| Indiana                              |   | 35-1938254                  |
|--------------------------------------|--------|-----------------------------|
| (State      or Other Jurisdiction of |   | (I.R.S.      Employer       |
| Incorporation      or Organization)  |   | Identification      Number) |

| Title of Each Class           |   | Name of Each Exchange on Which Registered |   |
|----------------------------------------------|--------|-------------------------------------------------------------------------|--------|
|                                         |   |                                                                    |   |
| Common      Stock, par value $0.10 per share |   | NASDAQ      National Market                                             |   |

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|                   |                                                                                                                   | Page   |
|------------------------|------------------------------------------------------------------------------------------------------------------------|--------|
| Part      I:           |                                                                                                                   |   |
| Item      1.           | Business                                                                                                               | 3      |
| Item      1A           | Risk      Factors                                                                                                      | 10     |
| Item      1B           | Unresolved      Staff Comments                                                                                         | 15     |
| Item      2.           | Properties                                                                                                             | 16     |
| Item      3.           | Legal      Proceedings                                                                                                 | 17     |
|                   |                                                                                                                   |   |
| Part      II:          |                                                                                                                   |   |
| Item      5.           | Market      for Registrant's Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities | 18     |
| Item      6.           | Selected      Financial Data                                                                                           | 20     |
| Item      7.           | Management's      Discussion and Analysis of Financial Condition and Results of      Operations                        | 21     |
| Item      7A.          | Quantitative      and Qualitative Disclosures about Market Risk                                                        | 44     |
| Item      8.           | Financial      Statements and Supplementary Data                                                                       | 48     |
| Item      9.           | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosures                        | 101    |
| Item      9A.          | Controls      and Procedures                                                                                           | 101    |
| Item      9B           | Other      Information                                                                                                 | 103    |
|                   |                                                                                                                   |   |
| Part      III:         |                                                                                                                   |   |
| Item      10.          | Directors      and Executive Officers of the Registrant                                                                | 103    |
| Item      11.          | Executive      Compensation                                                                                            | 103    |
| Item      12.          | Security      Ownership of Certain Beneficial Owners                                                                   |   |
|                   | and      Management and Related Stockholder Matters                                                                    | 103    |
| Item      13.          | Certain      Relationships and Related Transactions                                                                    | 103    |
| Item      14.          | Principal      Accountant Fees and Services                                                                            | 103    |
|                   |                                                                                                                   |   |
| Part      IV:          |                                                                                                                   |   |
| Item      15.          | Exhibits      and Financial Statement Schedules                                                                        | 104    |
|                   |                                                                                                                   |   |
| Signatures             | 105                                                                                                                    |
|                   |                                                                                                                   |
| Index      of Exhibits | 106                                                                                                                    |

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|  | •  | invest      in financial institutions and purchase troubled assets and mortgages from      financial institutions for the purpose of stabilizing and providing      liquidity to the U.S. financialmarkets; |
|--|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •  | temporarily      increase the limit on FDIC deposit insurance coverage to $250,000 per      depositor through December 31, 2013;and |
|--|---------------|------------------------------------------------------------------------------------------------------------------------------------------|

|  | •  | provide      for various forms of economic stimulus, including assisting homeowners      restructure and lower mortgage payments on qualifying    loans. |
|--|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | • | the      company’s net income available to stockholders for the past four quarters,      net of dividends previously paid during that period, is not sufficient to      fully fund the dividends; |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | the      prospective rate of earnings retention is inconsistent with the company’s      capital needs and overall current and prospective financial condition;      or |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | the      company will not meet, or is in danger of not meeting, its minimum      regulatory capital adequacy ratios. |
|--|---------|----------------------------------------------------------------------------------------------------------------------|

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| Location                                                 |   | Year Opened |   | Owned or Leased |   |
|----------------------------------------------------------|--------|------------------|--------|---------------------------|--------|
| Your      Community Bank:                                |   |             |   |                      |   |
| 101      West Spring Street - Main Office                |   | 1937             |   | Owned                     |   |
| New      Albany, IN 47150                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 401      East Spring Street - Drive Thru for Main Office |   | 2001             |   | Owned                     |   |
| New      Albany, IN 47150                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 2626      Charlestown Road                               |   | 1995             |   | Owned                     |   |
| New      Albany, IN 47150                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 4328      Charlestown Road                               |   | 2004             |   | Leased                    |   |
| New      Albany, IN 47150                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 480      New Albany Plaza                                |   | 1974             |   | Leased                    |   |
| New      Albany, IN 47130                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 901      East Highway 131                                |   | 1981             |   | Owned                     |   |
| Clarksville,      IN 47130                               |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 701      Highlander Point Drive                          |   | 1990             |   | Owned                     |   |
| Floyds      Knobs, IN 47119                              |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 102      Heritage Square                                 |   | 1992             |   | Owned                     |   |
| Sellersburg,      IN 47172                               |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 201      W. Court Avenue                                 |   | 1996             |   | Owned                     |   |
| Jeffersonville,      IN 4710                             |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 5112      Highway 62                                     |   | 1997             |   | Owned                     |   |
| Jeffersonville,      IN 47130                            |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 2917      E. 10th      Street                            |   | 2007             |   | Leased                    |   |
| Jeffersonville,      IN 47130                            |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 2910      Grantline Road                                 |   | 2002             |   | Leased                    |   |
| New      Albany, IN 47150                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 400      Blankenbaker Parkway, Suite 100                 |   | 2002             |   | Leased                    |   |
| Louisville,      KY 40243                                |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 106A      West John Rowan Boulevard. - Main Office       |   | 1997             |   | Leased                    |   |
| Bardstown,      KY 40004                                 |   |             |   |                      |   |
|                                                     |   |             |   |                      |   |
| 119      East Stephen Foster Avenue                      |   | 1972             |   | Owned                     |   |
| Bardstown,      KY 40004                                 |   |             |   |                      |   |

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| 4510      Shelbyville Road                 |   | 2003   |   | Leased |   |
|--------------------------------------------|--------|--------|--------|--------|--------|
| Louisville,      KY 40207                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| 13205      Magisterial Drive               |   | 2006   |   | Leased |   |
| Louisville,      KY 40223                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| 471      West Main Street                  |   | 2008   |   | Leased |   |
| Louisville,      KY 40202                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| The      Scott County State Bank:          |   |   |   |   |   |
| 136      West McClain Avenue - Main Office |   | 1890   |   | Owned  |   |
| Scottsburg,      IN 47170                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| 125      West Wardell - Drive Thru         |   | 1981   |   | Owned  |   |
| Scottsburg,      IN 47170                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| 1050      North Gardner                    |   | 1974   |   | Owned  |   |
| Scottsburg,      IN 47170                  |   |   |   |   |   |
|                                       |   |   |   |   |   |
| 57      North Michael Drive                |   | 1998   |   | Owned  |   |
| Scottsburg,      IN 47170                  |   |   |   |   |   |

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| 2009               |   | 2008   |   |
|--------------------|--------|--------|--------|
| QUARTER ENDED |   | HIGH   |   |   | LOW |   |   | DIVIDEND |   | QUARTER ENDED |   | HIGH |   |   | LOW |   |   | DIVIDEND |   |
| March      31      |   | $      | 12.40  |   |   | $ | 6.50 |   |   | $ | 0.175 |   | March 31 |   | $ | 20.50 |   |   | $ | 17.75 |   |   | $ | 0.175 |   |
| June      30       |   |   | 10.00  |   |   |   | 7.25 |   |   |   | 0.175 |   | June 30 |   |   | 20.00 |   |   |   | 15.16 |   |   |   | 0.175 |   |
| September      30  |   |   | 9.90   |   |   |   | 7.00 |   |   |   | 0.100 |   | September 30 |   |   | 17.06 |   |   |   | 11.05 |   |   |   | 0.175 |   |
| December      31   |   |   | 8.00   |   |   |   | 6.18 |   |   |   | 0.100 |   | December 31 |   |   | 15.50 |   |   |   | 10.37 |   |   |   | 0.175 |   |

|                                                             |   | Number ofSecurities to beIssued Upon Exerciseof Outstanding Options,Warrants and Rights |    |   | Weighted-Average Exercise Price OfOutstanding Options,Warrants and Rights |   |   | Number of SecuritiesRemaining Availablefor Future Issuanceunder equitycompensation plans(excluding securitiesreflected in column 1) |   |
|------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity      compensation plans approved      by security holders |   |                                                                                                                                 | 249,233 | (1)    |                                                                                                    | $      | 20.66  |                                                                                                                                                                                       |   |   | 476,442 | (2) |
| Equity      compensation plans not approved by security holders  |   |                                                                                                                                 | -       |   |                                                                                                    |   | -      |                                                                                                                                                                                       |   |   | - |   |
| Total                                                            |   |                                                                                                                                 | 249,233 | (1)    |                                                                                                    | $      | 20.66  |                                                                                                                                                                                       |   |   | 476,442 | (2) |

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|                                        |   | Period Ending |   |
|---------------------------------------------|--------|--------------------|--------|
| Index                                       |   | 12/31/04           |   |   | 12/31/05 |   |   | 12/31/06 |   |   | 12/31/07 |   |   | 12/31/08 |   |   | 12/31/09 |   |
| Community      Bank Shares of Indiana, Inc. |   |               | 100.00 |   |   |   | 109.30 |   |   |   | 110.98 |   |   |   | 90.64 |   |   |   | 62.56 |   |   |   | 36.99 |   |
| Russell      2000                           |   |               | 100.00 |   |   |   | 104.55 |   |   |   | 123.76 |   |   |   | 121.82 |   |   |   | 80.66 |   |   |   | 102.58 |   |
| SNL      Bank $500M-$1B                     |   |               | 100.00 |   |   |   | 104.29 |   |   |   | 118.61 |   |   |   | 95.04 |   |   |   | 60.90 |   |   |   | 58.00 |   |

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|                                                                        |   | Years Ended December 31, |    |
|-----------------------------------------------------------------------------|--------|-----------------------------------------|---------|
| (Dollars in thousands, except per share data) |   | 2009                                    |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Income      Statement Data:                                                 |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      income                                                        |   | $                                       | 39,262  |   |   | $ | 44,907 |   |   | $ | 51,776 |   |   | $ | 47,094 |   |   | $ | 35,220 |   |
| Interest      expense                                                       |   |                                    | 15,318  |   |   |   | 21,453 |   |   |   | 28,395 |   |   |   | 25,995 |   |   |   | 17,344 |   |
| Net      interest income                                                    |   |                                    | 23,944  |   |   |   | 23,454 |   |   |   | 23,381 |   |   |   | 21,099 |   |   |   | 17,876 |   |
| Provision      for loan losses                                              |   |                                    | 15,925  |   |   |   | 6,857 |   |   |   | 1,296 |   |   |   | 262 |   |   |   | 1,750 |   |
| Non-interest      income                                                    |   |                                    | 6,326   |   |   |   | 6,087 |   |   |   | 4,127 |   |   |   | 3,733 |   |   |   | 4,703 |   |
| Non-interest      expense                                                   |   |                                    | 41,168  |   |   |   | 22,554 |   |   |   | 21,804 |   |   |   | 19,116 |   |   |   | 16,155 |   |
| Income      (loss) before taxes                                             |   |                                    | (26,823 | ) |   |   | 130 |   |   |   | 4,408 |   |   |   | 5,454 |   |   |   | 4,674 |   |
| Net      income (loss)                                                      |   |                                    | (21,969 | ) |   |   | 821 |   |   |   | 3,503 |   |   |   | 4,111 |   |   |   | 3,749 |   |
| Net      income (loss) available to common shareholders                     |   |                                    | (22,587 | ) |   |   | 821 |   |   |   | 3,503 |   |   |   | 4,111 |   |   |   | 3,749 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      Sheet Data:                                                    |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                                           |   | $                                       | 819,159 |   |   | $ | 877,363 |   |   | $ | 823,568 |   |   | $ | 816,633 |   |   | $ | 665,008 |   |
| Total      securities                                                       |   |                                    | 172,723 |   |   |   | 121,659 |   |   |   | 99,465 |   |   |   | 121,311 |   |   |   | 98,835 |   |
| Total      loans, net                                                       |   |                                    | 528,183 |   |   |   | 623,103 |   |   |   | 629,732 |   |   |   | 607,932 |   |   |   | 512,448 |   |
| Allowance      for loan losses                                              |   |                                    | 15,236  |   |   |   | 9,478 |   |   |   | 6,316 |   |   |   | 5,654 |   |   |   | 5,920 |   |
| Total      deposits                                                         |   |                                    | 592,423 |   |   |   | 603,185 |   |   |   | 573,346 |   |   |   | 549,918 |   |   |   | 464,836 |   |
| Other      borrowings                                                       |   |                                    | 76,996  |   |   |   | 78,983 |   |   |   | 72,796 |   |   |   | 84,335 |   |   |   | 47,735 |   |
| FHLB      advances                                                          |   |                                    | 68,482  |   |   |   | 111,943 |   |   |   | 91,376 |   |   |   | 92,756 |   |   |   | 98,000 |   |
| Subordinated      debenture                                                 |   |                                    | 17,000  |   |   |   | 17,000 |   |   |   | 17,000 |   |   |   | 17,000 |   |   |   | 7,000 |   |
| Total      shareholders’ equity                                       |   |                                    | 59,950  |   |   |   | 62,599 |   |   |   | 64,465 |   |   |   | 65,541 |   |   |   | 42,775 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      Share Data:                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings (loss) per common share                                 |   | $                                       | (6.93   | ) |   | $ | 0.25 |   |   | $ | 1.05 |   |   | $ | 1.36 |   |   | $ | 1.43 |   |
| Diluted      earnings (loss) per common share                               |   |                                    | (6.93   | ) |   |   | 0.25 |   |   |   | 1.04 |   |   |   | 1.35 |   |   |   | 1.41 |   |
| Book      value per common share                                            |   |                                    | 12.49   |   |   |   | 19.31 |   |   |   | 19.77 |   |   |   | 19.06 |   |   |   | 16.42 |   |
| Cash      dividends per common share                                        |   |                                    | 0.550   |   |   |   | 0.700 |   |   |   | 0.685 |   |   |   | 0.640 |   |   |   | 0.580 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance      Ratios:                                                    |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on average assets                                               |   |                                    | (2.60   | )% |   |   | 0.10 | % |   |   | 0.43 | % |   |   | 0.55 | % |   |   | 0.59 | % |
| Return      on average equity                                               |   |                                    | (35.02  | ) |   |   | 1.29 |   |   |   | 5.39 |   |   |   | 7.73 |   |   |   | 8.68 |   |
| Net      interest margin                                                    |   |                                    | 3.19    |   |   |   | 3.09 |   |   |   | 3.16 |   |   |   | 3.04 |   |   |   | 3.00 |   |
| Efficiency      ratio                                                       |   |                                    | 136.00  |   |   |   | 76.35 |   |   |   | 79.26 |   |   |   | 76.98 |   |   |   | 71.55 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      Quality Ratios:                                                  |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing      assets to total loans                                   |   |                                    | 6.70    | % |   |   | 3.45 | % |   |   | 1.88 | % |   |   | 0.98 | % |   |   | 1.08 | % |
| Net      loan charge-offs to average loans                                  |   |                                    | 1.73    |   |   |   | 0.58 |   |   |   | 0.10 |   |   |   | 0.22 |   |   |   | 0.07 |   |
| Allowance      for loan losses to total loans                               |   |                                    | 2.80    |   |   |   | 1.50 |   |   |   | 0.99 |   |   |   | 0.92 |   |   |   | 1.14 |   |
| Allowance      for loan losses to non-performing loans                      |   |                                    | 49      |   |   |   | 46 |   |   |   | 56 |   |   |   | 102 |   |   |   | 108 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Ratios:                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Leverage      ratio                                                         |   |                                    | 8.6     | % |   |   | 7.6 | % |   |   | 8.0 | % |   |   | 8.1 | % |   |   | 8.0 | % |
| Average      stockholders’ equity to average total assets             |   |                                    | 7.4     |   |   |   | 7.6 |   |   |   | 8.0 |   |   |   | 7.1 |   |   |   | 6.8 |   |
| Tier      1 risk-based capital ratio                                        |   |                                    | 11.9    |   |   |   | 9.5 |   |   |   | 9.9 |   |   |   | 10.5 |   |   |   | 9.5 |   |
| Total      risk-based capital ratio                                         |   |                                    | 13.1    |   |   |   | 10.7 |   |   |   | 10.9 |   |   |   | 11.4 |   |   |   | 10.5 |   |
| Dividend      payout ratio                                                  |   | NM*                                     |    |   |   | 277.2 |   |   |   | 65.6 |   |   |   | 46.7 |   |   |   | 40.5 |   |
|                                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Key Data:                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| End-of-period      full-time equivalent employees                           |   |                                    | 199     |   |   |   | 238 |   |   |   | 232 |   |   |   | 224 |   |   |   | 182 |   |
| Number      of bank offices                                                 |   |                                    | 22      |   |   |   | 23 |   |   |   | 22 |   |   |   | 21 |   |   |   | 16 |   |

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|                                                                           |   | For the Year Ended December 31, |    |
|--------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|
| (Dollars in thousands, except per share amounts) |   | 2009                                                     |    |   | 2008 |   |   | 2007 |   |
| Net      income (loss) available to common shareholders                        |   | $                                                        | (22,587 | ) |   | $ | 821 |   |   | $ | 3,503 |   |
| Basic      earnings (loss) per common share                                    |   |                                                     | (6.93   | ) |   |   | 0.25 |   |   |   | 1.05 |   |
| Diluted      earnings (loss) per common share                                  |   |                                                     | (6.93   | ) |   |   | 0.25 |   |   |   | 1.04 |   |
| Return      on average assets                                                  |   |                                                     | (2.60   | )% |   |   | 0.10 | % |   |   | 0.43 | % |
| Return      on average equity                                                  |   |                                                     | (35.02  | ) |   |   | 1.29 |   |   |   | 5.39 |   |

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|                                                           |   | 2009    |    |   | 2008     |   |   | 2007    |   |
|----------------------------------------------------------------|--------|---------|---------|--------|----------|--------|--------|---------|--------|
|                                                           |   | Average |    |   |     |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| (Dollars in thousands)                               |   | Balance |    |   | Interest |   |   | Rate    |   |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
| ASSETS                                                         |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earning      assets:                                           |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits in other financial institutions |   | $       | 40,323  |   |     | $      | 133    |    |   |   | 0.33 | % |   | $ | 12,122 |   |   | $ | 241 |   |   |   | 1.99 | % |   | $ | 4,279 |   |   | $ | 144 |   |   |   | 3.37 | % |
| Taxable      securities                                        |   |    | 104,507 |   |     |   | 4,623  |    |   |   | 4.42 |   |   |   | 94,667 |   |   |   | 4,798 |   |   |   | 5.07 |   |   |   | 98,342 |   |   |   | 4,711 |   |   |   | 4.79 |   |
| Tax-exempt      securities                                     |   |    | 34,760  |   |     |   | 2,309  |    |   |   | 6.64 |   |   |   | 16,350 |   |   |   | 1,056 |   |   |   | 6.46 |   |   |   | 11,546 |   |   |   | 773 |   |   |   | 6.69 |   |
| Total      loans and fees (1)(2)                               |   |    | 587,970 |   |     |   | 32,713 |    |   |   | 5.56 |   |   |   | 639,275 |   |   |   | 38,833 |   |   |   | 6.07 |   |   |   | 625,972 |   |   |   | 46,030 |   |   |   | 7.35 |   |
| FHLB      and Federal Reserve stock                            |   |    | 8,315   |   |     |   | 269    |    |   |   | 3.24 |   |   |   | 8,141 |   |   |   | 338 |   |   |   | 4.15 |   |   |   | 7,928 |   |   |   | 381 |   |   |   | 4.81 |   |
| Total      earning assets                                      |   |    | 775,875 |   |     |   | 40,047 |    |   |   | 5.16 |   |   |   | 770,555 |   |   |   | 45,266 |   |   |   | 5.87 |   |   |   | 748,067 |   |   |   | 52,039 |   |   |   | 6.96 |   |
|                                                           |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      earning assets:                              |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:      Allowance for loan losses                           |   |    | (13,688 | )      |     |   |   |    |   |   |   |   |   |   | (6,763 | ) |   |   |   |   |   |   |   |   |   |   | (5,684 | ) |   |   |   |   |   |   |   |   |
| Non-earning      assets:                                       |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and due from banks                                   |   |    | 28,075  |   |     |   |   |    |   |   |   |   |   |   | 24,924 |   |   |   |   |   |   |   |   |   |   |   | 17,047 |   |   |   |   |   |   |   |   |   |
| Bank      premises and equipment, net                          |   |    | 14,815  |   |     |   |   |    |   |   |   |   |   |   | 15,160 |   |   |   |   |   |   |   |   |   |   |   | 15,320 |   |   |   |   |   |   |   |   |   |
| Other      assets                                              |   |    | 39,391  |   |     |   |   |    |   |   |   |   |   |   | 40,266 |   |   |   |   |   |   |   |   |   |   |   | 40,440 |   |   |   |   |   |   |   |   |   |
| Total      assets                                              |   | $       | 844,468 |   |     |   |   |    |   |   |   |   |   | $ | 844,142 |   |   |   |   |   |   |   |   |   |   | $ | 815,190 |   |   |   |   |   |   |   |   |   |
|                                                           |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing liabilities:                             |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and other                                         |   | $       | 224,330 |   |     | $      | 1,340  |    |   |   | 0.60 | % |   | $ | 212,475 |   |   | $ | 2,771 |   |   |   | 1.30 | % |   | $ | 214,683 |   |   | $ | 5,582 |   |   |   | 2.60 | % |
| Time      deposits                                             |   |    | 278,498 |   |     |   | 8,288  |    |   |   | 2.98 |   |   |   | 272,847 |   |   |   | 10,758 |   |   |   | 3.94 |   |   |   | 273,078 |   |   |   | 13,201 |   |   |   | 4.83 |   |
| Other      borrowings                                          |   |    | 61,361  |   |     |   | 883    |    |   |   | 1.44 |   |   |   | 70,691 |   |   |   | 1,403 |   |   |   | 1.98 |   |   |   | 63,713 |   |   |   | 2,824 |   |   |   | 4.43 |   |
| FHLB      advances                                             |   |    | 85,905  |   |     |   | 4,281  |    |   |   | 4.98 |   |   |   | 106,969 |   |   |   | 5,605 |   |   |   | 5.24 |   |   |   | 93,889 |   |   |   | 5,492 |   |   |   | 5.85 |   |
| Subordinated      debenture                                    |   |    | 17,000  |   |     |   | 526    |    |   |   | 3.09 |   |   |   | 17,000 |   |   |   | 916 |   |   |   | 5.39 |   |   |   | 17,000 |   |   |   | 1,296 |   |   |   | 7.62 |   |
| Total      interest bearing liabilities                        |   |    | 667,094 |   |     |   | 15,318 |    |   |   | 2.30 |   |   |   | 679,982 |   |   |   | 21,453 |   |   |   | 3.15 |   |   |   | 662,363 |   |   |   | 28,395 |   |   |   | 4.29 |   |
|                                                           |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing liabilities:                         |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing deposits                             |   |    | 110,108 |   |     |   |   |    |   |   |   |   |   |   | 97,726 |   |   |   |   |   |   |   |   |   |   |   | 80,782 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                         |   |    | 4,529   |   |     |   |   |    |   |   |   |   |   |   | 2,633 |   |   |   |   |   |   |   |   |   |   |   | 7,048 |   |   |   |   |   |   |   |   |   |
| Shareholders’      equity                                |   |    | 62,737  |   |     |   |   |    |   |   |   |   |   |   | 63,801 |   |   |   |   |   |   |   |   |   |   |   | 64,997 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and shareholders’ equity          |   | $       | 844,468 |   |     |   |   |    |   |   |   |   |   | $ | 844,142 |   |   |   |   |   |   |   |   |   |   | $ | 815,190 |   |   |   |   |   |   |   |   |   |
|                                                           |   |    |    |   |     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income (taxable equivalent basis)            |   |    |    |   |     |   | 24,729 |    |   |   |   |   |   |   |   |   |   |   | 23,813 |   |   |   |   |   |   |   |   |   |   |   | 23,644 |   |   |   |   |   |
| Less:      taxable equivalent adjustment                       |   |    |    |   |     |   | (785   | )       |   |   |   |   |   |   |   |   |   |   | (359 | ) |   |   |   |   |   |   |   |   |   |   | (263 | ) |   |   |   |   |
| Net      interest income                                       |   |    |    |   |     | $      | 23,944 |    |   |   |   |   |   |   |   |   |   | $ | 23,454 |   |   |   |   |   |   |   |   |   |   | $ | 23,381 |   |   |   |   |   |
| Net      interest spread                                       |   |    |    |   |     |   |   |    |   |   | 2.86 | % |   |   |   |   |   |   |   |   |   |   | 2.72 | % |   |   |   |   |   |   |   |   |   |   | 2.67 | % |
| Net      interest margin                                       |   |    |    |   |     |   |   |    |   |   | 3.19 | % |   |   |   |   |   |   |   |   |   |   | 3.09 | % |   |   |   |   |   |   |   |   |   |   | 3.16 | % |

----

|                                               |   | Year Ended December 31,2009compared toYear Ended December 31, 2008 |   |   | Year Ended December 31,2008compared toYear Ended December 31, 2007 |   |
|----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------|--------|
|                                               |   | Increase/(Decrease)Due to                                                                             |   |   | Increase/(Decrease)Due to                                                                             |   |
|                                               |   | Total NetChange                                                                                       |   |   | Volume                                                                                                     |   |   | Rate |   |   | Total NetChange |   |   | Volume |   |   | Rate |   |
| Interest      income:                              |   |                                                                                                       |   |   |                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      deposits with banks          |   | $                                                                                                          | (108   | )      |                                                                                                       | $      | 216 |   |   | $ | (324 | ) |   | $ | 97 |   |   | $ | 176 |   |   | $ | (79 | ) |
| Taxable      securities                            |   |                                                                                                       | (175   | )      |                                                                                                       |   | 470 |   |   |   | (645 | ) |   |   | 87 |   |   |   | (180 | ) |   |   | 267 |   |
| Tax-exempt      securities                         |   |                                                                                                       | 1,253  |   |                                                                                                       |   | 1,222 |   |   |   | 31 |   |   |   | 283 |   |   |   | 310 |   |   |   | (27 | ) |
| Total      loans and fees                          |   |                                                                                                       | (6,120 | )      |                                                                                                       |   | (2,989 | ) |   |   | (3,131 | ) |   |   | (7,197 | ) |   |   | 960 |   |   |   | (8,157 | ) |
| FHLB      and Federal Reserve stock                |   |                                                                                                       | (69    | )      |                                                                                                       |   | 7 |   |   |   | (76 | ) |   |   | (43 | ) |   |   | 10 |   |   |   | (53 | ) |
| Total      increase (decrease) in interest income  |   |                                                                                                       | (5,219 | )      |                                                                                                       |   | (1,074 | ) |   |   | (4,145 | ) |   |   | (6,773 | ) |   |   | 1,276 |   |   |   | (8,049 | ) |
|                                               |   |                                                                                                       |   |   |                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense:                             |   |                                                                                                       |   |   |                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      and other                             |   |                                                                                                       | (1,431 | )      |                                                                                                       |   | 147 |   |   |   | (1,578 | ) |   |   | (2,811 | ) |   |   | (57 | ) |   |   | (2,754 | ) |
| Time      deposits                                 |   |                                                                                                       | (2,470 | )      |                                                                                                       |   | 219 |   |   |   | (2,689 | ) |   |   | (2,443 | ) |   |   | (11 | ) |   |   | (2,432 | ) |
| Other      borrowings                              |   |                                                                                                       | (520   | )      |                                                                                                       |   | (169 | ) |   |   | (351 | ) |   |   | (1,421 | ) |   |   | 281 |   |   |   | (1,702 | ) |
| FHLB      advances                                 |   |                                                                                                       | (1,324 | )      |                                                                                                       |   | (1,060 | ) |   |   | (264 | ) |   |   | 113 |   |   |   | 719 |   |   |   | (606 | ) |
| Subordinated      debenture                        |   |                                                                                                       | (390   | )      |                                                                                                       |   | - |   |   |   | (390 | ) |   |   | (380 | ) |   |   | - |   |   |   | (380 | ) |
| Total      increase (decrease) in interest expense |   |                                                                                                       | (6,135 | )      |                                                                                                       |   | (863 | ) |   |   | (5,272 | ) |   |   | (6,942 | ) |   |   | 932 |   |   |   | (7,874 | ) |
| Increase      (decrease) in net interest income    |   | $                                                                                                          | 916    |   |                                                                                                       | $      | (211 | ) |   | $ | 1,127 |   |   | $ | 169 |   |   | $ | 344 |   |   | $ | (175 | ) |

----

|                                                                 |   | Year Ended December 31, |   |   | Percent Increase/(Decrease) |   |
|----------------------------------------------------------------------|--------|----------------------------------------|--------|--------|----------------------------------|--------|
| (Dollars in thousands)                                     |   | 2009                                   |   |   | 2008                             |   |   | 2007 |   |   |   | 2009/2008 |   |   |   | 2008/2007 |   |
|                                                                 |   |                                   |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      charges on deposit accounts                             |   | $                                      | 3,453  |   |                             | $      | 3,356 |   |   | $ | 3,187 |   |   |   | 2.9 | % |   |   | 5.3 | % |
| Commission      income                                               |   |                                   | 53     |   |                             |   | 194 |   |   |   | 172 |   |   |   | (72.7 | ) |   |   | 12.8 |   |
| Mortgage      banking income                                         |   |                                   | 314    |   |                             |   | 167 |   |   |   | 236 |   |   |   | 88.0 |   |   |   | (29.2 | ) |
| Earnings      on company owned life insurance                        |   |                                   | 745    |   |                             |   | 734 |   |   |   | 678 |   |   |   | 1.5 |   |   |   | 8.3 |   |
| Interchange      income                                              |   |                                   | 839    |   |                             |   | 811 |   |   |   | 704 |   |   |   | 3.5 |   |   |   | 15.2 |   |
| Other                                                                |   |                                   | 445    |   |                             |   | 281 |   |   |   | 439 |   |   |   | 58.4 |   |   |   | (36.0 | ) |
| Subtotal                                                             |   |                                   | 5,849  |   |                             |   | 5,543 |   |   |   | 5,416 |   |   |   | 5.5 |   |   |   | 2.3 |   |
|                                                                 |   |                                   |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in fair value and cash settlement of interest rate swaps |   |                                   | -      |   |                             |   | 180 |   |   |   | (1,248 | ) |   |   | (100.0 | ) |   | NM |   |
| Gain      on sale of loans                                           |   |                                   | 197    |   |                             |   | - |   |   |   | - |   |   | NM |   |   |   | - |   |
| Net      impairment loss recognized in earnings                      |   |                                   | (1,100 | )      |                             |   | - |   |   |   | - |   |   | NM |   |   |   | - |   |
| Gain      (loss) on sale of available for sale securities            |   |                                   | 1,380  |   |                             |   | 364 |   |   |   | (41 | ) |   |   | 279.1 |   |   | NM |   |
| Total                                                                |   | $                                      | 6,326  |   |                             | $      | 6,087 |   |   | $ | 4,127 |   |   |   | 3.9 | % |   |   | 47.5 | % |

----

----

|                                                |   | Year Ended in December 31, |   |   | Percent Increase/(Decrease) |   |
|-----------------------------------------------------|--------|------------------------------------------------|--------|--------|----------------------------------|--------|
| (Dollars in thousands)                    |   | 2009                                           |   |   | 2008                             |   |   | 2007 |   |   | 2009/2008 |   |   | 2008/2007 |   |
|                                                |   |                                           |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                 |   | $                                              | 11,160 |   |                             | $      | 12,125 |   |   | $ | 11,466 |   |   |   | (8.0 | )% |   |   | 5.7 | % |
| Occupancy                                           |   |                                           | 2,417  |   |                             |   | 2,169 |   |   |   | 1,760 |   |   |   | 11.4 |   |   |   | 23.2 |   |
| Equipment                                           |   |                                           | 1,419  |   |                             |   | 1,535 |   |   |   | 1,446 |   |   |   | (7.6 | ) |   |   | 6.2 |   |
| Data      processing                                |   |                                           | 2,498  |   |                             |   | 1,931 |   |   |   | 2,183 |   |   |   | 29.4 |   |   |   | (11.5 | ) |
| Marketing      and advertising                      |   |                                           | 495    |   |                             |   | 738 |   |   |   | 583 |   |   |   | (32.9 | ) |   |   | 26.6 |   |
| Legal      and professional                         |   |                                           | 1,627  |   |                             |   | 1,153 |   |   |   | 1,383 |   |   |   | 41.1 |   |   |   | (16.6 | ) |
| FDIC      insurance premiums                        |   |                                           | 1,685  |   |                             |   | 480 |   |   |   | 66 |   |   |   | 251.0 |   |   |   | 627.3 |   |
| Foreclosed      and repossessed assets, net         |   |                                           | 665    |   |                             |   | 217 |   |   |   | 66 |   |   |   | 206.5 |   |   |   | 228.8 |   |
| Other                                               |   |                                           | 2,210  |   |                             |   | 2,206 |   |   |   | 2,851 |   |   |   | 0.2 |   |   |   | (22.6 | ) |
| Subtotal                                            |   |                                           | 24,176 |   |                             |   | 22,554 |   |   |   | 21,804 |   |   |   | 7.2 |   |   |   | 3.4 |   |
|                                                |   |                                           |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Goodwill      and other intangible asset impairment |   |                                           | 16,154 |   |                             |   | - |   |   |   | - |   |   | NM |   |   | NM |   |
| Prepayment      penalties on extinguishment of debt |   |                                           | 838    |   |                             |   | - |   |   |   | - |   |   | NM |   |   | NM |   |
| Total                                               |   | $                                              | 41,168 |   |                             | $      | 22,554 |   |   | $ | 21,804 |   |   |   | 82.5 | % |   |   | 3.4 | % |

----

----

----

----

|                                   |   | As of December 31, |    |
|----------------------------------------|--------|-----------------------------------|---------|
| (Dollars in thousands)       |   | 2009                              |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                   |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Real      estate:                      |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                            |   | $                                 | 134,969 |   |   | $ | 177,230 |   |   | $ | 186,831 |   |   | $ | 187,080 |   |   | $ | 111,969 |   |
| Commercial                             |   |                              | 193,577 |   |   |   | 206,973 |   |   |   | 191,774 |   |   |   | 179,405 |   |   |   | 186,644 |   |
| Construction                           |   |                              | 51,592  |   |   |   | 73,936 |   |   |   | 87,364 |   |   |   | 83,944 |   |   |   | 61,031 |   |
| Commercial                             |   |                              | 94,168  |   |   |   | 95,365 |   |   |   | 88,353 |   |   |   | 80,132 |   |   |   | 92,640 |   |
| Home      equity                       |   |                              | 54,434  |   |   |   | 60,539 |   |   |   | 60,380 |   |   |   | 62,720 |   |   |   | 58,060 |   |
| Consumer                               |   |                              | 13,676  |   |   |   | 17,296 |   |   |   | 20,024 |   |   |   | 19,549 |   |   |   | 7,295 |   |
| Loans      secured by deposit accounts |   |                              | 1,003   |   |   |   | 1,242 |   |   |   | 1,322 |   |   |   | 756 |   |   |   | 729 |   |
| Total      loans                       |   | $                                 | 543,419 |   |   | $ | 632,581 |   |   | $ | 636,048 |   |   | $ | 613,586 |   |   | $ | 518,368 |   |

| As of December 31, 2009(Dollars in thousands) |   | Total  |    |   | OneYear orLess |   |    | Over OneThrough FiveYears |   |   | OverFiveYears |   |
|-----------------------------------------------------------------------------|--------|--------|---------|--------|---------------------|--------|---------|-------------------------------------|--------|--------|---------------|--------|
| Fixed      rate maturities:                                                 |   |   |    |   |                |   |    |                                |   |   |          |   |
| Real      estate:                                                           |   |   |    |   |                |   |    |                                |   |   |          |   |
| Residential                                                                 |   | $      | 109,801 |   |                | $      | 11,938  |                                |   | $      | 34,137        |   |   | $ | 63,726 |   |
| Commercial                                                                  |   |   | 94,566  |   |                |   | 8,807   |                                |   |   | 64,479        |   |   |   | 21,280 |   |
| Construction                                                                |   |   | 5,415   |   |                |   | 1,531   |                                |   |   | 1,642         |   |   |   | 2,242 |   |
| Commercial                                                                  |   |   | 36,265  |   |                |   | 4,727   |                                |   |   | 22,607        |   |   |   | 8,931 |   |
| Home      equity                                                            |   |   | 12,848  |   |                |   | 1,439   |                                |   |   | 4,624         |   |   |   | 6,785 |   |
| Consumer                                                                    |   |   | 13,515  |   |                |   | 3,296   |                                |   |   | 9,763         |   |   |   | 456 |   |
| Loans      secured by deposit accounts                                      |   |   | 1,003   |   |                |   | 183     |                                |   |   | 820           |   |   |   | - |   |
| Total      fixed rate maturities                                            |   | $      | 273,413 |   |                | $      | 31,921  |                                |   | $      | 138,072       |   |   | $ | 103,420 |   |
|                                                                        |   |   |    |   |                |   |    |                                |   |   |          |   |   |   |   |   |
| Variable      rate maturities:                                              |   |   |    |   |                |   |    |                                |   |   |          |   |   |   |   |   |
| Real      estate:                                                           |   |   |    |   |                |   |    |                                |   |   |          |   |   |   |   |   |
| Residential                                                                 |   | $      | 25,168  |   |                | $      | 5,974   |                                |   | $      | 1,287         |   |   | $ | 17,907 |   |
| Commercial                                                                  |   |   | 99,011  |   |                |   | 17,858  |                                |   |   | 4,544         |   |   |   | 76,609 |   |
| Construction                                                                |   |   | 46,177  |   |                |   | 44,927  |                                |   |   | 150           |   |   |   | 1,100 |   |
| Commercial                                                                  |   |   | 57,903  |   |                |   | 46,552  |                                |   |   | 8,639         |   |   |   | 2,712 |   |
| Home      equity                                                            |   |   | 41,586  |   |                |   | 3,599   |                                |   |   | 13,181        |   |   |   | 24,806 |   |
| Consumer                                                                    |   |   | 161     |   |                |   | 121     |                                |   |   | 40            |   |   |   | - |   |
| Total      variable rate maturities                                         |   | $      | 270,006 |   |                | $      | 119,031 |                                |   | $      | 27,841        |   |   | $ | 123,134 |   |

----

----

----

|                                                   |   | Year Ended in December 31, |    |
|--------------------------------------------------------|--------|------------------------------------------------|---------|
| (Dollars in thousands)                       |   | 2009                                           |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Allowance      for loan losses at beginning of year    |   | $                                              | 9,478   |   |   | $ | 6,316 |   |   | $ | 5,654 |   |   | $ | 5,920 |   |   | $ | 4,523 |   |
| Acquired      allowance of SCSB, July 1,2006           |   |                                           | -       |   |   |   | - |   |   |   | - |   |   |   | 754 |   |   |   | - |   |
| Charge-offs:                                           |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential      real estate                           |   |                                           | (474    | ) |   |   | (239 | ) |   |   | (173 | ) |   |   | (35 | ) |   |   | (83 | ) |
| Commercial      real estate                            |   |                                           | (411    | ) |   |   | (720 | ) |   |   | (44 | ) |   |   | (193 | ) |   |   | - |   |
| Construction                                           |   |                                           | (5,742  | ) |   |   | (780 | ) |   |   | - |   |   |   | (600 | ) |   |   | - |   |
| Commercial      business                               |   |                                           | (2,122  | ) |   |   | (1,080 | ) |   |   | (207 | ) |   |   | (138 | ) |   |   | (194 | ) |
| Home      equity                                       |   |                                           | (975    | ) |   |   | (491 | ) |   |   | (187 | ) |   |   | (26 | ) |   |   | (198 | ) |
| Consumer                                               |   |                                           | (661    | ) |   |   | (503 | ) |   |   | (190 | ) |   |   | (362 | ) |   |   | (64 | ) |
| Total                                                  |   |                                           | (10,385 | ) |   |   | (3,813 | ) |   |   | (801 | ) |   |   | (1,354 | ) |   |   | (539 | ) |
| Recoveries:                                            |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential      real estate                           |   |                                           | 36      |   |   |   | 1 |   |   |   | 14 |   |   |   | - |   |   |   | - |   |
| Commercial      real estate                            |   |                                           | 14      |   |   |   | 4 |   |   |   | 9 |   |   |   | 9 |   |   |   | 7 |   |
| Construction                                           |   |                                           | -       |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial      business                               |   |                                           | 52      |   |   |   | 7 |   |   |   | 92 |   |   |   | 26 |   |   |   | 34 |   |
| Home      equity                                       |   |                                           | 4       |   |   |   | 4 |   |   |   | 2 |   |   |   | - |   |   |   | 3 |   |
| Consumer                                               |   |                                           | 112     |   |   |   | 100 |   |   |   | 50 |   |   |   | 37 |   |   |   | 142 |   |
| Total                                                  |   |                                           | 218     |   |   |   | 118 |   |   |   | 167 |   |   |   | 72 |   |   |   | 186 |   |
| Net      loan charge-offs                              |   |                                           | (10,167 | ) |   |   | (3,695 | ) |   |   | (634 | ) |   |   | (1,282 | ) |   |   | (353 | ) |
| Provision      for loan losses                         |   |                                           | 15,925  |   |   |   | 6,857 |   |   |   | 1,296 |   |   |   | 262 |   |   |   | 1,750 |   |
| Allowance      for loan losses at end of year          |   | $                                              | 15,236  |   |   | $ | 9,478 |   |   | $ | 6,316 |   |   | $ | 5,654 |   |   | $ | 5,920 |   |
|                                                   |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                |   |                                           |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses to total loans          |   |                                           | 2.80    | % |   |   | 1.50 | % |   |   | 0.99 | % |   |   | 0.92 | % |   |   | 1.14 | % |
| Net      loan charge-offs to average loans             |   |                                           | 1.73    |   |   |   | 0.58 |   |   |   | 0.10 |   |   |   | 0.22 |   |   |   | 0.07 |   |
| Allowance      for loan losses to non-performing loans |   |                                           | 49      |   |   |   | 46 |   |   |   | 56 |   |   |   | 102 |   |   |   | 108 |   |

----

|                         |   | As of December 31, |   |
|------------------------------|--------|-----------------------------------|--------|
|                         |   | 2009                              |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| (Dollars inthousands)   |   | Allowance                         |   |   | PercentofLoansto TotalLoans |   |   | Allowance |   |   | PercentofLoansto TotalLoans |   |   | Allowance |   |   | PercentofLoansto TotalLoans |   |   | Allowance |   |   | PercentofLoansto TotalLoans |   |   | Allowance |   |   | PercentofLoansto TotalLoans |   |
| Residential      Real Estate |   | $                                 | 2,059  |   |   |   | 24.8 | % |   | $ | 644 |   |   |   | 28.0 | % |   | $ | 681 |   |   |   | 29.3 | % |   | $ | 479 |   |   |   | 30.5 | % |   | $ | 336 |   |   |   | 21.6 | % |
| Commercial      Real Estate  |   |                              | 1,828  |   |   |   | 35.6 |   |   |   | 3,244 |   |   |   | 32.7 |   |   |   | 2,857 |   |   |   | 30.2 |   |   |   | 2,992 |   |   |   | 29.2 |   |   |   | 3,544 |   |   |   | 36.0 |   |
| Construction                 |   |                              | 6,633  |   |   |   | 9.5 |   |   |   | 3,492 |   |   |   | 11.7 |   |   |   | 199 |   |   |   | 13.7 |   |   |   | 48 |   |   |   | 13.7 |   |   |   | 23 |   |   |   | 11.8 |   |
| Commercial      Business     |   |                              | 3,032  |   |   |   | 17.3 |   |   |   | 1,119 |   |   |   | 15.1 |   |   |   | 1,716 |   |   |   | 13.9 |   |   |   | 1,501 |   |   |   | 13.1 |   |   |   | 1,407 |   |   |   | 17.9 |   |
| Home      Equity             |   |                              | 1,184  |   |   |   | 10.0 |   |   |   | 510 |   |   |   | 9.6 |   |   |   | 662 |   |   |   | 9.5 |   |   |   | 435 |   |   |   | 10.2 |   |   |   | 495 |   |   |   | 11.2 |   |
| Consumer                     |   |                              | 500    |   |   |   | 2.7 |   |   |   | 469 |   |   |   | 2.9 |   |   |   | 201 |   |   |   | 3.4 |   |   |   | 199 |   |   |   | 3.3 |   |   |   | 115 |   |   |   | 1.5 |   |
|                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                        |   | $                                 | 15,236 |   |   |   | 100.0 | % |   | $ | 9,478 |   |   |   | 100.0 | % |   | $ | 6,316 |   |   |   | 100.0 | % |   | $ | 5,654 |   |   |   | 100.0 | % |   | $ | 5,920 |   |   |   | 100.0 | % |

----

|                                                    |   | As of December 31, |   |
|---------------------------------------------------------|--------|-----------------------------------|--------|
| (Dollars in thousands)                        |   | 2009                              |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      on non-accrual status (1)                    |   | $                                 | 22,653 |   |   | $ | 20,702 |   |   | $ | 11,134 |   |   | $ | 5,566 |   |   | $ | 5,498 |   |
| Troubled      debt restructuringst                      |   |                              | 8,562  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loans      past due 90 days or more and still accruing  |   |                              | -      |   |   |   | - |   |   |   | 244 |   |   |   | - |   |   |   | 5 |   |
| Total      non-performing loans                         |   |                              | 31,215 |   |   |   | 20,702 |   |   |   | 11,378 |   |   |   | 5,566 |   |   |   | 5,503 |   |
| Other      assets owned                                 |   |                              | 5,190  |   |   |   | 1,241 |   |   |   | 575 |   |   |   | 457 |   |   |   | 106 |   |
| Total      non-performing assets                        |   | $                                 | 36,405 |   |   | $ | 21,943 |   |   | $ | 11,953 |   |   | $ | 6,023 |   |   | $ | 5,609 |   |
|                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percentage      of non-performing loans to total loans  |   |                              | 5.74   | % |   |   | 3.27 | % |   |   | 1.79 | % |   |   | 0.91 | % |   |   | 1.06 | % |
| Percentage      of non-performing assets to total loans |   |                              | 6.70   |   |   |   | 3.47 |   |   |   | 1.88 |   |   |   | 0.98 |   |   |   | 1.08 |   |

|                                                                                        |   | December 31, |    |
|---------------------------------------------------------------------------------------------|--------|-------------------|---------|
| (Dollars in thousands)                                                            |   | 2009              |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Securities      Available for Sale:                                                         |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government and federal agency                                                     |   | $                 | -       |   |   | $ | - |   |   | $ | 6,077 |   |   | $ | 29,972 |   |   | $ | 10,921 |   |
| State      and municipal                                                                    |   |              | 49,809  |   |   |   | 20,542 |   |   |   | 13,312 |   |   |   | 11,645 |   |   |   | 6,449 |   |
| Residential      mortgage-backed agencies issued by U.S. Government sponsored      entities |   |              | 120,084 |   |   |   | 97,588 |   |   |   | 73,252 |   |   |   | 67,304 |   |   |   | 66,752 |   |
| Collateralized      debt obligations, including trust preferred securities                  |   |              | 2,585   |   |   |   | 3,285 |   |   |   | 6,583 |   |   |   | 12,150 |   |   |   | 14,471 |   |
| Mutual      Funds                                                                           |   |              | 245     |   |   |   | 244 |   |   |   | 241 |   |   |   | 240 |   |   |   | 242 |   |
| Total      securities available for sale                                                    |   | $                 | 172,723 |   |   | $ | 121,659 |   |   | $ | 99,465 |   |   | $ | 121,311 |   |   | $ | 98,835 |   |

----

|                                                                       |   | As of December 31, 2009 |    |
|----------------------------------------------------------------------------|--------|---------------------------------------------|---------|
| (Dollars in thousands)                                           |   | AmortizedCost                               |    |   | Fair Value |   |   | WeightedAverageYield |   |
| State      and municipal                                                   |   |                                        |    |   |   |   |   |   |   |
| Within      one year                                                       |   | $                                           | 1,325   |   |   | $ | 1,328 |   |   |   | 6.06 | % |
| Over      one through five years                                           |   |                                        | 1,514   |   |   |   | 1,556 |   |   |   | 6.59 |   |
| Over      five through ten years                                           |   |                                        | 4,605   |   |   |   | 4,778 |   |   |   | 6.06 |   |
| Over      ten years                                                        |   |                                        | 40,600  |   |   |   | 42,147 |   |   |   | 6.62 |   |
| Total      state and municipal                                             |   |                                        | 48,044  |   |   |   | 49,809 |   |   |   | 6.55 |   |
|                                                                       |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Collateralized      debt obligations, including trust preferred securities |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Over      ten years                                                        |   |                                        | 4,614   |   |   |   | 2,585 |   |   |   | 2.13 |   |
|                                                                       |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Total      mutual funds                                                    |   |                                        | 250     |   |   |   | 245 |   |   |   | 3.78 |   |
|                                                                       |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      securities                                            |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Over      one through five years                                           |   |                                        | 772     |   |   |   | 797 |   |   |   | 4.56 |   |
| Over      five through ten years                                           |   |                                        | 13,836  |   |   |   | 14,226 |   |   |   | 3.90 |   |
| Over      ten years                                                        |   |                                        | 102,798 |   |   |   | 105,061 |   |   |   | 4.25 |   |
| Total      mortgage-backed securities                                      |   |                                        | 117,406 |   |   |   | 120,084 |   |   |   | 4.21 |   |
|                                                                       |   |                                        |    |   |   |   |   |   |   |   |   |   |
| Total      available for sale securities                                   |   | $                                           | 170,314 |   |   | $ | 172,723 |   |   |   | 4.81 | % |

----

|                                                        |   | December 31, |    |
|-------------------------------------------------------------|--------|-------------------|---------|
| (Dollars in thousands)                            |   | 2009              |    |   | 2008 |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand      (NOW)                                           |   | $                 | 83,748  |   |   | $ | 91,641 |   |   | $ | 94,939 |   |   | $ | 63,542 |   |   | $ | 36,496 |   |
| Money      market accounts                                  |   |              | 119,991 |   |   |   | 101,032 |   |   |   | 107,880 |   |   |   | 115,248 |   |   |   | 146,659 |   |
| Savings                                                     |   |              | 31,721  |   |   |   | 29,302 |   |   |   | 26,971 |   |   |   | 30,264 |   |   |   | 22,507 |   |
| Individual      retirement accounts-certificates of deposit |   |              | 32,583  |   |   |   | 28,981 |   |   |   | 29,298 |   |   |   | 27,054 |   |   |   | 19,674 |   |
| Certificates      of deposit, $100,000 and over             |   |              | 90,380  |   |   |   | 97,440 |   |   |   | 87,887 |   |   |   | 95,069 |   |   |   | 88,592 |   |
| Other      certificates of deposit                          |   |              | 123,753 |   |   |   | 162,322 |   |   |   | 146,515 |   |   |   | 143,891 |   |   |   | 103,335 |   |
|                                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      interest bearing deposits                        |   |              | 482,176 |   |   |   | 510,718 |   |   |   | 493,490 |   |   |   | 475,068 |   |   |   | 417,263 |   |
| Total      non-interest bearing deposits                    |   |              | 110,247 |   |   |   | 92,467 |   |   |   | 79,856 |   |   |   | 74,850 |   |   |   | 47,573 |   |
|                                                        |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                 | 592,423 |   |   | $ | 603,185 |   |   | $ | 573,346 |   |   | $ | 549,918 |   |   | $ | 464,836 |   |

----

----

| (Dollars in thousands) |   |   |    |
|----------------------------------|--------|--------|---------|
| Commitments      to make loans   |   | $      | 7,897   |   |
| Unused      lines of credit      |   |   | 107,121 |   |
| Standby      letters of credit   |   |   | 3,105   |   |
| Total                            |   | $      | 118,123 |   |

| As of December 31, 2009 |   | Total  |    |   | Less than1 year |   |    | 1-3 years |   |   | 3-5 years |   |   | More than5 years |   |
|---------------------------------------------|--------|--------|---------|--------|---------------------------|--------|---------|----------------|--------|--------|----------------|--------|--------|----------------------------|--------|
| (Dollars      in thousands)                 |   |   |    |   |                      |   |    |           |   |   |           |   |   |                       |   |
| Time      deposits                          |   | $      | 246,716 |   |                      | $      | 204,846 |           |   | $      | 39,198         |   |   | $                          | 2,264  |   |   | $ | 408 |   |
| Repurchase      agreements                  |   |   | 70,696  |   |                      |   | 60,896  |           |   |   | 9,800          |   |   |                       | -      |   |   |   | - |   |
| FHLB      borrowings                        |   |   | 68,482  |   |                      |   | 53,482  |           |   |   | 10,000         |   |   |                       | 5,000  |   |   |   | - |   |
| Subordinated      debentures                |   |   | 17,000  |   |                      |   | -       |           |   |   | -              |   |   |                       | -      |   |   |   | 17,000 |   |
| Line      of credit                         |   |   | 6,300   |   |                      |   | 6,300   |           |   |   | -              |   |   |                       | -      |   |   |   | - |   |
| Defined      benefit plan                   |   |   | 687     |   |                      |   | 39      |           |   |   | 73             |   |   |                       | 72     |   |   |   | 503 |   |
| Lease      commitments                      |   |   | 3,435   |   |                      |   | 598     |           |   |   | 1,078          |   |   |                       | 718    |   |   |   | 1,041 |   |
| Total                                       |   | $      | 413,316 |   |                      | $      | 326,161 |           |   | $      | 60,149         |   |   | $                          | 8,054  |   |   | $ | 18,952 |   |

----

----

| (Dollars in thousands)                                       |   | Base   |   |   | GradualIncreaseIn InterestRates of 200Basis Points |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|------------------------------------------------------------------------|--------|
|                                                                   |   |   |   |   |                                                                   |   |
| Projected      interest income:                                        |   |   |   |   |                                                                   |   |
| Loans                                                                  |   | $      | 30,973 |   |                                                                   | $      | 32,002 |   |
| Investments                                                            |   |   | 6,943  |   |                                                                   |   | 7,078 |   |
| FHLB      and FRB stock                                                |   |   | 432    |   |                                                                   |   | 432 |   |
| Interest-bearing      deposits in other financial institutions         |   |   | 7      |   |                                                                   |   | 23 |   |
| Federal      funds sold                                                |   |   | 26     |   |                                                                   |   | 252 |   |
| Total      interest income                                             |   |   | 38,381 |   |                                                                   |   | 39,787 |   |
|                                                                   |   |   |   |   |                                                                   |   |   |   |
| Projected      interest expense:                                       |   |   |   |   |                                                                   |   |   |   |
| Deposits                                                               |   |   | 4,939  |   |                                                                   |   | 7,416 |   |
| Federal      funds purchased, line of credit and Repurchase agreements |   |   | 748    |   |                                                                   |   | 1,450 |   |
| FHLB      advances                                                     |   |   | 1,335  |   |                                                                   |   | 1,365 |   |
| Subordinated      debentures                                           |   |   | 401    |   |                                                                   |   | 543 |   |
| Total      interest expense                                            |   |   | 7,423  |   |                                                                   |   | 10,774 |   |
| Net      interest income                                               |   | $      | 30,958 |   |                                                                   | $      | 29,013 |   |
|                                                                   |   |   |   |   |                                                                   |   |   |   |
| Change      from base                                                  |   |   |   |   |                                                                   | $      | (1,945 | ) |
| %      Change from base                                                |   |   |   |   |                                                                   |   | (6.28 | )% |

----

| (Dollars in thousands)                                       |   | Base   |   |   | GradualIncreaseIn InterestRates of 200Basis Points |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|------------------------------------------------------------------------|--------|
|                                                                   |   |   |   |   |                                                                   |   |
| Projected      interest income:                                        |   |   |   |   |                                                                   |   |
| Loans                                                                  |   | $      | 36,673 |   |                                                                   | $      | 38,562 |   |
| Investments                                                            |   |   | 5,666  |   |                                                                   |   | 5,975 |   |
| FHLB      and FRB stock                                                |   |   | 432    |   |                                                                   |   | 432 |   |
| Interest-bearing      deposits in other financial institutions         |   |   | 1      |   |                                                                   |   | 148 |   |
| Federal      funds sold                                                |   |   | 11     |   |                                                                   |   | 185 |   |
| Total      interest income                                             |   |   | 42,783 |   |                                                                   |   | 45,302 |   |
|                                                                   |   |   |   |   |                                                                   |   |   |   |
| Projected      interest expense:                                       |   |   |   |   |                                                                   |   |   |   |
| Deposits                                                               |   |   | 10,729 |   |                                                                   |   | 12,914 |   |
| Federal      funds purchased, line of credit and Repurchase agreements |   |   | 740    |   |                                                                   |   | 1,437 |   |
| FHLB      advances                                                     |   |   | 4,809  |   |                                                                   |   | 4,875 |   |
| Subordinated      debentures                                           |   |   | 623    |   |                                                                   |   | 765 |   |
| Total      interest expense                                            |   |   | 16,901 |   |                                                                   |   | 19,991 |   |
| Net      interest income                                               |   | $      | 25,882 |   |                                                                   | $      | 25,311 |   |
|                                                                   |   |   |   |   |                                                                   |   |   |   |
| Change      from base                                                  |   |   |   |   |                                                                   | $      | (571 | ) |
| %      Change from base                                                |   |   |   |   |                                                                   |   | (2.21 | )% |

----

| REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                     | 48     |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |
| FINANCIAL      STATEMENTS                                                        |   |
|                                                                             |   |
| CONSOLIDATED      BALANCE SHEETS                                                 | 49     |
|                                                                             |   |
| CONSOLIDATED      STATEMENTS OF OPERATIONS                                       | 50     |
|                                                                             |   |
| CONSOLIDATED      STATEMENTS OF CHANGES IN  SHAREHOLDERS’ EQUITY | 52     |
|                                                                             |   |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                       | 54     |
|                                                                             |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS                                  | 56     |

----

|  |
|--|

|   | /s/      Crowe Horwath LLP |
|--------|----------------------------|

----

----

|                                                                                                                                                                                                  |   | 2009   |    |   | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| ASSETS                                                                                                                                                                                                |   |   |    |   |   |   |
| Cash      and due from financial institutions                                                                                                                                                         |   | $      | 24,474  |   |   | $      | 19,724 |   |
| Interest-bearing      deposits in other financial institutions                                                                                                                                        |   |   | 29,941  |   |   |   | 45,749 |   |
| Securities      available for sale                                                                                                                                                                    |   |   | 172,723 |   |   |   | 121,659 |   |
| Loans      held for sale                                                                                                                                                                              |   |   | 979     |   |   |   | 308 |   |
| Loans,      net of allowance for loan losses of $15,236 and $9,478                                                                                                                                    |   |   | 528,183 |   |   |   | 623,103 |   |
| Federal      Home Loan Bank and Federal Reserve stock                                                                                                                                                 |   |   | 7,670   |   |   |   | 8,472 |   |
| Accrued      interest receivable                                                                                                                                                                      |   |   | 3,216   |   |   |   | 3,163 |   |
| Premises      and equipment, net                                                                                                                                                                      |   |   | 14,388  |   |   |   | 15,128 |   |
| Company      owned life insurance                                                                                                                                                                     |   |   | 18,490  |   |   |   | 17,745 |   |
| Goodwill                                                                                                                                                                                              |   |   | -       |   |   |   | 15,335 |   |
| Other      intangible assets                                                                                                                                                                          |   |   | 1,352   |   |   |   | 2,492 |   |
| Foreclosed      and repossessed assets                                                                                                                                                                |   |   | 5,190   |   |   |   | 1,241 |   |
| Prepaid      FDIC insurance premium                                                                                                                                                                   |   |   | 4,898   |   |   |   | - |   |
| Other      assets                                                                                                                                                                                     |   |   | 7,655   |   |   |   | 3,244 |   |
|                                                                                                                                                                                                  |   | $      | 819,159 |   |   | $      | 877,363 |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                                                                                                                       |   |   |    |   |   |   |   |   |
| Deposits                                                                                                                                                                                              |   |   |    |   |   |   |   |   |
|  Non      interest-bearing                                                                                                                                                                       |   | $      | 110,247 |   |   | $      | 92,467 |   |
|  Interest-bearing                                                                                                                                                                                |   |   | 482,176 |   |   |   | 510,718 |   |
| Total      deposits                                                                                                                                                                                   |   |   | 592,423 |   |   |   | 603,185 |   |
| Other      borrowings                                                                                                                                                                                 |   |   | 76,996  |   |   |   | 78,983 |   |
| Federal      Home Loan Bank advances                                                                                                                                                                  |   |   | 68,482  |   |   |   | 111,943 |   |
| Subordinated      debentures                                                                                                                                                                          |   |   | 17,000  |   |   |   | 17,000 |   |
| Accrued      interest payable                                                                                                                                                                         |   |   | 818     |   |   |   | 1,705 |   |
| Other      liabilities                                                                                                                                                                                |   |   | 3,490   |   |   |   | 1,948 |   |
| Total      liabilities                                                                                                                                                                                |   |   | 759,209 |   |   |   | 814,764 |   |
|                                                                                                                                                                                                  |   |   |    |   |   |   |   |   |
| Commitments      and contingent liabilities (Note 15)                                                                                                                                                 |   |   | -       |   |   |   | - |   |
|                                                                                                                                                                                                  |   |   |    |   |   |   |   |   |
| Shareholders’      equity                                                                                                                                                                       |   |   |    |   |   |   |   |   |
| Preferred      stock, without par value; 5,000,000 shares authorized; none      issued                                                                                                                |   |   | -       |   |   |   | - |   |
| Preferred      stock, series A, without par value; 19,500 shares authorized; 19,468 and 0      issued and outstanding in 2009 and 2008, respectively; liquidation      preference of $1,000 per share |   |   | 19,034  |   |   |   | - |   |
| Common      stock, $.10 par value per share; 10,000,000 shares authorized; 3,863,942      shares issued; 3,274,697 and 3,242,577 outstanding in 2009 and 2008,      respectively                      |   |   | 386     |   |   |   | 386 |   |
| Additional      paid-in capital                                                                                                                                                                       |   |   | 45,550  |   |   |   | 45,313 |   |
| Retained      earnings                                                                                                                                                                                |   |   | 3,891   |   |   |   | 28,268 |   |
| Accumulated      other comprehensive income (loss)                                                                                                                                                    |   |   | 1,263   |   |   |   | (640 | ) |
| Treasury      stock, at cost (2009- 589,245 shares, 2008- 621,365shares)                                                                                                                              |   |   | (10,174 | )      |   |   | (10,728 | ) |
| Total      shareholders’ equity                                                                                                                                                                 |   |   | 59,950  |   |   |   | 62,599 |   |
|                                                                                                                                                                                                  |   | $      | 819,159 |   |   | $      | 877,363 |   |

----

----

|                                                                 |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest      and dividend income                                    |   |   |   |   |   |   |   |   |   |
| Loans,      including fees                                           |   | $      | 32,713 |   |   | $      | 38,833 |   |   | $ | 46,030 |   |
| Taxable      securities                                              |   |   | 4,623  |   |   |   | 4,798  |   |   |   | 4,711 |   |
| Tax-exempt      securities                                           |   |   | 1,524  |   |   |   | 697    |   |   |   | 510 |   |
| Federal      Home Loan Bank and Federal Reserve dividends            |   |   | 269    |   |   |   | 338    |   |   |   | 381 |   |
| Interest-bearing      deposits in other financial institutions       |   |   | 133    |   |   |   | 241    |   |   |   | 144 |   |
|                                                                 |   |   | 39,262 |   |   |   | 44,907 |   |   |   | 51,776 |   |
| Interest      expense                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                             |   |   | 9,628  |   |   |   | 13,529 |   |   |   | 18,783 |   |
| Other      borrowings                                                |   |   | 883    |   |   |   | 1,403  |   |   |   | 2,824 |   |
| Federal      Home Loan Bank advances                                 |   |   | 4,281  |   |   |   | 5,605  |   |   |   | 5,492 |   |
| Subordinated      debentures                                         |   |   | 526    |   |   |   | 916    |   |   |   | 1,296 |   |
|                                                                 |   |   | 15,318 |   |   |   | 21,453 |   |   |   | 28,395 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                                             |   |   | 23,944 |   |   |   | 23,454 |   |   |   | 23,381 |   |
| Provision      for loan losses                                       |   |   | 15,925 |   |   |   | 6,857  |   |   |   | 1,296 |   |
| Net      interest income after provision for loan losses             |   |   | 8,019  |   |   |   | 16,597 |   |   |   | 22,085 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      income                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Service      charges on deposit accounts                             |   |   | 3,453  |   |   |   | 3,356  |   |   |   | 3,187 |   |
| Commission      income                                               |   |   | 53     |   |   |   | 194    |   |   |   | 172 |   |
| Net      gain (loss) on sales of available for sale securities       |   |   | 1,380  |   |   |   | 364    |   |   |   | (41 | ) |
| Mortgage      banking income                                         |   |   | 314    |   |   |   | 167    |   |   |   | 236 |   |
| Gain      on sale of loans                                           |   |   | 197    |   |   |   | -      |   |   |   | - |   |
| Earnings      on company owned life insurance                        |   |   | 745    |   |   |   | 734    |   |   |   | 678 |   |
| Change      in fair value and cash settlement of interest rate swaps |   |   | -      |   |   |   | 180    |   |   |   | (1,248 | ) |
| Interchange      income                                              |   |   | 839    |   |   |   | 811    |   |   |   | 704 |   |
| Other-than-temporary      impairment loss                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      impairment loss                                           |   |   | (1,100 | )      |   |   | -      |   |   |   | - |   |
| Loss      recognized in other comprehensive income (loss)            |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Net      impairment loss recognized in earnings                      |   |   | (1,100 | )      |   |   | -      |   |   |   | - |   |
| Other      income                                                    |   |   | 445    |   |   |   | 281    |   |   |   | 439 |   |
|                                                                 |   |   | 6,326  |   |   |   | 6,087  |   |   |   | 4,127 |   |
| Non-interest      expense                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                                  |   |   | 11,160 |   |   |   | 12,125 |   |   |   | 11,466 |   |
| Occupancy                                                            |   |   | 2,417  |   |   |   | 2,169  |   |   |   | 1,760 |   |
| Equipment                                                            |   |   | 1,419  |   |   |   | 1,535  |   |   |   | 1,446 |   |
| Data      processing                                                 |   |   | 2,498  |   |   |   | 1,931  |   |   |   | 2,183 |   |
| Marketing      and advertising                                       |   |   | 495    |   |   |   | 738    |   |   |   | 583 |   |
| Legal      and professional service fees                             |   |   | 1,627  |   |   |   | 1,153  |   |   |   | 1,383 |   |
| FDIC      insurance premiums                                         |   |   | 1,685  |   |   |   | 480    |   |   |   | 66 |   |
| Goodwill      and other intangible asset impairment                  |   |   | 16,154 |   |   |   | -      |   |   |   | - |   |
| Prepayment      penalties on extinguishment of debt                  |   |   | 838    |   |   |   | -      |   |   |   | - |   |
| Foreclosed      and repossessed assets, net                          |   |   | 665    |   |   |   | 217    |   |   |   | 66 |   |
| Other      expense                                                   |   |   | 2,210  |   |   |   | 2,206  |   |   |   | 2,851 |   |
|                                                                 |   |   | 41,168 |   |   |   | 22,554 |   |   |   | 21,804 |   |

----

----

|                                                    |   | 2009   |    |   | 2008   |   |   | 2007   |   |
|---------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
|                                                    |   |   |    |   |   |   |   |   |   |
| Income      (loss) before income taxes                  |   | $      | (26,823 | )      |   | $      | 130    |   |   | $ | 4,408 |   |
|                                                    |   |   |    |   |   |   |   |   |   |   |   |   |
| Income      tax (benefit) expense                       |   |   | (4,854  | )      |   |   | (691   | )      |   |   | 905 |   |
|                                                    |   |   |    |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                  |   |   | (21,969 | )      |   |   | 821    |   |   |   | 3,503 |   |
|                                                    |   |   |    |   |   |   |   |   |   |   |   |   |
| Preferred      stock dividends and discount accretion   |   |   | (618    | )      |   |   | -      |   |   |   | - |   |
|                                                    |   |   |    |   |   |   |   |   |   |   |   |   |
| Net      income (loss) available to common shareholders |   | $      | (22,587 | )      |   | $      | 821    |   |   | $ | 3,503 |   |
|                                                    |   |   |    |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share:                  |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic                                                   |   | $      | (6.93   | )      |   | $      | 0.25   |   |   | $ | 1.05 |   |
| Diluted                                                 |   | $      | (6.93   | )      |   | $      | 0.25   |   |   | $ | 1.04 |   |

----

----

|                                                                                                                    |   |           |   |   | Additional  |   |   |           |   |   | AccumulatedOther |   |   |                            |   |   | Total         |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------|--------|--------|----------------|--------|--------|------------------|--------|--------|---------------------------------|--------|--------|---------------|--------|
|                                                                                                                    |   | PreferredStock |   |   | CommonStock |   |   | Paid-InCapital |   |   | RetainedEarnings |   |   | ComprehensiveIncome (Loss) |   |   | TreasuryStock |   |   | Shareholders’Equity |   |
| Balance at January 1, 2007                                                                     |   | $              | -      |   |        | $      | 386    |           |   | $      | 45,032           |   |   | $                               | 28,519 |   |          | $      | (1,741 | ) |   | $ | (6,655 | ) |   | $ | 65,541 |   |
|                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                              |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                         |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | 3,503  |   |          |   |   |   |   |   | - |   |   |   | 3,503 |   |
| Change      in unrealized gains (losses) on securities available for sale, net of      reclassification and tax effects |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | 752 |   |   |   | - |   |   |   | 752 |   |
| Change      in unrealized gains (losses), interest rate swap net of reclassification      and tax effects               |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | 632 |   |   |   | - |   |   |   | 632 |   |
| Unrealized      loss on pension benefits, net of tax effects                                                            |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | (36 | ) |   |   | - |   |   |   | (36 | ) |
| Total      comprehensive income                                                                                         |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   | 4,851 |   |
|                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification      of unrealized loss on interest rate swap, net of taxeffect                                        |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | 154 |   |   |   | - |   |   |   | 154 |   |
| Cash      dividends declared on common stock ($.685 per share)                                                          |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | (2,299 | )      |          |   | - |   |   |   | - |   |   |   | (2,299 | ) |
| Purchase      of treasury stock                                                                                         |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | - |   |   |   | (3,904 | ) |   |   | (3,904 | ) |
| Stock      award expense                                                                                                |   |           | -      |   |        |   | -      |           |   |   | 122              |   |   |                            | -      |   |          |   | - |   |   |   | - |   |   |   | 122 |   |
| Issuance      of performance unit shares                                                                                |   |           | -      |   |        |   | -      |           |   |   | (119             | )      |   |                            | -      |   |          |   | - |   |   |   | 119 |   |   |   | - |   |
| Balance      at December 31, 2007                                                                                       |   | $              | -      |   |        | $      | 386    |           |   | $      | 45,035           |   |   | $                               | 29,723 |   |          | $      | (239 | ) |   | $ | (10,440 | ) |   | $ | 64,465 |   |
|                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                              |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                         |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | 821    |   |          |   | - |   |   |   | - |   |   |   | 821 |   |
| Change      in unrealized gains (losses) on securities available for sale, net of      reclassification and tax effects |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -      |   |          |   | (261 | ) |   |   | - |   |   |   | (261 | ) |

----

----

|                                                                                                                                                                                                                    |   |           |   |   | Additional  |   |   |           |   |   | AccumulatedOther |   |   |                            |    |   | Total         |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------|--------|--------|----------------|--------|--------|------------------|--------|--------|---------------------------------|---------|--------|---------------|--------|
|                                                                                                                                                                                                                    |   | PreferredStock |   |   | CommonStock |   |   | Paid-InCapital |   |   | RetainedEarnings |   |   | ComprehensiveIncome (Loss) |    |   | TreasuryStock |   |   | Shareholders’Equity |   |
| Unrealized      loss on pension benefits, net of tax effects                                                                                                                                                            |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -       |   |          |   | (140 | ) |   |   | - |   |   |   | (140 | ) |
| Total      comprehensive income                                                                                                                                                                                         |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   | 420 |   |
|                                                                                                                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends declared on common stock ($.700 per share)                                                                                                                                                          |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | (2,276  | )      |          |   | - |   |   |   | - |   |   |   | (2,276 | ) |
| Purchase      of treasury stock                                                                                                                                                                                         |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -       |   |          |   | - |   |   |   | (400 | ) |   |   | (400 | ) |
| Issuance      of treasury stock under dividend reinvestment plan                                                                                                                                                        |   |           | -      |   |        |   | -      |           |   |   | (31              | )      |   |                            | -       |   |          |   | - |   |   |   | 112 |   |   |   | 81 |   |
| Stock      award expense                                                                                                                                                                                                |   |           | -      |   |        |   | -      |           |   |   | 309              |   |   |                            | -       |   |          |   | - |   |   |   | - |   |   |   | 309 |   |
| Balance      at December 31, 2008                                                                                                                                                                                       |   | $              | -      |   |        | $      | 386    |           |   | $      | 45,313           |   |   | $                               | 28,268  |   |          | $      | (640 | ) |   | $ | (10,728 | ) |   | $ | 62,599 |   |
|                                                                                                                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      loss:                                                                                                                                                                                                |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                                                                                                           |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | (21,969 | )      |          |   | - |   |   |   | - |   |   |   | (21,969 | ) |
| Change      in unrealized gains (losses) on securities available for sale for which a      portion of an other-than-temporary impairment has been recognized in      earnings, net of reclassifications and tax effects |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -       |   |          |   | 288 |   |   |   | - |   |   |   | 288 |   |
| Change      in unrealized gains (losses) on securities available for sale, net of      reclassifications and tax effects                                                                                                |   |           | -      |   |        |   | -      |           |   |   |             |   |   |                            | -       |   |          |   | 1,558 |   |   |   | - |   |   |   | 1,558 |   |
| Unrealized      gain on pension benefits, net of tax effects                                                                                                                                                            |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | -       |   |          |   | 57 |   |   |   | - |   |   |   | 57 |   |
| Total      comprehensive loss                                                                                                                                                                                           |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   | (20,066 | ) |
|                                                                                                                                                                                                                    |   |           |   |   |        |   |   |           |   |   |             |   |   |                            |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends declared on common stock ($.550 per share)                                                                                                                                                          |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | (1,790  | )      |          |   | - |   |   |   | - |   |   |   | (1,790 | ) |
| Dividends      on preferred stock                                                                                                                                                                                       |   |           | -      |   |        |   | -      |           |   |   | -                |   |   |                            | (568    | )      |          |   | - |   |   |   | - |   |   |   | (568 | ) |
| Issuance      of treasury stock under dividend reinvestment plan                                                                                                                                                        |   |           | -      |   |        |   | -      |           |   |   | (293             | )      |   |                            | -       |   |          |   | - |   |   |   | 554 |   |   |   | 261 |   |
| Issuance      of preferred stock                                                                                                                                                                                        |   |           | 18,984 |   |        |   | -      |           |   |   | -                |   |   |                            | -       |   |          |   | - |   |   |   | - |   |   |   | 18,984 |   |
| Issuance      of warrants to purchase common shares                                                                                                                                                                     |   |           | -      |   |        |   | -      |           |   |   | 445              |   |   |                            | -       |   |          |   | - |   |   |   | - |   |   |   | 445 |   |
| Amortization      of preferred discount                                                                                                                                                                                 |   |           | 50     |   |        |   | -      |           |   |   | -                |   |   |                            | (50     | )      |          |   | - |   |   |   | - |   |   |   | - |   |
| Stock      award expense                                                                                                                                                                                                |   |           | -      |   |        |   | -      |           |   |   | 85               |   |   |                            | -       |   |          |   | - |   |   |   | - |   |   |   | 85 |   |
| Balance      at December 31, 2009                                                                                                                                                                                       |   | $              | 19,034 |   |        | $      | 386    |           |   | $      | 45,550           |   |   | $                               | 3,891   |   |          | $      | 1,263 |   |   | $ | (10,174 | ) |   | $ | 59,950 |   |

----

----

|                                                           |   | 2009   |     |   | 2008   |   |    | 2007   |   |
|----------------------------------------------------------------|--------|--------|----------|--------|--------|--------|---------|--------|--------|
| Cash      flows from operating activities                      |   |   |     |   |   |   |    |   |   |
| Net      income (loss)                                         |   | $      | (21,969  | )      |   | $      | 821     |   |   | $ | 3,503 |   |
| Adjustments      to reconcile net income (loss) to             |   |   |     |   |   |   |    |   |   |   |   |   |
| net      cash from operating activities:                       |   |   |     |   |   |   |    |   |   |   |   |   |
| Provision      for loan losses                                 |   |   | 15,925   |   |   |   | 6,857   |   |   |   | 1,296 |   |
| Depreciation      and amortization                             |   |   | 1,763    |   |   |   | 1,863   |   |   |   | 1,660 |   |
| Net      amortization (accretion) of securities                |   |   | 193      |   |   |   | (120    | )      |   |   | (106 | ) |
| Net      (gain) loss on sales of available for sale securities |   |   | (1,380   | )      |   |   | (364    | )      |   |   | 41 |   |
| Other-than-temporary      impairment loss                      |   |   | 1,100    |   |   |   | -       |   |   |   | - |   |
| Prepayment      penalties on extinguishment of debt            |   |   | 838      |   |   |   | -       |   |   |   | - |   |
| Mortgage      loans originated for sale                        |   |   | (21,203  | )      |   |   | (13,589 | )      |   |   | (12,032 | ) |
| Proceeds      from mortgage loan sales                         |   |   | 20,825   |   |   |   | 14,235  |   |   |   | 12,370 |   |
| Net      gain on sales of mortgage loans                       |   |   | (293     | )      |   |   | (197    | )      |   |   | (187 | ) |
| Earnings      on company owned life insurance                  |   |   | (745     | )      |   |   | (734    | )      |   |   | (678 | ) |
| FHLB      stock dividends                                      |   |   | -        |   |   |   | (16     | )      |   |   | - |   |
| Gain      on sale of loans                                     |   |   | (197     | )      |   |   | -       |   |   |   | - |   |
| Goodwill      and other intangible asset impairment            |   |   | 16,154   |   |   |   | -       |   |   |   | - |   |
| Share      based compensation expense                          |   |   | 85       |   |   |   | 309     |   |   |   | 122 |   |
| Net      loss on sale of foreclosed assets                     |   |   | 107      |   |   |   | 22      |   |   |   | 48 |   |
| Net      (gain) loss on disposition of premises and equipment  |   |   | (4       | )      |   |   | (4      | )      |   |   | 19 |   |
| Net      change in                                             |   |   |     |   |   |   |    |   |   |   |   |   |
| Accrued      interest receivable                               |   |   | (53      | )      |   |   | 374     |   |   |   | 431 |   |
| Accrued      interest payable                                  |   |   | (887     | )      |   |   | (251    | )      |   |   | (222 | ) |
| Other      assets                                              |   |   | (9,466   | )      |   |   | (438    | )      |   |   | (415 | ) |
| Other      liabilities                                         |   |   | 653      |   |   |   | (893    | )      |   |   | (890 | ) |
| Net      cash from operating activities                        |   |   | 1,446    |   |   |   | 7,875   |   |   |   | 4,960 |   |
|                                                           |   |   |     |   |   |   |    |   |   |   |   |   |
| Cash      flows from investing activities                      |   |   |     |   |   |   |    |   |   |   |   |   |
| Net      change in interest-bearing deposits                   |   |   | 15,808   |   |   |   | (31,806 | )      |   |   | (12,733 | ) |
| Available      for sale securities:                            |   |   |     |   |   |   |    |   |   |   |   |   |
| Sales                                                          |   |   | 76,467   |   |   |   | 19,098  |   |   |   | 10,937 |   |
| Purchases                                                      |   |   | (146,313 | )      |   |   | (65,381 | )      |   |   | (21,868 | ) |
| Maturities,      prepayments and calls                         |   |   | 21,661   |   |   |   | 24,181  |   |   |   | 34,100 |   |
| Loan      originations and payments, net                       |   |   | 58,016   |   |   |   | (3,149  | )      |   |   | (23,387 | ) |
| Purchase      of premises and equipment, net                   |   |   | (740     | )      |   |   | (1,524  | )      |   |   | (1,504 | ) |
| Proceeds      from the sale of premises and equipment          |   |   | 8        |   |   |   | 10      |   |   |   | - |   |
| Proceeds      from the sale of foreclosed assets               |   |   | 2,436    |   |   |   | 2,318   |   |   |   | 252 |   |
| Proceeds      from the sale of loans held for investment       |   |   | 14,739   |   |   |   | -       |   |   |   | - |   |
| Purchase      of FHLB and Federal Reserve stock                |   |   | -        |   |   |   | (376    | )      |   |   | (769 | ) |
| Redemption      of FHLB and Federal Reserve stock              |   |   | 802      |   |   |   | 16      |   |   |   | 91 |   |
| Investment      in company owned life insurance                |   |   | -        |   |   |   | (100    | )      |   |   | - |   |
| Net      cash from investing activities                        |   |   | 42,884   |   |   |   | (56,713 | )      |   |   | (14,881 | ) |

----

----

|                                                              |   | 2009   |    |   | 2008   |   |    | 2007   |   |
|-------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Cash      flows from financing activities                         |   |   |    |   |   |   |    |   |   |
| Net      change in deposits                                       |   | $      | (10,745 | )      |   | $      | 29,900  |   |   | $ | 23,509 |   |
| Net      change in other borrowings                               |   |   | (1,987  | )      |   |   | 6,187   |   |   |   | (11,539 | ) |
| Proceeds      from Federal Home Loan Bank advances                |   |   | 25,000  |   |   |   | 77,000  |   |   |   | 113,000 |   |
| Repayment      of Federal Home Loan Bank advances                 |   |   | (69,338 | )      |   |   | (56,500 | )      |   |   | (114,500 | ) |
| Proceeds      from issuance of preferred stock and warrants       |   |   | 19,468  |   |   |   | -       |   |   |   | - |   |
| Purchase      of treasury stock                                   |   |   | -       |   |   |   | (400    | )      |   |   | (3,904 | ) |
| Cash      dividends paid on preferred shares                      |   |   | (449    | )      |   |   | -       |   |   |   | - |   |
| Cash      dividends paid on common shares                         |   |   | (1,529  | )      |   |   | (2,195  | )      |   |   | (2,299 | ) |
| Net      cash from financing activities                           |   |   | (39,580 | )      |   |   | 53,992  |   |   |   | 4,267 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Net      change in cash and due from banks                        |   |   | 4,750   |   |   |   | 5,154   |   |   |   | (5,654 | ) |
| Cash      and due from banks at beginning of year                 |   |   | 19,724  |   |   |   | 14,570  |   |   |   | 20,224 |   |
| Cash      and due from banks at end of year                       |   | $      | 24,474  |   |   | $      | 19,724  |   |   | $ | 14,570 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental      cash flow information:                          |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest      paid                                                |   | $      | 16,205  |   |   | $      | 21,704  |   |   | $ | 28,617 |   |
| Income      taxes paid, net of refunds                            |   |   | (230    | )      |   |   | 334     |   |   |   | 1,274 |   |
|                                                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental      noncash disclosures:                            |   |   |    |   |   |   |    |   |   |   |   |   |
| Transfers      from loans to foreclosed assets                    |   |   | 6,751   |   |   |   | 3,292   |   |   |   | 592 |   |
| Sale      and financing of foreclosed assets                      |   |   | 261     |   |   |   | 286     |   |   |   | 167 |   |
| Issuance      of treasury shares under dividend reinvestment plan |   |   | 261     |   |   |   | 81      |   |   |   | - |   |

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|                                                                                         |   | Amortized Cost |    |   | GrossUnrealizedGains |   |   | Gross Unrealized Losses |   |   | FairValue |   |
|----------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|
| 2009                                                                                         |   | (In      thousands) |    |
| State      and municipal                                                                     |   | $                   | 48,044  |   |                 | $      | 1,878  |                              |   | $      | (113      | )      |   | $ | 49,809 |   |
| Residential      mortgaged-backed agencies issued by U.S. Government sponsored      entities |   |                | 117,406 |   |                 |   | 2,776  |                              |   |   | (98       | )      |   |   | 120,084 |   |
| Collateralized      debt obligations, including trust preferred securities                   |   |                | 4,614   |   |                 |   | -      |                              |   |   | (2,029    | )      |   |   | 2,585 |   |
| Mutual      funds                                                                            |   |                | 250     |   |                 |   | -      |                              |   |   | (5        | )      |   |   | 245 |   |
| Total                                                                                        |   | $                   | 170,314 |   |                 | $      | 4,654  |                              |   | $      | (2,245    | )      |   | $ | 172,723 |   |

|                                                                                         |   | Amortized Cost |    |   | GrossUnrealizedGains |   |   | Gross Unrealized Losses |   |   | FairValue |   |
|----------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|----------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|
| 2008                                                                                         |   | (In      thousands) |    |
| State      and municipal                                                                     |   | $                   | 20,926  |   |                 | $      | 174    |                              |   | $      | (558      | )      |   | $ | 20,542 |   |
| Residential      mortgaged-backed agencies issued by U.S. Government sponsored      entities |   |                | 95,170  |   |                 |   | 2,430  |                              |   |   | (12       | )      |   |   | 97,588 |   |
| Collateralized      debt obligations, including trust preferred securities                   |   |                | 5,696   |   |                 |   | -      |                              |   |   | (2,411    | )      |   |   | 3,285 |   |
| Mutual      funds                                                                            |   |                | 250     |   |                 |   | -      |                              |   |   | (6        | )      |   |   | 244 |   |
|      Total                                                          |   | $                   | 122,042 |   |                 | $      | 2,604  |                              |   | $      | (2,987    | )      |   | $ | 121,659 |   |

|              |   | 2009                |   |   | 2008   |   |   | 2007   |   |
|-------------------|--------|---------------------|--------|--------|--------|--------|--------|--------|--------|
|              |   | (In thousands) |   |
| Proceeds          |   | $                   | 76,467 |   |   | $      | 19,098 |   |   | $ | 10,937 |   |
| Gross      gains  |   |                | 1,389  |   |   |   | 364    |   |   |   | 2 |   |
| Gross      losses |   |                | (9     | )      |   |   | -      |   |   |   | (43 | ) |

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|                                                                                        |   | AmortizedCost       |    |   | FairValue |   |
|---------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|-----------|--------|
| 2009                                                                                        |   | (In      thousands) |    |
| Due      in one year or less                                                                |   | $                   | 1,325   |   |      | $      | 1,328 |   |
| Due      from one to five years                                                             |   |                | 1,514   |   |      |   | 1,556 |   |
| Due      from five to ten years                                                             |   |                | 4,605   |   |      |   | 4,778 |   |
| Due      after ten years                                                                    |   |                | 45,214  |   |      |   | 44,732 |   |
| Residential      mortgage-backed agencies issued by U.S. Government sponsored      entities |   |                | 117,406 |   |      |   | 120,084 |   |
| Mutual      Funds                                                                           |   |                | 250     |   |      |   | 245 |   |
| Total                                                                                       |   | $                   | 170,314 |   |      | $      | 172,723 |   |

|                                                                                        |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total           |   |
|---------------------------------------------------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|-----------------|--------|
|                                                                                        |   | (In thousands)                |   |   |                             |   |   |            |   |
| 2009                                                                                        |   | Fair Value                    |   |   | UnrealizedLoss                   |   |   | Fair Value |   |   | UnrealizedLoss |   |   | Fair Value |   |   | UnrealizedLoss |   |
| State      and municipal                                                                    |   | $                                  | 3,022  |   |                             | $      | (49    | )               |   | $ | 996 |   |   | $ | (64 | ) |   | $ | 4,018 |   |   | $ | (113 | ) |
| Residential      mortgage-backed agencies issued by U.S. Government sponsored      entities |   |                               | 15,858 |   |                             |   | (98    | )               |   |   | - |   |   |   | - |   |   |   | 15,858 |   |   |   | (98 | ) |
| Collateralized      debt obligations, including trust preferred securities                  |   |                               | -      |   |                             |   | -      |            |   |   | 2,585 |   |   |   | (2,029 | ) |   |   | 2,585 |   |   |   | (2,029 | ) |
| Mutual      funds                                                                           |   |                               | -      |   |                             |   | -      |            |   |   | 245 |   |   |   | (5 | ) |   |   | 245 |   |   |   | (5 | ) |
| Total      temporarily impaired                                                             |   | $                                  | 18,880 |   |                             | $      | (147   | )               |   | $ | 3,826 |   |   | $ | (2,098 | ) |   | $ | 22,706 |   |   | $ | (2,245 | ) |

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|                                                                                        |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total           |   |
|---------------------------------------------------------------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|-----------------|--------|
|                                                                                        |   | (In thousands)                |   |   |                             |   |   |            |   |
| 2008                                                                                        |   | Fair Value                    |   |   | UnrealizedLoss                   |   |   | Fair Value |   |   | UnrealizedLoss |   |   | Fair Value |   |   | UnrealizedLoss |   |
| State      and municipal                                                                    |   | $                                  | 13,174 |   |                             | $      | (558   | )               |   | $ | - |   |   | $ | - |   |   | $ | 13,174 |   |   | $ | (558 | ) |
| Residential      mortgage-backed agencies issued by U.S. Government sponsored      entities |   |                               | 2,241  |   |                             |   | (8     | )               |   |   | 560 |   |   |   | (4 | ) |   |   | 2,801 |   |   |   | (12 | ) |
| Collateralized      debt obligations, including trust preferred securities                  |   |                               | -      |   |                             |   | -      |            |   |   | 3,285 |   |   |   | (2,411 | ) |   |   | 3,285 |   |   |   | (2,411 | ) |
| Mutual      funds                                                                           |   |                               | -      |   |                             |   | -      |            |   |   | 244 |   |   |   | (6 | ) |   |   | 244 |   |   |   | (6 | ) |
| Total      temporarily impaired                                                             |   | $                                  | 15,415 |   |                             | $      | (566   | )               |   | $ | 4,089 |   |   | $ | (2,421 | ) |   | $ | 19,504 |   |   | $ | (2,987 | ) |

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|            | CurrentRating     |   | Par Value |   |   | AmortizedCost |   |   | EstimatedFair Value |   |   | PreviouslyRecognizedOTTI Related toCredit Loss,Pre-Tax |   |   | OTTI Related toCredit LossRecognized in2009,Pre-Tax |   |
|-----------------|-------------------|--------|----------------|--------|--------|---------------|--------|--------|--------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |
| Security      1 | B+      (S&P) |   | $              | 2,000  |   |          | $      | 2,000  |                     |   | $      | 1,242                                                                 |   |   | $                                                                       | -      |   |   | $ | - |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
| Security      2 | Ba3               |   |           | 332    |   |          |   | 330    |                     |   |   | 201                                                                   |   |   |                                                                    | -      |   |   |   | - |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
| Security      3 | Ca                |   |           | 49     |   |          |   | 43     |                     |   |   | 35                                                                    |   |   |                                                                    | -      |   |   |   | 5 |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
| Security      4 | Ca                |   |           | 317    |   |          |   | 283    |                     |   |   | 229                                                                   |   |   |                                                                    | -      |   |   |   | 35 |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
| Security      5 | Ca                |   |           | 1,509  |   |          |   | 979    |                     |   |   | 439                                                                   |   |   |                                                                    | -      |   |   |   | 530 |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
| Security      6 | Ca                |   |           | 1,509  |   |          |   | 979    |                     |   |   | 439                                                                   |   |   |                                                                    | -      |   |   |   | 530 |   |
|            |              |   |           |   |   |          |   |   |                     |   |   |                                                                  |   |   |                                                                    |   |   |   |   |   |   |
|            |              |   | $              | 5,716  |   |          | $      | 4,614  |                     |   | $      | 2,585                                                                 |   |   | $                                                                       | -      |   |   | $ | 1,100 |   |

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|                                                          |   | (In thousands) |        |
|---------------------------------------------------------------|--------|---------------------|-------------|
|                                                          |   |                |        |
| Beginning      balance, January 1, 2009                       |   | $                   | -           |   |
| Other-than-temporary      impairment related to credit losses |   |                |  1,100 |   |
| Ending      balance, December 31, 2009                        |   | $                   | 1,100       |   |

|                                                              |   | 2009                |         |   | 2008   |   |
|-------------------------------------------------------------------|--------|---------------------|--------------|--------|--------|--------|
|                                                              |   | (In thousands) |         |
| Commercial                                                        |   | $                   | 94,168       |   |   | $      | 95,365 |   |
| Real      Estate:                                                 |   |                |         |   |   |   |   |   |
| Residential                                                       |   |                | 134,969      |   |   |   | 177,230 |   |
| Commercial                                                        |   |                | 193,577      |   |   |   | 206,973 |   |
| Construction                                                      |   |                | 51,592       |   |   |   | 73,936 |   |
| Home      Equity                                                  |   |                | 54,434       |   |   |   | 60,539 |   |
| Loans      secured by deposit accounts                            |   |                | 1,003        |   |   |   | 1,242 |   |
| Consumer                                                          |   |                |  13,676 |   |   |   |  17,296 |   |
| Subtotal                                                          |   |                | 543,419      |   |   |   | 632,581 |   |
| Less:     Allowance      for loan losses |   |                | (15,236      | )      |   |   | (9,478 | ) |
| Loans,      net                                                   |   | $                   | 528,183      |   |   | $      | 623,103 |   |

|                           |   | 2009                |    |   | 2008   |   |   | 2007   |   |
|--------------------------------|--------|---------------------|---------|--------|--------|--------|--------|--------|--------|
|                           |   | (In thousands) |    |
| Beginning      balance         |   | $                   | 9,478   |   |   | $      | 6,316  |   |   | $ | 5,654 |   |
| Provision      for loan losses |   |                | 15,925  |   |   |   | 6,857  |   |   |   | 1,296 |   |
| Loans      charged-off         |   |                | (10,385 | )      |   |   | (3,813 | )      |   |   | (801 | ) |
| Recoveries                     |   |                | 218     |   |   |   | 118    |   |   |   | 167 |   |
| Ending      balance            |   | $                   | 15,236  |   |   | $      | 9,478  |   |   | $ | 6,316 |   |

----

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|                                                                                                    |   | 2009                |   |   | 2008   |   |   | 2007   |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                    |   | (In thousands) |   |
| Impaired      loans at year-end, including troubled debt restructurings of $8.6 million,      $0 and $0 |   | $                   | 31,952 |   |   | $      | 20,189 |   |   | $ | 9,295 |   |
| Amount      of the allowance for loan losses allocated                                                  |   |                | 3,474  |   |   |   | 4,413  |   |   |   | 1,593 |   |
| Average      of impaired loans during the year                                                          |   |                | 28,415 |   |   |   | 8,107  |   |   |   | 4,628 |   |
| Interest      income recognized and received during impairment                                          |   |                | 346    |   |   |   | 4      |   |   |   | 75 |   |
|                                                                                                    |   |                |   |   |   |   |   |   |   |   |   |   |
| Nonperforming      loans at year-end were as follows.                                                   |   |                |   |   |   |   |   |   |   |   |   |   |
| Loans      past due over 90 days still on accrual                                                       |   | $                   | -      |   |   | $      | -      |   |   | $ | 244 |   |
| Non-accrual      loans                                                                                  |   |                | 22,653 |   |   |   | 20,702 |   |   |   | 11,134 |   |
| Troubled      debt restructurings                                                                       |   |                | 8,562  |   |   |   | -      |   |   |   | - |   |

|                                      |   | 2009                |    |
|-------------------------------------------|--------|---------------------|---------|
|                                      |   | (In thousands) |    |
| Beginning      loans                      |   | $                   | 23,807  |   |
| New      loans                            |   |                | 11,495  |   |
| Effect      of changes in related parties |   |                | (60     | ) |
| Repayments                                |   |                | (11,449 | ) |
| Ending      loans                         |   | $                   | 23,793  |   |

----

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|                                           |   | 2009                |    |   | 2008   |   |
|------------------------------------------------|--------|---------------------|---------|--------|--------|--------|
|                                           |   | (In thousands) |    |
| Land      and land improvements                |   | $                   | 2,766   |   |   | $      | 2,766 |   |
| Buildings                                      |   |                | 13,161  |   |   |   | 13,176 |   |
| Furniture,      fixtures and equipment         |   |                | 11,750  |   |   |   | 11,085 |   |
| Leasehold      improvements                    |   |                | 1,384   |   |   |   | 1,384 |   |
|                                           |   |                | 29,061  |   |   |   | 28,411 |   |
| Less:  Accumulated      depreciation |   |                | (14,673 | )      |   |   | (13,283 | ) |
|                                           |   | $                   | 14,388  |   |   | $      | 15,128 |   |

| 2010       |   | $      | 598   |   |
|------------|--------|--------|-------|--------|
| 2011       |   |   | 546   |   |
| 2012       |   |   | 532   |   |
| 2013       |   |   | 404   |   |
| 2014       |   |   | 314   |   |
| Thereafter |   |   | 1,041 |   |
| Total      |   | $      | 3,435 |   |

----

----

|                   |   | 2009   |    |   | 2008   |   |
|------------------------|--------|--------|---------|--------|--------|--------|
| Beginning      of year |   | $      | 15,335  |   |   | $      | 15,335 |   |
| Impairment             |   |   | (15,335 | )      |   |   | - |   |
| End      of year       |   | $      | -       |   |   | $      | 15,335 |   |

| · | Market      comparison – The market comparison methodology utilizes data from recent      acquisitions in the Company’s geographical market area, including those      transactions with companies that have similar characteristics to the      Company including return on averageassets. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Asset      value method – The asset value methodology considers the liquidation value      of assets based on informationavailable. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

| · | Earnings      value method – The earnings value method is based on the premise that      common stock value is equivalent to that price at which its future      dividends and residual earnings will produce a particular      yield.  A short-term value was estimated based on a 5 year      earnings projections and cash flows while a long-term value was also      determined based on a 20 year earnings projection and cash      flows. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Acquisition      analysis – The acquisition analysis considers what a potential acquirer      would pay for the Company to achieve a desirable rate of return      contemplating both a 10% and 20% reduction in non-interest      expense. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                      |   | 2009                |   |   | 2008                    |   |
|---------------------------|--------|---------------------|--------|--------|-------------------------|--------|
|                      |   | GrossCarryingAmount |   |   | AccumulatedAmortization |   |   | GrossCarryingAmount |   |   | AccumulatedAmortization |   |
|                      |   |                |   |   |                    |   |   |   |   |   |   |   |
| Beginning      of year    |   | $                   | 3,512  |   |                    | $      | 1,020 |   |   | $ | 3,512 |   |   | $ | 613 |   |
| Amortization      expense |   |                | -      |   |                    |   | 321 |   |   |   | - |   |   |   | 407 |   |
| Impairment                |   |                | 819    |   |                    |   | - |   |   |   | - |   |   |   | - |   |
| End      of year          |   | $                   | 2,693  |   |                    | $      | 1,341 |   |   | $ | 3,512 |   |   | $ | 1,020 |   |

| 2010 |   | $      | 246 |   |
|------|--------|--------|-----|--------|
| 2011 |   |   | 241 |   |
| 2012 |   |   | 228 |   |
| 2013 |   |   | 212 |   |
| 2014 |   |   | 192 |   |

----

----

| 2010 |   | $      | 204,846 |   |
|------|--------|--------|---------|--------|
| 2011 |   |   | 31,548  |   |
| 2012 |   |   | 7,650   |   |
| 2013 |   |   | 1,298   |   |
| 2014 |   |   | 966     |   |

----

----

|                                                             |   | 2009                             |   |   | 2008   |   |   | 2007   |   |
|------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                             |   | (Dollars in thousands) |   |
| Repurchase      agreements at year-end                           |   |                             |   |   |   |   |   |   |   |
| Balance                                                          |   | $                                | 60,896 |   |   | $      | 60,011 |   |   |   |   |
| Weighted      average interest rate                              |   |                             | 0.34   | %      |   |   | 0.42   | %      |   |   |   |
| Repurchase      agreements during the year                       |   |                             |   |   |   |   |   |   |   |   |   |
| Average      daily balance                                       |   | $                                | 43,169 |   |   | $      | 50,260 |   |   | $ | 48,547 |   |
| Maximum      month-end balance                                   |   |                             | 60,896 |   |   |   | 60,011 |   |   |   | 54,443 |   |
| Weighted      average interest rate                              |   |                             | 0.32   | %      |   |   | 1.30   | %      |   |   | 4.10 | % |
|                                                             |   |                             |   |   |   |   |   |   |   |   |   |   |
| Federal      funds purchased and lines of credit at year-end     |   |                             |   |   |   |   |   |   |   |   |   |   |
| Balance                                                          |   | $                                | 6,300  |   |   | $      | 9,172  |   |   |   |   |   |
| Weighted      average interest rate                              |   |                             | 3.28   | %      |   |   | 2.97   | %      |   |   |   |   |
| Federal      funds purchased and lines of credit during the year |   |                             |   |   |   |   |   |   |   |   |   |   |
| Average      daily balance                                       |   | $                                | 8,393  |   |   | $      | 10,631 |   |   | $ | 13,687 |   |
| Maximum      month-end balance                                   |   |                             | 9,372  |   |   |   | 28,367 |   |   |   | 32,139 |   |
| Weighted      average interest rate                              |   |                             | 3.07   | %      |   |   | 4.22   | %      |   |   | 5.78 | % |
|                                                             |   |                             |   |   |   |   |   |   |   |   |   |   |
| Structured      repurchase agreement at year-end                 |   |                             |   |   |   |   |   |   |   |   |   |   |
| Balance                                                          |   | $                                | 9,800  |   |   | $      | 9,800  |   |   |   |   |   |
| Weighted      average interest rate                              |   |                             | 4.90   | %      |   |   | 4.90   | %      |   |   |   |   |
| Structured      repurchase agreement during the year             |   |                             |   |   |   |   |   |   |   |   |   |   |
| Average      daily balance                                       |   | $                                | 9,800  |   |   | $      | 9,800  |   |   | $ | 1,128 |   |
| Maximum      month-end balance                                   |   |                             | 9,800  |   |   |   | 9,800  |   |   |   | 9,800 |   |
| Weighted      average interest rate                              |   |                             | 4.97   | %      |   |   | 3.05   | %      |   |   | 2.72 | % |

|               |   | 2009                        |   |   | 2008   |   |
|--------------------|--------|-----------------------------|--------|--------|--------|--------|
|               |   | WeightedAverageRate         |   |   | Amount |   |   | WeightedAverageRate |   |   | Amount |   |
|               |   | (Dollars      in thousands) |   |
|               |   |                        |   |   |   |   |   |   |   |   |   |   |
| Fixed      rate    |   |                        | 3.93   | %      |   | $      | 43,482 |   |   |   | 4.90 | % |   | $ | 111,943 |   |
| Floating      Rate |   |                        | 0.47   |   |   |   | 25,000 |   |   |   | - |   |   |   | - |   |
|               |   |                        | 2.66   |   |   | $      | 68,482 |   |   |   | 4.90 | % |   | $ | 111,943 |   |

----

----

|   |   | (In      thousands) |   |
|--------|--------|---------------------|--------|
| 2010   |   | $                   | 53,482 |   |
| 2011   |   |                | 10,000 |   |
| 2012   |   |                | -      |   |
| 2013   |   |                | 5,000  |   |
|   |   | $                   | 68,482 |   |

----

----

|                                        |   | 2009                |   |   | 2008   |   |
|---------------------------------------------|--------|---------------------|--------|--------|--------|--------|
|                                        |   | (In thousands) |   |
| Change      in projected benefit obligation |   |                |   |   |   |   |
| Balance,      beginning of year             |   | $                   | 967    |   |   | $      | 991 |   |
| Interest      cost                          |   |                | 57     |   |   |   | 53 |   |
| Actuarial      (gain) loss                  |   |                | 23     |   |   |   | (47 | ) |
| Benefits      paid to participants          |   |                | (32    | )      |   |   | (33 | ) |
| Ending      benefit obligation              |   |                | 1,015  |   |   |   | 967 |   |
|                                        |   |                |   |   |   |   |   |   |
| Change      in plan assets                  |   |                |   |   |   |   |   |   |
| Fair      value, beginning of year          |   |                | 586    |   |   |   | 702 |   |
| Actual      return on plan assets           |   |                | 138    |   |   |   | (211 | ) |
| Employer      contributions                 |   |                | 61     |   |   |   | 128 |   |
| Benefits      paid to participants          |   |                | (32    | )      |   |   | (33 | ) |
| Fair      value, end of year                |   |                | 753    |   |   |   | 586 |   |
|                                        |   |                |   |   |   |   |   |   |
| Funded      status                          |   | $                   | (262   | )      |   | $      | (381 | ) |

|                                                                                          |   | 2009                        |   |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                          |   | (Dollars      in thousands) |   |
| Interest      cost                                                                            |   | $                           | 57     |   |   | $      | 56     |   |   | $ | 53 |   |
| Expected      return on plan assets                                                           |   |                        | (44    | )      |   |   | (56    | )      |   |   | (53 | ) |
| Amortization      of unrecognized loss                                                        |   |                        | 16     |   |   |   | 8      |   |   |   | 27 |   |
| Net      periodic benefit cost                                                                |   |                        | 29     |   |   |   | 8      |   |   |   | 27 |   |
|                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Net      loss (gain)                                                                          |   |                        | (87    | )      |   |   | 212    |   |   |   | 60 |   |
| Total      recognized in other comprehensive loss (income)                                    |   |                        | (87    | )      |   |   | 212    |   |   |   | 60 |   |
|                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |
| Total      recognized in net periodic benefit cost and other comprehensive loss      (income) |   | $                           | (58    | )      |   | $      | 220    |   |   | $ | 87 |   |
|                                                                                          |   |                        |   |   |   |   |   |   |   |   |   |   |

----

----

|                                          |   | 2009   |   |   | 2008   |   |   | 2007 |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------|--------|
| Discount      rate on benefit obligation      |   |   | 5.75   | %      |   |   | 6.00   | %    |   |   | 5.75 | % |
| Rate      of expected return on plan assets   |   |   | 7.50   | %      |   |   | 8.00   | %    |   |   | 8.00 | % |
| Discount      rate for periodic benefit costs |   |   | 6.00   | %      |   |   | 5.75   | %    |   |   | 5.75 | % |

|                |   | TargetAllocation |   |   | Percentage of PlanAssets at Year-end |   |   | Weighted-AverageExpected Long-Term |   |
|---------------------|--------|------------------|--------|--------|----------------------------------------------------------|--------|--------|-----------------------------------------|--------|
|                |   | 2010             |   |   | 2009                                                     |   |   | 2008                                    |   |   | Rate of Return |   |
| Asset      Category |   |             |   |   |                                                     |   |   |                                    |   |   |   |   |
| Mutual      funds   |   |             | 85     | %      |                                                     |   | 92     | %                                       |   |   | 98 | % |   |   | 9.0 | % |
| Money      market   |   |             | 15     |   |                                                     |   | 8      |                                    |   |   | 2 |   |   |   | 4.0 |   |
| Total               |   |             | 100    | %      |                                                     |   | 100    | %                                       |   |   | 100 | % |   |   | 8.0 | % |

----

----

|                             |   |          |   |   | Fair Value Measurements at December 31, 2009 Using:    |   |
|----------------------------------|--------|---------------|--------|--------|-------------------------------------------------------------------------------------------|--------|
|                             |   | CarryingValue |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant OtherObservable Inputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
| (Dollars in Thousands) |   |          |   |   |                                                                                      |   |   |   |   |   |   |   |
| Plan      Assets                 |   |          |   |   |                                                                                      |   |   |   |   |   |   |   |
| Money      Market Mutual Fund    |   | $             | 57     |   |                                                                                      | $      | 57 |   |   | $ | - |   |   | $ | - |   |
| Equity      Mutual Funds         |   |          | 696    |   |                                                                                      |   | 696 |   |   |   | - |   |   |   | - |   |
|                             |   |          |   |   |                                                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total      Plan Assets           |   | $             | 753    |   |                                                                                      | $      | 753 |   |   | $ | - |   |   | $ | - |   |

|                 |   | Pension Benefits |   |
|----------------------|--------|------------------|--------|
| 2010                 |   | $                | 39     |   |
| 2011                 |   |             | 37     |   |
| 2012                 |   |             | 36     |   |
| 2013                 |   |             | 36     |   |
| 2014                 |   |             | 36     |   |
| Years      2015-2019 |   |             | 503    |   |

----

----

|                                 |   | 2007           |   |
|--------------------------------------|--------|----------------|--------|
| Risk-free      interest rate         |   |           | 5.10   | % |
| Expected      term                   |   | 5.7      years |   |
| Expected      stock price volatility |   |           | 15.38  | % |
| Dividend      yield                  |   |           | 3.24   | % |

|                                  |   | Shares              |   |   | WeightedAverageExercisePrice |   |   | WeightedAverageRemainingContractualTerm |   |   | AggregateIntrinsicValue |   |
|---------------------------------------|--------|---------------------|--------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------|--------|
|                                  |   | (In thousands) |   |
| Outstanding      at beginning of year |   |                | 263    |   |                         | $      | 20.56  |                                    |   |   |                    |   |   |   |
| Granted                               |   |                | -      |   |                         |   | -      |                                    |   |   |                    |   |   |   |
| Exercised                             |   |                | -      |   |                         |   | -      |                                    |   |   |                    |   |   |   |
| Forfeited                             |   |                | (37    | )      |                         |   | 20.27  |                                    |   |   |                    |   |   |   |
| Expired                               |   |                | (2     | )      |                         |   | 15.57  |                                    |   |   |                    |   |   |   |
| Outstanding      at end of year       |   |                | 224    |   |                         | $      | 20.66  |                                    |   |   | 5.7                     |   |   | $ | - |   |
| Vested      and expected to vest      |   |                | 224    |   |                         | $      | 20.66  |                                    |   |   | 5.7                     |   |   | $ | - |   |
| Exercisable      at end of year       |   |                | 177    |   |                         | $      | 20.42  |                                    |   |   | 4.5                     |   |   | $ | - |   |

----

----

|                                                |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Intrinsic      value of options exercised           |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |
| Cash      received from option exercises            |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Tax      benefit realized from option exercises     |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Weighted      average fair value of options granted |   |   | -      |   |   |   | -      |   |   |   | 2.76 |   |

| Nonvested Units                |   | Units               |     |   | Weighted-AverageGrant-DateFair Value |   |
|-------------------------------------|--------|---------------------|----------|--------|-------------------------------------------|--------|
|                                |   | (In thousands) |     |   |                                      |   |
| Nonvested      at January 1, 2009   |   |                | 23       |   |                                      | $      | 18.68 |   |
| Granted                             |   |                | -        |   |                                      |   | - |   |
| Vested                              |   |                | (21      | )      |                                      |   | 18.68 |   |
| Forfeited                           |   |                |  (2 | )      |                                      |   | 18.68 |   |
| Nonvested      at December 31, 2009 |   |                |  -  |   |                                      | $      | - |   |

----

----

| Nonvested Shares               |   | Shares              |     |   | Weighted-AverageGrant-DateFair Value |   |
|-------------------------------------|--------|---------------------|----------|--------|-------------------------------------------|--------|
|                                |   | (In thousands) |     |   |                                      |   |
| Nonvested      at January 1, 2009   |   |                | 20       |   |                                      | $      | 18.72 |   |
| Granted                             |   |                | 4        |   |                                      |   | 8.07 |   |
| Vested                              |   |                | -        |   |                                      |   | - |   |
| Forfeited                           |   |                |  (7 | )      |                                      |   | 12.62 |   |
| Nonvested      at December 31, 2009 |   |                |  17 |   |                                      | $      | 18.72 |   |

| Nonvested Units                |   | Units               |     |   | Weighted-AverageGrant-DateFair Value |   |
|-------------------------------------|--------|---------------------|----------|--------|-------------------------------------------|--------|
|                                |   | (In thousands) |     |   |                                      |   |
| Nonvested      at January 1, 2009   |   |                | -        |   |                                      | $      | - |   |
| Granted                             |   |                | 15       |   |                                      |   | 8.07 |   |
| Vested                              |   |                | -        |   |                                      |   | - |   |
| Forfeited                           |   |                |  (2 | )      |                                      |   | 8.07 |   |
| Nonvested      at December 31, 2009 |   |                |  13 |   |                                      | $      | 8.07 |   |

----

----

|                               |   | 2009                |   |   | 2008   |   |   | 2007   |   |
|------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|--------|--------|
|                               |   | (In thousands) |   |
| Current                            |   | $                   | (876   | )      |   | $      | 383    |   |   | $ | 1,221 |   |
| Deferred                           |   |                | (5,051 | )      |   |   | (1,458 | )      |   |   | (393 | ) |
| Change      in valuation allowance |   |                | 1,073  |   |   |   | 384    |   |   |   | 77 |   |
| Total                              |   | $                   | (4,854 | )      |   | $      | (691   | )      |   | $ | 905 |   |

|                                                           |   | 2009                             |   |   | 2008   |   |       | 2007   |   |
|----------------------------------------------------------------|--------|----------------------------------|--------|--------|--------|--------|------------|--------|--------|
|                                                           |   | (Dollars in thousands) |   |
| Federal      statutory rate times financial statement income   |   | $                                | (9,120 | )      |   |   | 34.0       | %      |   | $ | 44 |   |   |   | 34.0 | % |   | $ | 1,499 |   |   |   | 34.0 | % |
| Effect      of:                                                |   |                             |   |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax-exempt      income                                         |   |                             | (552   | )      |   |   | 2.1        |   |   |   | (381 | ) |   |   | (292.6 | ) |   |   | (253 | ) |   |   | (5.7 | ) |
| State      taxes, net of federal benefit                       |   |                             | (1,073 | )      |   |   | 4.0        |   |   |   | (384 | ) |   |   | (294.7 | ) |   |   | (77 | ) |   |   | (1.7 | ) |
| Change      in valuation allowance                             |   |                             | 1,073  |   |   |   | (4.0       | )      |   |   | 384 |   |   |   | 294.7 |   |   |   | 77 |   |   |   | 1.7 |   |
| Nontaxable      earnings from company owned insurance policies |   |                             | (253   | )      |   |   | 0.9        |   |   |   | (250 | ) |   |   | (191.5 | ) |   |   | (231 | ) |   |   | (5.2 | ) |
| New      markets tax credit                                    |   |                             | (180   | )      |   |   | 0.7        |   |   |   | (180 | ) |   |   | (138.1 | ) |   |   | (180 | ) |   |   | (4.1 | ) |
| Incentive      stock options expense                           |   |                             | 14     |   |   |   | (0.1       | )      |   |   | 43 |   |   |   | 32.8 |   |   |   | 40 |   |   |   | 0.9 |   |
| Goodwill      and other intangible asset impairment            |   |                             | 5,214  |   |   |   | (19.4      | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other,      net                                                |   |                             | 23     |   |   |   |  (0.1 | )      |   |   | 33 |   |   |   |  25.3 |   |   |   | 30 |   |   |   |  0.6 |   |
| Total                                                          |   | $                                | (4,854 | )      |   |   | 18.1       | %      |   | $ | (691 | ) |   |   | (530.1 | )% |   | $ | 905 |   |   |   | 20.5 | % |

----

----

|                                                      |   | 2009                |   |   | 2008   |   |
|-----------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|
|                                                      |   | (In thousands) |   |
| Deferred      tax assets:                                 |   |                |   |   |   |   |
| Allowance      for loan losses                            |   | $                   | 5,180  |   |   | $      | 3,222 |   |
| Employee      benefit plans                               |   |                | 92     |   |   |   | 100 |   |
| Other-than-temporary      impairment                      |   |                | 374    |   |   |   | - |   |
| Minimum      pension liability                            |   |                | 169    |   |   |   | 198 |   |
| Net      unrealized loss on securities available for sale |   |                | -      |   |   |   | 126 |   |
| State      taxes                                          |   |                | 1,879  |   |   |   | 806 |   |
| Tax      credit carryforward                              |   |                | 880    |   |   |   | - |   |
| Other                                                     |   |                | 414    |   |   |   | 142 |   |
|                                                      |   |                | 8,988  |   |   |   | 4,594 |   |
| Deferred      tax liabilities:                            |   |                |   |   |   |   |   |   |
| Premises      and equipment                               |   |                | (427   | )      |   |   | (407 | ) |
| FHLB      stock                                           |   |                | (248   | )      |   |   | (308 | ) |
| Deferred      loan fees and costs                         |   |                | (206   | )      |   |   | (254 | ) |
| Mortgage      servicing rights                            |   |                | (19    | )      |   |   | (23 | ) |
| Net      unrealized gain on securities available for sale |   |                | (818   | )      |   |   | - |   |
| Fair      value adjustments from acquisitions             |   |                | (234   | )      |   |   | (238 | ) |
| Intangible      assets                                    |   |                | (460   | )      |   |   | (847 | ) |
| Prepaid      expenses                                     |   |                | (117   | )      |   |   | (102 | ) |
| Other                                                     |   |                | (109   | )      |   |   | (143 | ) |
|                                                      |   |                | (2,638 | )      |   |   | (2,322 | ) |
| Valuation      allowance on net deferred tax assets       |   |                | (1,879 | )      |   |   | (806 | ) |
| Net      deferred tax asset                               |   | $                   | 4,471  |   |   | $      | 1,466 |   |

----

----

----

----

----

----

----

----

|                                           |   | Actual                     |   |   | For CapitalAdequacy Purposes |   |   | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |   |
|------------------------------------------------|--------|----------------------------|--------|--------|----------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                                           |   | Amount                     |   |   | Ratio                                  |   |   | Amount                                                                                 |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| 2009                                           |   | (Dollars      in millions) |   |
| Total      Capital (to Risk Weighted Assets):  |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 78.5   |   |                                   |   | 13.1   | %                                                                                      |   | $ | 47.8 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 65.1   |   |                                   |   | 12.7   |                                                                                   |   |   | 41.1 |   |   |   | 8.0 |   |   |   | 51.4 |   |   |   | 10.0 | % |
| Scott      County State Bank                   |   |                       | 12.6   |   |                                   |   | 14.6   |                                                                                   |   |   | 6.9 |   |   |   | 8.0 |   |   |   | 8.6 |   |   |   | 10.0 |   |
|                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to Risk Weighted Assets): |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 71.0   |   |                                   |   | 11.9   | %                                                                                      |   | $ | 23.9 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 58.6   |   |                                   |   | 11.4   |                                                                                   |   |   | 20.6 |   |   |   | 4.0 |   |   |   | 30.8 |   |   |   | 6.0 | % |
| Scott      County State Bank                   |   |                       | 11.5   |   |                                   |   | 13.4   |                                                                                   |   |   | 3.5 |   |   |   | 4.0 |   |   |   | 5.2 |   |   |   | 6.0 |   |
|                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to Average Assets):       |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 71.0   |   |                                   |   | 8.6    | %                                                                                      |   | $ | 33.1 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 58.6   |   |                                   |   | 8.6    |                                                                                   |   |   | 27.2 |   |   |   | 4.0 |   |   |   | 34.1 |   |   |   | 5.0 | % |
| Scott      County State Bank                   |   |                       | 11.5   |   |                                   |   | 8.7    |                                                                                   |   |   | 5.3 |   |   |   | 4.0 |   |   |   | 6.6 |   |   |   | 5.0 |   |
|                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      Capital (to Risk Weighted Assets):  |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 70.7   |   |                                   |   | 10.7   | %                                                                                      |   | $ | 52.7 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 65.5   |   |                                   |   | 11.5   |                                                                                   |   |   | 45.4 |   |   |   | 8.0 |   |   |   | 56.8 |   |   |   | 10.0 | % |
| Scott      County State Bank                   |   |                       | 13.4   |   |                                   |   | 14.1   |                                                                                   |   |   | 7.6 |   |   |   | 8.0 |   |   |   | 9.5 |   |   |   | 10.0 |   |
|                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to Risk Weighted Assets): |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 62.4   |   |                                   |   | 9.5    | %                                                                                      |   | $ | 26.3 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 58.3   |   |                                   |   | 10.3   |                                                                                   |   |   | 22.7 |   |   |   | 4.0 |   |   |   | 34.1 |   |   |   | 6.0 | % |
| Scott      County State Bank                   |   |                       | 12.7   |   |                                   |   | 13.3   |                                                                                   |   |   | 3.8 |   |   |   | 4.0 |   |   |   | 5.7 |   |   |   | 6.0 |   |
|                                           |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier      I Capital (to Average Assets):       |   |                       |   |   |                                   |   |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                                   |   | $                          | 62.4   |   |                                   |   | 7.6    | %                                                                                      |   | $ | 33.1 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
| Your      Community Bank                       |   |                       | 58.3   |   |                                   |   | 8.2    |                                                                                   |   |   | 28.3 |   |   |   | 4.0 |   |   |   | 35.4 |   |   |   | 5.0 | % |
| Scott      County State Bank                   |   |                       | 12.7   |   |                                   |   | 9.4    |                                                                                   |   |   | 5.4 |   |   |   | 4.0 |   |   |   | 6.7 |   |   |   | 5.0 |   |

----

----

|                           |   | 2009                |   |   | 2008         |   |
|--------------------------------|--------|---------------------|--------|--------|--------------|--------|
|                           |   | FixedRate           |   |   | VariableRate |   |   | FixedRate |   |   | VariableRate |   |
|                           |   | (In thousands) |   |
| Commitments      to make loans |   | $                   | 7,792  |   |         | $      | 105 |   |   | $ | 1,734 |   |   | $ | 350 |   |
| Unused      lines of credit    |   |                | 5,966  |   |         |   | 101,155 |   |   |   | 2,493 |   |   |   | 119,803 |   |
| Letters      of credit         |   |                | -      |   |         |   | 3,105 |   |   |   | - |   |   |   | 5,737 |   |

----

----

----

----

|                                                                                          |   |                                                             | Fair Value Measurements at December 31, 2009, Using |   |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|----------------------------------------------------------------------------------------|--------|
|                                                                                          |   | Assets at FairValue at December 31,2009 |                                                                                   |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                                                                          |   |                                                             |                                                                                   |   | (in thousands) |   |
| Assets:                                                                                       |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |
| Available      for sale securities:                                                           |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |
| State      and municipal                                                                      |   | $                                                                | 49,809                                                                                 |   |   | $ | - |   |   | $ | 49,809 |   |   | $ | - |   |
| Residential      mortgage-backed securities issued by U.S. Government sponsored      entities |   |                                                             |  120,084                                                                          |   |   |   |  - |   |   |   |  120,084 |   |   |   |  - |   |
| Collateralized      debt obligations, including trust preferred securities                    |   |                                                             | 2,585                                                                                  |   |   |   | - |   |   |   | - |   |   |   | 2,585 |   |
| Mutual      funds                                                                             |   |                                                             | 245                                                                                    |   |   |   | - |   |   |   | 245 |   |   |   | - |   |
|                                                                                          |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      available for sale securities                                                      |   | $                                                                | 172,723                                                                                |   |   | $ | - |   |   | $ | 170,138 |   |   | $ | 2,585 |   |

----

----

|                                                                                          |   |                                                             | Fair Value Measurements at December 31, 2008, Using |   |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|----------------------------------------------------------------------------------------|--------|
|                                                                                          |   | Assets at FairValue at December 31,2008 |                                                                                   |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                                                                          |   |                                                             |                                                                                   |   | (in thousands) |   |
| Assets:                                                                                       |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |
| Available      for sale securities:                                                           |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |
| State      and municipal                                                                      |   | $                                                                | 20,542                                                                                 |   |   | $ | - |   |   | $ | 20,542 |   |   | $ | - |   |
| Residential      mortgage-backed securities issued by U.S. Government sponsored      entities |   |                                                             |  97,588                                                                           |   |   |   |  - |   |   |   |  97,588 |   |   |   |  - |   |
| Collateralized      debt obligations, including trust preferred securities                    |   |                                                             | 3,285                                                                                  |   |   |   | - |   |   |   | - |   |   |   | 3,285 |   |
| Mutual      funds                                                                             |   |                                                             | 244                                                                                    |   |   | - |   |   |   | 244 |   |   |   | - |   |
|                                                                                          |   |                                                             |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      available for sale securities                                                      |   | $                                                                | 121,659                                                                                |   |   | $ | - |   |   | $ | 118,374 |   |   | $ | 3,285 |   |

|                                                            |   | Twelve MonthsEndedDecember 31,2009 |   |
|-----------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                            |   | (in thousands)                          |   |
|                                                            |   |                                         |   |
| Balance,      January 1, 2009                                   |   | $                                            | 3,285  |   |
| Other-than-temporary      impairment recognized in earnings     |   |                                         | (1,100 | ) |
| Net      unrealized gain included in other comprehensive income |   |                                         | 382    |   |
| Payments-in-kind                                                |   |                                         | 18     |   |
| Balance,      December 31, 2009                                 |   | $                                            | 2,585  |   |

----

----

|                                                            |   | Twelve MonthsEndedDecember 31,2008 |    |
|-----------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                            |   | (in thousands)                          |    |
|                                                            |   |                                         |    |
| Balance,      January 1, 2008                                   |   | $                                            | — |   |
| Transfer      into level 3, April 1, 2008                       |   |                                         | 5,189   |   |
| Net      unrealized loss included in other comprehensive income |   |                                         | (1,756  | ) |
| Principal      paydowns                                         |   |                                         | (148    | ) |
| Balance,      December 31, 2008                                 |   | $                                            | 3,285   |   |

|                                   |   |                                                             | Fair Value Measurements at December 31,2009, Using |   |
|----------------------------------------|--------|------------------------------------------------------------------|----------------------------------------------------------------------------------|--------|
|                                   |   | Assets at FairValue atDecember 31, 2009 |                                                                             |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                   |   |                                                             |                                                                             |   | (in thousands) |   |
| Assets:                                |   |                                                             |                                                                             |   |   |   |   |   |   |   |   |   |
| Impaired      loans                    |   | $                                                                | 17,931                                                                           |   |   | $ | — |   |   | $ | — |   |   | $ | 17,931 |   |
| Acquired      intangible assets        |   |                                                             | 1,352                                                                            |   |   |   | — |   |   |   | — |   |   |   | 1,352 |   |
| Foreclosed      and repossessed assets |   |                                                             | 5,190                                                                            |   |   |   | — |   |   |   | — |   |   |   | 5,190 |   |

----

----

|                           |   |                                                             | Fair Value Measurements at December 31,2008, Using |   |
|--------------------------------|--------|------------------------------------------------------------------|----------------------------------------------------------------------------------|--------|
|                           |   | Assets at FairValue atDecember 31, 2008 |                                                                             |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                           |   |                                                             |                                                                             |   | (in thousands) |   |
| Assets:                        |   |                                                             |                                                                             |   |   |   |   |   |   |   |   |   |
| Impaired      loans            |   | $                                                                | 15,776                                                                           |   |   | $ | — |   |   | $ | — |   |   | $ | 15,776 |   |
| Mortgage      servicing rights |   |                                                             | 69                                                                               |   |   |   | — |   |   |   | 69 |   |   |   | — |   |

----

----

|                                                            |   | 2009                |    |   | 2008      |   |
|-----------------------------------------------------------------|--------|---------------------|---------|--------|-----------|--------|
|                                                            |   | CarryingAmount      |    |   | FairValue |   |   | CarryingAmount |   |   | FairValue |   |
|                                                            |   | (In thousands) |    |
| Financial      assets                                           |   |                |    |   |      |   |   |   |   |   |   |   |
| Cash      and due from financial institutions                   |   | $                   | 24,474  |   |      | $      | 24,474 |   |   | $ | 19,724 |   |   | $ | 19,724 |   |
| Interest-bearing      deposits in other financial institutions  |   |                | 29,941  |   |      |   | 29,941 |   |   |   | 45,749 |   |   |   | 45,749 |   |
| Loans      held for sale                                        |   |                | 979     |   |      |   | 989 |   |   |   | 308 |   |   |   | 312 |   |
| Loans,      net of allowance for loan losses and impaired loans |   |                | 496,231 |   |      |   | 527,279 |   |   |   | 623,103 |   |   |   | 615,501 |   |
| Accrued      interest receivable                                |   |                | 3,216   |   |      |   | 3,216 |   |   |   | 3,163 |   |   |   | 3,163 |   |
| Federal      Home Loan Bank and Federal Reserve Stock           |   |                | 7,670   |   |      |   | n/a |   |   |   | 8,472 |   |   |   | n/a |   |
|                                                            |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Financial      liabilities                                      |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                        |   |                | 592,423 |   |      |   | 571,863 |   |   |   | 603,185 |   |   |   | 589,537 |   |
| Other      borrowings                                           |   |                | 76,996  |   |      |   | 77,830 |   |   |   | 78,983 |   |   |   | 80,158 |   |
| Federal      Home Loan Bank Advances                            |   |                | 68,482  |   |      |   | 69,581 |   |   |   | 111,943 |   |   |   | 116,007 |   |
| Subordinated      debentures                                    |   |                | 17,000  |   |      |   | 9,973 |   |   |   | 17,000 |   |   |   | 12,699 |   |
| Accrued      interest payable                                   |   |                | 818     |   |      |   | 818 |   |   |   | 1,705 |   |   |   | 1,705 |   |

----

----

|                                                           |   | December 31,   |        |
|----------------------------------------------------------------|--------|---------------------|-------------|
|                                                           |   | 2009                |        |   | 2008 |   |
|                                                           |   | (In thousands) |        |
| ASSETS                                                         |   |                |        |   |   |   |
| Cash      and due from financial institutions                  |   | $                   | 8,046       |   |   | $ | 826 |   |
| Interest-bearing      deposits in other financial institutions |   |                | -           |   |   |   | 5 |   |
| Investment      in subsidiaries                                |   |                | 75,306      |   |   |   | 88,583 |   |
| Other      assets                                              |   |                |  1,354 |   |   |   |  799 |   |
| Total      assets                                              |   | $                   | 84,706      |   |   | $ | 90,213 |   |
|                                                           |   |                |        |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                |   |                |        |   |   |   |   |   |
| Other      borrowings                                          |   | $                   | 6,300       |   |   | $ | 9,172 |   |
| Subordinated      debentures                                   |   |                | 17,000      |   |   |   | 17,000 |   |
| Accrued      expenses and other liabilities                    |   |                |  1,456 |   |   |   |  1,442 |   |
| Total      liabilities                                         |   |                | 24,756      |   |   |   | 27,614 |   |
| Total      shareholders’ equity                          |   |                | 59,950      |   |   |   | 62,599 |   |
|                                                           |   | $                   | 84,706      |   |   | $ | 90,213 |   |

|                                                           |   | Years ended December 31, |    |
|----------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                           |   | 2009                                    |    |   | 2008 |   |   | 2007 |   |
|                                                           |   | (In thousands)                     |    |
| Income                                                         |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Dividends      from subsidiaries                               |   | $                                       | 1,500   |   |   | $ | 4,000 |   |   | $ | 4,500 |   |
| Management      fees from subsidiaries                         |   |                                    | 3,119   |   |   |   | - |   |   |   | - |   |
|                                                           |   |                                    | 4,619   |   |   |   | 4,000 |   |   |   | 4,500 |   |
| Expense                                                        |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                        |   |                                    | 5,134   |   |   |   | 2,669 |   |   |   | 3,171 |   |
| Income      (loss) before income taxes and equity              |   |                                    |    |   |   |   |   |   |   |   |   |   |
| in      undistributed net income of subsidiaries               |   |                                    | (515    | ) |   |   | 1,331 |   |   |   | 1,329 |   |
| Income      tax benefit                                        |   |                                    | 669     |   |   |   | 864 |   |   |   | 1,037 |   |
| Income      before equity in undistributed net                 |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Income      (loss) of subsidiaries                             |   |                                    | 154     |   |   |   | 2,195 |   |   |   | 2,366 |   |
| Equity      in undistributed net income (loss) of subsidiaries |   |                                    | (22,123 | ) |   |   | (1,374 | ) |   |   | 1,137 |   |
| Net      Income (loss)                                         |   | $                                       | (21,969 | ) |   | $ | 821 |   |   | $ | 3,503 |   |

----

----

|                                                                              |   | Years ended December 31, |    |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                                              |   | 2009                                    |    |   | 2008 |   |   | 2007 |   |
|                                                                              |   | (In thousands)                     |    |
| Cash flows from operating activities                          |   |                                    |    |
| Net      income (loss)                                                            |   | $                                       | (21,969 | ) |   | $ | 821 |   |   | $ | 3,503 |   |
| Adjustments      to reconcile net income to net cash from operating    activities |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Equity      in undistributed net (income) loss of subsidiaries                    |   |                                    | 22,123  |   |   |   | 1,374 |   |   |   | (1,137 | ) |
| Share-based      compensation expense                                             |   |                                    | 85      |   |   |   | 309 |   |   |   | 122 |   |
| Net      change in other assets and liabilities                                   |   |                                    | (642    | ) |   |   | 2,297 |   |   |   | (1,415 | ) |
| Net      cash from operating activities                                           |   |                                    | (403    | ) |   |   | 4,801 |   |   |   | 1,073 |   |
|                                                                              |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities                                         |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Net      change in interest-bearing deposits with banks                           |   |                                    | 5       |   |   |   | (5 | ) |   |   | - |   |
| Investment      in subsidiary                                                     |   |                                    | (7,000  | ) |   |   | (2,000 | ) |   |   | - |   |
| Net      cash from investing activities                                           |   |                                    | (6,995  | ) |   |   | (2,005 | ) |   |   |   |   |
|                                                                              |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities                                         |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Net      change in short-term borrowings                                          |   |                                    | (2,872  | ) |   |   | 618 |   |   |   | 5,074 |   |
| Proceeds      from issuance of preferred stock and warrants                       |   |                                    | 19,468  |   |   |   | - |   |   |   | - |   |
| Purchase      of treasury stock                                                   |   |                                    | -       |   |   |   | (400 | ) |   |   | (3,904 | ) |
| Cash      dividends paid on preferred shares                                      |   |                                    | (449    | ) |   |   | - |   |   |   | - |   |
| Cash      dividends paid on common shares                                         |   |                                    | (1,529  | ) |   |   | (2,195 | ) |   |   | (2,299 | ) |
| Net      cash from financing activities                                           |   |                                    | 14,618  |   |   |   | (1,977 | ) |   |   | (1,129 | ) |
|                                                                              |   |                                    |    |   |   |   |   |   |   |   |   |   |
| Net      change in cash                                                           |   |                                    | 7,220   |   |   |   | 819 |   |   |   | (56 | ) |
| Cash      at beginning of year                                                    |   |                                    | 826     |   |   |   | 7 |   |   |   | 63 |   |
| Cash      at end of year                                                          |   | $                                       | 8,046   |   |   | $ | 826 |   |   | $ | 7 |   |

----

----

|                                                         |   | 2009                                                                            |      |   | 2008   |   |      | 2007   |   |
|--------------------------------------------------------------|--------|---------------------------------------------------------------------------------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                         |   | (In thousands, except share and per shareamounts) |      |
| Basic                                                        |   |                                                                            |      |   |   |   |      |   |   |
| Net      income (loss)                                       |   | $                                                                               | (21,969   | )      |   | $      | 821       |   |   | $ | 3,503 |   |
| Preferred      stock dividends and discount amortization     |   |                                                                            | (618      | )      |   |   | -         |   |   |   | - |   |
| Net      Income (loss) per common share                      |   | $                                                                               | (22,587   | )      |   | $      | 821       |   |   | $ | 3,503 |   |
| Average      shares:                                         |   |                                                                            |      |   |   |   |      |   |   |   |   |   |
| Common      shares issued                                    |   |                                                                            | 3,863,942 |   |   |   | 3,863,942 |   |   |   | 3,863,942 |   |
| Less:  Treasury      stock                         |   |                                                                            | (605,393  | )      |   |   | (615,157  | )      |   |   | (514,521 | ) |
| Average      shares outstanding                              |   |                                                                            | 3,258,549 |   |   |   | 3,248,785 |   |   |   | 3,349,421 |   |
| Net      income (loss) per common share, basic               |   | $                                                                               | (6.93     | )      |   | $      | 0.25      |   |   | $ | 1.05 |   |
|                                                         |   |                                                                            |      |   |   |   |      |   |   |   |   |   |
| Diluted                                                      |   |                                                                            |      |   |   |   |      |   |   |   |   |   |
| Net      income (loss) available to common shareholders      |   | $                                                                               | (22,587   | )      |   | $      | 821       |   |   | $ | 3,503 |   |
| Average      shares:                                         |   |                                                                            |      |   |   |   |      |   |   |   |   |   |
| Common      shares outstanding for basic                     |   |                                                                            | 3,258,549 |   |   |   | 3,248,785 |   |   |   | 3,349,421 |   |
| Add:  Dilutive      effects of outstanding options |   |                                                                            | -         |   |   |   | 10,376    |   |   |   |  24,802 |   |
| Average      shares and dilutive potential common shares     |   |                                                                            | 3,258,549 |   |   |   | 3,259,161 |   |   |   |  3,374,223 |   |
| Net      income (loss) per common share, diluted             |   | $                                                                               | (6.93     | )      |   | $      | 0.25      |   |   | $ | 1.04 |   |

----

----

|                                                                                                                                                                         |   | 2009                |   |   | 2008   |   |   | 2007   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                         |   | (In thousands) |   |
| Unrealized      holding gains (losses) on available for sale securities for which a      portion of an other-than- temporary impairment has been recognized in      earnings |   | $                   | 436    |   |   | $      | (27    | )      |   | $ | 1,216 |   |
| Unrealized      holding gains (losses) on available for sale securities                                                                                                      |   |                | 2,636  |   |   |   |   |   |   |   |   |   |
| Less      reclassification adjustments for (gains) losses recognized in      income                                                                                          |   |                | (1,380 | )      |   |   | (364   | )      |   |   | 41 |   |
| Less      reclassification adjustments for other-than-temporary impairment related      to credit losses                                                                     |   |                | 1,100  |   |   |   | -      |   |   |   | - |   |
| Net      unrealized gain (loss) on securities available for sale, net of      reclassifications                                                                              |   |                | 2,792  |   |   |   | (391   | )      |   |   | 1,257 |   |
|                                                                                                                                                                         |   |                |   |   |   |   |   |   |   |   |   |   |
| Unrealized      holding gain (loss) on interest rate swaps                                                                                                                   |   |                | -      |   |   |   | -      |   |   |   | 44 |   |
| Amounts      reclassified to interest income                                                                                                                                 |   |                | -      |   |   |   | -      |   |   |   | 1,014 |   |
| Net      unrealized gain (loss) on interest rate swaps, net of      reclassifications                                                                                        |   |                | -      |   |   |   | -      |   |   |   | 1,058 |   |
|                                                                                                                                                                         |   |                |   |   |   |   |   |   |   |   |   |   |
| Unrealized      loss on pension benefits                                                                                                                                     |   |                | 87     |   |   |   | (212   | )      |   |   | (60 | ) |
|                                                                                                                                                                         |   |                |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss) before tax effects                                                                                                                    |   |                | 2,879  |   |   |   | (603   | )      |   |   | 2,255 |   |
| Tax      effect                                                                                                                                                              |   |                | (976   | )      |   |   | 202    |   |   |   | (907 | ) |
| Other      comprehensive income (loss)                                                                                                                                       |   | $                   | 1,903  |   |   | $      | (401   | )      |   | $ | 1,348 |   |

|                                                            |   | Balanceat12/31/08 |   |   | CurrentPeriodChange |   |   | Balanceat12/31/09 |   |
|-----------------------------------------------------------------|--------|-------------------|--------|--------|---------------------|--------|--------|-------------------|--------|
|                                                            |   |              |   |   |                |   |   |              |   |
| Unrealized      gains (losses) on securities available for sale |   | $                 | (256   | )      |                | $      | 1,846  |              |   | $ | 1,590 |   |
| Unrealized      loss on pension benefits                        |   |              | (384   | )      |                |   | 57     |              |   |   | (327 | ) |
|                                                            |   |              |   |   |                |   |   |              |   |   |   |   |
| Total                                                           |   | $                 | (640   | )      |                | $      | 1,903  |              |   | $ | 1,263 |   |

----

----

|                |   |                                                              |   |   |              |   |   | Net    |   |   | Earnings (Loss) Per |   |
|---------------------|--------|-------------------------------------------------------------------|--------|--------|-------------------|--------|--------|--------|--------|--------|-------------------------------|--------|
|                |   | Interest                                                          |   |   | Net Interest |   |   | Income |   |   | Share                         |   |
|                |   | Income                                                            |   |   | Income            |   |   | (Loss) |   |   | Basic                         |   |   | Diluted |   |
| 2009                |   | (In thousands, except per share amounts) |   |
| First      quarter  |   | $                                                                 | 10,304 |   |              | $      | 5,840  |   |   | $      | 623                           |   |   | $ | 0.19 |   |   | $ | 0.19 |   |
| Second      quarter |   |                                                              | 9,463  |   |              |   | 5,429  |   |   |   | (24,870                       | )      |   |   | (7.67 | ) |   |   | (7.67 | ) |
| Third      quarter  |   |                                                              | 9,817  |   |              |   | 6,092  |   |   |   | 957                           |   |   |   | 0.21 |   |   |   | 0.21 |   |
| Fourth      quarter |   |                                                              | 9,678  |   |              |   | 6,583  |   |   |   | 1,321                         |   |   |   | 0.32 |   |   |   | 0.32 |   |
|                |   |                                                              |   |   |              |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |
| 2008                |   |                                                              |   |   |              |   |   |   |   |   |                          |   |   |   |   |   |   |   |   |   |
| First      quarter  |   | $                                                                 | 11,802 |   |              | $      | 5,782  |   |   | $      | 1,036                         |   |   | $ | 0.32 |   |   | $ | 0.32 |   |
| Second      quarter |   |                                                              | 11,088 |   |              |   | 5,886  |   |   |   | 218                           |   |   |   | 0.07 |   |   |   | 0.06 |   |
| Third      quarter  |   |                                                              | 11,280 |   |              |   | 5,946  |   |   |   | 919                           |   |   |   | 0.28 |   |   |   | 0.28 |   |
| Fourth      quarter |   |                                                              | 10,737 |   |              |   | 5,840  |   |   |   | (1,352                        | )      |   |   | (0.42 | ) |   |   | (0.42 | ) |

----

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|  ̈ | Pertain      to the maintenance of records that in reasonable detail accurately and      fairly reflect the transactions and dispositions of the Company’s      assets; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ̈ | Provide      reasonable assurance that transactions are recorded as necessary to permit      preparation of financial statements in accordance with U.S. generally      accepted accounting principles, and that receipts and expenditures of the      Company are being made only in accordance with authorizations of      management and directors of the Company;and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ̈ | Provide      reasonable assurance regarding prevention or timely detection of      unauthorized acquisition, use or disposition of the Company’s assets that      could have a material effect on the financial  statements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| /s/ James D. Rickard                       |   | /s/ Paul A. Chrisco               |
|--------------------------------------------|--------|-----------------------------------|
| James      D. Rickard                      |   | Paul      A. Chrisco              |
| President      and Chief Executive Officer |   | Executive      Vice President and |
|                                       |   | Chief      Financial Officer      |

----

----

| Report      of Independent Registered Public Accounting Firm          |   |
|-----------------------------------------------------------------------|--------|
| Consolidated      Balance Sheets                                      |   |
| Consolidated      Statements of Operations                            |   |
| Consolidated      Statements of Changes in Shareholders’ Equity |   |
| Consolidated      Statements of Cash Flows                            |   |
| Notes      to Consolidated Financial Statements                       |   |

----

|                | COMMUNITY      BANK SHARES                 |                 |
|---------------------|--------------------------------------------|----------------------|
|                | OF      INDIANA, INC.                      |                 |
|                |                                       |                 |   |
| March      31, 2010 | By:                                        | /s/ James D. Rickard |   |
|                | James      D. Rickard                      |                 |
|                | President      and Chief Executive Officer |                 |

| /s/ James D. Rickard     |   | President,      Chief Executive Officer, and Director     |   | March      31, 2010 |
|--------------------------|--------|-----------------------------------------------------------|--------|---------------------|
| James      D. Rickard    |   | (Principal      Executive Officer)                        |   |                |
|                     |   |                                                      |   |                |
| /s/ Paul A. Chrisco      |   | Executive      Vice-President and Chief Financial Officer |   | March      31, 2010 |
| Paul      A. Chrisco     |   | (Principal      Financial and Accounting Officer)         |   |                |
|                     |   |                                                      |   |                |
| /s/ Timothy T. Shea      |   | Chairman      of the Board of Directors and Director      |   | March      31, 2010 |
| Timothy      T. Shea     |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ Gary L. Libs         |   | Director                                                  |   | March      31, 2010 |
| Gary      L. Libs        |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ R. Wayne Estopinal   |   | Director                                                  |   | March      31, 2010 |
| R.      Wayne Estopinal  |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ George M. Ballard    |   | Director                                                  |   | March      31, 2010 |
| George      M. Ballard   |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ Gordon L. Huncilman  |   | Director                                                  |   | March      31, 2010 |
| Gordon      L. Huncilman |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ Kerry M. Stemler     |   | Director                                                  |   | March      31, 2010 |
| Kerry      M. Stemler    |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ Steven R. Stemler    |   | Director                                                  |   | March      31, 2010 |
| Steven      R. Stemler   |   |                                                      |   |                |
|                     |   |                                                      |   |                |
| /s/ Norman E. Pfau       |   | Director                                                  |   | March      31, 2010 |
| Norman      E. Pfau      |   |                                                      |   |                |

----

| Exhibit |   |                                                                                                                                                                  |   | Filedwith      this |   | Incorporated      By Reference |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------------------------------|
| Number  |   | Document                                                                                                                                                              |   | Form      10-K      |   | Form                           |   | File      No. |   | Date      Filed |
| 2.1     |   | Agreement      and Plan of Merger between Community Bank Shares of Indiana, Inc., The      Bancshares, Inc., and CBIN Subsidiary, Inc.                                |   |                |   | 8-K                            |   | 000-25766 |   | 02/16/2006 |
| 3.1     |   | Articles      of Incorporation                                                                                                                                        |   |                |   | 8-K                            |   | 000-25766 |   | 06/01/2009 |
| 3.2     |   | Bylaws                                                                                                                                                                |   |                |   | 8-K                            |   | 000-25766 |   | 07/27/2007 |
| 4.0     |   | Common      Stock Certificate                                                                                                                                         |   |                |   | 8-K                            |   | 000-25766 |   | 07/27/2007 |
| 10.1    |   | Employment      Agreement with Dale Orem *                                                                                                                            |   |                |   | 10-K                           |   | 000-25766 |   | 04/02/2002 |
| 10.2    |   | Employment      Agreement with Robert E. Yates*                                                                                                                       |   |                |   | 10-K                           |   | 000-25766 |   | 04/02/2002 |
| 10.3    |   | Employment      Agreement James D. Rickard *                                                                                                                          |   |                |   | 10-Q                           |   | 000-25766 |   | 11/14/2000 |
| 10.4    |   | Community      Bank Shares of Indiana, Inc. 1997 Stock Incentive Plan *                                                                                               |   |                |   | S-8                            |   | 333-      60089 |   | 07/29/1998 |
| 10.5    |   | Community      Bank Shares of Indiana, Inc. Dividend Reinvestment Plan *                                                                                              |   |                |   | S-3DS-3D                       |   | 333-40211333-130721 |   | 11/14/199712/28/2005 |
| 10.6    |   | Employment      Agreement with Christopher L. Bottorff *                                                                                                              |   |                |   | 10-K                           |   | 000-25766 |   | 03/31/2003 |
| 10.7    |   | Employment      Agreement with Kevin J. Cecil *                                                                                                                       |   |                |   | 10-K                           |   | 000-25766 |   | 03/31/2004 |
| 10.8    |   | Employment      Agreement with Paul A. Chrisco *                                                                                                                      |   |                |   | 10-K                           |   | 000-25766 |   | 03/31/2004 |
| 10.9    |   | Consulting      Agreement with Dale L. Orem *                                                                                                                         |   |                |   | 10-K                           |   | 000-25766 |   | 03/31/2004 |
| 10.10   |   | Community      Bank Shares of Indiana, Inc. and Affiliates Business Ethics      Policy                                                                                |   |                |   | 8-K                            |   | 000-25766 |   | 04/24/2007 |
| 10.11   |   | Community      Bank Shares of Indiana, Inc. 2005 Stock Award Plan, as amended      *                                                                                  |   |                |   | Exh.      B toDEF      14A     |   | 000-25766 |   | 11/06/2006 |
| 10.12   |   | Amendment      to Employment Agreement with James D. Rickard *                                                                                                        |   |                |   | 8-K                            |   | 000-25766 |   | 11/06/2006 |
| 10.13   |   | Amendment      to Employment Agreement with Christopher L. Bottorff *                                                                                                 |   |                |   | 8-K                            |   | 000-25766 |   | 11/06/2006 |
| 10.14   |   | Amendment      to Employment Agreement with Kevin J. Cecil *                                                                                                          |   |                |   | 8-K                            |   | 000-25766 |   | 11/06/2006 |
| 10.15   |   | Amendment      to Employment Agreement with Paul A. Chrisco *                                                                                                         |   |                |   | 8-K                            |   | 000-25766 |   | 11/06/2006 |
| 10.16   |   | Community      Bank Shares of Indiana, Inc. Performance Units Plan, as amended      *                                                                                 |   |                |   | 8-K                            |   | 000-25766 |   | 10/23/2006 |
| 10.17   |   | Letter      of agreement between Community Bank Shares of Indiana, Inc. and the United      States Department of Treasury                                             |   |                |   | 8-K                            |   | 000-25766 |   | 06/01/2009 |
| 11.1    |   | Computation      of Earnings Per Share                                                                                                                                |   | X                   |   |                           |   |   |   |   |
| 21.0    |   | Subsidiaries      of Registrant                                                                                                                                       |   | X                   |   |                           |   |   |   |   |
| 23.1    |   | Consent      of Crowe Horwath LLP                                                                                                                                     |   | X                   |   |                           |   |   |   |   |
| 31.1    |   | Certification      of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 (As      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002) |   | X                   |   |                           |   |   |   |   |
| 31.2    |   | Certification      of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 (As      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002) |   | X                   |   |                           |   |   |   |   |
| 32.1    |   | Certification      of Principal Executive Officer pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                                                      |   | X                   |   |                           |   |   |   |   |
| 32.2    |   | Certification      of Principal Financial Officer pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002                                                      |   | X                   |   |                           |   |   |   |   |
| 99.1    |   | Certification      of Principal Executive Officer and Principal Financial Officer pursuant to      31 CFR Part 30                                                     |   | X                   |   |                           |   |   |   |   |

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