 |      |   | Interest |   |   |   |   |   | Average |   |   | Interest |   |   |   |   |   | Average |   |   | Interest |   |   |   |   |
|                                                       |   | Daily                                   |      |   | Earned |   |   | Average |   |   | Daily |   |   | Earned |   |   | Average |   |   | Daily |   |   | Earned |   |   | Average |   |
| (Dollars in Thousands)                           |   | Balance                                 |      |   | or Paid |   |   | Yield |   |   | Balance |   |   | or Paid |   |   | Yield |   |   | Balance |   |   | or Paid |   |   | Yield |   |
| Investments                                                |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Bearing Balances Due From Banks                   |   | $                                       | 49,972    |   |   | $ | 131 |   |   |   | 0.26 | % |   | $ | 30,161 |   |   | $ | 89 |   |   |   | 0.30 | % |   | $ | 3,368 |   |   | $ | 29 |   |   |   | 0.86 | % |
| Obligations of US Government Agencies                      |   |                                    | 258,859   |   |   |   | 7,888 |   |   |   | 3.05 | % |   |   | 283,030 |   |   |   | 12,572 |   |   |   | 4.44 | % |   |   | 313,283 |   |   |   | 16,073 |   |   |   | 5.13 | % |
| Obligations of States & Political Subdivisions1        |   |                                    | 48,614    |   |   |   | 1,955 |   |   |   | 4.02 | % |   |   | 82,523 |   |   |   | 3,358 |   |   |   | 4.07 | % |   |   | 76,862 |   |   |   | 3,390 |   |   |   | 4.41 | % |
| Other Securities                                           |   |                                    | 22,405    |   |   |   | 602 |   |   |   | 2.69 | % |   |   | 39,549 |   |   |   | 2,076 |   |   |   | 5.25 | % |   |   | 48,459 |   |   |   | 2,903 |   |   |   | 5.99 | % |
| Total Investments                                          |   |                                    | 379,850   |   |   |   | 10,576 |   |   |   | 2.78 | % |   |   | 435,263 |   |   |   | 18,095 |   |   |   | 4.16 | % |   |   | 441,972 |   |   |   | 22,395 |   |   |   | 5.07 | % |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                      |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                 |   |                                    | 554,474   |   |   |   | 31,384 |   |   |   | 5.66 | % |   |   | 619,198 |   |   |   | 35,217 |   |   |   | 5.69 | % |   |   | 670,473 |   |   |   | 41,757 |   |   |   | 6.23 | % |
| Mortgage                                                   |   |                                    | 171,417   |   |   |   | 9,021 |   |   |   | 5.26 | % |   |   | 192,881 |   |   |   | 10,944 |   |   |   | 5.67 | % |   |   | 210,427 |   |   |   | 12,679 |   |   |   | 6.03 | % |
| Consumer                                                   |   |                                    | 80,702    |   |   |   | 5,605 |   |   |   | 6.95 | % |   |   | 93,274 |   |   |   | 6,748 |   |   |   | 7.23 | % |   |   | 102,682 |   |   |   | 8,036 |   |   |   | 7.83 | % |
| Total Loans2                                               |   |                                    | 806,593   |   |   |   | 46,010 |   |   |   | 5.70 | % |   |   | 905,353 |   |   |   | 52,909 |   |   |   | 5.84 | % |   |   | 983,582 |   |   |   | 62,472 |   |   |   | 6.35 | % |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Funds Sold                                         |   |                                    | -         |   |   |   | - |   |   |   | n/a |   |   |   | - |   |   |   | - |   |   |   | n/a |   |   |   | 4,333 |   |   |   | 36 |   |   |   | 0.83 | % |
| Total Interest Earning Assets                              |   |                                    | 1,186,443 |   |   |   | 56,586 |   |   |   | 4.77 | % |   |   | 1,340,616 |   |   |   | 71,004 |   |   |   | 5.30 | % |   |   | 1,429,887 |   |   |   | 84,903 |   |   |   | 5.94 | % |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash & Non Interest Bearing Due From Banks             |   |                                    | 17,239    |   |   |   |   |   |   |   |   |   |   |   | 17,748 |   |   |   |   |   |   |   |   |   |   |   | 20,420 |   |   |   |   |   |   |   |   |   |
| Interest Receivable and Other Assets                       |   |                                    | 100,620   |   |   |   |   |   |   |   |   |   |   |   | 105,067 |   |   |   |   |   |   |   |   |   |   |   | 97,412 |   |   |   |   |   |   |   |   |   |
| Total Assets                                               |   | $                                       | 1,304,302 |   |   |   |   |   |   |   |   |   |   | $ | 1,463,431 |   |   |   |   |   |   |   |   |   |   | $ | 1,547,719 |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings Accounts                                           |   | $                                       | 114,657   |   |   | $ | 300 |   |   |   | 0.26 | % |   | $ | 106,446 |   |   | $ | 343 |   |   |   | 0.32 | % |   | $ | 95,546 |   |   | $ | 183 |   |   |   | 0.19 | % |
| NOW Accounts                                               |   |                                    | 103,236   |   |   |   | 545 |   |   |   | 0.53 | % |   |   | 92,544 |   |   |   | 637 |   |   |   | 0.69 | % |   |   | 82,031 |   |   |   | 668 |   |   |   | 0.81 | % |
| Money Market Deposits                                      |   |                                    | 266,139   |   |   |   | 983 |   |   |   | 0.37 | % |   |   | 279,329 |   |   |   | 1,962 |   |   |   | 0.70 | % |   |   | 293,797 |   |   |   | 6,115 |   |   |   | 2.08 | % |
| Certificates of Deposit                                    |   |                                    | 395,887   |   |   |   | 11,266 |   |   |   | 2.85 | % |   |   | 450,056 |   |   |   | 15,044 |   |   |   | 3.34 | % |   |   | 494,962 |   |   |   | 19,870 |   |   |   | 4.01 | % |
| Federal Funds Purchased                                    |   |                                    | 3         |   |   |   | - |   |   |   | 0.00 | % |   |   | 381 |   |   |   | 1 |   |   |   | 0.26 | % |   |   | 18,364 |   |   |   | 466 |   |   |   | 2.54 | % |
| Repurchase Agreements                                      |   |                                    | 30,000    |   |   |   | 1,388 |   |   |   | 4.63 | % |   |   | 30,000 |   |   |   | 1,388 |   |   |   | 4.63 | % |   |   | 32,008 |   |   |   | 1,474 |   |   |   | 4.61 | % |
| FHLB Advances                                              |   |                                    | 159,185   |   |   |   | 5,276 |   |   |   | 3.31 | % |   |   | 248,837 |   |   |   | 10,614 |   |   |   | 4.27 | % |   |   | 258,303 |   |   |   | 13,738 |   |   |   | 5.32 | % |
| Total Interest Bearing Liabilities                         |   |                                    | 1,069,107 |   |   |   | 19,758 |   |   |   | 1.85 | % |   |   | 1,207,593 |   |   |   | 29,989 |   |   |   | 2.48 | % |   |   | 1,275,011 |   |   |   | 42,514 |   |   |   | 3.33 | % |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest Bearing Deposits                              |   |                                    | 141,409   |   |   |   |   |   |   |   |   |   |   |   | 129,789 |   |   |   |   |   |   |   |   |   |   |   | 136,918 |   |   |   |   |   |   |   |   |   |
| Other Liabilities                                          |   |                                    | 9,998     |   |   |   |   |   |   |   |   |   |   |   | 11,490 |   |   |   |   |   |   |   |   |   |   |   | 10,921 |   |   |   |   |   |   |   |   |   |
| Total Liabilities                                          |   |                                    | 1,220,514 |   |   |   |   |   |   |   |   |   |   |   | 1,348,872 |   |   |   |   |   |   |   |   |   |   |   | 1,422,850 |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders' Equity                                       |   |                                    | 83,788    |   |   |   |   |   |   |   |   |   |   |   | 114,559 |   |   |   |   |   |   |   |   |   |   |   | 124,869 |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Liabilities & Stockholders' Equity               |   | $                                       | 1,304,302 |   |   |   |   |   |   |   |   |   |   | $ | 1,463,431 |   |   |   |   |   |   |   |   |   |   | $ | 1,547,719 |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                        |   |                                    |      |   |   | $ | 36,828 |   |   |   |   |   |   |   |   |   |   | $ | 41,015 |   |   |   |   |   |   |   |   |   |   | $ | 42,389 |   |   |   |   |   |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Rate Spread                                       |   |                                    |      |   |   |   |   |   |   |   | 2.92 | % |   |   |   |   |   |   |   |   |   |   | 2.82 | % |   |   |   |   |   |   |   |   |   |   | 2.61 | % |
|                                                       |   |                                    |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income as a percent of average earning assets |   |                                    |      |   |   |   |   |   |   |   | 3.10 | % |   |   |   |   |   |   |   |   |   |   | 3.06 | % |   |   |   |   |   |   |   |   |   |   | 2.96 | % |

----

|                                          |   | Years Ended December 31, |   |
|----------------------------------------------------|--------|--------------------------|--------|
|                                               |   | 2010 versus 2009         |   |   | 2009 versus 2008 |   |   | 2008 versus 2007 |   |
|                                               |   | Changes due to           |   |   | Changes due to |   |   | Changes due to |   |
|                                               |   | increased (decreased)    |   |   | increased (decreased) |   |   | increased (decreased) |   |
| (Dollars in Thousands)                             |   | Rate                     |   |   | Volume |   |   | Net |   |   | Rate |   |   | Volume |   |   | Net |   |   | Rate |   |   | Volume |   |   | Net |   |
| Interest Income                                    |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments                                        |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Bearing Balances Due From Banks           |   | $                        | (16    | ) |   | $ | 59 |   |   | $ | 43 |   |   | $ | (169 | ) |   | $ | 229 |   |   | $ | 60 |   |   | $ | (141 | ) |   | $ | 161 |   |   | $ | 20 |   |
| Obligations of US Government Agencies              |   |                     | (3,610 | ) |   |   | (1,074 | ) |   |   | (4,684 | ) |   |   | (1,949 | ) |   |   | (1,552 | ) |   |   | (3,501 | ) |   |   | (735 | ) |   |   | (110 | ) |   |   | (845 | ) |
| Obligations of States & Political Subdivisions |   |                     | (23    | ) |   |   | (1,380 | ) |   |   | (1,403 | ) |   |   | (282 | ) |   |   | 250 |   |   |   | (32 | ) |   |   | 235 |   |   |   | (22 | ) |   |   | 213 |   |
| Other Securities                                   |   |                     | (574   | ) |   |   | (901 | ) |   |   | (1,475 | ) |   |   | (293 | ) |   |   | (534 | ) |   |   | (827 | ) |   |   | (34 | ) |   |   | 879 |   |   |   | 845 |   |
| Total Investments                                  |   |                     | (4,223 | ) |   |   | (3,296 | ) |   |   | (7,519 | ) |   |   | (2,693 | ) |   |   | (1,607 | ) |   |   | (4,300 | ) |   |   | (675 | ) |   |   | 908 |   |   |   | 233 |   |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                              |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                         |   |                     | (153   | ) |   |   | (3,680 | ) |   |   | (3,833 | ) |   |   | (3,355 | ) |   |   | (3,185 | ) |   |   | (6,540 | ) |   |   | (6,928 | ) |   |   | 602 |   |   |   | (6,326 | ) |
| Mortgage                                           |   |                     | (705   | ) |   |   | (1,218 | ) |   |   | (1,923 | ) |   |   | (678 | ) |   |   | (1,057 | ) |   |   | (1,735 | ) |   |   | (27 | ) |   |   | (674 | ) |   |   | (701 | ) |
| Consumer                                           |   |                     | (233   | ) |   |   | (910 | ) |   |   | (1,143 | ) |   |   | (552 | ) |   |   | (736 | ) |   |   | (1,288 | ) |   |   | (580 | ) |   |   | (1,166 | ) |   |   | (1,746 | ) |
| Total Loans                                        |   |                     | (1,091 | ) |   |   | (5,808 | ) |   |   | (6,899 | ) |   |   | (4,585 | ) |   |   | (4,978 | ) |   |   | (9,563 | ) |   |   | (7,535 | ) |   |   | (1,238 | ) |   |   | (8,773 | ) |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Funds Sold                                 |   |                     | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (36 | ) |   |   | (36 | ) |   |   | (189 | ) |   |   | 81 |   |   |   | (108 | ) |
| Total Interest Income                              |   |                     | (5,314 | ) |   |   | (9,104 | ) |   |   | (14,418 | ) |   |   | (7,278 | ) |   |   | (6,621 | ) |   |   | (13,899 | ) |   |   | (8,399 | ) |   |   | (249 | ) |   |   | (8,648 | ) |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                                   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings Accounts                                   |   |                     | (69    | ) |   |   | 26 |   |   |   | (43 | ) |   |   | 139 |   |   |   | 21 |   |   |   | 160 |   |   |   | (30 | ) |   |   | 0 |   |   |   | (30 | ) |
| NOW Accounts                                       |   |                     | (166   | ) |   |   | 74 |   |   |   | (92 | ) |   |   | (117 | ) |   |   | 86 |   |   |   | (31 | ) |   |   | 366 |   |   |   | 49 |   |   |   | 415 |   |
| Money Market Deposits                              |   |                     | (886   | ) |   |   | (93 | ) |   |   | (979 | ) |   |   | (3,852 | ) |   |   | (301 | ) |   |   | (4,153 | ) |   |   | (3,960 | ) |   |   | 245 |   |   |   | (3,715 | ) |
| Certificates of Deposit                            |   |                     | (1,967 | ) |   |   | (1,811 | ) |   |   | (3,778 | ) |   |   | (3,023 | ) |   |   | (1,803 | ) |   |   | (4,826 | ) |   |   | (2,080 | ) |   |   | (177 | ) |   |   | (2,257 | ) |
| Federal Funds Purchased                            |   |                     | 1      |   |   |   | (1 | ) |   |   | - |   |   |   | (8 | ) |   |   | (457 | ) |   |   | (465 | ) |   |   | (483 | ) |   |   | 431 |   |   |   | (52 | ) |
| Repurchase agreements                              |   |                     | -      |   |   |   | - |   |   |   | - |   |   |   | 6 |   |   |   | (92 | ) |   |   | (86 | ) |   |   | 50 |   |   |   | (220 | ) |   |   | (170 | ) |
| FHLB Advances                                      |   |                     | (1,515 | ) |   |   | (3,824 | ) |   |   | (5,339 | ) |   |   | (2,621 | ) |   |   | (503 | ) |   |   | (3,124 | ) |   |   | (2,573 | ) |   |   | 114 |   |   |   | (2,459 | ) |
| Total Interest Expense                             |   |                     | (4,602 | ) |   |   | (5,629 | ) |   |   | (10,231 | ) |   |   | (9,476 | ) |   |   | (3,049 | ) |   |   | (12,525 | ) |   |   | (8,710 | ) |   |   | 442 |   |   |   | (8,268 | ) |
|                                               |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                |   | $                        | (712   | ) |   | $ | (3,475 | ) |   | $ | (4,187 | ) |   | $ | 2,198 |   |   | $ | (3,572 | ) |   | $ | (1,374 | ) |   | $ | 311 |   |   | $ | (691 | ) |   | $ | (380 | ) |

----

|                                          |   | Maturing      |   |
|----------------------------------------------------|--------|---------------|--------|
|                                               |   | Within 1 year |   |   | 1 - 5 years |   |   | 5 - 10 Years |   |   | Over 10 Years |   |   | Total |   |
|                                               |   | Amount        |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |   | Amount |   |   | Yield |   |
| (Dollars in Thousands)                             |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations of US Government Agencies              |   | $             | -      |   |   |   | 0.00 | % |   | $ | 55,721 |   |   |   | 1.34 | % |   | $ | 51,616 |   |   |   | 3.00 | % |   | $ | 159,704 |   |   |   | 3.46 | % |   | $ | 267,041 |   |   |   | 2.93 | % |
| Obligations of States & Political Subdivisions |   |          | 4,591  |   |   |   | 4.02 | % |   |   | 12,714 |   |   |   | 4.12 | % |   |   | 12,560 |   |   |   | 4.27 | % |   |   | 8,658 |   |   |   | 3.59 | % |   |   | 38,523 |   |   |   | 4.04 | % |
| Trust Preferred CDO Securities                     |   |          | -      |   |   |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |   |   | 5,188 |   |   |   | 1.25 | % |   |   | 5,188 |   |   |   | 1.25 | % |
| Other Securities                                   |   |          | -      |   |   |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |   |   | - |   |   |   | 0.00 | % |   |   | 2,417 |   |   |   | 0.00 | % |   |   | 2,417 |   |   |   | 0.00 | % |
| Total                                              |   | $             | 4,591  |   |   |   | 4.02 | % |   | $ | 68,435 |   |   |   | 1.86 | % |   | $ | 64,176 |   |   |   | 3.25 | % |   | $ | 175,967 |   |   |   | 3.35 | % |   | $ | 313,169 |   |   |   | 3.01 | % |

|                                            |   | Assets/Liabilities at December 31, 2010, Maturing or Repricing in: |    |
|------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|---------|
|                                                 |   | 0 - 6                                                                                            |    |   | 6 - 12 |   |   | 1 - 2 |   |   | 2 - 5 |   |   | Over 5 |   |   | Total |   |
| (Dollars in Thousands)                     |   | Months                                                                                                     |    |   | Months |   |   | Years |   |   | Years |   |   | Years |   |   | Amount |   |
| Interest Earning Assets                    |   |                                                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| US Treas Secs & Obligations of US Gov't Agencies |   | $                                                                                                          | 98,371  |   |   | $ | 31,225 |   |   | $ | 38,166 |   |   | $ | 33,635 |   |   | $ | 65,644 |   |   | $ | 267,041 |   |
| Obligations of States & Political Subdivisions   |   |                                                                                                       | 10,560  |   |   |   | 2,288 |   |   |   | 4,986 |   |   |   | 8,288 |   |   |   | 12,401 |   |   |   | 38,523 |   |
| Other Securities                                     |   |                                                                                                       | 2,620   |   |   |   | - |   |   |   | 2,568 |   |   |   | - |   |   |   | 2,417 |   |   |   | 7,605 |   |
| Commercial Loans                                     |   |                                                                                                       | 168,626 |   |   |   | 31,307 |   |   |   | 79,116 |   |   |   | 180,011 |   |   |   | 7,837 |   |   |   | 466,897 |   |
| Mortgage Loans                                       |   |                                                                                                       | 25,830  |   |   |   | 34,726 |   |   |   | 23,623 |   |   |   | 45,987 |   |   |   | 85,611 |   |   |   | 215,777 |   |
| Consumer Loans                                       |   |                                                                                                       | 34,830  |   |   |   | 6,856 |   |   |   | 10,736 |   |   |   | 15,267 |   |   |   | 3,497 |   |   |   | 71,186 |   |
| Intereset Bearing DFB                                |   |                                                                                                       | 72,511  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 72,511 |   |
| Total Interest Earning Assets                        |   | $                                                                                                          | 413,348 |   |   | $ | 106,402 |   |   | $ | 159,195 |   |   | $ | 283,188 |   |   | $ | 177,407 |   |   | $ | 1,139,540 |   |
|                                                 |   |                                                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest Bearing Liabilities                         |   |                                                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings Deposits                                     |   | $                                                                                                          | 264,369 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 264,369 |   |
| Other Time Deposits                                  |   |                                                                                                       | 86,323  |   |   |   | 118,290 |   |   |   | 93,350 |   |   |   | 93,205 |   |   |   | 8,728 |   |   |   | 399,896 |   |
| FHLB Advances                                        |   |                                                                                                       | 113,500 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 113,500 |   |
| Repurchase Agreements                                |   |                                                                                                       | 10,000  |   |   |   | - |   |   |   | 5,000 |   |   |   | - |   |   |   | 15,000 |   |   |   | 30,000 |   |
| Notes Payable                                        |   |                                                                                                       | -       |   |   |   | - |   |   |   | - |   |   |   | 135 |   |   |   | - |   |   |   | 135 |   |
| Total Interest Bearing Liabilities                   |   | $                                                                                                          | 474,192 |   |   | $ | 118,290 |   |   | $ | 98,350 |   |   | $ | 93,340 |   |   | $ | 23,728 |   |   | $ | 807,900 |   |
|                                                 |   |                                                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gap                                                  |   | $                                                                                                          | (60,844 | ) |   | $ | (11,888 | ) |   | $ | 60,845 |   |   | $ | 189,848 |   |   | $ | 153,679 |   |   | $ | 331,640 |   |
| Cumulative Gap                                       |   | $                                                                                                          | (60,844 | ) |   | $ | (72,732 | ) |   | $ | (11,887 | ) |   | $ | 177,961 |   |   | $ | 331,640 |   |   | $ | 331,640 |   |
|                                                 |   |                                                                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sensitivity Ratio                                    |   |                                                                                                       | 0.87    |   |   |   | 0.90 |   |   |   | 1.62 |   |   |   | 3.03 |   |   |   | 7.48 |   |   |   | 1.41 |   |
| Cumulative Sensitivity Ratio                         |   |                                                                                                       | 0.87    |   |   |   | 0.88 |   |   |   | 0.98 |   |   |   | 1.23 |   |   |   | 1.41 |   |   |   | 1.41 |   |

----

|                          |   | Assets/Liabilities at December 31, 2010, Maturing or Repricing in: |     |
|------------------------------------|--------|------------------------------------------------------------------------------------------------------------|----------|
|                               |   | 0-6                                                                                                        |     |   | 6-12 |   |   | 1-2 |   |   | 2-5 |   |   | Over 5 |   |   |   |   |
|                               |   | Months                                                                                                     |     |   | Months |   |   | Years |   |   | Years |   |   | Years |   |   | Total |   |
| Total Interest Earning Assets      |   | $                                                                                                          | 413,348  |   |   | $ | 106,402 |   |   | $ | 159,195 |   |   | $ | 283,188 |   |   | $ | 177,407 |   |   | $ | 1,139,540 |   |
| Total Interest Bearing Liabilities |   | $                                                                                                          | 693,612  |   |   | $ | 118,290 |   |   | $ | 98,350 |   |   | $ | 93,340 |   |   | $ | 23,728 |   |   | $ | 1,027,320 |   |
|                               |   |                                                                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gap                                |   | $                                                                                                          | (280,264 | ) |   | $ | (11,888 | ) |   | $ | 60,845 |   |   | $ | 189,848 |   |   | $ | 153,679 |   |   | $ | 112,220 |   |
| Cumulative Gap                     |   | $                                                                                                          | (280,264 | ) |   | $ | (292,152 | ) |   | $ | (231,307 | ) |   | $ | (41,459 | ) |   | $ | 112,220 |   |   | $ | 112,220 |   |
|                               |   |                                                                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sensitivity Ratio                  |   |                                                                                                       | 0.60     |   |   |   | 0.90 |   |   |   | 1.62 |   |   |   | 3.03 |   |   |   | 7.48 |   |   |   | 1.11 |   |
| Cumulative Sensitivity Ratio       |   |                                                                                                       | 0.60     |   |   |   | 0.64 |   |   |   | 0.75 |   |   |   | 0.96 |   |   |   | 1.11 |   |   |   | 1.11 |   |

|                             |   | Years Ended December 31, |    |
|----------------------------------|--------|-----------------------------------------|---------|
| (Dollars in Thousands) |   | 2010                                    |    |   | 2009 |   |   | 2008 |   |
| Maturing Within                  |   |                                    |    |   |   |   |   |   |   |
| 3 Months                         |   | $                                       | 20,057  |   |   | $ | 31,376 |   |   | $ | 50,991 |   |
| 3 - 6 Months                     |   |                                    | 8,695   |   |   |   | 12,039 |   |   |   | 18,888 |   |
| 6 - 12 Months                    |   |                                    | 35,719  |   |   |   | 13,637 |   |   |   | 24,775 |   |
| Over 12 Months                   |   |                                    | 59,266  |   |   |   | 60,507 |   |   |   | 38,595 |   |
| Total                            |   | $                                       | 123,737 |   |   | $ | 117,559 |   |   | $ | 133,249 |   |

----

|                                                                                                                 |   | 2010 (a) |    |   | 2009 (a) |   |    | 2008 (a) |   |   | 2007 (a) |   |   | 2006 (a) |      |
|----------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|----------|--------|---------|----------|--------|--------|----------|--------|--------|----------|-----------|
| Loans secured by real estate:                                                                                        |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |
| Construction and land development                                                                                    |   | $        | 46,311  |   |     | $      | 64,520  |     |   | $      | 98,104   |   |   | $        | 149,271   |   |   | $ | 160,566 |   |
| Secured by farmland (including farm residential and other improvements)                                              |   |     | 14,084  |   |     |   | 10,349  |     |   |   | 10,459   |   |   |     | 9,792     |   |   |   | 10,057 |   |
| Secured by 1-4 family residential properties                                                                         |   |     | 246,070 |   |     |   | 275,557 |     |   |   | 304,834  |   |   |     | 317,327   |   |   |   | 331,775 |   |
| Secured by multifamily (5 or more) residential properties                                                            |   |     | 23,084  |   |     |   | 23,730  |     |   |   | 25,002   |   |   |     | 11,953    |   |   |   | 10,124 |   |
| Secured by nonfarm nonresidential properties                                                                         |   |     | 323,351 |   |     |   | 351,027 |     |   |   | 352,934  |   |   |     | 357,622   |   |   |   | 328,145 |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Loans to finance agricultural production and other loans to farmers                                                  |   |     | 6,369   |   |     |   | 7,121   |     |   |   | 9,763    |   |   |     | 5,981     |   |   |   | 3,738 |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Commercial and industrial loans to U.S. addresses (domicile)                                                         |   |     | 76,782  |   |     |   | 93,865  |     |   |   | 109,337  |   |   |     | 107,156   |   |   |   | 97,512 |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Loans to individuals for household, family, and other personal expenditures (includes  purchased paper):        |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Credit cards and related plans                                                                                       |   |     | 311     |   |     |   | 362     |     |   |   | 403      |   |   |     | 374       |   |   |   | 377 |   |
| Other                                                                                                                |   |     | 16,195  |   |     |   | 21,873  |     |   |   | 29,728   |   |   |     | 40,620    |   |   |   | 55,510 |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Nonrated industrial development obligations (other than securities) of states and political subdivisions in the U.S. |   |     | -       |   |     |   | -       |     |   |   | -        |   |   |     | -         |   |   |   | - |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Other loans:                                                                                                         |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Loans for purchasing or carrying securities (secured and unsecured)                                                  |   |     | -       |   |     |   | -       |     |   |   | -        |   |   |     | 25        |   |   |   | - |   |
| All other loans                                                                                                      |   |     | 330     |   |     |   | 575     |     |   |   | 384      |   |   |     | 707       |   |   |   | 473 |   |
| Less: Any unearned income on loans                                                                                   |   |     | -       |   |     |   | -       |     |   |   | -        |   |   |     | -         |   |   |   | - |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Total loans and leases, net of unearned income                                                                       |   | $        | 752,887 |   |     | $      | 848,979 |     |   | $      | 940,948  |   |   | $        | 1,000,828 |   |   | $ | 998,277 |   |
|                                                                                                                 |   |     |    |   |     |   |    |     |   |   |     |   |   |     |      |   |   |   |   |   |
| Nonaccrual loans                                                                                                     |   | $        | 67,581  |   |     | $      | 56,992  |     |   | $      | 47,872   |   |   | $        | 30,459    |   |   | $ | 19,152 |   |
| Loans 90 days or more past due and accruing                                                                          |   | $        | 4       |   |     | $      | 20      |     |   | $      | 93       |   |   | $        | 102       |   |   | $ | 69 |   |
| Troubled debt restructurings                                                                                         |   | $        | 14,098  |   |     | $      | 29,102  |     |   | $      | 5,811    |   |   | $        | 3,367     |   |   | $ | 888 |   |

| (a) | Loan categories are presented net of deferred loan fees. The presentation in Note 4 to the consolidated financial statements differs from this schedule’s presentation by presenting the loan categories, gross, before deferred loan fees have been subtracted. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                              |   | Years Ended December 31, |   |
|-------------------------------------------------------------------|--------|-----------------------------------------|--------|
| (Dollars in Thousands)                                  |   | 2010                                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Balance Beginning of Period                                       |   | $                                       | 24,063 |   |   | $ | 18,528 |   |   | $ | 20,222 |   |   | $ | 13,764 |   |   | $ | 13,625 |   |
|                                                              |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans Charged Off (Domestic)                                      |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, Financial, and Agricultural                           |   |                                    | 2,907  |   |   |   | 7,093 |   |   |   | 7,591 |   |   |   | 1,052 |   |   |   | 1,600 |   |
| Secured by Real Estate                                            |   |                                    | 20,698 |   |   |   | 24,266 |   |   |   | 12,036 |   |   |   | 4,284 |   |   |   | 14,910 |   |
| Loans to Individuals                                              |   |                                    | 951    |   |   |   | 635 |   |   |   | 1,021 |   |   |   | 1,050 |   |   |   | 1,867 |   |
| Recoveries (Domestic)                                             |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, Financial, and Agricultural                           |   |                                    | 220    |   |   |   | 607 |   |   |   | 201 |   |   |   | 730 |   |   |   | 815 |   |
| Secured by Real Estate                                            |   |                                    | 437    |   |   |   | 594 |   |   |   | 250 |   |   |   | 48 |   |   |   | 421 |   |
| Loans to Individuals                                              |   |                                    | 559    |   |   |   | 328 |   |   |   | 503 |   |   |   | 659 |   |   |   | 805 |   |
| Net Loans Charged Off                                             |   |                                    | 23,340 |   |   |   | 30,465 |   |   |   | 19,694 |   |   |   | 4,949 |   |   |   | 16,336 |   |
| Provision Charged to Operations                                   |   |                                    | 20,500 |   |   |   | 36,000 |   |   |   | 18,000 |   |   |   | 11,407 |   |   |   | 16,475 |   |
| Balance End of Period                                             |   | $                                       | 21,223 |   |   | $ | 24,063 |   |   | $ | 18,528 |   |   | $ | 20,222 |   |   | $ | 13,764 |   |
|                                                              |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of Net Loans Charged Off to Average Total Loans Outstanding |   |                                    | 2.89   | % |   |   | 3.36 | % |   |   | 2.00 | % |   |   | 0.49 | % |   |   | 1.62 | % |

----

|                               |   | Years Ended December 31, |   |
|-----------------------------------------|--------|-----------------------------------------|--------|
|                                    |   | 2010                                    |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                    |   | $                                       |   |   | % of loans |   |   | $ |   |   | % of loans |   |   | $ |   |   | % of loans |   |   | $ |   |   | % of loans |   |   | $ |   |   | % of loans |   |
| (Dollars in Thousands)        |   | Amount                                  |   |   | to total loans |   |   | Amount |   |   | to total loans |   |   | Amount |   |   | to total loans |   |   | Amount |   |   | to total loans |   |   | Amount |   |   | to total loans |   |
| Balance at end of period applicable to: |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Domestic                                |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, Financial, and Agricultural |   | $                                       | 4,573  |   |   |   | 12.9 | % |   | $ | 6,502 |   |   |   | 13.1 | % |   | $ | 3,586 |   |   |   | 13.8 | % |   | $ | 2,436 |   |   |   | 12.3 | % |   | $ | 1,524 |   |   |   | 11.1 | % |
| Real Estate - Construction              |   |                                    | 3,729  |   |   |   | 6.1 | % |   |   | 2,351 |   |   |   | 7.6 | % |   |   | 2,915 |   |   |   | 10.4 | % |   |   | 3,610 |   |   |   | 14.9 | % |   |   | 2,181 |   |   |   | 16.1 | % |
| Real Estate - Mortgage                  |   |                                    | 12,551 |   |   |   | 78.8 | % |   |   | 14,888 |   |   |   | 76.6 | % |   |   | 11,673 |   |   |   | 72.6 | % |   |   | 13,618 |   |   |   | 68.7 | % |   |   | 9,056 |   |   |   | 67.1 | % |
| Loans to Individuals                    |   |                                    | 370    |   |   |   | 2.2 | % |   |   | 322 |   |   |   | 2.7 | % |   |   | 354 |   |   |   | 3.2 | % |   |   | 558 |   |   |   | 4.1 | % |   |   | 1,003 |   |   |   | 5.7 | % |
| Foreign                                 |   |                                    | -      |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |
| Total                                   |   | $                                       | 21,223 |   |   |   | 100.0 | % |   | $ | 24,063 |   |   |   | 100.0 | % |   | $ | 18,528 |   |   |   | 100.0 | % |   | $ | 20,222 |   |   |   | 100.0 | % |   | $ | 13,764 |   |   |   | 100.0 | % |

|                             |   | Payment Due by Period |    |
|----------------------------------|--------|--------------------------------------|---------|
|                             |   |                                 |    |   | Less than |   |   | 1 - 3 |   |   | 3 - 5 |   |   | Over 5 |   |
| (Dollars in Thousands) |   | Total                                |    |   | 1 year |   |   | Years |   |   | Years |   |   | Years |   |
| Long Term Debt Obligations       |   | $                                    | 143,500 |   |   | $ | 16,500 |   |   | $ | 100,000 |   |   | $ | 12,000 |   |   | $ | 15,000 |   |
| Operating Lease Obligations      |   |                                 | 509     |   |   |   | 241 |   |   |   | 210 |   |   |   | 44 |   |   |   | 14 |   |
| Salary Continuation Obligations  |   |                                 | 987     |   |   |   | 58 |   |   |   | 116 |   |   |   | 116 |   |   |   | 697 |   |
| Total Contractual Obligations    |   | $                                    | 144,996 |   |   | $ | 16,799 |   |   | $ | 100,326 |   |   | $ | 12,160 |   |   | $ | 15,711 |   |

----

|                                             |   | Base       |   |   | Rates      |   |   | Rates      |   |   | Rates      |   |   | Rates        |   |   | Rates        |   |   | Rates        |   |
|-------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
| (Dollars in Thousands)                      |   | Projection |   |   | Up 1% |   |   | Up 2% |   |   | Up 3% |   |   | Down 1% |   |   | Down 2% |   |   | Down 3% |   |
| Year-End 2010 12 Month Projection |   |       |   |   |       |   |   |       |   |   |       |   |   |         |   |   |         |   |   |         |   |
| Interest Income                                       |   | $          | 49,729 |   |       | $      | 51,198 |       |   | $      | 52,857     |   |   | $            | 54,578 |   |         | $      | 48,599 |         |   | $ | 47,212 |   |   | $ | 46,000 |   |
| Interest Expense                                      |   |       | 15,040 |   |       |   | 15,876 |       |   |   | 16,714     |   |   |         | 17,544 |   |         |   | 14,710 |         |   |   | 14,642 |   |   |   | 14,621 |   |
| Net Interest Income                                   |   | $          | 34,689 |   |       | $      | 35,322 |       |   | $      | 36,143     |   |   | $            | 37,034 |   |         | $      | 33,889 |         |   | $ | 32,570 |   |   | $ | 31,379 |   |
|                                                  |   |       |   |   |       |   |   |       |   |   |       |   |   |         |   |   |         |   |   |         |   |   |   |   |   |   |   |   |
| Percent Change From Base Projection                   |   |       |   |   |       |   | 1.8    | %          |   |   | 4.2        | %      |   |         | 6.8    | %      |         |   | -2.3   | %            |   |   | -6.1 | % |   |   | -9.5 | % |
| ALCO Policy Limit (+/-)                               |   |       |   |   |       |   | 5.0    | %          |   |   | 7.5        | %      |   |         | 10.0   | %      |         |   | 5.0    | %            |   |   | 7.5 | % |   |   | 10.0 | % |

|                                             |   | Base       |   |   | Rates      |   |   | Rates      |   |   | Rates      |   |   | Rates        |   |   | Rates        |   |   | Rates        |   |
|-------------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|
| (Dollars in Thousands)                      |   | Projection |   |   | Up 1% |   |   | Up 2% |   |   | Up 3% |   |   | Down 1% |   |   | Down 2% |   |   | Down 3% |   |
| Year-End 2009 12 Month Projection |   |       |   |   |       |   |   |       |   |   |       |   |   |         |   |   |         |   |   |         |   |
| Interest Income                                  |   | $          | 63,190 |   |       | $      | 64,713 |       |   | $      | 66,324     |   |   | $            | 68,025 |   |         | $      | 62,290 |         |   | $ | 60,970 |   |   | $ | 59,610 |   |
| Interest Expense                                      |   |       | 23,254 |   |       |   | 23,998 |       |   |   | 24,749     |   |   |         | 25,494 |   |         |   | 23,027 |         |   |   | 22,970 |   |   |   | 22,939 |   |
| Net Interest Income                                   |   | $          | 39,936 |   |       | $      | 40,715 |       |   | $      | 41,575     |   |   | $            | 42,531 |   |         | $      | 39,263 |         |   | $ | 38,000 |   |   | $ | 36,671 |   |
|                                                  |   |       |   |   |       |   |   |       |   |   |       |   |   |         |   |   |         |   |   |         |   |   |   |   |   |   |   |   |
| Percent Change From Base Projection                   |   |       |   |   |       |   | 2.0    | %          |   |   | 4.1        | %      |   |         | 6.5    | %      |         |   | -1.7   | %            |   |   | -4.8 | % |   |   | -8.2 | % |
| ALCO Policy Limit (+/-)                               |   |       |   |   |       |   | 5.0    | %          |   |   | 7.5        | %      |   |         | 10.0   | %      |         |   | 5.0    | %            |   |   | 7.5 | % |   |   | 10.0 | % |

----

|                       |   | Fair Value at December 31, 2010 |      |
|---------------------------------|--------|----------------------------------------------------------|-----------|
|                            |   | Rates                                                    |      |   |   |   |   |   |   |
| (Dollars in Millions) |   | Base                                                     |      |   | Up 1% |   |   | Up 2% |   |   | Up 3% |   |   | Down 1% |   |   | Down 2% |   |   | Down 3% |   |
| Assets                          |   | $                                                        | 1,287,184 |   |   | $ | 1,264,426 |   |   | $ | 1,240,767 |   |   | $ | 1,217,684 |   |   | $ | 1,303,459 |   |   | $ | 1,314,582 |   |   | $ | 1,324,861 |   |
| Liabilities                     |   |                                                     | 1,179,170 |   |   |   | 1,156,858 |   |   |   | 1,135,273 |   |   |   | 1,114,385 |   |   |   | 1,200,001 |   |   |   | 1,214,896 |   |   |   | 1,217,227 |   |
| Stockholders' Equity            |   | $                                                        | 108,014   |   |   | $ | 107,568 |   |   | $ | 105,494 |   |   | $ | 103,299 |   |   | $ | 103,458 |   |   | $ | 99,686 |   |   | $ | 107,634 |   |
|                            |   |                                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in Equity                |   |                                                     |      |   |   |   | -0.4 | % |   |   | -2.3 | % |   |   | -4.4 | % |   |   | -4.2 | % |   |   | -7.7 | % |   |   | -0.4 | % |
| ALCO Policy Limit (+/-)         |   |                                                     |      |   |   |   | 10.0 | % |   |   | 20.0 | % |   |   | 30.0 | % |   |   | 10.0 | % |   |   | 20.0 | % |   |   | 30.0 | % |

|                       |   | Fair Value at December 31, 2009 |      |
|---------------------------------|--------|----------------------------------------------------------|-----------|
|                            |   | Rates                                                    |      |   |   |   |   |   |   |
| (Dollars in Millions) |   | Base                                                     |      |   | Up 1% |   |   | Up 2% |   |   | Up 3% |   |   | Down 1% |   |   | Down 2% |   |   | Down 3% |   |
| Assets                          |   | $                                                        | 1,421,652 |   |   | $ | 1,396,696 |   |   | $ | 1,369,958 |   |   | $ | 1,343,551 |   |   | $ | 1,438,458 |   |   | $ | 1,452,525 |   |   | $ | 1,468,502 |   |
| Liabilities                     |   |                                                     | 1,276,781 |   |   |   | 1,251,611 |   |   |   | 1,227,288 |   |   |   | 1,203,769 |   |   |   | 1,298,803 |   |   |   | 1,317,834 |   |   |   | 1,327,323 |   |
| Stockholders' Equity            |   | $                                                        | 144,871   |   |   | $ | 145,085 |   |   | $ | 142,670 |   |   | $ | 139,782 |   |   | $ | 139,655 |   |   | $ | 134,691 |   |   | $ | 141,179 |   |
|                            |   |                                                     |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in Equity                |   |                                                     |      |   |   |   | 0.1 | % |   |   | -1.5 | % |   |   | -3.5 | % |   |   | -3.6 | % |   |   | -7.0 | % |   |   | -2.5 | % |
| ALCO Policy Limit (+/-)         |   |                                                     |      |   |   |   | 10.0 | % |   |   | 20.0 | % |   |   | 30.0 | % |   |   | 10.0 | % |   |   | 20.0 | % |   |   | 30.0 | % |

----

----

| /s/ Plante & Moran, PLLC |   |
|------------------------------|--------|
| Auburn Hills, Michigan       |   |
| March 18, 2011               |   |

----

----

|                                                                                                               |   | December 31, |      |
|--------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|
| Dollars in thousands                                                                                               |   | 2010              |      |   | 2009 |   |
| Assets                                                                                                             |   |              |      |   |   |   |
| Cash and Cash Equivalents (Note 2)                                                                                 |   |              |      |   |   |   |
| Cash and due from banks                                                                                            |   |              |      |   |   |   |
| Non-interest bearing                                                                                               |   | $                 | 13,789    |   |   | $ | 18,448 |   |
| Interest bearing                                                                                                   |   |              | 72,511    |   |   |   | 51,298 |   |
| Total cash and cash equivalents                                                                                    |   |              | 86,300    |   |   |   | 69,746 |   |
|                                                                                                               |   |              |      |   |   |   |   |   |
| Securities - Held to Maturity (Note 3)                                                                             |   |              | 23,804    |   |   |   | 36,433 |   |
| Securities - Available for Sale (Note 3)                                                                           |   |              | 289,365   |   |   |   | 307,346 |   |
| Federal Home Loan Bank stock - at cost                                                                             |   |              | 11,831    |   |   |   | 13,086 |   |
| Loans held for sale                                                                                                |   |              | 973       |   |   |   | 931 |   |
| Loans - Net (Notes 4 and 5)                                                                                        |   |              | 731,664   |   |   |   | 824,916 |   |
| Accrued interest receivable and other assets (Note 12)                                                             |   |              | 34,207    |   |   |   | 50,580 |   |
| Bank Owned Life Insurance (Note 9)                                                                                 |   |              | 50,664    |   |   |   | 47,953 |   |
| Premises and Equipment - Net (Note 6)                                                                              |   |              | 30,569    |   |   |   | 32,378 |   |
| Total assets                                                                                                       |   | $                 | 1,259,377 |   |   | $ | 1,383,369 |   |
|                                                                                                               |   |              |      |   |   |   |   |   |
| Liabilities                                                                                                        |   |              |      |   |   |   |   |   |
| Deposits:                                                                                                          |   |              |      |   |   |   |   |   |
| Non-interest bearing                                                                                               |   | $                 | 148,208   |   |   | $ | 135,038 |   |
| Interest-bearing (Note 7)                                                                                          |   |              | 883,685   |   |   |   | 896,753 |   |
| Total deposits                                                                                                     |   |              | 1,031,893 |   |   |   | 1,031,791 |   |
|                                                                                                               |   |              |      |   |   |   |   |   |
| Federal Home Loan Bank advances (Note 8)                                                                           |   |              | 113,500   |   |   |   | 228,500 |   |
| Securities sold under repurchase agreements (Note 8)                                                               |   |              | 30,000    |   |   |   | 30,000 |   |
| Notes Payable                                                                                                      |   |              | 135       |   |   |   | - |   |
| Interest payable and other liabilities (Note 9)                                                                    |   |              | 9,851     |   |   |   | 11,314 |   |
| Total liabilities                                                                                                  |   |              | 1,185,379 |   |   |   | 1,301,605 |   |
|                                                                                                               |   |              |      |   |   |   |   |   |
| Stockholders' Equity (Notes 10, 13 and 15)                                                                         |   |              |      |   |   |   |   |   |
| Common stock (no par value; 30,000,000 shares authorized, 17,252,329 and 16,210,110 shares issued and outstanding) |   |              | 2,146     |   |   |   | 593 |   |
| Retained Earnings                                                                                                  |   |              | 76,497    |   |   |   | 88,396 |   |
| Unearned Compensation                                                                                              |   |              | (187      | ) |   |   | - |   |
| Accumulated other comprehensive loss                                                                               |   |              | (4,458    | ) |   |   | (7,225 | ) |
| Total stockholders' equity                                                                                         |   |              | 73,998    |   |   |   | 81,764 |   |
| Total liabilities and stockholders' equity                                                                         |   | $                 | 1,259,377 |   |   | $ | 1,383,369 |   |

----

| Consolidated Statements of Income |
|-----------------------------------|

|                                                                                                       |   | Years Ended December 31, |    |
|------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
| Dollars in thousands                                                                                       |   | 2010                     |    |   | 2009 |   |   | 2008 |   |
| Interest Income                                                                                            |   |                     |    |   |   |   |   |   |   |
| Interest and fees on loans                                                                                 |   | $                        | 46,010  |   |   | $ | 52,909 |   |   | $ | 62,472 |   |
| Interest on investment securities-                                                                         |   |                     |    |   |   |   |   |   |   |   |   |   |
| Tax-exempt                                                                                                 |   |                     | 1,936   |   |   |   | 3,358 |   |   |   | 3,390 |   |
| Taxable                                                                                                    |   |                     | 8,508   |   |   |   | 14,648 |   |   |   | 18,976 |   |
| Interest on balances due from banks                                                                        |   |                     | 132     |   |   |   | 89 |   |   |   | 29 |   |
| Interest on federal funds sold                                                                             |   |                     | -       |   |   |   | - |   |   |   | 36 |   |
| Total interest income                                                                                      |   |                     | 56,586  |   |   |   | 71,004 |   |   |   | 84,903 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Interest Expense                                                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Interest on deposits (Note 7)                                                                              |   |                     | 13,094  |   |   |   | 17,986 |   |   |   | 26,835 |   |
| Interest on borrowed funds                                                                                 |   |                     | 6,664   |   |   |   | 12,003 |   |   |   | 15,679 |   |
| Total interest expense                                                                                     |   |                     | 19,758  |   |   |   | 29,989 |   |   |   | 42,514 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net Interest Income                                                                                        |   |                     | 36,828  |   |   |   | 41,015 |   |   |   | 42,389 |   |
| Provision For Loan Losses (Note 5)                                                                    |   |                     | 20,500  |   |   |   | 36,000 |   |   |   | 18,000 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net Interest Income After                                                                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
| Provision For Loan Losses                                                                                  |   |                     | 16,328  |   |   |   | 5,015 |   |   |   | 24,389 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other Income                                                                                               |   |                     |    |   |   |   |   |   |   |   |   |   |
| Wealth management income                                                                                   |   |                     | 4,049   |   |   |   | 3,762 |   |   |   | 4,329 |   |
| Service charges and other fees                                                                             |   |                     | 5,297   |   |   |   | 5,788 |   |   |   | 6,371 |   |
| Net gain on sales of securities                                                                            |   |                     | 3,260   |   |   |   | 7,421 |   |   |   | 422 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other Than Temporary Impairment losses on securities                                                       |   |                     | -       |   |   |   | (14,952 | ) |   |   | - |   |
| Non credit related losses on securities not expected to be sold (recognized in other comprehensive income) |   |                     | -       |   |   |   | 3,191 |   |   |   | - |   |
| Net impairment losses                                                                                      |   |                     | -       |   |   |   | (11,761 | ) |   |   | - |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Origination fees on mortgage loans sold                                                                    |   |                     | 718     |   |   |   | 473 |   |   |   | 426 |   |
| Bank owned life insurance income                                                                           |   |                     | 1,944   |   |   |   | 1,493 |   |   |   | 1,390 |   |
| Other                                                                                                      |   |                     | 4,168   |   |   |   | 3,304 |   |   |   | 3,047 |   |
| Total other income                                                                                         |   |                     | 19,436  |   |   |   | 10,480 |   |   |   | 15,985 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Other Expenses                                                                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits (Notes 9 and 15)                                                            |   |                     | 19,106  |   |   |   | 20,740 |   |   |   | 20,614 |   |
| Occupancy expense (Note 6)                                                                                 |   |                     | 2,867   |   |   |   | 3,260 |   |   |   | 3,591 |   |
| Equipment expense                                                                                          |   |                     | 3,170   |   |   |   | 3,069 |   |   |   | 3,290 |   |
| Marketing expense                                                                                          |   |                     | 991     |   |   |   | 1,034 |   |   |   | 1,253 |   |
| Professional fees                                                                                          |   |                     | 2,155   |   |   |   | 1,563 |   |   |   | 1,635 |   |
| Collection expense                                                                                         |   |                     | 377     |   |   |   | 750 |   |   |   | 601 |   |
| Net loss on other real estate owned                                                                        |   |                     | 3,699   |   |   |   | 10,533 |   |   |   | 2,737 |   |
| Other real estate owned expense                                                                            |   |                     | 2,630   |   |   |   | 1,437 |   |   |   | 1,380 |   |
| FDIC deposit insurance assessment                                                                          |   |                     | 3,130   |   |   |   | 2,876 |   |   |   | 619 |   |
| Debt prepayment penalties                                                                                  |   |                     | 2,492   |   |   |   | - |   |   |   | - |   |
| Other                                                                                                      |   |                     | 3,863   |   |   |   | 4,512 |   |   |   | 4,279 |   |
| Total other expenses                                                                                       |   |                     | 44,480  |   |   |   | 49,774 |   |   |   | 39,999 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Income (Loss) Before Provision For Income Taxes                                                            |   |                     | (8,716  | ) |   |   | (34,279 | ) |   |   | 375 |   |
| Provision For (Benefit From) Income Taxes (Note 12)                                                        |   |                     | 3,183   |   |   |   | (102 | ) |   |   | (1,317 | ) |
| Net Income (Loss)                                                                                          |   | $                        | (11,899 | ) |   | $ | (34,177 | ) |   | $ | 1,692 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Basic Earnings (Loss) Per Common Share (Note 14)                                                           |   | $                        | (0.72   | ) |   | $ | (2.11 | ) |   | $ | 0.10 |   |
|                                                                                                       |   |                     |    |   |   |   |   |   |   |   |   |   |
| Diluted Earnings (Loss) Per Common Share (Note 14)                                                         |   | $                        | (0.72   | ) |   | $ | (2.11 | ) |   | $ | 0.10 |   |

----

| Consolidated Statements of Changes in Stockholders’ Equity |
|------------------------------------------------------------------|

|                                                                                           |   |   |   |   |     |   |    |         |   |   | Accumulated   |   |   |   |   |
|------------------------------------------------------------------------------------------------|--------|--------|--------|--------|----------|--------|---------|--------------|--------|--------|---------------|--------|--------|--------|--------|
|                                                                                           |   |   |   |   |     |   |    |         |   |   | Other         |   |   |   |   |
|                                                                                           |   | Common |   |   | Retained |   |    | Unearned     |   |   | Comprehensive |   |   |   |   |
| Dollars in thousands                                                                           |   | Stock  |   |   | Earnings |   |    | Compensation |   |   | Income (Loss) |   |   | Total  |   |
| Balance - January 1, 2008                                                                      |   | $      | -      |   |     | $      | 129,917 |         |   | $      | -             |   |   | $      | (2,470 | ) |   | $ | 127,447 |   |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock (23,485 shares)                                                       |   |   | 131    |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 131 |   |
| Equity Compensation                                                                            |   |   | 190    |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 190 |   |
| Dividends declared ($0.54 per share)                                                           |   |   | -      |   |     |   | (8,713  | )            |   |   | -             |   |   |   | -      |   |   |   | (8,713 | ) |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                          |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Net income                                                                                     |   |   | -      |   |     |   | 1,692   |         |   |   | -             |   |   |   | -      |   |   |   | 1,692 |   |
| Change in net unrealized loss on securities available for sale - Net of tax effect of $(168)   |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 312    |   |   |   | 312 |   |
| Reclassification adjustment for gains included in net income - Net of tax effect of $148       |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | (274   | ) |   |   | (274 | ) |
| Change in postretirement liability - Net of tax effect of $(103)                               |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 192    |   |   |   | 192 |   |
| Total Comprehensive Income                                                                     |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   | 1,922 |   |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2008                                                                    |   | $      | 321    |   |     | $      | 122,896 |         |   | $      | -             |   |   | $      | (2,240 | ) |   | $ | 120,977 |   |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock (61,628 shares)                                                       |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Restricted stock awards (15,000 shares)                                                        |   |   | 45     |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 45 |   |
| Other stock issued (46,628 shares)                                                             |   |   | 102    |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 102 |   |
| Equity Compensation                                                                            |   |   | 125    |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 125 |   |
| Dividends declared ($0.02 per share)                                                           |   |   | -      |   |     |   | (323    | )            |   |   | -             |   |   |   | -      |   |   |   | (323 | ) |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                          |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                       |   |   | -      |   |     |   | (34,177 | )            |   |   | -             |   |   |   | -      |   |   |   | (34,177 | ) |
| Change in net unrealized loss on securities available for sale - Net of tax effect of $4,437   |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | (8,240 | ) |   |   | (8,240 | ) |
| Reclassification adjustment for losses included in net income - Net of tax effect of $(1,519)  |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 2,821  |   |   |   | 2,821 |   |
| Change in postretirement liability - Net of tax effect of $(234)                               |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 434    |   |   |   | 434 |   |
| Total Comprehensive Income                                                                     |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   | (39,162 | ) |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2009                                                                    |   | $      | 593    |   |     | $      | 88,396  |         |   | $      | -             |   |   | $      | (7,225 | ) |   | $ | 81,764 |   |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Issuance of Common Stock (1,042,219 shares)                                                    |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Restricted stock awards (120,000 shares)                                                       |   |   | 186    |   |     |   | -       |         |   |   | (216          | )      |   |   | -      |   |   |   | (30 | ) |
| Other stock issued (922,219 shares)                                                            |   |   | 1,303  |   |     |   | -       |         |   |   | -             |   |   |   | -      |   |   |   | 1,303 |   |
| Equity compensation                                                                            |   |   | 64     |   |     |   | -       |         |   |   | 29            |   |   |   | -      |   |   |   | 93 |   |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                          |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                       |   |   | -      |   |     |   | (11,899 | )            |   |   | -             |   |   |   | -      |   |   |   | (11,899 | ) |
| Change in net unrealized loss on securities available for sale - Net of tax effect of $(2,669) |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 4,860  |   |   |   | 4,860 |   |
| Reclassification adjustment for losses included in net income - Net of tax effect of $1,109    |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | (2,151 | ) |   |   | (2,151 | ) |
| Change in postretirement liability - Net of tax effect of $(30)                                |   |   | -      |   |     |   | -       |         |   |   | -             |   |   |   | 58     |   |   |   | 58 |   |
| Total Comprehensive Income                                                                     |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   | (9,132 | ) |
|                                                                                           |   |   |   |   |     |   |    |         |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2010                                                                    |   | $      | 2,146  |   |     | $      | 76,497  |         |   | $      | (187          | )      |   | $      | (4,458 | ) |   | $ | 73,998 |   |

----

| Consolidated Statements of Cash Flows |
|---------------------------------------|

|                                                                                 |   | Years Ended December 31, |     |
|--------------------------------------------------------------------------------------|--------|--------------------------|----------|
| Dollars in thousands                                                                 |   | 2010                     |     |   | 2009 |   |   | 2008 |   |
| Cash Flows from Operating Activities                                                 |   |                     |     |   |   |   |   |   |   |
| Net Income (Loss)                                                                    |   | $                        | (11,899  | ) |   | $ | (34,177 | ) |   | $ | 1,692 |   |
| Adjustments to reconcile net income (loss) to net cash from operating activities     |   |                     |     |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                            |   |                     | 20,500   |   |   |   | 36,000 |   |   |   | 18,000 |   |
| Depreciation                                                                         |   |                     | 2,122    |   |   |   | 2,228 |   |   |   | 2,586 |   |
| (Increase) decrease in net deferred federal income tax asset                         |   |                     | 3,183    |   |   |   | 7,087 |   |   |   | (1,394 | ) |
| Net (accretion) amortization of investment premium and discount                      |   |                     | 1,300    |   |   |   | 555 |   |   |   | (94 | ) |
| Writedowns on other real estate owned                                                |   |                     | 3,729    |   |   |   | 7,917 |   |   |   | 2,545 |   |
| Net decrease in interest payable and other liabilities                               |   |                     | (1,375   | ) |   |   | (1,863 | ) |   |   | (439 | ) |
| Net increase in interest receivable and other assets                                 |   |                     | (67      | ) |   |   | (26,101 | ) |   |   | (11,742 | ) |
| Equity based compensation expense                                                    |   |                     | 93       |   |   |   | 125 |   |   |   | 190 |   |
| Net (gain) loss on sales of securities                                               |   |                     | (3,260   | ) |   |   | (7,421 | ) |   |   | (422 | ) |
| Other Than Temporary Impairment of investment securities                             |   |                     | -        |   |   |   | 11,761 |   |   |   | - |   |
| Increase in cash surrender value of life insurance                                   |   |                     | (1,944   | ) |   |   | (1,593 | ) |   |   | (1,390 | ) |
| Net cash provided by (used for) operating activities                                 |   | $                        | 12,382   |   |   | $ | (5,482 | ) |   | $ | 9,532 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Proceeds from maturities and redemptions of investment securities held to maturity   |   | $                        | 14,070   |   |   | $ | 31,583 |   |   | $ | 12,613 |   |
| Proceeds from maturities and redemptions of investment securities available for sale |   |                     | 69,302   |   |   |   | 150,050 |   |   |   | 207,676 |   |
| Proceeds from sales of investment securities held to maturity                        |   |                     | 150      |   |   |   | - |   |   |   | - |   |
| Proceeds from sales of investment securities available for sale                      |   |                     | 162,252  |   |   |   | 289,274 |   |   |   | 65,762 |   |
| Net (increase) decrease in loans                                                     |   |                     | 72,710   |   |   |   | 61,357 |   |   |   | 40,833 |   |
| Proceeds from sales of other real estate owned                                       |   |                     | 6,653    |   |   |   | 8,211 |   |   |   | 4,133 |   |
| Proceeds from sales of other assets                                                  |   |                     | 1,300    |   |   |   | 215 |   |   |   | 187 |   |
| Purchase of investment securities held to maturity                                   |   |                     | (1,582   | ) |   |   | (21,170 | ) |   |   | (14,715 | ) |
| Purchase of bank owned life insurance                                                |   |                     | (1,222   | ) |   |   | (1,439 | ) |   |   | (1,589 | ) |
| Proceeds from surrender of bank owned life insurance                                 |   |                     | 455      |   |   |   | 568 |   |   |   | - |   |
| Purchase of investment securities available for sale                                 |   |                     | (206,108 | ) |   |   | (353,471 | ) |   |   | (298,747 | ) |
| Purchase of bank premises and equipment                                              |   |                     | (318     | ) |   |   | (1,819 | ) |   |   | (2,779 | ) |
| Net cash provided by investing activities                                            |   | $                        | 117,662  |   |   | $ | 163,359 |   |   | $ | 13,374 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in deposits                                                  |   | $                        | 102      |   |   | $ | (104,287 | ) |   | $ | 26,098 |   |
| Net decrease in short term borrowings                                                |   |                     | -        |   |   |   | - |   |   |   | (13,300 | ) |
| Proceeds from issuance of long term debt                                             |   |                     | 135      |   |   |   | - |   |   |   | - |   |
| Net increase in Federal Home Loan Bank borrowings                                    |   |                     | -        |   |   |   | - |   |   |   | 5,000 |   |
| Repayment of Federal Home Loan Bank borrowings                                       |   |                     | (115,000 | ) |   |   | (33,000 | ) |   |   | - |   |
| Net decrease in securities sold under repurchase agreements                          |   |                     | -        |   |   |   | - |   |   |   | (5,000 | ) |
| Issuance of common stock                                                             |   |                     | 1,273    |   |   |   | 147 |   |   |   | 131 |   |
| Dividends paid                                                                       |   |                     | -        |   |   |   | (1,777 | ) |   |   | (10,162 | ) |
| Net cash provided by (used for) financing activities                                 |   | $                        | (113,490 | ) |   | $ | (138,917 | ) |   | $ | 2,767 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents                                 |   | $                        | 16,554   |   |   | $ | 18,960 |   |   | $ | 25,673 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Cash and Cash Equivalents at Beginning of Year (Note 1)                              |   |                     | 69,746   |   |   |   | 50,786 |   |   |   | 25,113 |   |
| Cash and Cash Equivalents at End of Year (Note 1)                                    |   | $                        | 86,300   |   |   | $ | 69,746 |   |   | $ | 50,786 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                                   |   |                     |     |   |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                               |   | $                        | 20,135   |   |   | $ | 30,829 |   |   | $ | 42,336 |   |
| Cash paid (refunded) for federal income taxes                                        |   | $                        | (7,385   | ) |   | $ | 240 |   |   | $ | 1,459 |   |
|                                                                                 |   |                     |     |   |   |   |   |   |   |   |   |   |
| Supplemental Schedule of Non Cash Investing Activities                               |   |                     |     |   |   |   |   |   |   |   |   |   |
| Transfer of loans to other real estate owned                                         |   | $                        | 12,185   |   |   | $ | 18,296 |   |   | $ | 13,306 |   |
| Transfer of loans to other assets                                                    |   | $                        | 446      |   |   | $ | 264 |   |   | $ | 393 |   |

----

| Notes To Consolidated Financial Statements |
|--------------------------------------------|

| (1)  | Summary of Significant Accounting Policies |
|-----------|--------------------------------------------|

----

| Dollars in thousands                                              |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Unrealized gains (losses) on securities available for sale        |   | $      | (1,145 | )      |   | $      | (13,014 | )      |   | $ | 85 |   |
| Reclassification adjustment for losses (gains) realized in income |   |   | (3,260 | )      |   |   | 4,340   |   |   |   | (422 | ) |
| Net unrealized losses                                             |   | $      | (4,405 | )      |   | $      | (8,674  | )      |   | $ | (337 | ) |
| Post retirement benefit obligations                               |   |   | (2,353 | )      |   |   | (2,441  | )      |   |   | (3,109 | ) |
| Tax effect                                                        |   |   | 2,300  |   |   |   | 3,890   |   |   |   | 1,206 |   |
| Accumulated other comprehensive loss                              |   | $      | (4,458 | )      |   | $      | (7,225  | )      |   | $ | (2,240 | ) |

----

|   | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s U.S. government agency securities, government sponsored mortgage backed securities, and mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.  Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Cash and Due from Banks |
|-----|-------------------------|

----

| (3) | Investment Securities |
|-----|-----------------------|

|                                             |   | Held to Maturity   |    |
|--------------------------------------------------|--------|--------------------|---------|
|                                             |   | December 31, 2010  |    |
|                                             |   |               |    |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                             |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Market |   |
|                                             |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
| Obligations of U.S. Government Agencies          |   | $                  | 6       |   |   | $ | - |   |   | $ | - |   |   | $ | 6 |   |
| Obligations of States and Political Subdivisions |   |               | 23,798  |   |   |   | 303 |   |   |   | (265 | ) |   |   | 23,836 |   |
|                                             |   | $                  | 23,804  |   |   | $ | 303 |   |   | $ | (265 | ) |   | $ | 23,842 |   |
|                                             |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Available for Sale |    |
|                                             |   | December 31, 2010  |    |
|                                             |   |               |    |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                             |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Market |   |
|                                             |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
| Obligations of U.S. Government Agencies          |   | $                  | 266,773 |   |   | $ | 2,526 |   |   | $ | (2,264 | ) |   | $ | 267,035 |   |
| Obligations of States and Political Subdivisions |   |               | 14,881  |   |   |   | 49 |   |   |   | (205 | ) |   |   | 14,725 |   |
| Trust Preferred CDO Securities                   |   |               | 9,563   |   |   |   | - |   |   |   | (4,375 | ) |   |   | 5,188 |   |
| Other Securities                                 |   |               | 2,553   |   |   |   | 80 |   |   |   | (216 | ) |   |   | 2,417 |   |
|                                             |   | $                  | 293,770 |   |   | $ | 2,655 |   |   | $ | (7,060 | ) |   | $ | 289,365 |   |
|                                             |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Held to Maturity   |    |
|                                             |   | December 31, 2009  |    |
|                                             |   |               |    |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                             |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Market |   |
|                                             |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
| Obligations of U.S. Government Agencies          |   | $                  | 6       |   |   | $ | - |   |   | $ | - |   |   | $ | 6 |   |
| Obligations of States and Political Subdivisions |   |               | 36,427  |   |   |   | 336 |   |   |   | (352 | ) |   |   | 36,411 |   |
|                                             |   | $                  | 36,433  |   |   | $ | 336 |   |   | $ | (352 | ) |   | $ | 36,417 |   |
|                                             |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | Available for Sale |    |
|                                             |   | December 31, 2009  |    |
|                                             |   |               |    |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                             |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Market |   |
|                                             |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
| Obligations of U.S. Government Agencies          |   | $                  | 256,483 |   |   | $ | 602 |   |   | $ | (2,457 | ) |   | $ | 254,628 |   |
| Obligations of States and Political Subdivisions |   |               | 35,117  |   |   |   | 667 |   |   |   | (147 | ) |   |   | 35,637 |   |
| Trust Preferred CDO Securities                   |   |               | 13,485  |   |   |   | - |   |   |   | (6,270 | ) |   |   | 7,215 |   |
| Corporate Debt Securities                        |   |               | 8,383   |   |   |   | - |   |   |   | (874 | ) |   |   | 7,509 |   |
| Other Securities                                 |   |               | 2,553   |   |   |   | 74 |   |   |   | (270 | ) |   |   | 2,357 |   |
|                                             |   | $                  | 316,021 |   |   | $ | 1,343 |   |   | $ | (10,018 | ) |   | $ | 307,346 |   |

|                               |   | Held to Maturity |   |   | Available for Sale |   |
|------------------------------------|--------|------------------|--------|--------|--------------------|--------|
|                               |   |             |   |   | Estimated          |   |   | Weighted |   |   |   |   |   | Estimated |   |   | Weighted |   |
|                               |   | Amortized        |   |   | Market             |   |   | Average |   |   | Amortized |   |   | Market |   |   | Average |   |
|                               |   | Cost             |   |   | Value              |   |   | Yield |   |   | Cost |   |   | Value |   |   | Yield |   |
| Maturing within                    |   |             |   |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1 year                             |   | $                | 3,172  |   |               | $      | 3,192 |   |   |   | 4.54 | % |   | $ | 1,415 |   |   | $ | 1,419 |   |   |   | 2.83 | % |
| 1 to 5 years                       |   |             | 9,323  |   |               |   | 9,522 |   |   |   | 4.38 | % |   |   | 58,861 |   |   |   | 59,112 |   |   |   | 1.46 | % |
| 5 to 10 years                      |   |             | 8,162  |   |               |   | 8,146 |   |   |   | 4.53 | % |   |   | 55,977 |   |   |   | 56,014 |   |   |   | 3.06 | % |
| Over 10 years                      |   |             | 3,147  |   |               |   | 2,982 |   |   |   | 4.43 | % |   |   | 174,964 |   |   |   | 170,403 |   |   |   | 3.33 | % |
| Securities with no stated maturity |   |             | -      |   |               |   | - |   |   |   | 0.00 | % |   |   | 2,553 |   |   |   | 2,417 |   |   |   | 0.00 | % |
|                               |   | $                | 23,804 |   |               | $      | 23,842 |   |   |   | 4.46 | % |   | $ | 293,770 |   |   | $ | 289,365 |   |   |   | 2.87 | % |

----

| December 31, 2010                      |   |
|--------------------------------------------------|--------|
|                                             |   |
|                                             |   | Less than 12 months |   |   | 12 months or longer |   |   | Total |   |
|                                             |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |
| Obligations of United States Government Agencies |   | $ | 83,030 |   |   | $ | 2,264 |   |   | $ | - |   |   | $ | - |   |   | $ | 83,030 |   |   | $ | 2,264 |   |
| Obligations of States and Political Subdivisions |   |   | 12,192 |   |   |   | 296 |   |   |   | 1,931 |   |   |   | 174 |   |   |   | 14,123 |   |   |   | 470 |   |
| Trust Preferred CDO Securities                   |   |   | - |   |   |   | - |   |   |   | 5,188 |   |   |   | 4,375 |   |   |   | 5,188 |   |   |   | 4,375 |   |
| Equity Securities                                |   |   | - |   |   |   | - |   |   |   | 324 |   |   |   | 216 |   |   |   | 324 |   |   |   | 216 |   |
|                                             |   | $ | 95,222 |   |   | $ | 2,560 |   |   | $ | 7,443 |   |   | $ | 4,765 |   |   | $ | 102,665 |   |   | $ | 7,325 |   |

| December 31, 2009                      |   |
|--------------------------------------------------|--------|
|                                             |   |
|                                             |   | Less than 12 months |   |   | 12 months or longer |   |   | Total |   |
|                                             |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |   | AggregateFair Value |   |   | GrossUnrealizedLosses |   |
| Obligations of United States Government Agencies |   | $ | 170,584 |   |   | $ | 2,457 |   |   | $ | - |   |   | $ | - |   |   | $ | 170,584 |   |   | $ | 2,457 |   |
| Obligations of States and Political Subdivisions |   |   | 14,616 |   |   |   | 299 |   |   |   | 5,058 |   |   |   | 200 |   |   |   | 19,674 |   |   |   | 499 |   |
| Trust Preferred CDO Securities                   |   |   | - |   |   |   | - |   |   |   | 1,662 |   |   |   | 3,078 |   |   |   | 1,662 |   |   |   | 3,078 |   |
| Corporate Debt Securities                        |   |   | - |   |   |   | - |   |   |   | 7,509 |   |   |   | 874 |   |   |   | 7,509 |   |   |   | 874 |   |
| Equity Securities                                |   |   | 270 |   |   |   | 270 |   |   |   | - |   |   |   | - |   |   |   | 270 |   |   |   | 270 |   |
|                                             |   | $ | 185,470 |   |   | $ | 3,026 |   |   | $ | 14,229 |   |   | $ | 4,152 |   |   | $ | 199,699 |   |   | $ | 7,178 |   |

----

| (4) | Loans |
|-----|-------|

|                                                                        |   | 2010   |    |   | 2009   |   |
|-----------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Residential real estate loans                                               |   | $      | 330,325 |   |   | $      | 374,970 |   |
| Non residential real estate loans                                           |   |   | 323,471 |   |   |   | 351,256 |   |
| Loans to finance agricultural production and other loans to farmers         |   |   | 6,357   |   |   |   | 7,113 |   |
| Commercial and industrial loans                                             |   |   | 76,701  |   |   |   | 93,786 |   |
| Loans to individuals for household, family, and other personal expenditures |   |   | 16,393  |   |   |   | 22,071 |   |
| All other loans (including overdrafts)                                      |   |   | 330     |   |   |   | 574 |   |
| Total loans, gross                                                          |   | $      | 753,577 |   |   | $      | 849,770 |   |
| Less: Deferred loan fees and costs                                          |   |   | 690     |   |   |   | 791 |   |
| Total loans, net of deferred loan fees and costs                            |   | $      | 752,887 |   |   | $      | 848,979 |   |
| Less: Allowance for loan losses                                             |   |   | 21,223  |   |   |   | 24,063 |   |
|                                                                        |   | $      | 731,664 |   |   | $      | 824,916 |   |

| (5) | Allowance For Loan Losses and Credit Quality of Loans |
|-----|-------------------------------------------------------|

----

| 2010                                                 |   | AgricultureandAgriculturalReal Estate |   |   | Commercial |   |   | CommercialReal Estate |   |   | ConstructionReal Estate |   |   | ResidentialReal Estate |   |   | Consumerand Other |   |    | Total  |   |
|------------------------------------------------------|--------|--------------------------------------------|--------|--------|------------|--------|--------|----------------------------|--------|--------|-------------------------|--------|--------|-----------------------------|--------|--------|------------------------|--------|---------|--------|--------|
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                    |   |   |                        |   |   |                   |   |    |   |   |
| Allowance for loan losses:                           |   |                                       |   |   |       |   |   |                       |   |   |                    |   |   |                        |   |   |                   |   |    |   |   |
| Beginning Balance                                    |   | $                                          | 142    |   |       | $      | 6,360  |                       |   | $      | 8,331                   |   |   | $                           | 2,351  |   |                   | $      | 6,382   |   |   | $ | 497 |   |   | $ | 24,063 |   |
| Charge-offs                                          |   |                                       | -      |   |       |   | (2,907 | )                          |   |   | (10,024                 | )      |   |                        | (5,303 | )      |                   |   | (5,370  | )      |   |   | (951 | ) |   |   | (24,555 | ) |
| Recoveries                                           |   |                                       | 1      |   |       |   | 219    |                       |   |   | 295                     |   |   |                        | 22     |   |                   |   | 119     |   |   |   | 559 |   |   |   | 1,215 |   |
| Provision                                            |   |                                       | (66    | )      |       |   | 203    |                       |   |   | 10,438                  |   |   |                        | 6,215  |   |                   |   | 3,465   |   |   |   | 245 |   |   |   | 20,500 |   |
| Ending balance                                       |   | $                                          | 77     |   |       | $      | 3,875  |                       |   | $      | 9,040                   |   |   | $                           | 3,285  |   |                   | $      | 4,596   |   |   | $ | 350 |   |   | $ | 21,223 |   |
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                    |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $                                          | 74     |   |       | $      | 2,016  |                       |   | $      | 2,958                   |   |   | $                           | 876    |   |                   | $      | 973     |   |   | $ | 49 |   |   | $ | 6,946 |   |
| Ending balance collectively evaluated for impairment |   |                                       | 3      |   |       |   | 1,859  |                       |   |   | 6,082                   |   |   |                        | 2,409  |   |                   |   | 3,623   |   |   |   | 301 |   |   |   | 14,277 |   |
| Ending balance                                       |   | $                                          | 77     |   |       | $      | 3,875  |                       |   | $      | 9,040                   |   |   | $                           | 3,285  |   |                   | $      | 4,596   |   |   | $ | 350 |   |   | $ | 21,223 |   |
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                    |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                               |   |                                       |   |   |       |   |   |                       |   |   |                    |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $                                          | 656    |   |       | $      | 10,075 |                       |   | $      | 42,326                  |   |   | $                           | 8,398  |   |                   | $      | 16,948  |   |   | $ | 135 |   |   | $ | 78,538 |   |
| Ending balance collectively evaluated for impairment |   |                                       | 19,797 |   |       |   | 66,708 |                       |   |   | 281,025                 |   |   |                        | 37,912 |   |                   |   | 252,205 |   |   |   | 16,702 |   |   |   | 674,349 |   |
| Ending balance                                       |   | $                                          | 20,453 |   |       | $      | 76,783 |                       |   | $      | 323,351                 |   |   | $                           | 46,310 |   |                   | $      | 269,153 |   |   | $ | 16,837 |   |   | $ | 752,887 |   |

| 2009                                                 |   | AgricultureandAgriculturalReal Estate |   |   | Commercial |   |   | CommercialReal Estate |   |   | ConstructionReal Estate |   |   | ResidentialReal Estate |   |   | Consumerand Other |   |    | Total  |   |
|------------------------------------------------------|--------|--------------------------------------------|--------|--------|------------|--------|--------|----------------------------|--------|--------|------------------------------|--------|--------|-----------------------------|--------|--------|------------------------|--------|---------|--------|--------|
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |
| Allowance for loan losses:                           |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |
| Beginning Balance                                    |   | $                                          | 43     |   |       | $      | 3,428  |                       |   | $      | 6,481                        |   |   | $                           | 2,915  |   |                   | $      | 5,192   |   |   | $ | 469 |   |   | $ | 18,528 |   |
| Charge-offs                                          |   |                                       | (932   | )      |       |   | (6,186 | )                          |   |   | (6,362                       | )      |   |                        | (8,858 | )      |                   |   | (9,021  | )      |   |   | (635 | ) |   |   | (31,994 | ) |
| Recoveries                                           |   |                                       | -      |   |       |   | 607    |                       |   |   | 241                          |   |   |                        | 126    |   |                   |   | 227     |   |   |   | 328 |   |   |   | 1,529 |   |
| Provision                                            |   |                                       | 1,031  |   |       |   | 8,511  |                       |   |   | 7,971                        |   |   |                        | 8,168  |   |                   |   | 9,984   |   |   |   | 335 |   |   |   | 36,000 |   |
| Ending balance                                       |   | $                                          | 142    |   |       | $      | 6,360  |                       |   | $      | 8,331                        |   |   | $                           | 2,351  |   |                   | $      | 6,382   |   |   | $ | 497 |   |   | $ | 24,063 |   |
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $                                          | 25     |   |       | $      | 713    |                       |   | $      | 2,432                        |   |   | $                           | 1,593  |   |                   | $      | 1,716   |   |   | $ | - |   |   | $ | 6,479 |   |
| Ending balance collectively evaluated for impairment |   |                                       | 117    |   |       |   | 5,647  |                       |   |   | 5,899                        |   |   |                        | 758    |   |                   |   | 4,666   |   |   |   | 497 |   |   |   | 17,584 |   |
| Ending balance                                       |   | $                                          | 142    |   |       | $      | 6,360  |                       |   | $      | 8,331                        |   |   | $                           | 2,351  |   |                   | $      | 6,382   |   |   | $ | 497 |   |   | $ | 24,063 |   |
|                                                 |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Loans:                                               |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Ending balance individually evaluated for impairment |   | $                                          | 546    |   |       | $      | 4,761  |                       |   | $      | 36,398                       |   |   | $                           | 16,972 |   |                   | $      | 18,287  |   |   | $ | - |   |   | $ | 76,964 |   |
| Ending balance collectively evaluated for impairment |   |                                       | 16,924 |   |       |   | 89,104 |                       |   |   | 314,629                      |   |   |                        | 47,548 |   |                   |   | 281,000 |   |   |   | 22,810 |   |   |   | 772,015 |   |
| Ending balance                                       |   | $                                          | 17,470 |   |       | $      | 93,865 |                       |   | $      | 351,027                      |   |   | $                           | 64,520 |   |                   | $      | 299,287 |   |   | $ | 22,810 |   |   | $ | 848,979 |   |

----

|   | · | Grade 1 – Excellent – Loans secured by marketable collateral, with adequate margin, or supported by strong financial statements. Probability of serious financial deterioration is unlikely. Possess a sound repayment source and a secondary source. This classification will also include all loans secured by certificates of deposit or cash equivalents. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 2 – Satisfactory – Loans that have less than average risk and clearly demonstrate adequate debt service coverage. These loans may have some vulnerability, but are sufficiently strong to have minimal deterioration if adverse factors are encountered, and are expected to be fully collectable. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 3 – Average – Loans that have a reasonable amount of risk and may exhibit vulnerability to deterioration if adverse factors are encountered. These loans should demonstrate adequate debt service coverage but warrant a higher level of monitoring to ensure that weaknesses do not advance. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 4 – Pass/Watch – Loans that are considered “pass credits” yet appear on the “watch list”. Credit deficiency or potential weakness may include a lack of current or complete financial information. The level of risk is considered acceptable so long as the loan is given additional management supervision. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 5 – Watch – Loans that possess some credit deficiency or potential weakness that if not corrected, could increase risk in the future. The source of loan repayment is sufficient but may be considered inadequate by the Bank’s standards. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 6 – Substandard – Loans that exhibit one or more of the following characteristics: (1) uncertainty of repayment from primary source and financial deterioration currently underway; (2) inadequate current net worth and paying capacity of the obligor; (3) reliance on secondary source of repayment such as collateral liquidation or guarantees; (4) distinct possibility the Bank will sustain loss if deficiencies are not corrected; (5) unusual courses of action are needed to maintain probability of repayment; (6) insufficient cash flow to repay principal but continuing to pay interest; (7) the Bank is subordinated or unsecured due to flaws in documentation; (8) loans are restructured or are on nonaccrual status due to concessions to the borrower when compared to normal terms; (9) the Bank is contemplating foreclosure or legal action due to deterioration in the loan; or (10) thereis deterioration in conditions and the borrower is highly vulnerable to these conditions. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grade 7 – Doubtful – Loans that exhibit one or more of the following characteristics: (1) loans with the weaknesses of Substandard loans and collection or liquidation is not probable to result in payment in full; (2) the primary source of repayment is gone and the quality of the secondary source is doubtful; or (3) the possibility of loss is high, but important pending factors may strengthen the loan. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grades 8 & 9 - Loss – Loans are considered uncollectible and of such little value that carrying them on the Bank’s financial statements is not feasible. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2010          |   | AgricultureandAgriculturalReal Estate |   |   | Commercial |   |   | CommercialReal Estate |   |   | ConstructionReal Estate |   |   | ResidentialReal Estate |   |   | Consumer andOther |   |    | Total  |   |
|---------------|--------|--------------------------------------------|--------|--------|------------|--------|--------|----------------------------|--------|--------|------------------------------|--------|--------|-----------------------------|--------|--------|------------------------|--------|---------|--------|--------|
| Not Rated     |   | $                                          | 56     |   |       | $      | 1,002  |                       |   | $      | 177                          |   |   | $                           | 4,983  |   |                   | $      | 202,020 |   |   | $ | 16,609 |   |   | $ | 224,847 |   |
| 1             |   |                                       | -      |   |       |   | 955    |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | 955 |   |
| 2             |   |                                       | 351    |   |       |   | 319    |                       |   |   | 5,381                        |   |   |                        | 107    |   |                   |   | 1,136   |   |   |   | - |   |   |   | 7,294 |   |
| 3             |   |                                       | 8,941  |   |       |   | 5,600  |                       |   |   | 18,939                       |   |   |                        | 1,064  |   |                   |   | 2,409   |   |   |   | 40 |   |   |   | 36,993 |   |
| 4             |   |                                       | 10,146 |   |       |   | 43,197 |                       |   |   | 152,697                      |   |   |                        | 16,285 |   |                   |   | 25,754  |   |   |   | 32 |   |   |   | 248,111 |   |
| 5             |   |                                       | -      |   |       |   | 11,384 |                       |   |   | 73,651                       |   |   |                        | 8,918  |   |                   |   | 12,237  |   |   |   | - |   |   |   | 106,190 |   |
| 6             |   |                                       | 959    |   |       |   | 14,326 |                       |   |   | 72,506                       |   |   |                        | 14,953 |   |                   |   | 25,597  |   |   |   | 156 |   |   |   | 128,497 |   |
| 7             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| 8             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| 9             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| Total         |   | $                                          | 20,453 |   |       | $      | 76,783 |                       |   | $      | 323,351                      |   |   | $                           | 46,310 |   |                   | $      | 269,153 |   |   | $ | 16,837 |   |   | $ | 752,887 |   |
|          |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Performing    |   | $                                          | 19,798 |   |       | $      | 67,472 |                       |   | $      | 282,746                      |   |   | $                           | 37,805 |   |                   | $      | 247,018 |   |   | $ | 16,365 |   |   | $ | 671,204 |   |
| Nonperforming |   |                                       | 655    |   |       |   | 9,311  |                       |   |   | 40,605                       |   |   |                        | 8,505  |   |                   |   | 22,135  |   |   |   | 472 |   |   |   | 81,683 |   |
| Total         |   | $                                          | 20,453 |   |       | $      | 76,783 |                       |   | $      | 323,351                      |   |   | $                           | 46,310 |   |                   | $      | 269,153 |   |   | $ | 16,837 |   |   | $ | 752,887 |   |

----

| 2009          |   | AgricultureandAgriculturalReal Estate |   |   | Commercial |   |   | CommercialReal Estate |   |   | ConstructionReal Estate |   |   | ResidentialReal Estate |   |   | Consumer andOther |   |    | Total  |   |
|---------------|--------|--------------------------------------------|--------|--------|------------|--------|--------|----------------------------|--------|--------|------------------------------|--------|--------|-----------------------------|--------|--------|------------------------|--------|---------|--------|--------|
| Not Rated     |   | $                                          | 73     |   |       | $      | 1,927  |                       |   | $      | 49                           |   |   | $                           | 6,426  |   |                   | $      | 230,656 |   |   | $ | 22,633 |   |   | $ | 261,764 |   |
| 1             |   |                                       | -      |   |       |   | 461    |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | 461 |   |
| 2             |   |                                       | 853    |   |       |   | 316    |                       |   |   | 7,413                        |   |   |                        | 205    |   |                   |   | 1,500   |   |   |   | 36 |   |   |   | 10,323 |   |
| 3             |   |                                       | 5,708  |   |       |   | 11,703 |                       |   |   | 25,024                       |   |   |                        | 3,272  |   |                   |   | 5,534   |   |   |   | 38 |   |   |   | 51,279 |   |
| 4             |   |                                       | 9,050  |   |       |   | 55,308 |                       |   |   | 185,054                      |   |   |                        | 23,276 |   |                   |   | 29,264  |   |   |   | 62 |   |   |   | 302,014 |   |
| 5             |   |                                       | 845    |   |       |   | 9,488  |                       |   |   | 69,005                       |   |   |                        | 13,723 |   |                   |   | 6,986   |   |   |   | - |   |   |   | 100,047 |   |
| 6             |   |                                       | 941    |   |       |   | 14,662 |                       |   |   | 64,482                       |   |   |                        | 17,618 |   |                   |   | 25,347  |   |   |   | 41 |   |   |   | 123,091 |   |
| 7             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| 8             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| 9             |   |                                       | -      |   |       |   | -      |                       |   |   | -                            |   |   |                        | -      |   |                   |   | -       |   |   |   | - |   |   |   | - |   |
| Total         |   | $                                          | 17,470 |   |       | $      | 93,865 |                       |   | $      | 351,027                      |   |   | $                           | 64,520 |   |                   | $      | 299,287 |   |   | $ | 22,810 |   |   | $ | 848,979 |   |
|          |   |                                       |   |   |       |   |   |                       |   |   |                         |   |   |                        |   |   |                   |   |    |   |   |   |   |   |   |   |   |   |
| Performing    |   | $                                          | 16,924 |   |       | $      | 87,839 |                       |   | $      | 313,703                      |   |   | $                           | 49,570 |   |                   | $      | 272,185 |   |   | $ | 22,644 |   |   | $ | 762,865 |   |
| Nonperforming |   |                                       | 546    |   |       |   | 6,026  |                       |   |   | 37,324                       |   |   |                        | 14,950 |   |                   |   | 27,102  |   |   |   | 166 |   |   |   | 86,114 |   |
| Total         |   | $                                          | 17,470 |   |       | $      | 93,865 |                       |   | $      | 351,027                      |   |   | $                           | 64,520 |   |                   | $      | 299,287 |   |   | $ | 22,810 |   |   | $ | 848,979 |   |

| 2010                                     |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | >90 Days PastDue |   |   | Total Past Due |   |   | Current |   |   | Total Loans |   |    | RecordedInvestment >90Days Past Dueand Accruing |   |
|------------------------------------------|--------|------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|---------|--------|--------|------------------|--------|---------|------------------------------------------------------------------------|--------|
|                                     |   |                         |   |   |                         |   |   |                          |   |   |                     |   |   |    |   |   |             |   |    |                                                                   |   |
| Agriculture and Agricultural Real Estate |   | $                            | 98     |   |                         | $      | -      |                          |   | $      | 343                      |   |   | $       | 441    |   |             | $      | 20,012  |                                                                   |   | $ | 20,453 |   |   | $ | - |   |
| Commercial                               |   |                         | 2,265  |   |                         |   | 1,031  |                          |   |   | 3,999                    |   |   |    | 7,295  |   |             |   | 69,488  |                                                                   |   |   | 76,783 |   |   |   | 4 |   |
| Commercial Real Estate                   |   |                         | 8,212  |   |                         |   | 4,532  |                          |   |   | 14,391                   |   |   |    | 27,135 |   |             |   | 296,216 |                                                                   |   |   | 323,351 |   |   |   | - |   |
| Construction Real Estate                 |   |                         | 186    |   |                         |   | 46     |                          |   |   | 6,136                    |   |   |    | 6,368  |   |             |   | 39,942  |                                                                   |   |   | 46,310 |   |   |   | - |   |
| Residential Real Estate                  |   |                         | 6,331  |   |                         |   | 4,910  |                          |   |   | 14,962                   |   |   |    | 26,203 |   |             |   | 242,950 |                                                                   |   |   | 269,153 |   |   |   | - |   |
| Consumer and Other                       |   |                         | 213    |   |                         |   | 43     |                          |   |   | 291                      |   |   |    | 547    |   |             |   | 16,290  |                                                                   |   |   | 16,837 |   |   |   | - |   |
| Total                                    |   | $                            | 17,305 |   |                         | $      | 10,562 |                          |   | $      | 40,122                   |   |   | $       | 67,989 |   |             | $      | 684,898 |                                                                   |   | $ | 752,887 |   |   | $ | 4 |   |

| 2009                                     |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | >90 Days PastDue |   |   | Total Past Due |   |   | Current |   |   | Total Loans |   |    | RecordedInvestment >90Days Past Dueand Accruing |   |
|------------------------------------------|--------|------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------|--------|--------|---------|--------|--------|------------------|--------|---------|------------------------------------------------------------------------|--------|
|                                     |   |                         |   |   |                         |   |   |                          |   |   |                     |   |   |    |   |   |             |   |    |                                                                   |   |
| Agriculture and Agricultural Real Estate |   | $                            | 99     |   |                         | $      | -      |                          |   | $      | 344                      |   |   | $       | 443    |   |             | $      | 17,027  |                                                                   |   | $ | 17,470 |   |   | $ | - |   |
| Commercial                               |   |                         | 1,224  |   |                         |   | 2,304  |                          |   |   | 3,065                    |   |   |    | 6,593  |   |             |   | 87,272  |                                                                   |   |   | 93,865 |   |   |   | 16 |   |
| Commercial Real Estate                   |   |                         | 8,392  |   |                         |   | 4,189  |                          |   |   | 14,459                   |   |   |    | 27,040 |   |             |   | 323,987 |                                                                   |   |   | 351,027 |   |   |   | - |   |
| Construction Real Estate                 |   |                         | 2,493  |   |                         |   | 3,212  |                          |   |   | 8,757                    |   |   |    | 14,462 |   |             |   | 50,058  |                                                                   |   |   | 64,520 |   |   |   | - |   |
| Residential Real Estate                  |   |                         | 6,421  |   |                         |   | 2,938  |                          |   |   | 14,194                   |   |   |    | 23,553 |   |             |   | 275,734 |                                                                   |   |   | 299,287 |   |   |   | - |   |
| Consumer and Other                       |   |                         | 802    |   |                         |   | 384    |                          |   |   | 293                      |   |   |    | 1,479  |   |             |   | 21,331  |                                                                   |   |   | 22,810 |   |   |   | 4 |   |
| Total                                    |   | $                            | 19,431 |   |                         | $      | 13,027 |                          |   | $      | 41,112                   |   |   | $       | 73,570 |   |             | $      | 775,409 |                                                                   |   | $ | 848,979 |   |   | $ | 20 |   |

|                                     |   | 2010   |   |   | 2009   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Agriculture and Agricultural Real Estate |   | $      | 386    |   |   | $      | 546 |   |
| Commercial                               |   |   | 7,179  |   |   |   | 5,134 |   |
| Commercial Real Estate                   |   |   | 32,033 |   |   |   | 19,416 |   |
| Construction Real Estate                 |   |   | 7,556  |   |   |   | 13,578 |   |
| Residential Real Estate                  |   |   | 20,087 |   |   |   | 18,152 |   |
| Consumer and Other                       |   |   | 340    |   |   |   | 166 |   |
| Total                                    |   | $      | 67,581 |   |   | $      | 56,992 |   |

----

| 2010                                     |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |   |
|------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| With no related allowance recorded:      |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Agriculture and Agricultural Real Estate |   | $                  | -      |   |                   | $      | -      |             |   | $      | -                         |   |   | $                        | -      |   |   | $ | - |   |
| Commercial                               |   |               | 1,069  |   |                   |   | 2,220  |             |   |   | -                         |   |   |                     | 1,845  |   |   |   | 108 |   |
| Commercial Real Estate                   |   |               | 16,968 |   |                   |   | 23,585 |             |   |   | -                         |   |   |                     | 19,314 |   |   |   | 819 |   |
| Construction Real Estate                 |   |               | 1,678  |   |                   |   | 2,457  |             |   |   | -                         |   |   |                     | 1,603  |   |   |   | 97 |   |
| Residential Real Estate                  |   |               | 14,816 |   |                   |   | 12,175 |             |   |   | -                         |   |   |                     | 10,033 |   |   |   | 480 |   |
| Consumer and Other                       |   |               | 337    |   |                   |   | -      |             |   |   | -                         |   |   |                     | -      |   |   |   | - |   |
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| With an allowance recorded:              |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Agriculture and Agricultural Real Estate |   |               | 655    |   |                   |   | 656    |             |   |   | 74                        |   |   |                     | 656    |   |   |   | 7 |   |
| Commercial                               |   |               | 8,242  |   |                   |   | 12,521 |             |   |   | 2,016                     |   |   |                     | 9,154  |   |   |   | 365 |   |
| Commercial Real Estate                   |   |               | 23,637 |   |                   |   | 29,682 |             |   |   | 2,958                     |   |   |                     | 23,887 |   |   |   | 1,058 |   |
| Construction Real Estate                 |   |               | 6,827  |   |                   |   | 11,171 |             |   |   | 876                       |   |   |                     | 7,280  |   |   |   | 190 |   |
| Residential Real Estate                  |   |               | 7,319  |   |                   |   | 9,315  |             |   |   | 973                       |   |   |                     | 7,596  |   |   |   | 356 |   |
| Consumer and Other                       |   |               | 135    |   |                   |   | 135    |             |   |   | 49                        |   |   |                     | 138    |   |   |   | 6 |   |
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Total:                                   |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Agriculture and Agricultural Real Estate |   | $                  | 655    |   |                   | $      | 656    |             |   | $      | 74                        |   |   | $                        | 656    |   |   | $ | 7 |   |
| Commercial                               |   |               | 9,311  |   |                   |   | 14,741 |             |   |   | 2,016                     |   |   |                     | 10,999 |   |   |   | 473 |   |
| Commercial Real Estate                   |   |               | 40,605 |   |                   |   | 53,267 |             |   |   | 2,958                     |   |   |                     | 43,201 |   |   |   | 1,877 |   |
| Construction Real Estate                 |   |               | 8,505  |   |                   |   | 13,628 |             |   |   | 876                       |   |   |                     | 8,883  |   |   |   | 287 |   |
| Residential Real Estate                  |   |               | 22,135 |   |                   |   | 21,490 |             |   |   | 973                       |   |   |                     | 17,629 |   |   |   | 836 |   |
| Consumer and Other                       |   |               | 472    |   |                   |   | 135    |             |   |   | 49                        |   |   |                     | 138    |   |   |   | 6 |   |

| 2009                                     |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | AverageRecordedInvestment |   |   | InterestIncomeRecognized |   |
|------------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| With no related allowance recorded:      |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |
| Agriculture and Agricultural Real Estate |   | $                  | 344    |   |                   | $      | 1,206  |             |   | $      | -                         |   |   | $                        | 611    |   |   | $ | - |   |
| Commercial                               |   |               | 4,186  |   |                   |   | 6,983  |             |   |   | -                         |   |   |                     | 3,272  |   |   |   | 124 |   |
| Commercial Real Estate                   |   |               | 19,149 |   |                   |   | 20,737 |             |   |   | -                         |   |   |                     | 19,144 |   |   |   | 684 |   |
| Construction Real Estate                 |   |               | 3,173  |   |                   |   | 5,695  |             |   |   | -                         |   |   |                     | 5,444  |   |   |   | 84 |   |
| Residential Real Estate                  |   |               | 10,942 |   |                   |   | 2,506  |             |   |   | -                         |   |   |                     | 2,436  |   |   |   | 104 |   |
| Consumer and Other                       |   |               | 166    |   |                   |   | -      |             |   |   | -                         |   |   |                     | -      |   |   |   | - |   |
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| With an allowance recorded:              |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Agriculture and Agricultural Real Estate |   |               | 202    |   |                   |   | 227    |             |   |   | 25                        |   |   |                     | 227    |   |   |   | 14 |   |
| Commercial                               |   |               | 1,840  |   |                   |   | 1,985  |             |   |   | 713                       |   |   |                     | 1,967  |   |   |   | 63 |   |
| Commercial Real Estate                   |   |               | 18,175 |   |                   |   | 21,543 |             |   |   | 2,432                     |   |   |                     | 20,131 |   |   |   | 737 |   |
| Construction Real Estate                 |   |               | 11,777 |   |                   |   | 14,847 |             |   |   | 1,593                     |   |   |                     | 14,945 |   |   |   | 430 |   |
| Residential Real Estate                  |   |               | 16,160 |   |                   |   | 19,423 |             |   |   | 1,716                     |   |   |                     | 18,143 |   |   |   | 976 |   |
| Consumer and Other                       |   |               | -      |   |                   |   | -      |             |   |   |                      |   |   |                     | -      |   |   |   | - |   |
|                                     |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Total:                                   |   |               |   |   |                   |   |   |             |   |   |                      |   |   |                     |   |   |   |   |   |   |
| Agriculture and Agricultural Real Estate |   | $                  | 546    |   |                   | $      | 1,433  |             |   | $      | 25                        |   |   | $                        | 838    |   |   | $ | 14 |   |
| Commercial                               |   |               | 6,026  |   |                   |   | 8,968  |             |   |   | 713                       |   |   |                     | 5,239  |   |   |   | 187 |   |
| Commercial Real Estate                   |   |               | 37,324 |   |                   |   | 42,280 |             |   |   | 2,432                     |   |   |                     | 39,275 |   |   |   | 1,421 |   |
| Construction Real Estate                 |   |               | 14,950 |   |                   |   | 20,542 |             |   |   | 1,593                     |   |   |                     | 20,389 |   |   |   | 514 |   |
| Residential Real Estate                  |   |               | 27,102 |   |                   |   | 21,929 |             |   |   | 1,716                     |   |   |                     | 20,579 |   |   |   | 1,080 |   |
| Consumer and Other                       |   |               | 166    |   |                   |   | -      |             |   |   | -                         |   |   |                     | -      |   |   |   | - |   |

----

|                              |   | 2010   |   |   | 2009   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Land, buildings and improvements  |   | $      | 43,906 |   |   | $      | 43,839 |   |
| Equipment, furniture and fixtures |   |   | 21,634 |   |   |   | 21,875 |   |
| Total Bank premises and equipment |   | $      | 65,540 |   |   | $      | 65,714 |   |
| Less accumulated depreciation     |   |   | 34,971 |   |   |   | 33,336 |   |
| Bank premises and equipment, net  |   | $      | 30,569 |   |   | $      | 32,378 |   |

| Year       |   | MinimumPayment |    |
|------------|--------|----------------|---------|
| 2011       |   | $              | 138,000 |   |
| 2012       |   |           | 73,000  |   |
| 2013       |   |           | 57,000  |   |
| Thereafter |   |           | -       |   |

|    |   | Under $100,000 |        |   | $100,000 andover |   |
|--------------|--------|---------------------|-------------|--------|-----------------------|--------|
| 2011         |   | $                   | 143,541,000 |   |                  | $      | 64,471,000 |   |
| 2012         |   |                | 66,146,000  |   |                  |   | 28,829,000 |   |
| 2013         |   |                | 31,563,000  |   |                  |   | 12,275,000 |   |
| 2014         |   |                | 16,926,000  |   |                  |   | 13,814,000 |   |
| 2015         |   |                | 14,353,000  |   |                  |   | 4,348,000 |   |
| Thereafter   |   |                | 3,629,000   |   |                  |   | - |   |
| Total        |   | $                   | 276,158,000 |   |                  | $      | 123,737,000 |   |

| December 31, 2010 |   |
|-------------------|--------|
|              |   |
|              |   | Floating Rate |   |   | Fixed Rate |   |
| Maturing in       |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
| 2011              |   |   | 3,000 |   |   |   | 0.45 | % |   |   | 3,500 |   |   |   | 5.08 | % |
| 2013              |   |   | 95,000 |   |   |   | 2.57 | % |   |   | - |   |   |   | - |   |
| 2014              |   |   | 12,000 |   |   |   | 0.46 | % |   |   | - |   |   |   | - |   |
|              |   | $ | 110,000 |   |   |   | 2.28 | % |   | $ | 3,500 |   |   |   | 5.08 | % |

----

| December 31, 2009 |   |
|-------------------|--------|
|              |   |
|              |   | Floating Rate |   |   | Fixed Rate |   |
| Maturing in       |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
| 2010              |   | $ | - |   |   |   | - |   |   | $ | 115,000 |   |   |   | 5.40 | % |
| 2011              |   |   | 3,000 |   |   |   | 0.40 | % |   |   | 3,500 |   |   |   | 5.08 | % |
| 2013              |   |   | 95,000 |   |   |   | 2.54 | % |   |   | - |   |   |   | - |   |
| 2014              |   |   | 12,000 |   |   |   | 0.41 | % |   |   | - |   |   |   | - |   |
|              |   | $ | 110,000 |   |   |   | 2.25 | % |   | $ | 118,500 |   |   |   | 5.39 | % |

| Securities Sold Under Agreements to Repurchase |   |
|------------------------------------------------|--------|
| December 31, 2010 and 2009                     |   |
|                                           |   |
|                                           |   | Floating Rate |   |   | Fixed Rate |   |
| Maturing in                                    |   | Amount |   |   | Rate |   |   | Amount |   |   | Rate |   |
| 2011                                           |   | $ | - |   |   |   | - |   |   | $ | 10,000 |   |   |   | 4.65 | % |
| 2012                                           |   |   | - |   |   |   | - |   |   |   | 5,000 |   |   |   | 4.12 | % |
| 2016                                           |   |   | - |   |   |   | - |   |   |   | 15,000 |   |   |   | 4.65 | % |
|                                           |   | $ | - |   |   |   | - |   |   | $ | 30,000 |   |   |   | 4.56 | % |

|                                    |   | 2010   |   |   | 2009   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|
| APBO                                    |   | $      | 2,277  |   |   | $      | 2,078 |   |
| Unrecognized net transition obligation  |   |   | (107   | )      |   |   | (161 | ) |
| Unrecognized prior service costs        |   |   | (13    | )      |   |   | (17 | ) |
| Unrecognized net gain                   |   |   | 264    |   |   |   | 373 |   |
| Accrued benefit cost at fiscal year end |   | $      | 2,421  |   |   | $      | 2,273 |   |

----

|                             |   | 2010   |   |   | 2009   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|
| APBO at beginning of year        |   | $      | 2,078  |   |   | $      | 2,000 |   |
| Service cost                     |   |   | 98     |   |   |   | 101 |   |
| Interest cost                    |   |   | 111    |   |   |   | 112 |   |
| Actuarial loss (gain)            |   |   | 97     |   |   |   | (27 | ) |
| Plan participants' contributions |   |   | 125    |   |   |   | 139 |   |
| Benefits paid during year        |   |   | (232   | )      |   |   | (247 | ) |
| APBO at end of year              |   | $      | 2,277  |   |   | $      | 2,078 |   |

|                                  |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Service cost                          |   | $      | 98     |   |   | $      | 101    |   |   | $ | 102 |   |
| Interest cost                         |   |   | 111    |   |   |   | 112    |   |   |   | 116 |   |
| Amortization of transition obligation |   |   | 53     |   |   |   | 53     |   |   |   | 54 |   |
| Prior service costs                   |   |   | 4      |   |   |   | 4      |   |   |   | 4 |   |
| Amortization of gains                 |   |   | (10    | )      |   |   | (10    | )      |   |   | (4 | ) |
| Net postretirement benefit expense    |   | $      | 256    |   |   | $      | 260    |   |   | $ | 272 |   |

----

|                                           |   | Postretirement Death BenefitObligations |   |   | Postretirement Health CareBenefits |   |
|------------------------------------------------|--------|---------------------------------------------------|--------|--------|----------------------------------------------|--------|
|                                      |   | 2010                                              |   |   | 2009                                         |   |   | 2010 |   |   | 2009 |   |
|                                           |   |                                              |   |   |                                         |   |   |   |   |   |   |   |
| Change in benefit obligation                   |   |                                              |   |   |                                         |   |   |   |   |   |   |   |
| Benefit obligation at beginning of year        |   | $                                                 | 4,437  |   |                                         |   | 4,414 |   |   | $ | 2,078 |   |   | $ | 2,000 |   |
| Service cost                                   |   |                                              | 41     |   |                                         |   | 60 |   |   |   | 98 |   |   |   | 101 |   |
| Interest cost                                  |   |                                              | 239    |   |                                         |   | 243 |   |   |   | 111 |   |   |   | 112 |   |
| Plan participants' contributions               |   |                                              | -      |   |                                         |   | - |   |   |   | 125 |   |   |   | 139 |   |
| Actuarial loss (gain)                          |   |                                              | 175    |   |                                         |   | (280 | ) |   |   | 97 |   |   |   | (27 | ) |
| Benefits paid                                  |   |                                              | -      |   |                                         |   | - |   |   |   | (232 | ) |   |   | (247 | ) |
| Benefit obligation at end of year              |   | $                                                 | 4,892  |   |                                         | $      | 4,437 |   |   | $ | 2,277 |   |   | $ | 2,078 |   |
|                                           |   |                                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Change in accrued benefit cost                 |   |                                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Accrued benefit cost at beginning of year      |   | $                                                 | 1,801  |   |                                         | $      | 1,184 |   |   | $ | 2,273 |   |   | $ | 2,121 |   |
| Service cost                                   |   |                                              | 41     |   |                                         |   | 60 |   |   |   | 98 |   |   |   | 101 |   |
| Interest cost                                  |   |                                              | 239    |   |                                         |   | 243 |   |   |   | 111 |   |   |   | 112 |   |
| Amortization                                   |   |                                              | 314    |   |                                         |   | 314 |   |   |   | 46 |   |   |   | 47 |   |
| Employer contributions                         |   |                                              | -      |   |                                         |   | - |   |   |   | (107 | ) |   |   | (108 | ) |
| Net gain                                       |   |                                              | -      |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Accrued benefit cost at end of year            |   | $                                                 | 2,395  |   |                                         | $      | 1,801 |   |   | $ | 2,421 |   |   | $ | 2,273 |   |
|                                           |   |                                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Change in plan assets                          |   |                                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of plan assets at beginning of year |   | $                                                 | -      |   |                                         | $      | - |   |   | $ | - |   |   | $ | - |   |
| Employer contributions                         |   |                                              | -      |   |                                         |   | - |   |   |   | 107 |   |   |   | 108 |   |
| Plan participants' contributions               |   |                                              | -      |   |                                         |   | - |   |   |   | 125 |   |   |   | 139 |   |
| Benefits paid during year                      |   |                                              | -      |   |                                         |   | - |   |   |   | (232 | ) |   |   | (247 | ) |
| Fair value of plan assets at end of year       |   | $                                                 | -      |   |                                         | $      | - |   |   | $ | - |   |   | $ | - |   |
|                                           |   |                                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Funded status at end of year                   |   | $                                                 | (2,497 | )      |                                         | $      | (2,636 | ) |   | $ | 144 |   |   | $ | 195 |   |

|        |   | Postretirement Death BenefitObligations |   |   | Postretirement Health CareBenefits |   |
|-------------|--------|---------------------------------------------------|--------|--------|----------------------------------------------|--------|
|        |   | 2010                                              |   |   | 2009                                         |   |   | 2010 |   |   | 2009 |   |
| Assets      |   | $                                                 | -      |   |                                         |   | - |   |   | $ | - |   |   | $ | - |   |
| Liabilities |   |                                              | 4,892  |   |                                         |   | 4,437 |   |   |   | 2,277 |   |   |   | 2,078 |   |
| Total       |   | $                                                 | 4,892  |   |                                         | $      | 4,437 |   |   | $ | 2,277 |   |   | $ | 2,078 |   |

|                          |   | Postretirement Death BenefitObligations |   |   | Postretirement Health CareBenefits |   |
|-------------------------------|--------|---------------------------------------------------|--------|--------|----------------------------------------------|--------|
|                          |   | 2010                                              |   |   | 2009                                         |   |   | 2010 |   |   | 2009 |   |
| Net loss (gain)               |   | $                                                 | (116   | )      |                                         |   | (291 | ) |   | $ | (264 | ) |   | $ | (373 | ) |
| Transition obligation (asset) |   |                                              | -      |   |                                         |   | - |   |   |   | 107 |   |   |   | 161 |   |
| Prior service cost (credit)   |   |                                              | 2,613  |   |                                         |   | 2,927 |   |   |   | 13 |   |   |   | 17 |   |
|                          |   | $                                                 | 2,497  |   |                                         | $      | 2,636 |   |   | $ | (144 | ) |   | $ | (195 | ) |

----

|                                                   |   | December 31, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|
|                                              |   | Carrying                    |    |   | Estimated                   |   |   | Carrying |   |   | Estimated |   |
|                                              |   | Value                       |    |   | Fair Value             |   |   | Value |   |   | Fair Value |   |
| Financial Assets:                                      |   |                        |    |   |                        |   |   |   |   |   |   |   |
| Cash and due from banks                                |   | $                           | 86,300  |   |                        | $      | 86,300 |   |   | $ | 69,746 |   |   | $ | 69,746 |   |
| Securities - Held to Maturity                          |   |                        | 23,804  |   |                        |   | 23,842 |   |   |   | 36,433 |   |   |   | 36,417 |   |
| Securities - Available for Sale                        |   |                        | 289,365 |   |                        |   | 289,365 |   |   |   | 307,346 |   |   |   | 307,346 |   |
| Federal Home Loan Bank Stock                           |   |                        | 11,831  |   |                        |   | 11,831 |   |   |   | 13,086 |   |   |   | 13,086 |   |
| Loans Held for Sale                                    |   |                        | 973     |   |                        |   | 973 |   |   |   | 931 |   |   |   | 931 |   |
| Loans, net                                             |   |                        | 731,664 |   |                        |   | 755,312 |   |   |   | 824,916 |   |   |   | 838,965 |   |
| Accrued Interest Receivable                            |   |                        | 3,912   |   |                        |   | 3,912 |   |   |   | 5,513 |   |   |   | 5,513 |   |
|                                                   |   |                        |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities:                                 |   |                        |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Demand, NOW, savings and money market savings deposits |   |                        | 631,997 |   |                        |   | 631,997 |   |   |   | 630,065 |   |   |   | 630,065 |   |
| Other Time Deposits                                    |   |                        | 399,896 |   |                        |   | 405,736 |   |   |   | 401,726 |   |   |   | 408,516 |   |
| Borrowed funds                                         |   |                        |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Variable Rate FHLB Advances                            |   |                        | 110,000 |   |                        |   | 115,045 |   |   |   | 110,000 |   |   |   | 116,938 |   |
| Fixed Rate FHLB Advances                               |   |                        | 3,500   |   |                        |   | 3,567 |   |   |   | 3,500 |   |   |   | 3,688 |   |
| Putable FHLB Advances                                  |   |                        | -       |   |                        |   | - |   |   |   | 115,000 |   |   |   | 119,700 |   |
| Repurchase Agreements                                  |   |                        | 30,000  |   |                        |   | 33,796 |   |   |   | 30,000 |   |   |   | 34,896 |   |
| Notes Payable                                          |   |                        | 135     |   |                        |   | 135 |   |   |   | - |   |   |   | - |   |
| Accrued Interest Payable                               |   |                        | 882     |   |                        |   | 882 |   |   |   | 1,259 |   |   |   | 1,259 |   |

----

|                                                |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Federal income taxes currently payable (refundable) |   | $      | -      |   |   | $      | (7,189 | )      |   | $ | 77 |   |
| Provision (credit) for deferred taxes on:           |   |   |   |   |   |   |   |   |   |   |   |   |
| Book (over) under tax loan loss provision           |   |   | 614    |   |   |   | (1,937 | )      |   |   | 584 |   |
| Accretion of bond discount                          |   |   | (74    | )      |   |   | (46    | )      |   |   | 18 |   |
| Net deferred loan origination fees                  |   |   | 40     |   |   |   | (14    | )      |   |   | (21 | ) |
| Accrued postretirement benefits                     |   |   | (150   | )      |   |   | (293   | )      |   |   | (303 | ) |
| Tax over (under) book depreciation                  |   |   | (67    | )      |   |   | 197    |   |   |   | 14 |   |
| Alternative minimum tax                             |   |   | (67    | )      |   |   | (264   | )      |   |   | (440 | ) |
| Non-accrual loan interest                           |   |   | (102   | )      |   |   | 294    |   |   |   | (352 | ) |
| Write down of other real estate owned               |   |   | (481   | )      |   |   | (411   | )      |   |   | (799 | ) |
| Other than temporary impairment AFS securities      |   |   | 3,550  |   |   |   | (4,116 | )      |   |   | - |   |
| Net operating loss carry forward                    |   |   | (6,851 | )      |   |   | -      |   |   |   | - |   |
| Other, net                                          |   |   | (306   | )      |   |   | (173   | )      |   |   | (95 | ) |
| Total deferred provision (credit)                   |   |   | (3,894 | )      |   |   | (6,763 | )      |   |   | (1,394 | ) |
| Valuation allowance deferred tax assets             |   |   | 7,077  |   |   |   | 13,850 |   |   |   | - |   |
| Net deferred provision                              |   |   | 3,183  |   |   |   | 7,087  |   |   |   | (1,394 | ) |
| Tax expense                                         |   | $      | 3,183  |   |   | $      | (102   | )      |   | $ | (1,317 | ) |

|                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Statutory rate            |   |   | (34.0  | )%     |   |   | (34.0  | )%     |   |   | 34.0 | % |
| Municipal interest income |   |   | (6.9   | )      |   |   | (3.0   | )      |   |   | (266.7 | ) |
| Other, net                |   |   | (3.8   | )      |   |   | (3.7   | )      |   |   | (118.5 | ) |
| Valuation allowance       |   |   | 81.2   |   |   |   | 40.4   |   |   |   | - |   |
| Effective tax rate        |   |   | 36.5   | %      |   |   | (0.3   | )%     |   |   | (351.2 | )% |

|                                                   |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Deferred Federal income tax assets:                    |   |   |    |   |   |   |
| Allowance for loan losses                              |   | $      | 7,913   |   |   | $      | 8,527 |   |
| Net deferred loan origination fees                     |   |   | 206     |   |   |   | 246 |   |
| Tax versus book depreciation differences               |   |   | 146     |   |   |   | 79 |   |
| Net unrealized losses on securities available for sale |   |   | 1,500   |   |   |   | 3,036 |   |
| Accrued postretirement benefits                        |   |   | 2,683   |   |   |   | 2,587 |   |
| Alternative minimum tax                                |   |   | 771     |   |   |   | 704 |   |
| Non-accrual loan interest                              |   |   | 224     |   |   |   | 122 |   |
| Write down of other real estate owned                  |   |   | 1,952   |   |   |   | 1,471 |   |
| Other than temporary impairment AFS securities         |   |   | 566     |   |   |   | 4,116 |   |
| Net operating loss                                     |   |   | 6,851   |   |   |   | - |   |
| Other, net                                             |   |   | 804     |   |   |   | 607 |   |
| Gross deferred tax asset                               |   |   | 23,616  |   |   |   | 21,495 |   |
| Valuation allowance                                    |   |   | (20,927 | )      |   |   | (13,850 | ) |
| Total Federal deferred tax asset                       |   | $      | 2,689   |   |   | $      | 7,645 |   |
|                                                   |   |   |    |   |   |   |   |   |
| Deferred Federal income tax liabilities:               |   |   |    |   |   |   |   |   |
| Accretion of bond discount                             |   | $      | (24     | )      |   | $      | (98 | ) |
| Other                                                  |   |   | (365    | )      |   |   | (474 | ) |
|                                                   |   | $      | (389    | )      |   | $      | (572 | ) |
| Net deferred Federal income tax asset                  |   | $      | 2,300   |   |   | $      | 7,073 |   |

----

|                                   |   | Actual |   |   | Minimum to Qualify asWell Capitalized* |   |
|----------------------------------------|--------|--------|--------|--------|------------------------------------------------------------|--------|
|                                   |   | Amount |   |   | Ratio                                                      |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2010:               |   |   |   |   |                                                       |   |   |   |   |   |   |   |
| Total Capital to Risk-Weighted Assets  |   |   |   |   |                                                       |   |   |   |   |   |   |   |
| Consolidated                           |   | $      | 89,270 |   |                                                       |   | 10.24 | % |   | $ | 87,196 |   |   |   | 10 | % |
| Monroe Bank & Trust                |   |   | 88,440 |   |                                                       |   | 10.15 | % |   |   | 87,120 |   |   |   | 10 | % |
| Tier 1 Capital to Risk-Weighted Assets |   |   |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                           |   |   | 78,239 |   |                                                       |   | 8.97 | % |   |   | 52,318 |   |   |   | 6 | % |
| Monroe Bank & Trust                |   |   | 77,383 |   |                                                       |   | 8.88 | % |   |   | 52,272 |   |   |   | 6 | % |
| Tier 1 Capital to Average Assets       |   |   |   |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                           |   |   | 78,239 |   |                                                       |   | 6.24 | % |   |   | 62,705 |   |   |   | 5 | % |
| Monroe Bank & Trust                |   |   | 77,383 |   |                                                       |   | 6.17 | % |   |   | 62,672 |   |   |   | 5 | % |

|   | * | Although the Bank’s capital ratios exceed the “Well Capitalized” minimums, the Bank is categorized as “Adequately Capitalized” as of December 31, 2010 due to its Consent Order with the FDIC. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |   | Actual |    |   | Minimum to Qualify asWell Capitalized |   |
|----------------------------------------|--------|--------|---------|--------|---------------------------------------|--------|
|                                   |   | Amount |    |   | Ratio                                 |   |   | Amount |   |   | Ratio |   |
| As of December 31, 2009:               |   |   |    |   |                                  |   |   |   |   |   |   |   |
| Total Capital to Risk-Weighted Assets  |   |   |    |   |                                  |   |   |   |   |   |   |   |
| Consolidated                           |   | $      | 101,158 |   |                                  |   | 10.21 | % |   | $ | 99,065 |   |   |   | 10 | % |
| Monroe Bank & Trust                |   |   | 100,329 |   |                                  |   | 10.14 | % |   |   | 98,984 |   |   |   | 10 | % |
| Tier 1 Capital to Risk-Weighted Assets |   |   |    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                           |   |   | 88,627  |   |                                  |   | 8.95 | % |   |   | 59,439 |   |   |   | 6 | % |
| Monroe Bank & Trust                |   |   | 87,775  |   |                                  |   | 8.87 | % |   |   | 59,390 |   |   |   | 6 | % |
| Tier 1 Capital to Average Assets       |   |   |    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                           |   |   | 88,627  |   |                                  |   | 6.27 | % |   |   | 70,681 |   |   |   | 5 | % |
| Monroe Bank & Trust                |   |   | 87,775  |   |                                  |   | 6.21 | % |   |   | 70,643 |   |   |   | 5 | % |

----

|                                         |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|----------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
| Basic                                        |   |   |        |   |   |   |        |   |   |
| Net income (loss)                            |   | $      | (11,899,000 | )      |   | $      | (34,177,000 | )      |   | $ | 1,692,000 |   |
| Less preferred dividends                     |   |   | -           |   |   |   | -           |   |   |   | - |   |
| Net income (loss) applicable to common stock |   | $      | (11,899,000 | )      |   | $      | (34,177,000 | )      |   | $ | 1,692,000 |   |
| Average common shares outstanding            |   |   | 16,498,734  |   |   |   | 16,186,478  |   |   |   | 16,134,570 |   |
| Earnings (loss) per common share - basic     |   | $      | (0.72       | )      |   | $      | (2.11       | )      |   | $ | 0.10 |   |
|                                         |   |   |        |   |   |   |        |   |   |   |   |   |
|                                         |   | 2010   |        |   | 2009   |   |        | 2008   |   |
| Diluted                                      |   |   |        |   |   |   |        |   |   |   |   |   |
| Net income (loss)                            |   | $      | (11,899,000 | )      |   | $      | (34,177,000 | )      |   | $ | 1,692,000 |   |
| Less preferred dividends                     |   |   | -           |   |   |   | -           |   |   |   | - |   |
| Net income (loss) applicable to common stock |   | $      | (11,899,000 | )      |   | $      | (34,177,000 | )      |   | $ | 1,692,000 |   |
| Average common shares outstanding            |   |   | 16,498,734  |   |   |   | 16,186,478  |   |   |   | 16,134,570 |   |
| Stock option adjustment                      |   |   | -           |   |   |   | -           |   |   |   | - |   |
| Average common shares outstanding - diluted  |   |   | 16,498,734  |   |   |   | 16,186,478  |   |   |   | 16,134,570 |   |
| Earnings (loss) per common share - diluted   |   | $      | (0.72       | )      |   | $      | (2.11       | )      |   | $ | 0.10 |   |

----

|                                                                 |   | 2010   |    |   | 2009                         |   |   | 2008   |   |
|----------------------------------------------------------------------|--------|--------|---------|--------|------------------------------|--------|--------|--------|--------|
| Stock Options                                                   |   | Shares |    |   | WeightedAverageExercisePrice |   |   | Shares |   |   | WeightedAverageExercisePrice |   |   | Shares |   |   | WeightedAverageExercisePrice |   |
| Options Outstanding, January 1                                       |   |   | 489,075 |   |                         | $      | 17.35  |   |   |   | 541,976 |   |   | $ | 17.42 |   |   |   | 602,143 |   |   | $ | 17.36 |   |
| Granted                                                              |   |   | -       |   |                         |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Exercised                                                            |   |   | -       |   |                         |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited/Expired                                                    |   |   | 44,500  |   |                         |   | 18.03  |   |   |   | 52,901 |   |   |   | 18.03 |   |   |   | 60,167 |   |   |   | 16.85 |   |
| Options Outstanding, December 31                                     |   |   | 444,575 |   |                         | $      | 17.28  |   |   |   | 489,075 |   |   | $ | 17.35 |   |   |   | 541,976 |   |   | $ | 17.42 |   |
| Options Exercisable, December 31                                     |   |   | 444,575 |   |                         | $      | 17.28  |   |   |   | 489,075 |   |   | $ | 17.35 |   |   |   | 513,646 |   |   | $ | 17.54 |   |
|                                                                 |   |   |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock Only Stock Appreciation Rights (SOSARs)                        |   |   |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SOSARs Outstanding, January 1                                        |   |   | 221,500 |   |                         | $      | 5.23   |   |   |   | 99,500 |   |   | $ | 8.53 |   |   |   | - |   |   | $ | 0.00 |   |
| Granted                                                              |   |   | 16,000  |   |                         |   | 1.52   |   |   |   | 141,500 |   |   |   | 3.03 |   |   |   | 99,500 |   |   |   | 8.53 |   |
| Exercised                                                            |   |   | -       |   |                         |   | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Forfeited/Expired                                                    |   |   | 13,500  |   |                         |   | 2.58   |   |   |   | 19,500 |   |   |   | 6.13 |   |   |   | - |   |   |   | - |   |
| SOSARs Outstanding, December 31                                      |   |   | 224,000 |   |                         | $      | 5.12   |   |   |   | 221,500 |   |   | $ | 5.23 |   |   |   | 99,500 |   |   | $ | 8.53 |   |
| SOSARs Exercisable, December 31                                      |   |   | 190,820 |   |                         | $      | 5.49   |   |   |   | 124,682 |   |   | $ | 5.63 |   |   |   | 35,845 |   |   | $ | 8.53 |   |
|                                                                 |   |   |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Fair Value of Options or SOSARs Granted During Year |   |   |    |   |                         | $      | 0.45   |   |   |   |   |   |   | $ | 0.52 |   |   |   |   |   |   | $ | 1.39 |   |

|          |   |   | Outstanding Options |    |                               | Exercisable Options |   |
|---------------|--------|--------|--------------------------|---------|------------------------------------|--------------------------|--------|
| ExercisePrice |   | Shares |                     |    | Remaining Life(in years) |                     |   | Shares |   |   | Remaining Life(in years) |   |
| $             | 13.20  |   |                     | 68,335  |                               |                     |   | 2.01 |   |   |   | 68,335 |   |   |   | 2.01 |   |
| $             | 13.85  |   |                     | 25,838  |                               |                     |   | 1.01 |   |   |   | 25,838 |   |   |   | 1.01 |   |
| $             | 13.94  |   |                     | 4,402   |                               |                     |   | 0.01 |   |   |   | 4,402 |   |   |   | 0.01 |   |
| $             | 15.33  |   |                     | 78,000  |                               |                     |   | 6.01 |   |   |   | 78,000 |   |   |   | 6.01 |   |
| $             | 16.24  |   |                     | 67,000  |                               |                     |   | 5.01 |   |   |   | 67,000 |   |   |   | 5.01 |   |
| $             | 16.69  |   |                     | 93,500  |                               |                     |   | 3.01 |   |   |   | 93,500 |   |   |   | 3.01 |   |
| $             | 23.40  |   |                     | 107,500 |                               |                     |   | 4.01 |   |   |   | 107,500 |   |   |   | 4.01 |   |
|          |   |   |                     | 444,575 |                               |                     |   | 3.78 |   |   |   | 444,575 |   |   |   | 3.78 |   |

|          |   |   | Outstanding SOSARs |    |                               | Exercisable SOSARs |   |
|---------------|--------|--------|-------------------------|---------|------------------------------------|-------------------------|--------|
| ExercisePrice |   | Shares |                    |    | Remaining Life(in years) |                    |   | Shares |   |   | Remaining Life(in years) |   |
| $             | 1.52   |   |                    | 12,000  |                               |                    |   | 9.01 |   |   |   | 12,000 |   |   |   | 9.01 |   |
| $             | 3.03   |   |                    | 123,500 |                               |                    |   | 8.01 |   |   |   | 90,320 |   |   |   | 8.01 |   |
| $             | 8.53   |   |                    | 88,500  |                               |                    |   | 7.60 |   |   |   | 88,500 |   |   |   | 7.60 |   |
|          |   |   |                    | 224,000 |                               |                    |   | 7.90 |   |   |   | 190,820 |   |   |   | 7.88 |   |

| Nonvested SOSAR Shares |   | Shares |    |   | Weighted AverageGrant Date FairValue |   |
|----------------------------------|--------|--------|---------|--------|-----------------------------------------------------|--------|
| Nonvested at January 1, 2010     |   |   | 96,818  |   |                                                | $      | 0.78 |   |
| Granted                          |   |   | 16,000  |   |                                                |   | 0.45 |   |
| Vested                           |   |   | (74,638 | )      |                                                |   | 0.85 |   |
| Forfeited                        |   |   | (5,000  | )      |                                                |   | 0.46 |   |
| Nonvested at December 31, 2010   |   |   | 33,180  |   |                                                | $      | 0.51 |   |

----

| Date               |   | Shares Vesting |   |
|--------------------|--------|---------------------|--------|
| June 30, 2012      |   |                | 20,000 |   |
| September 23, 2012 |   |                | 50,000 |   |
| September 23, 2013 |   |                | 25,000 |   |
| September 23, 2014 |   |                | 25,000 |   |

| Restricted Stock Awards  |   | 2010   |    |   | 2009   |   |
|--------------------------|--------|--------|---------|--------|--------|--------|
| Nonvested at January 1   |   |   | 15,000  |   |   |   | - |   |
| Granted                  |   |   | 120,000 |   |   |   | 15,000 |   |
| Vested                   |   |   | -       |   |   |   | - |   |
| Forfeited                |   |   | -       |   |   |   | - |   |
| Nonvested at December 31 |   |   | 135,000 |   |   |   | 15,000 |   |

|                                       |   | December 31, |   |
|--------------------------------------------|--------|-------------------|--------|
|                                       |   | 2010              |   |   | 2009 |   |
| Assets                                     |   |              |   |   |   |   |
| Cash and due from banks                    |   | $                 | 339    |   |   | $ | 239 |   |
| Securities                                 |   |              | 324    |   |   |   | 270 |   |
| Investment in subsidiary bank              |   |              | 73,192 |   |   |   | 80,959 |   |
| Other assets                               |   |              | 278    |   |   |   | 296 |   |
| Total assets                               |   | $                 | 74,133 |   |   | $ | 81,764 |   |
|                                       |   |              |   |   |   |   |   |   |
| Liabilities                                |   |              |   |   |   |   |   |   |
| Dividends payable and other liabilities    |   | $                 | 135    |   |   | $ | - |   |
| Total liabilities                          |   |              | 135    |   |   |   | - |   |
|                                       |   |              |   |   |   |   |   |   |
| Stockholders' Equity                       |   |              |   |   |   |   |   |   |
| Total stockholders' equity                 |   |              | 73,998 |   |   |   | 81,764 |   |
| Total liabilities and stockholders' equity |   | $                 | 74,133 |   |   | $ | 81,764 |   |

----

|                                                                                      |   | Years Ended December 31, |    |
|-------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                                      |   | 2010                                    |    |   | 2009 |   |   | 2008 |   |
| Income                                                                                    |   |                                    |    |   |   |   |   |   |   |
| Dividends from subsidiary bank                                                            |   | $                                       | -       |   |   | $ | - |   |   | $ | 10,549 |   |
| Other operating income                                                                    |   |                                    | -       |   |   |   | - |   |   |   | 5 |   |
| Total income                                                                              |   |                                    | -       |   |   |   | - |   |   |   | 10,554 |   |
|                                                                                      |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Expense                                                                                   |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Interest on borrowed funds                                                                |   |                                    | 2       |   |   |   | - |   |   |   | - |   |
| Other expense                                                                             |   |                                    | 298     |   |   |   | 592 |   |   |   | 493 |   |
| Total expense                                                                             |   |                                    | 300     |   |   |   | 592 |   |   |   | 493 |   |
|                                                                                      |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Income (loss) before tax and equity in undistributed net income (loss) of subsidiary bank |   |                                    | (300    | ) |   |   | (592 | ) |   |   | 10,061 |   |
| Income tax benefit                                                                        |   |                                    | -       |   |   |   | (202 | ) |   |   | (166 | ) |
| Income (loss) before equity in undistributed net income of subsidiary bank                |   |                                    | (300    | ) |   |   | (390 | ) |   |   | 10,227 |   |
| Equity in undistributed net income (loss) of subsidiary bank                              |   |                                    | (11,599 | ) |   |   | (33,787 | ) |   |   | (8,535 | ) |
| Net Income (Loss)                                                                         |   | $                                       | (11,899 | ) |   | $ | (34,177 | ) |   | $ | 1,692 |   |

|                                                  |   | Years Ended December 31, |    |
|-------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                  |   | 2010                                    |    |   | 2009 |   |   | 2008 |   |
| Cash Flows Provided By Operating Activities:          |   |                                    |    |   |   |   |   |   |   |
| Net income (loss)                                     |   | $                                       | (11,899 | ) |   | $ | (34,177 | ) |   | $ | 1,692 |   |
| Equity in undistributed net income of subsidiary bank |   |                                    | 11,599  |   |   |   | 33,787 |   |   |   | 8,535 |   |
| Net increase (decrease) in other liabilities          |   |                                    | -       |   |   |   | (19 | ) |   |   | (1,430 | ) |
| Net (increase) decrease in other assets               |   |                                    | 92      |   |   |   | 223 |   |   |   | 190 |   |
| Net cash provided by (used for) operating activities  |   | $                                       | (208    | ) |   | $ | (186 | ) |   | $ | 8,987 |   |
|                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash Flows Used For Investing Activities:             |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Investment in subsidiary                              |   | $                                       | (1,100  | ) |   | $ | - |   |   | $ | - |   |
| Net cash used for investing activities                |   | $                                       | (1,100  | ) |   | $ | - |   |   | $ | - |   |
|                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash Flows Used For Financing Activities:             |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Issuance of common stock                              |   | $                                       | 1,273   |   |   | $ | 147 |   |   | $ | 131 |   |
| Dividends paid                                        |   |                                    | -       |   |   |   | (1,777 | ) |   |   | (10,162 | ) |
| Issuance of long term debt                            |   |                                    | 135     |   |   |   | - |   |   |   | - |   |
| Net cash used for financing activities                |   | $                                       | 1,408   |   |   | $ | (1,630 | ) |   | $ | (10,031 | ) |
|                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Net Decrease In                                       |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash And Cash Equivalents                             |   | $                                       | 100     |   |   | $ | (1,816 | ) |   | $ | (1,044 | ) |
|                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash And Cash Equivalents                             |   |                                    |    |   |   |   |   |   |   |   |   |   |
| At Beginning Of Year                                  |   |                                    | 239     |   |   |   | 2,055 |   |   |   | 3,099 |   |
| Cash And Cash Equivalents At End Of Year              |   | $                                       | 339     |   |   | $ | 239 |   |   | $ | 2,055 |   |

----

|                                                       |   | Contractual Amount |   |
|------------------------------------------------------------|--------|-------------------------|--------|
|                                                       |   | 2010                    |   |   | 2009 |   |
| Commitments to extend credit:                              |   |                    |   |   |   |   |
| Unused portion of commercial lines of credit               |   | $                       | 59,238 |   |   | $ | 64,096 |   |
| Unused portion of credit card lines of credit              |   |                    | 2,987  |   |   |   | 4,286 |   |
| Unused portion of home equity lines of credit              |   |                    | 15,905 |   |   |   | 16,034 |   |
| Standby letters of credit and financial guarantees written |   |                    | 4,710  |   |   |   | 5,008 |   |
| All other off-balance sheet assets                         |   |                    | -      |   |   |   | 2,986 |   |

| 2010                                     |   | First  |   |   | Second |   |   | Third  |   |   | Fourth |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Total Interest Income                    |   | $      | 15,314 |   |   | $      | 14,499 |   |   | $      | 13,789 |   |   | $ | 12,984 |   |
| Total Interest Expense                   |   |   | 5,909  |   |   |   | 5,311  |   |   |   | 4,368  |   |   |   | 4,170 |   |
| Net Interest Income                      |   |   | 9,405  |   |   |   | 9,188  |   |   |   | 9,421  |   |   |   | 8,814 |   |
| Provision for Loan Losses                |   |   | 2,200  |   |   |   | 3,750  |   |   |   | 7,464  |   |   |   | 7,086 |   |
| Other Income                             |   |   | 4,041  |   |   |   | 6,819  |   |   |   | 4,381  |   |   |   | 4,195 |   |
| Other Expenses                           |   |   | 10,898 |   |   |   | 12,629 |   |   |   | 10,676 |   |   |   | 10,277 |   |
| Income Before Provision For Income Taxes |   |   | 348    |   |   |   | (372   | )      |   |   | (4,338 | )      |   |   | (4,354 | ) |
| Provision For Income Taxes               |   |   | -      |   |   |   | -      |   |   |   | -      |   |   |   | 3,183 |   |
| Net Income                               |   | $      | 348    |   |   | $      | (372   | )      |   | $      | (4,338 | )      |   | $ | (7,537 | ) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings Per Common Share          |   | $      | 0.02   |   |   | $      | (0.02  | )      |   | $      | (0.27  | )      |   | $ | (0.45 | ) |
| Diluted Earnings Per Common Share        |   | $      | 0.02   |   |   | $      | (0.02  | )      |   | $      | (0.27  | )      |   | $ | (0.45 | ) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends Declared Per Share             |   | $      | -      |   |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |

----

| 2009                                     |   | First  |   |   | Second |   |   | Third  |   |   | Fourth |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Total Interest Income                    |   | $      | 18,992 |   |   | $      | 17,870 |   |   | $      | 17,640 |   |   | $ | 16,502 |   |
| Total Interest Expense                   |   |   | 8,779  |   |   |   | 7,685  |   |   |   | 7,124  |   |   |   | 6,401 |   |
| Net Interest Income                      |   |   | 10,213 |   |   |   | 10,185 |   |   |   | 10,516 |   |   |   | 10,101 |   |
| Provision for Loan Losses                |   |   | 4,200  |   |   |   | 8,000  |   |   |   | 6,800  |   |   |   | 17,000 |   |
| Other Income                             |   |   | 3,331  |   |   |   | 3,630  |   |   |   | 3,559  |   |   |   | (40 | ) |
| Other Expenses                           |   |   | 11,997 |   |   |   | 14,589 |   |   |   | 11,390 |   |   |   | 11,798 |   |
| Income Before Provision For Income Taxes |   |   | (2,653 | )      |   |   | (8,774 | )      |   |   | (4,115 | )      |   |   | (18,737 | ) |
| Provision For Income Taxes               |   |   | (1,286 | )      |   |   | (3,401 | )      |   |   | (1,790 | )      |   |   | 6,375 |   |
| Net Income                               |   | $      | (1,367 | )      |   | $      | (5,373 | )      |   | $      | (2,325 | )      |   | $ | (25,112 | ) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic Earnings Per Common Share          |   | $      | (0.08  | )      |   | $      | (0.33  | )      |   | $      | (0.14  | )      |   | $ | (1.56 | ) |
| Diluted Earnings Per Common Share        |   | $      | (0.08  | )      |   | $      | (0.33  | )      |   | $      | (0.14  | )      |   | $ | (1.56 | ) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends Declared Per Share             |   | $      | 0.01   |   |   | $      | 0.01   |   |   | $      | -      |   |   | $ | - |   |

| Investment Securities Available for Sale atDecember 31, 2010 |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |    |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|---------|--------|------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|
| Obligations of U.S. Government Agencies                                                         |   | $                                                                                         | 267,035 |   |                                                       | $      | -      |                                              |   | $ | - |   |
| Obligations of States and Political Subdivisions                                                |   |                                                                                      | -       |   |                                                       |   | 14,725 |                                              |   |   | - |   |
| Trust Preferred CDO Securities                                                                  |   |                                                                                      | -       |   |                                                       |   | -      |                                              |   |   | 5,188 |   |
| Other Securities                                                                                |   |                                                                                      | 2,093   |   |                                                       |   | 324    |                                              |   |   | - |   |
| Total Securities Available for Sale                                                             |   | $                                                                                         | 269,128 |   |                                                       | $      | 15,049 |                                              |   | $ | 5,188 |   |

| Investment Securities Available for Sale atDecember 31, 2009 |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |    |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|---------|--------|------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|
| Obligations of U.S. Government Agencies                                                         |   | $                                                                                         | 254,628 |   |                                                       | $      | -      |                                              |   | $ | - |   |
| Obligations of States and Political Subdivisions                                                |   |                                                                                      | -       |   |                                                       |   | 35,637 |                                              |   |   | - |   |
| Trust Preferred CDO Securities                                                                  |   |                                                                                      | -       |   |                                                       |   | -      |                                              |   |   | 7,215 |   |
| Corporate Debt Securities                                                                       |   |                                                                                      | 7,509   |   |                                                       |   |   |                                              |   |   |   |   |
| Other Securities                                                                                |   |                                                                                      | 2,087   |   |                                                       |   | 270    |                                              |   |   | - |   |
| Total Securities Available for Sale                                                             |   | $                                                                                         | 264,224 |   |                                                       | $      | 35,907 |                                              |   | $ | 7,215 |   |

----

| Investment Securities - Available for Sale                             |   | 2010   |   |   | 2009   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Balance at January 1                                                   |   | $      | 7,215  |   |   | $      | 19,746 |   |
| Total realized and unrealized gains (losses) included in income        |   |   | -      |   |   |   | (11,760 | ) |
| Total unrealized gains (losses) included in other comprehensive income |   |   | 1,893  |   |   |   | (771 | ) |
| Net purchases, sales, calls and maturities                             |   |   | (3,920 | )      |   |   | - |   |
| Net transfers in/out of Level 3                                        |   |   | -      |   |   |   | - |   |
| Balance at December 31                                                 |   | $      | 5,188  |   |   | $      | 7,215 |   |

|                    |   | Balance atDecember 31,2010 |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |   | Total Losses forthe year endedDecember 31,2010 |   |
|-------------------------|--------|--------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|
|                    |   |                                 |   |   |                                                                                      |   |   |                                                       |   |   |                                              |   |   |                                                                    |   |
| Impaired loans          |   | $                                    | 78,538 |   |                                                                                      | $      | -      |                                                       |   | $      | -                                                 |   |   | $                                                                       | 78,538 |   |   | $ | 20,008 |   |
| Other Real Estate Owned |   | $                                    | 19,432 |   |                                                                                      | $      | -      |                                                       |   | $      | -                                                 |   |   | $                                                                       | 19,432 |   |   | $ | 2,807 |   |

|                    |   | Balance atDecember 31,2009 |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |   | Total Losses forthe year endedDecember 31,2009 |   |
|-------------------------|--------|--------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|
|                    |   |                                 |   |   |                                                                                      |   |   |                                                       |   |   |                                              |   |   |                                                                    |   |
| Impaired loans          |   | $                                    | 76,964 |   |                                                                                      | $      | -      |                                                       |   | $      | -                                                 |   |   | $                                                                       | 76,964 |   |   | $ | 27,272 |   |
| Other Real Estate Owned |   | $                                    | 17,502 |   |                                                                                      | $      | -      |                                                       |   | $      | -                                                 |   |   | $                                                                       | 17,502 |   |   | $ | 3,025 |   |

----

----

| (a) | Executive Officers – See “Executive Officers” in part I, Item 1 hereof. |
|-----|-------------------------------------------------------------------------------------------|

| (b) | Directors and Executive Officers – information required by this item is incorporated by reference from the sections entitled “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for the Annual Meeting of Shareholders that is to be filed with the Securities Exchange Commission. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Audit Committee Financial Expert – The Board of Directors has determined that Peter H. Carlton, member of the Audit Committee, is an “audit committee financial expert” and “independent” as defined under applicable SEC and Nasdaq rules. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | MBT Financial Corp. has adopted its Code of Ethics, a code of ethics that applies to all its directors, officers, and employees, including its Chief Executive Officer, Chief Financial Officer, and internal auditor. A copy of the Code of Ethics is posted on our website at http://www.mbandt.com. In the event we make any amendment to, or grant any waiver of, a provision of the Code of Ethics that applies to the principal executive officers, principal financial officer, principal accounting officer, or controller, or persons performing similar functions that require disclosure under applicable SEC rules, we intend to disclose such amendment or waiver, the reasons for it, and the nature of any waiver, the name of the person to whom it was granted, and the date, on our internet website. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | Number of securities to beissued upon exercise ofoutstanding options, warrants,and rights |    |   | Weighted averageexercise price ofoutstanding options,warrants, and rights |   |   | Number of securities remainingavailable for future issuance underequity compensation plans(excluding securities reflected in thefirst column ) |   |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity Compensation plans approved by security holders     |   |                                                                                                                                        | 444,575 |   |                                                                                                    | $      | 17.28  |                                                                                                                                                                                                                      |   |   | 595,541 |   |
| Equity Compensation plans not approved by security holders |   |                                                                                                                                        | 0       |   |                                                                                                    |   | 0      |                                                                                                                                                                                                                      |   |   | 0 |   |
| Total                                                      |   |                                                                                                                                        | 444,475 |   |                                                                                                    | $      | 17.28  |                                                                                                                                                                                                                      |   |   | 595,541 |   |

----

| Financial Statements |
|----------------------|
|                 |
|                 | Reports of Independent Registered Public Accounting Firm – Pages 43-44 |
|                 |   |
|                 | Consolidated Balance Sheets as of December 31, 2010 and 2009 – Page 45 |
|                 |   |
|                 | Consolidated Statements of Income for the Years Ended |
|                 | December 31, 2010, 2009, and 2008 – Page 46 |
|                 |   |
|                 | Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended |
|                 | December 31, 2010, 2009, and 2008 – Page 47 |
|                 |   |
|                 | Consolidated Statements of Cash Flows for the Years Ended |
|                 | December 31, 2010, 2009, and 2008 – Page 48 |
|                 |   |
|                 | Notes to Consolidated Financial Statements – Pages 49 – 72 |

----

|   3.1 |         | Restated Articles of Incorporation of MBT Financial Corp. Previously filed as Exhibit 3.1 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                                      |
|-----------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   3.2 |         | Amended and Restated Bylaws of MBT Financial Corp. Previously filed as Exhibit 3.2 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2004.                                                                             |
| 10.1            |         | MBT Financial Corp. 2008 Stock Incentive Compensation Plan. Previously filed as Exhibit 10 on Form 8-K filed by MBT Financial Corp. on June 5, 2008.                                                                                                 |
| 10.2            |         | Monroe Bank & Trust Salary Continuation Agreement with Ronald D. LaBeau. Previously filed as Exhibit 10.2 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                  |
| 10.3            |         | MBT Financial Corp. Amended and Restated Change in Control Agreement with H. Douglas Chaffin. Previously filed as Exhibit 10.5 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2005.                                 |
| 10.4            |         | Monroe Bank & Trust Group Director Death Benefit Only Plan. Previously filed as Exhibit 10.4 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2006.                                                               |
| 10.5            |         | Monroe Bank & Trust Group Executive Death Benefit Only Plan. Previously filed as Exhibit 10.5 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2006.                                                              |
| 10.6            |         | Monroe Bank & Trust Amended and Restated Supplemental Executive Retirement Agreement with H. Douglas Chaffin. Previously filed as Exhibit 10.6 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2007.             |
| 10.7            |         | MBT Financial Corp. Severance Agreements with Donald M. Lieto, James E. Morr, Thomas G. Myers, and John L. Skibski. Previously filed as Exhibit 10 on Form 8-K filed by MBT Financial Corp. on January 26, 2006.                                     |
| 10.8            |         | MBT Financial Corp. Severance Agreement with Scott E. McKelvey. Previously filed as Exhibit 10.1 to MBT Financial Corp.’s Form 10-Q for its quarter ended June 30, 2007.                                                                       |
| 10.9            |         | Real estate purchase agreement dated August 27, 2009 between Registrant’s wholly owned commercial bank subsidiary and D-M Investments, LLC. Previously filed as Exhibit 10 to the Form 8-K filed by MBT Financial Corp. on September 22, 2009. |
| 10.10           |         | Stipulation and consent to the issuance of a Consent Order with the FDIC and Michigan OFIR dated July 12, 2010. Previously filed as Exhibit 10 to the Form 8-K filed by MBT Financial Corp. on July 13, 2010.                                        |
|   21  |         | Subsidiaries of the Registrant. Previously filed as Exhibit 21 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                                                                 |
|   23  |         | Consent of Independent Auditors                                                                                                                                                                                                                      |
| 31.1            |         | Certification by Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14.                                                                                                                                                 |
| 31.2            |         | Certification by Chief Financial Officer required by Securities and Exchange Commission Rule 13a-14.                                                                                                                                                 |
| 32.1            |         | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   |
| 32.1            |    | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   |

----

| Dated: March 18, 2011 |            | MBT FINANCIAL CORP.     |
|-----------------------|-----------------|-------------------------|
|                  |            |                    |
|                  | By:   | /s/ John L. Skibski     |
|                  |            | John L. Skibski         |
|                  |            | Chief Financial Officer |

| /s/ H. Douglas Chaffin     |         | /s/ John L. Skibski                   |
|----------------------------|--------------|---------------------------------------|
| H. Douglas Chaffin         |         | John L. Skibski                       |
| President, Chief Executive |         | Chief Financial Officer &         |
| Officer & Director     |         | Director                              |
|                       |         |                                  |
| /s/ Michael J. Miller      |         | /s/ Peter H. Carlton                  |
| Michael J. Miller          |         | Peter H. Carlton                      |
| Chairman                   |         | Director                              |
|                       |         |                                  |
| /s/ Joseph S. Daly         |         | /s/ Edwin L. Harwood                  |
| Joseph S. Daly             |         | Edwin L. Harwood                      |
| Director                   |         | Director                              |
|                       |         |                                  |
| /s/ Thomas M. Huner        |         | /s/ Debra J. Shah                     |
| Thomas M. Huner            |         | Debra J. Shah                         |
| Director                   |         | Director                              |
|                       |         |                                  |
| /s/ Philip P. Swy          |         | /s/ Karen M. Colina Wilson Smithbauer |
| Philip P. Swy              |         | Karen M. Colina Wilson Smithbauer     |
| Director                   |    | Director                              |

----

| Exhibit Number |         | Description of Exhibits                                                                                                                                                                                                                    |
|---------------------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                 |         | Restated Articles of Incorporation of MBT Financial Corp. Previously filed as Exhibit 3.1 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                                      |
| 3.2                 |         | Amended and Restated Bylaws of MBT Financial Corp. Previously filed as Exhibit 3.2 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2004.                                                                             |
| 10.1                |         | MBT Financial Corp. 2008 Stock Incentive Compensation Plan. Previously filed as Exhibit 10 on Form 8-K filed by MBT Financial Corp. on June 5, 2008.                                                                                                 |
| 10.2                |         | Monroe Bank & Trust Salary Continuation Agreement with Ronald D. LaBeau. Previously filed as Exhibit 10.2 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                  |
| 10.3                |         | MBT Financial Corp. Amended and Restated Change in Control Agreement with H. Douglas Chaffin. Previously filed as Exhibit 10.5 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2005.                                 |
| 10.4                |         | Monroe Bank & Trust Group Director Death Benefit Only Plan. Previously filed as Exhibit 10.4 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2006.                                                               |
| 10.5                |         | Monroe Bank & Trust Group Executive Death Benefit Only Plan. Previously filed as Exhibit 10.5 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2006.                                                              |
| 10.6                |         | Monroe Bank & Trust Amended and Restated Supplemental Executive Retirement Agreement with H. Douglas Chaffin. Previously filed as Exhibit 10.6 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2007.             |
| 10.7                |         | MBT Financial Corp. Severance Agreements with Donald M. Lieto, James E. Morr, Thomas G. Myers, and John L. Skibski. Previously filed as Exhibit 10 on Form 8-K filed by MBT Financial Corp. on January 26, 2006.                                     |
| 10.8                |         | MBT Financial Corp. Severance Agreement with Scott E. McKelvey. Previously filed as Exhibit 10.1 to MBT Financial Corp.’s Form 10-Q for its quarter ended June 30, 2007.                                                                       |
| 10.9                |         | Real estate purchase agreement dated August 27, 2009 between Registrant’s wholly owned commercial bank subsidiary and D-M Investments, LLC. Previously filed as Exhibit 10 to the Form 8-K filed by MBT Financial Corp. on September 22, 2009. |
| 10.10               |         | Stipulation and consent to the issuance of a Consent Order with the FDIC and Michigan OFIR. Previously filed as Exhibit 10 to the Form 8-K filed by MBT Financial Corp. on July 13, 2010.                                                            |
| 21                  |         | Subsidiaries of the Registrant. Previously filed as Exhibit 21 to MBT Financial Corp.’s Form 10-K for its fiscal year ended December 31, 2000.                                                                                                 |
| 23                  |         | Consent of Independent Auditors                                                                                                                                                                                                                      |
| 31.1                |         | Certification by Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14.                                                                                                                                                 |
| 31.2                |         | Certification by Chief Financial Officer required by Securities and Exchange Commission Rule 13a-14.                                                                                                                                                 |
| 32.1                |         | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   |
| 32.1                |    | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                   |

----