| 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 Capital Market                     |

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|              |   |   |                                                                          | Page   |
|-------------------|--------|--------|-------------------------------------------------------------------------------|--------|
| Part I:           |   |   |                                                                          |   |
| Item              | 1      | .      | Business                                                                      | 4      |
| Item              | 1      | A.     | Risk Factors                                                                  | 12     |
| Item              | 1      | B.     | Unresolved Staff Comments                                                     | 17     |
| Item              | 2      | .      | Properties                                                                    | 18     |
| Item              | 3      | .      | Legal Proceedings                                                             | 19     |
|              |   |   |                                                                          |   |
| Part II:          |   |   |                                                                          |   |
| Item              | 5      | .      | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer |   |
|              |   |   |   Purchases of Equity Securities                                    | 20     |
| Item              | 6      | .      | Selected Financial Data                                                       | 22     |
| Item              | 7      | .      | Management's Discussion and Analysis of Financial Condition and               |   |
|              |   |   |   Results of Operations                                             | 23     |
| Item              | 7      | A.     | Quantitative and Qualitative Disclosures about Market Risk                    | 47     |
| Item              | 8      | .      | Financial Statements and Supplementary Data                                   | 50     |
| Item              | 9      | .      | Changes in and Disagreements with Accountants on Accounting and               |   |
|              |   |   |   Financial Disclosures                                             | 105    |
| Item              | 9      | A.     | Controls and Procedures                                                       | 105    |
| Item              | 9      | B      | Other Information                                                             | 107    |
|              |   |   |                                                                          |   |
| Part III:         |   |   |                                                                          |   |
| Item              | 10     | .      | Directors and Executive Officers of the Registrant                            | 107    |
| Item              | 11     | .      | Executive Compensation                                                        | 107    |
| Item              | 12     | .      | Security Ownership of Certain Beneficial Owners                               |   |
|              |   |   |   and Management and Related Stockholder Matters                    | 107    |
| Item              | 13     | .      | Certain Relationships and Related Transactions                                | 107    |
| Item              | 14     | .      | Principal Accountant Fees and Services                                        | 107    |
|              |   |   |                                                                          |   |
| Part IV:          |   |   |                                                                          |   |
| Item              | 15     | .      | Exhibits and Financial Statement Schedules                                    | 108    |
|              |   |   |                                                                          |
| Signatures        |   |   | 109                                                                           |
|              |   |
| Index of Exhibits | 116    |

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| ·   | the creation of a Financial Stability Oversight Counsel to identify emerging systemic risks and improve interagency cooperation; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | the establishment of strengthened capital and liquidity requirements for banks and bank holding companies, including minimum leverage and risk-based capital requirements no less than the strictest requirements in effect for depository institutions as of the date of enactment; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the requirement by statute that bank holding companies serve as a source of financial strength for their depository institution subsidiaries; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the termination of investments by the U.S. Treasury under TARP; |
|--------------------|-----------------------------------------------------------------|

| ·   | the elimination and phase out of trust preferred securities from Tier 1 capital for institutions with more than $15 billion in assets; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a permanent increase of the previously implemented temporary increase of FDIC deposit insurance to $250,000 and an extension of federal deposit coverage until January 1, 2013 for the full net amount held by depositors in non-interest bearing transaction accounts; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | authorization for financial institutions to pay interest on business checking accounts; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | changes in the calculation of FDIC deposit insurance assessments, such that the assessment base will no longer be the institution’s deposit base, but instead, will be its average consolidated total assets less its average tangible equity; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | expanded restrictions on transactions with affiliates and insiders under Section 23A and 23B of the Federal Reserve Act and lending limits for derivative transactions, repurchase agreements and securities lending and borrowing transactions; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provisions that affect corporate governance and executive compensation at most U.S. publicly traded companies, including:  1)  stockholder advisory votes on executive compensation, 2)  executive compensation “clawback” requirements for companies listed on national securities exchanges in the event of materially inaccurate statements of earnings, revenues, gains or other criteria, 3)  enhanced independence requirements for compensation committee members, and 4)  authority for the SEC to adopt proxy access rules which would permit stockholders of publicly traded companies to nominate candidates for election as director and have those nominees included in a company’s proxy statement; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the creation of a Consumer Financial Protection Bureau, which is authorized to promulgate consumer protection regulations relating to bank and non-bank financial products and examine and enforce these regulations on institutions with more than $10 billion in assets. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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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                     |        |            |
|                                                |        |            |
| 106A West John Rowan Boulevard. - Main Office       | 1997        | Leased          |
| Bardstown, KY 40004                                 |        |            |
|                                                |        |            |
| 119 East Stephen Foster Avenue                      | 1972        | Owned           |
| Bardstown, KY 40004                                 |        |            |
|                                                |        |            |
| 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                                |        |            |
|                                                |        |            |

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| 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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| 2010          |   | 2009   |   |
|---------------|--------|--------|--------|
| QUARTER ENDED |   | HIGH   |   |   | LOW |   |   | DIVIDEND |   | QUARTER ENDED |   | HIGH |   |   | LOW |   |   | DIVIDEND |   |
| March 31      |   | $      | 9.50   |   |   | $ | 6.51 |   |   | $ | 0.100 |   | March 31 |   | $ | 12.40 |   |   | $ | 6.50 |   |   | $ | 0.175 |   |
| June 30       |   |   | 10.01  |   |   |   | 8.25 |   |   |   | 0.100 |   | June 30 |   |   | 10.00 |   |   |   | 7.25 |   |   |   | 0.175 |   |
| September 30  |   |   | 10.50  |   |   |   | 8.00 |   |   |   | 0.100 |   | September 30 |   |   | 9.90 |   |   |   | 7.00 |   |   |   | 0.100 |   |
| December 31   |   |   | 9.97   |   |   |   | 8.10 |   |   |   | 0.100 |   | December 31 |   |   | 8.00 |   |   |   | 6.18 |   |   |   | 0.100 |   |

|                              |   | Number ofSecurities to beIssued Upon Exercise of Outstanding Options,Warrants and Rights |    |   | Weighted-Average Exercise Price OfOutstanding Options,Warrants and Rights |   |        | Number of SecuritiesRemaining Available for Future Issuance under equity compensation plans(excluding securitiesreflected in column 1) |   |
|------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|---------|--------|--------------------------------------------------------------------------------|--------|-------------|----------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by security holders     |   |                                                                                     | 218,033 | (1)    |                                                                           | $      | 21.94       |                                                                                                                                   |   |   | 464,942 | (2) |
| Equity compensation plans not approved by security holders |   |                                                                                     |  - |   |                                                                           |   |  -     |                                                                                                                                   |   |   |   - |   |
| Total                                                      |   |                                                                                     | 218,033 | (1)    |                                                                           | $      |  21.94 |                                                                                                                                   |   |   | 464,942 | (2) |

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|                                   |   Period Ending |
|----------------------------------------|----------------------|
| Index                                  | 12/31/05             | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | 12/31/10 |
| Community Bank Shares of Indiana, Inc. | 100.00               | 101.54 | 82.93 | 57.24 | 33.84 | 52.38 |
| Russell 2000                           | 100.00               | 118.37 | 116.51 | 77.15 | 98.11 | 124.46 |
| SNL Bank $500M-$1B                     | 100.00               | 113.73 | 91.14 | 58.40 | 55.62 | 60.72 |

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|                                                         |   | Years Ended December 31, |        |
|--------------------------------------------------------------|--------|--------------------------|-------------|
| (Dollars in thousands, except per share data)                |   | 2010                     |        |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Income Statement Data:                                       |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                              |   | $                        | 35,894      |   |   | $ | 39,262 |   |   | $ | 44,907 |   |   | $ | 51,776 |   |   | $ | 47,094 |   |
| Interest expense                                             |   |                     | 8,180       |   |   |   | 15,318 |   |   |   | 21,453 |   |   |   | 28,395 |   |   |   | 25,995 |   |
| Net interest income                                          |   |                     | 27,714      |   |   |   | 23,944 |   |   |   | 23,454 |   |   |   | 23,381 |   |   |   | 21,099 |   |
| Provision for loan losses                                    |   |                     | 3,833       |   |   |   | 15,925 |   |   |   | 6,857 |   |   |   | 1,296 |   |   |   | 262 |   |
| Non-interest income                                          |   |                     | 7,414       |   |   |   | 6,326 |   |   |   | 6,087 |   |   |   | 4,127 |   |   |   | 3,733 |   |
| Non-interest expense                                         |   |                     | 22,461      |   |   |   | 41,168 |   |   |   | 22,554 |   |   |   | 21,804 |   |   |   | 19,116 |   |
| Income (loss) before taxes                                   |   |                     | 8,834       |   |   |   | (26,823 | ) |   |   | 130 |   |   |   | 4,408 |   |   |   | 5,454 |   |
| Net income (loss                                             |   |                     | 6,988       |   |   |   | (21,969 | ) |   |   | 821 |   |   |   | 3,503 |   |   |   | 4,111 |   |
| Net income (loss) available to common shareholders           |   |                     | 5,923       |   |   |   | (22,587 | ) |   |   | 821 |   |   |   | 3,503 |   |   |   | 4,111 |   |
|                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance Sheet Data:                                          |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                 |   | $                        | 801,466     |   |   | $ | 819,159 |   |   | $ | 877,363 |   |   | $ | 823,568 |   |   | $ | 816,633 |   |
| Total securities                                             |   |                     | 204,188     |   |   |   | 172,723 |   |   |   | 121,659 |   |   |   | 99,465 |   |   |   | 121,311 |   |
| Total loans, net                                             |   |                     | 502,223     |   |   |   | 528,183 |   |   |   | 623,103 |   |   |   | 629,732 |   |   |   | 607,932 |   |
| Allowance for loan losses                                    |   |                     | 10,864      |   |   |   | 15,236 |   |   |   | 9,478 |   |   |   | 6,316 |   |   |   | 5,654 |   |
| Total deposits                                               |   |                     | 618,821     |   |   |   | 592,423 |   |   |   | 603,185 |   |   |   | 573,346 |   |   |   | 549,918 |   |
| Other borrowings                                             |   |                     | 49,426      |   |   |   | 76,996 |   |   |   | 78,983 |   |   |   | 72,796 |   |   |   | 84,335 |   |
| FHLB advances                                                |   |                     | 50,000      |   |   |   | 68,482 |   |   |   | 111,943 |   |   |   | 91,376 |   |   |   | 92,756 |   |
| Subordinated debenture                                       |   |                     | 17,000      |   |   |   | 17,000 |   |   |   | 17,000 |   |   |   | 17,000 |   |   |   | 17,000 |   |
| Total shareholders’ equity                             |   |                     | 63,165      |   |   |   | 59,950 |   |   |   | 62,599 |   |   |   | 64,465 |   |   |   | 65,541 |   |
|                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per Share Data:                                              |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per common share                       |   | $                        | 1.80        |   |   | $ | (6.93 | ) |   | $ | 0.25 |   |   | $ | 1.05 |   |   | $ | 1.36 |   |
| Diluted earnings (loss) per common share                     |   |                     | 1.77        |   |   |   | (6.93 | ) |   |   | 0.25 |   |   |   | 1.04 |   |   |   | 1.35 |   |
| Book value per common share                                  |   |                     | 13.36       |   |   |   | 12.49 |   |   |   | 19.31 |   |   |   | 19.77 |   |   |   | 19.06 |   |
| Cash dividends per common share                              |   |                     | 0.400       |   |   |   | 0.550 |   |   |   | 0.700 |   |   |   | 0.685 |   |   |   | 0.640 |   |
|                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performance Ratios:                                          |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average assets                                     |   |                     | 0.85        | % |   |   | (2.60 | )% |   |   | 0.10 | % |   |   | 0.43 | % |   |   | 0.55 | % |
| Return on average equity                                     |   |                     | 10.95       |   |   |   | (35.02 | ) |   |   | 1.29 |   |   |   | 5.39 |   |   |   | 7.73 |   |
| Net interest margin                                          |   |                     | 3.90        |   |   |   | 3.19 |   |   |   | 3.09 |   |   |   | 3.16 |   |   |   | 3.04 |   |
| Efficiency ratio                                             |   |                     | 63.94       |   |   |   | 136.00 |   |   |   | 76.35 |   |   |   | 79.26 |   |   |   | 76.98 |   |
|                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset Quality Ratios:                                        |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing assets to total loans                         |   |                     | 5.62        | % |   |   | 6.70 | % |   |   | 3.45 | % |   |   | 1.88 | % |   |   | 0.98 | % |
| Net loan charge-offs to average loans                        |   |                     | 1.54        |   |   |   | 1.73 |   |   |   | 0.58 |   |   |   | 0.10 |   |   |   | 0.22 |   |
| Allowance for loan losses to total loans                     |   |                     | 2.11        |   |   |   | 2.80 |   |   |   | 1.50 |   |   |   | 0.99 |   |   |   | 0.92 |   |
| Allowance for loan losses to  non-performing loans |   |                     |  42.82 |   |   |   |  48.81 |   |   |   |  45.78 |   |   |   |  55.51 |   |   |   |  101.58 |   |
|                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| Capital Ratios:                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|--------|-----------|
| Leverage ratio                                             |   |   | 9.1       | %      |   |   | 8.6       | %      |   |   | 7.6       | %      |   |   | 8.0       | % |   |   | 8.1 | % |
| Average stockholders’ equity to average total assets |   |   |  7.8 |   |   |   |  7.4 |   |   |   |  7.6 |   |   |   |  8.0 |   |   |   |  7.1 |   |
| Tier 1 risk-based capital ratio                            |   |   | 13.5      |   |   |   | 11.9      |   |   |   | 9.5       |   |   |   | 9.9       |   |   |   | 10.5 |   |
| Total risk-based capital ratio                             |   |   | 14.7      |   |   |   | 13.1      |   |   |   | 10.7      |   |   |   | 10.9      |   |   |   | 11.4 |   |
| Dividend payout ratio                                      |   |   | 18.8      |   |   | NM*    |      |   |   | 277.2  |      |   |   | 65.6   |      |   |   | 46.7 |   |
|                                                       |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| Other Key Data:                                            |   |   |      |   |   |   |      |   |   |   |      |   |   |   |      |   |   |   |   |   |
| End-of-period full-time equivalent employees               |   |   |  199 |   |   |   |  199 |   |   |   |  238 |   |   |   |  232 |   |   |   |  224 |   |
| Number of bank offices                                     |   |   | 21        |   |   |   | 22        |   |   |   | 23        |   |   |   | 22        |   |   |   | 21 |   |

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|                                               |   | For the Year Ended December 31, |   |
|----------------------------------------------------|--------|---------------------------------|--------|
| (Dollars in thousands, except per share amounts)   |   | 2010                            |   |   | 2009 |   |   | 2008 |   |
| Net income (loss) available to common shareholders |   | $                               | 5,923  |   |   | $ | (22,587 | ) |   | $ | 821 |   |
| Basic earnings (loss) per common share             |   |                            | 1.80   |   |   |   | (6.93 | ) |   |   | 0.25 |   |
| Diluted earnings (loss) per common share           |   |                            | 1.77   |   |   |   | (6.93 | ) |   |   | 0.25 |   |
| Return on average assets                           |   |                            | 0.85   | % |   |   | (2.60 | )% |   |   | 0.10 | % |
| Return on average equity                           |   |                            | 10.95  |   |   |   | (35.02 | ) |   |   | 1.29 |   |

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|                                             |   |  2010 |    |   |  2009 |   |   |  2008 |   |
|--------------------------------------------------|--------|------------|---------|--------|------------|--------|--------|------------|--------|
|                                             |   | 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                                     |   | $          | 40,879  |   |       | $      | 84     |       |   |   | 0.21 | % |   | $ | 40,323 |   |   | $ | 133 |   |   |   | 0.33 | % |   | $ | 12,122 |   |   | $ | 241 |   |   |   | 1.99 | % |
|  Taxable securities                         |   |       | 120,390 |   |       |   | 3,971  |       |   |   | 3.31 |   |   |   | 104,507 |   |   |   | 4,623 |   |   |   | 4.42 |   |   |   | 94,667 |   |   |   | 4,798 |   |   |   | 5.07 |   |
|  Tax-exempt securities                      |   |       | 47,068  |   |       |   | 3,164  |       |   |   | 6.74 |   |   |   | 34,760 |   |   |   | 2,309 |   |   |   | 6.64 |   |   |   | 16,350 |   |   |   | 1,056 |   |   |   | 6.46 |   |
|  Total loans and fees (1)(2)                |   |       | 523,982 |   |       |   | 29,589 |       |   |   | 5.66 |   |   |   | 587,970 |   |   |   | 32,713 |   |   |   | 5.56 |   |   |   | 639,275 |   |   |   | 38,833 |   |   |   | 6.07 |   |
|  FHLB and Federal Reserve stock             |   |       | 7,489   |   |       |   | 162    |       |   |   | 2.17 |   |   |   | 8,315 |   |   |   | 269 |   |   |   | 3.24 |   |   |   | 8,141 |   |   |   | 338 |   |   |   | 4.15 |   |
| Total earning assets                             |   |       | 739,808 |   |       |   | 36,970 |       |   |   | 5.01 |   |   |   | 775,875 |   |   |   | 40,047 |   |   |   | 5.16 |   |   |   | 770,555 |   |   |   | 45,266 |   |   |   | 5.87 |   |
| Non-interest earning assets:                     |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less: Allowance for loan losses                  |   |       | (13,794 | )      |       |   |   |       |   |   |   |   |   |   | (13,688 | ) |   |   |   |   |   |   |   |   |   |   | (6,763 | ) |   |   |   |   |   |   |   |   |
|  Non-earning assets:                        |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Cash and due from banks                    |   |       | 36,081  |   |       |   |   |       |   |   |   |   |   |   | 28,075 |   |   |   |   |   |   |   |   |   |   |   | 24,924 |   |   |   |   |   |   |   |   |   |
|  Bank premises and equipment, net           |   |       | 14,093  |   |       |   |   |       |   |   |   |   |   |   | 14,815 |   |   |   |   |   |   |   |   |   |   |   | 15,160 |   |   |   |   |   |   |   |   |   |
|  Other assets                               |   |       | 44,255  |   |       |   |   |       |   |   |   |   |   |   | 39,391 |   |   |   |   |   |   |   |   |   |   |   | 40,266 |   |   |   |   |   |   |   |   |   |
| Total assets                                     |   | $          | 820,443 |   |       |   |   |       |   |   |   |   |   | $ | 844,468 |   |   |   |   |   |   |   |   |   |   | $ | 844,142 |   |   |   |   |   |   |   |   |   |
|                                             |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY       |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                    |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Savings and other                          |   | $          | 245,431 |   |       | $      | 1,213  |       |   |   | 0.50 | % |   | $ | 224,330 |   |   | $ | 1,340 |   |   |   | 0.60 | % |   | $ | 212,475 |   |   | $ | 2,771 |   |   |   | 1.30 | % |
|  Time deposits                              |   |       | 242,907 |   |       |   | 4,269  |       |   |   | 1.76 |   |   |   | 278,498 |   |   |   | 8,288 |   |   |   | 2.98 |   |   |   | 272,847 |   |   |   | 10,758 |   |   |   | 3.94 |   |
|  Other borrowings                           |   |       | 54,567  |   |       |   | 828    |       |   |   | 1.52 |   |   |   | 61,361 |   |   |   | 883 |   |   |   | 1.44 |   |   |   | 70,691 |   |   |   | 1,403 |   |   |   | 1.98 |   |
|  FHLB advances                              |   |       | 54,626  |   |       |   | 1,451  |       |   |   | 2.66 |   |   |   | 85,905 |   |   |   | 4,281 |   |   |   | 4.98 |   |   |   | 106,969 |   |   |   | 5,605 |   |   |   | 5.24 |   |
|  Subordinated debenture                     |   |       | 17,000  |   |       |   | 419    |       |   |   | 2.47 |   |   |   | 17,000 |   |   |   | 526 |   |   |   | 3.09 |   |   |   | 17,000 |   |   |   | 916 |   |   |   | 5.39 |   |
| Total interest bearing liabilities               |   |       | 614,531 |   |       |   | 8,180  |       |   |   | 1.33 |   |   |   | 667,094 |   |   |   | 15,318 |   |   |   | 2.30 |   |   |   | 679,982 |   |   |   | 21,453 |   |   |   | 3.15 |   |
| Non-interest bearing liabilities:                |   |       |    |   |       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Non-interest bearing deposits              |   |       | 135,843 |   |       |   |   |       |   |   |   |   |   |   | 110,108 |   |   |   |   |   |   |   |   |   |   |   | 97,726 |   |   |   |   |   |   |   |   |   |
|  Other liabilities                          |   |       | 6,261   |   |       |   |   |       |   |   |   |   |   |   | 4,529 |   |   |   |   |   |   |   |   |   |   |   | 2,633 |   |   |   |   |   |   |   |   |   |
|  Shareholders’ equity                 |   |       | 63,808  |   |       |   |   |       |   |   |   |   |   |   | 62,737 |   |   |   |   |   |   |   |   |   |   |   | 63,801 |   |   |   |   |   |   |   |   |   |
| Total liabilities and shareholders’ equity |   | $          | 820,443 |   |       |   |   |       |   |   |   |   |   | $ | 844,468 |   |   |   |   |   |   |   |   |   |   | $ | 844,142 |   |   |   |   |   |   |   |   |   |
| Net interest income (taxable equivalent basis).  |   |       |    |   |       |   | 28,790 |       |   |   |   |   |   |   |   |   |   |   | 24,729 |   |   |   |   |   |   |   |   |   |   |   | 23,813 |   |   |   |   |   |
| Less: taxable equivalent adjustment              |   |       |    |   |       |   | (1,076 | )          |   |   |   |   |   |   |   |   |   |   | (785 | ) |   |   |   |   |   |   |   |   |   |   | (359 | ) |   |   |   |   |
| Net interest income                              |   |       |    |   |       | $      | 27,714 |       |   |   |   |   |   |   |   |   |   | $ | 23,944 |   |   |   |   |   |   |   |   |   |   | $ | 23,454 |   |   |   |   |   |
| Net interest spread                              |   |       |    |   |       |   |   |       |   |   | 3.68 | % |   |   |   |   |   |   |   |   |   |   | 2.86 | % |   |   |   |   |   |   |   |   |   |   | 2.72 | % |
| Net interest margin                              |   |       |    |   |       |   |   |       |   |   | 3.90 | % |   |   |   |   |   |   |   |   |   |   | 3.19 | % |   |   |   |   |   |   |   |   |   |   | 3.09 | % |

----

|                                                        |   | Year Ended December 31,2010compared toYear Ended December 31, 2009 |         |   | Year Ended December 31,2009compared toYear Ended December 31, 2008 |   |
|-------------------------------------------------------------|--------|--------------------------------------------------------------------|--------------|--------|--------------------------------------------------------------------|--------|
|                                                        |   | Increase/(Decrease)Due to                                          |         |   | Increase/(Decrease)Due to                                          |   |
|                                                        |   | Total NetChange                                                    |         |   |  Volume                                                       |   |   |  Rate |   |   | Total NetChange |   |   |  Volume |   |   |  Rate |   |
| Interest income:                                            |   |                                                               |         |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing deposits with other financial institutions |   | $                                                                  | (49          | )      |                                                               | $      | 2 |   |   | $ | (51 | ) |   | $ | (108 | ) |   | $ | 216 |   |   | $ | (324 | ) |
| Taxable securities                                          |   |                                                               | (652         | )      |                                                               |   | 636 |   |   |   | (1,288 | ) |   |   | (175 | ) |   |   | 470 |   |   |   | (645 | ) |
| Tax-exempt securities                                       |   |                                                               | 855          |   |                                                               |   | 827 |   |   |   | 28 |   |   |   | 1,253 |   |   |   | 1,222 |   |   |   | 31 |   |
| Total loans and fees                                        |   |                                                               | (3,124       | )      |                                                               |   | (3,607 | ) |   |   | 483 |   |   |   | (6,120 | ) |   |   | (2,989 | ) |   |   | (3,131 | ) |
| FHLB and Federal Reserve stock                              |   |                                                               | (107         | )      |                                                               |   | (25 | ) |   |   | (82 |   |   |   | (69 | ) |   |   | 7 |   |   |   | (76 | ) |
| Total increase (decrease) in interest income                |   |                                                               |  (3,077 | )      |                                                               |   | (2,167 | ) |   |   | (910 | ) |   |   | (5,219 | ) |   |   | (1,074 | ) |   |   | (4,145 | ) |
|                                                        |   |                                                               |         |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                           |   |                                                               |         |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings and other                                           |   |                                                               | (127         | )      |                                                               |   | 118 |   |   |   | (245 | ) |   |   | (1,431 | ) |   |   | 147 |   |   |   | (1,578 | ) |
| Time deposits                                               |   |                                                               | (4,019       | )      |                                                               |   | (956 | ) |   |   | (3,063 | ) |   |   | (2,470 | ) |   |   | 219 |   |   |   | (2,689 | ) |
| Other borrowings                                            |   |                                                               | (55          | )      |                                                               |   | (101 | ) |   |   | 46 |   |   |   | (520 | ) |   |   | (169 | ) |   |   | (351 | ) |
| FHLB advances                                               |   |                                                               | (2,830       | )      |                                                               |   | (1,240 | ) |   |   | (1,590 | ) |   |   | (1,324 | ) |   |   | (1,060 | ) |   |   | (264 | ) |
| Subordinated debenture                                      |   |                                                               | (107         | )      |                                                               |   | - |   |   |   | (107 | ) |   |   | (390 | ) |   |   | - |   |   |   | (390 | ) |
| Total increase (decrease) in interest expense               |   |                                                               | (7,138       | )      |                                                               |   | (2,179 | ) |   |   | (4,959 | ) |   |   | (6,135 | ) |   |   | (863 | ) |   |   | (5,272 | ) |
| Increase (decrease) in net interest income                  |   | $                                                                  | 4,061        |   |                                                               | $      | 12 |   |   | $ | 4,049 |   |   | $ | 916 |   |   | $ | (211 | ) |   | $ | 1,127 |   |

----

|                                                            |   | Year Ended December 31, |   |   | Percent Increase/(Decrease) |   |
|-----------------------------------------------------------------|--------|-------------------------|--------|--------|-----------------------------|--------|
|                                                            |   |                    |   |   |                        |   |   |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                          |   | 2010                    |   |   | 2009                        |   |   | 2008 |   |   |   | 2010/2009 |   |   |   | 2009/2008 |   |
|                                                            |   |                    |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                             |   | $                       | 3,433  |   |                        | $      | 3,453 |   |   | $ | 3,356 |   |   |   | (0.6 | )% |   |   | 2.9 | % |
| Commission income                                               |   |                    | 130    |   |                        |   | 53 |   |   |   | 194 |   |   |   | 145.3 |   |   |   | (72.7 | ) |
| Net gain on sale of available for sale securities               |   |                    | 1,751  |   |                        |   | 1,380 |   |   |   | 364 |   |   |   | 26.9 |   |   |   | 279.1 |   |
| Mortgage banking income                                         |   |                    | 365    |   |                        |   | 314 |   |   |   | 167 |   |   |   | 16.2 |   |   |   | 88.0 |   |
| Gain on sale of loans                                           |   |                    | -      |   |                        |   | 197 |   |   |   | - |   |   |   | (100.0 | ) |   | NM |   |
| Earnings on company owned life insurance                        |   |                    | 720    |   |                        |   |  745 |   |   |   |  734 |   |   |   | (3.4 | ) |   |   |  1.5 |   |
| Change in fair value and cash settlement of interest rate swaps |   |                    | -      |   |                        |   |  - |   |   |   |  180 |   |   |   |  - |   |   |   |  (100.0 | ) |
| Interchange income                                              |   |                    | 907    |   |                        |   | 839 |   |   |   | 811 |   |   |   | 8.1 |   |   |   | 3.5 |   |
| Net impairment loss recognized in earnings                      |   |                    | (360   | )      |                        |   | (1,100 | ) |   |   | - |   |   |   | (67.3 | ) |   | NM |   |
| Other                                                           |   |                    | 468    |   |                        |   | 445 |   |   |   | 281 |   |   |   | 5.2 |   |   |   | 58.4 |   |
|    Total                                         |   | $                       | 7,414  |   |                        | $      | 6,326 |   |   | $ | 6,087 |   |   |   | 17.2 | % |   |   | 3.9 | % |

----

----

|                                           |   | Year Ended in December 31, |   |   | Percent Increase/(Decrease) |   |
|------------------------------------------------|--------|----------------------------|--------|--------|-----------------------------|--------|
| (Dollars in thousands)                         |   | 2010                       |   |   | 2009                        |   |   | 2008 |   |   |   | 2010/2009 |   |   |   | 2009/2008 |   |
|                                           |   |                       |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                 |   | $                          | 10,492 |   |                        | $      | 11,160 |   |   | $ | 12,125 |   |   |   | (5.99 | )% |   |   | (8.0 | )% |
| Occupancy                                      |   |                       | 2,053  |   |                        |   | 2,417 |   |   |   | 2,169 |   |   |   | (15.1 | ) |   |   | 11.4 |   |
| Equipment                                      |   |                       | 1,215  |   |                        |   | 1,419 |   |   |   | 1,535 |   |   |   | (14.4 | ) |   |   | (7.6 | ) |
| Data processing                                |   |                       | 2,508  |   |                        |   | 2,498 |   |   |   | 1,931 |   |   |   | 0.4 |   |   |   | 29.4 |   |
| Marketing and advertising                      |   |                       | 241    |   |                        |   | 362 |   |   |   | 568 |   |   |   | (33.4 | ) |   |   | (36.3 | ) |
| Legal and professional                         |   |                       | 1,379  |   |                        |   | 1,627 |   |   |   | 1,153 |   |   |   | (15.2 | ) |   |   | 41.1 |   |
| FDIC insurance premiums                        |   |                       | 1,370  |   |                        |   | 1,685 |   |   |   | 480 |   |   |   | (18.7 | ) |   |   | 251.0 |   |
| Goodwill and other intangible asset impairment |   |                       | -      |   |                        |   | 16,154 |   |   |   | - |   |   |   | (100.0 | ) |   | NM |   |
| Prepayment penalties on extinguishment of debt |   |                       | 335    |   |                        |   | 838 |   |   |   | - |   |   |   | (60.0 | ) |   | NM |   |
| Foreclosed and repossessed assets, net         |   |                       | 548    |   |                        |   | 665 |   |   |   | 217 |   |   |   | (17.6 | ) |   |   | 206.5 |   |
| Other                                          |   |                       | 2,320  |   |                        |   | 2,343 |   |   |   | 2,376 |   |   |   | (0.1 | ) |   |   | (0.1 | ) |
| Total                                          |   | $                          | 22,461 |   |                        | $      | 41,168 |   |   | $ | 22,554 |   |   |   | (45.4 | )% |   |   | 82.5 | % |

----

----

----

----

|                    |   | As of December 31, |    |
|-------------------------|--------|--------------------|---------|
| (Dollars in thousands)  |   | 2010               |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                    |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial              |   | $                  | 103,295 |   |   | $ | 94,168 |   |   | $ | 95,365 |   |   | $ | 88,353 |   |   | $ | 80,132 |   |
| Construction            |   |               | 48,872  |   |   |   | 51,592 |   |   |   | 73,936 |   |   |   | 87,364 |   |   |   | 83,944 |   |
| Commercial Real Estate  |   |               | 171,931 |   |   |   | 193,577 |   |   |   | 206,973 |   |   |   | 191,774 |   |   |   | 179,405 |   |
| Residential Real Estate |   |               | 177,411 |   |   |   | 189,403 |   |   |   | 237,769 |   |   |   | 247,211 |   |   |   | 249,800 |   |
| Consumer                |   |               | 11,578  |   |   |   | 14,679 |   |   |   | 18,538 |   |   |   | 21,346 |   |   |   | 20,305 |   |
| Total loans             |   | $                  | 513,087 |   |   | $ | 543,419 |   |   | $ | 632,581 |   |   | $ | 636,048 |   |   | $ | 613,586 |   |

|  As of December 31, 2010(Dollars in thousands) |   | Total  |    |   | OneYear orLess |   |   | Over OneThrough FiveYears |   |   | OverFiveYears |   |
|-----------------------------------------------------|--------|--------|---------|--------|----------------|--------|--------|---------------------------|--------|--------|---------------|--------|
| Fixed rate maturities:                              |   |   |    |   |           |   |   |                      |   |   |          |   |
| Commercial                                          |   | $      | 49,753  |   |           | $      | 7,340  |                      |   | $      | 21,519        |   |   | $ | 20,894 |   |
| Construction                                        |   |   | 10,981  |   |           |   | 2,448  |                      |   |   | 6,552         |   |   |   | 1,981 |   |
| Commercial Real Estate                              |   |   | 97,539  |   |           |   | 11,529 |                      |   |   | 67,483        |   |   |   | 18,527 |   |
| Residential Real Estate                             |   |   | 114,829 |   |           |   | 7,571  |                      |   |   | 47,533        |   |   |   | 59,725 |   |
| Consumer                                            |   |   | 11,358  |   |           |   | 3,096  |                      |   |   | 7,809         |   |   |   | 453 |   |
| Total fixed rate maturities                         |   | $      | 284,460 |   |           | $      | 31,984 |                      |   | $      | 150,896       |   |   | $ | 101,580 |   |
|                                                |   |   |    |   |           |   |   |                      |   |   |          |   |   |   |   |   |
| Variable rate maturities:                           |   |   |    |   |           |   |   |                      |   |   |          |   |   |   |   |   |
| Commercial                                          |   | $      | 53,542  |   |           | $      | 47,018 |                      |   | $      | 4,220         |   |   | $ | 2,304 |   |
| Construction                                        |   |   | 37,891  |   |           |   | 27,043 |                      |   |   | 9,913         |   |   |   | 935 |   |
| Commercial Real Estate                              |   |   | 74,392  |   |           |   | 11,807 |                      |   |   | 2,996         |   |   |   | 59,589 |   |
| Residential Real Estate                             |   |   | 62,582  |   |           |   | 10,477 |                      |   |   | 14,948        |   |   |   | 37,157 |   |
| Consumer                                            |   |   | 220     |   |           |   | 89     |                      |   |   | 48            |   |   |   | 83 |   |
| Total variable rate maturities                      |   | $      | 228,627 |   |           | $      | 96,434 |                      |   | $      | 32,125        |   |   | $ | 100,068 |   |

----

----

|                                                          |   | Year Ended in December 31, |   |
|---------------------------------------------------------------|--------|----------------------------|--------|
| (Dollars in thousands)                                        |   | 2010                       |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Allowance for loan losses at beginning of year                |   | $                          | 15,236 |   |   | $ | 9,478 |   |   | $ | 6,316 |   |   | $ | 5,654 |   |   | $ | 5,920 |   |
| Acquired allowance of SCSB, July 1,2006                       |   |                       | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 754 |   |
| Charge-offs:                                                  |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial                                  |   |                       | (843   | ) |   |   | (2,122 | ) |   |   | (1,080 | ) |   |   | (207 | ) |   |   | (138 | ) |
|    Construction                                |   |                       | (4,063 | ) |   |   | (5,742 | ) |   |   | (780 | ) |   |   | - |   |   |   | (600 | ) |
|    Commercial real estate                      |   |                       | (1,885 | ) |   |   | (411 | ) |   |   | (720 | ) |   |   | (44 | ) |   |   | (193 | ) |
|    Residential real estate                     |   |                       | (1,557 | ) |   |   | (1,449 | ) |   |   | (730 | ) |   |   | (360 | ) |   |   | (61 | ) |
|    Consumer                                    |   |                       | (340   | ) |   |   | (661 | ) |   |   | (503 | ) |   |   | (190 | ) |   |   | (362 | ) |
|        Total               |   |                       | (8,688 | ) |   |   | (10,385 | ) |   |   | (3,813 | ) |   |   | (801 | ) |   |   | (1,354 | ) |
| Recoveries:                                                   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Commercial                                  |   |                       | 212    |   |   |   | 52 |   |   |   | 7 |   |   |   | 92 |   |   |   | 26 |   |
|    Construction                                |   |                       | 22     |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |
|    Commercial real estate                      |   |                       | 102    |   |   |   | 14 |   |   |   | 4 |   |   |   | 9 |   |   |   | 9 |   |
|    Residential real estate                     |   |                       | 68     |   |   |   | 40 |   |   |   | 5 |   |   |   | 16 |   |   |   | - |   |
|    Consumer                                    |   |                       | 79     |   |   |   | 112 |   |   |   | 100 |   |   |   | 50 |   |   |   | 37 |   |
|        Total               |   |                       | 483    |   |   |   | 218 |   |   |   | 118 |   |   |   | 167 |   |   |   | 72 |   |
| Net loan charge-offs                                          |   |                       | (8,205 | ) |   |   | (10,167 | ) |   |   | (3,695 | ) |   |   | (634 | ) |   |   | (1,282 | ) |
| Provision for loan losses                                     |   |                       | 3,833  |   |   |   | 15,925 |   |   |   | 6,857 |   |   |   | 1,296 |   |   |   | 262 |   |
| Allowance for loan losses at end of year                      |   | $                          | 10,864 |   |   | $ | 15,236 |   |   | $ | 9,478 |   |   | $ | 6,316 |   |   | $ | 5,654 |   |
|                                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Allowance for loan losses to total loans          |   |                       | 2.11   | % |   |   | 2.80 | % |   |   | 1.50 | % |   |   | 0.99 | % |   |   | 0.92 | % |
|   Net loan charge-offs to average loans             |   |                       | 1.57   |   |   |   | 1.73 |   |   |   | 0.58 |   |   |   | 0.10 |   |   |   | 0.22 |   |
|   Allowance for loan losses to non-performing loans |   |                       | 42.82  |   |   |   | 48.81 |   |   |   | 45.78 |   |   |   | 55.51 |   |   |   | 101.58 |   |

----

|                                     |   | As of December 31,          |   |
|------------------------------------------|--------|-----------------------------|--------|
|                                     |   | 2010                        |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|    (Dollars in thousands) |   |    Allowance |   |   | Percent of Loansto TotalLoans |   |   |    Allowance |   |   | Percent of Loansto TotalLoans |   |   |    Allowance |   |   | Percent of Loansto TotalLoans |   |   |    Allowance |   |   | Percent of Loansto TotalLoans |   |   |    Allowance |   |   | Percent of Loansto TotalLoans |   |
| Commercial                               |   | $                           | 3,245  |   |   |   | 20.1 | % |   | $ | 3,032 |   |   |   | 17.3 | % |   | $ | 1,119 |   |   |   | 15.1 | % |   | $ | 1,716 |   |   |   | 13.9 | % |   | $ | 1,501 |   |   |   | 13.1 | % |
| Construction                             |   |                        | 1,893  |   |   |   | 9.5 |   |   |   | 6,633 |   |   |   | 9.5 |   |   |   | 3,492 |   |   |   | 11.7 |   |   |   | 199 |   |   |   | 13.7 |   |   |   | 48 |   |   |   | 13.7 |   |
| Commercial Real Estate                   |   |                        | 2,499  |   |   |   | 33.5 |   |   |   | 1,828 |   |   |   | 35.6 |   |   |   | 3,244 |   |   |   | 32.7 |   |   |   | 2,857 |   |   |   | 30.2 |   |   |   | 2,992 |   |   |   | 29.2 |   |
| Residential Real Estate                  |   |                        | 2,803  |   |   |   | 34.6 |   |   |   | 3,243 |   |   |   | 34.9 |   |   |   | 1,154 |   |   |   | 37.6 |   |   |   | 1,343 |   |   |   | 38.8 |   |   |   | 914 |   |   |   | 40.7 |   |
| Consumer                                 |   |                        | 424    |   |   |   | 2.3 |   |   |   | 500 |   |   |   | 2.7 |   |   |   | 469 |   |   |   | 2.9 |   |   |   | 201 |   |   |   | 3.4 |   |   |   | 199 |   |   |   | 3.3 |   |
| Total                                    |   | $                           | 10,864 |   |   |   | 100.0 | % |   | $ | 15,236 |   |   |   | 100.0 | % |   | $ | 9,478 |   |   |   | 100.0 | % |   | $ | 6,316 |   |   |   | 100.0 | % |   | $ | 5,654 |   |   |   | 100.0 | % |

----

|                                               |   | As of December 31, |        |
|----------------------------------------------------|--------|--------------------|-------------|
| (Dollars in thousands)                        |   | 2010               |        |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Loans on non-accrual status (1                     |   | $                  | 15,013      |   |   | $ | 22,653 |   |   | $ | 20,702 |   |   | $ | 11,134 |   |   | $ | 5,566 |   |
| Troubled debt restructurings                       |   |               | 10,361      |   |   |   | 8,562 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loans past due 90 days or more and still accruing  |   |               | -           |   |   |   | - |   |   |   | - |   |   |   | 244 |   |   |   | - |   |
| Total non-performing loans                         |   |               | 25,374      |   |   |   | 31,215 |   |   |   | 20,702 |   |   |   | 11,378 |   |   |   | 5,566 |   |
| Other assets owned                                 |   |               |  3,633 |   |   |   |  5,190 |   |   |   | 1,241 |   |   |   | 575 |   |   |   | 457 |   |
| Total non-performing assets                        |   | $                  | 29,007      |   |   | $ | 36,405 |   |   | $ | 21,943 |   |   | $ | 11,953 |   |   | $ | 6,023 |   |
|                                               |   |               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percentage of non-performing loans to total loans  |   |               | 4.92        | % |   |   | 5.74 | % |   |   | 3.27 | % |   |   | 1.79 | % |   |   | 0.91 | % |
| Percentage of non-performing assets to total loans |   |               | 5.62        |   |   |   | 6.70 |   |   |   | 3.47 |   |   |   | 1.88 |   |   |   | 0.98 |   |

|                                                                                      |   | December 31, |    |
|-------------------------------------------------------------------------------------------|--------|--------------|---------|
| (Dollars in thousands)                                                                    |   | 2010         |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Securities Available for Sale:                                                            |   |         |    |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government and federal agency                                                        |   | $            | -       |   |   | $ | - |   |   | $ | - |   |   | $ | 6,077 |   |   | $ | 29,972 |   |
| State and municipal                                                                       |   |         | 56,498  |   |   |   | 49,809 |   |   |   | 20,542 |   |   |   | 13,312 |   |   |   | 11,645 |   |
| Residential mortgage-backed agencies issued by U.S. Government sponsored entities         |   |         | 146,083 |   |   |   | 120,084 |   |   |   | 97,588 |   |   |   | 73,252 |   |   |   | 67,304 |   |
| Collateralized debt obligations, including trust preferred securities                     |   |         | 1,359   |   |   |   | 2,585 |   |   |   | 3,285 |   |   |   | 6,583 |   |   |   | 12,150 |   |
| Mutual Funds                                                                              |   |         | 248     |   |   |   | 245 |   |   |   | 244 |   |   |   | 241 |   |   |   | 240 |   |
|          Total securities available for sale |   | $            | 204,188 |   |   | $ | 172,723 |   |   | $ | 121,659 |   |   | $ | 99,465 |   |   | $ | 121,311 |   |

----

|                                                                              |   | As of December 31, 2010 |    |
|-----------------------------------------------------------------------------------|--------|-------------------------|---------|
|   (Dollars in thousands)                                                |   | AmortizedCost           |    |   |  Fair Value |   |   | WeightedAverageYield |   |
| State and municipal                                                               |   |                    |    |   |   |   |   |   |   |
|    Within one year                                                 |   | $                       | 19      |   |   | $ | 19 |   |   |   | 8.84 | % |
|    Over one through five years                                     |   |                    | 1,658   |   |   |   | 1,747 |   |   |   | 6.39 |   |
|    Over five through ten years                                     |   |                    | 11,090  |   |   |   | 11,340 |   |   |   | 5.53 |   |
|    Over ten years                                                  |   |                    | 42,531  |   |   |   | 43,392 |   |   |   | 6.60 |   |
| Total state and municipal                                                         |   |                    | 55,298  |   |   |   | 56,498 |   |   |   | 6.38 |   |
|                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Collateralized debt obligations, including trust preferred securities             |   |                    |    |   |   |   |   |   |   |   |   |   |
|    Over ten years                                                  |   |                    | 4,069   |   |   |   | 1,359 |   |   |   | 2.14 |   |
|                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total mutual funds                                                                |   |                    | 250     |   |   |   | 248 |   |   |   | 3.21 |   |
|                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Residential mortgage-backed agencies issued by U.S. Government sponsored entities |   |                    |    |   |   |   |   |   |   |   |   |   |
|    Over one through five years                                     |   |                    | 421     |   |   |   | 444 |   |   |   | 4.64 |   |
|    Over five through ten years                                     |   |                    | 25,482  |   |   |   | 26,028 |   |   |   | 3.22 |   |
|    Over ten years                                                  |   |                    | 119,065 |   |   |   | 119,611 |   |   |   | 3.47 |   |
| Total mortgage-backed securities                                                  |   |                    | 144,968 |   |   |   | 146,083 |   |   |   | 3.43 |   |
|                                                                              |   |                    |    |   |   |   |   |   |   |   |   |   |
| Total available for sale securities                                               |   | $                       | 204,585 |   |   | $ | 204,188 |   |   |   | 4.20 | % |

----

|                                                   |   | December 31, |         |
|--------------------------------------------------------|--------|--------------|--------------|
| (Dollars in thousands)                            |   | 2010         |         |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                   |   |         |         |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand (NOW                                            |   | $            | 85,520       |   |   | $ | 83,748 |   |   | $ | 91,641 |   |   | $ | 94,939 |   |   | $ | 63,542 |   |
| Money market accounts                                  |   |         | 149,777      |   |   |   | 119,991 |   |   |   | 101,032 |   |   |   | 107,880 |   |   |   | 115,248 |   |
| Savings                                                |   |         | 35,127       |   |   |   | 31,721 |   |   |   | 29,302 |   |   |   | 26,971 |   |   |   | 30,264 |   |
| Individual retirement accounts-certificates of deposit |   |         |  31,760 |   |   |   |  32,583 |   |   |   |  28,981 |   |   |   |  29,298 |   |   |   | 27,054 |   |
| Certificates of deposit, $100,000 and over             |   |         | 83,918       |   |   |   | 90,380 |   |   |   | 97,440 |   |   |   | 87,887 |   |   |   | 95,069 |   |
| Other certificates of deposit                          |   |         | 117,705      |   |   |   | 123,753 |   |   |   | 162,322 |   |   |   | 146,515 |   |   |   | 143,891 |   |
|                                                   |   |         |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest bearing deposits                        |   |         | 503,807      |   |   |   | 482,176 |   |   |   | 510,718 |   |   |   | 493,490 |   |   |   | 475,068 |   |
| Total non-interest bearing deposits                    |   |         | 115,014      |   |   |   | 110,247 |   |   |   | 92,467 |   |   |   | 79,856 |   |   |   | 74,850 |   |
|                                                   |   |         |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | $            | 618,821      |   |   | $ | 592,423 |   |   | $ | 603,185 |   |   | $ | 573,346 |   |   | $ | 549,918 |   |

----

|                                                   |            | December 31, |         |
|--------------------------------------------------------|-----------------|--------------|--------------|
| (Dollars in thousands)                                 |            | 2010         |         |   | 2009 |   |   | 2008 |   |
|                                                   | Average Balance |         |         | Average Rate |   |   | Average Balance |   |   | Average Rate |   |   | Average Balance |   |   | Average Rate |   |
| Demand (NOW                                            |            | $            | 79,644       |   |   |   | 0.35 | % |   | $ | 77,264 |   |   |   | 0.34 | % |   | $ | 74,966 |   |   |   | 0.84 | % |
| Money market accounts                                  |            |         | 132,219      |   |   |   | 0.69 |   |   |   | 115,627 |   |   |   | 0.92 |   |   |   | 108,298 |   |   |   | 1.91 |   |
| Savings                                                |            |         | 33,568       |   |   |   | 0.05 |   |   |   | 31,439 |   |   |   | 0.05 |   |   |   | 29,212 |   |   |   | 0.25 |   |
| Individual retirement accounts-certificates of deposit |            |         |  32,754 |   |   |   |  2.01 |   |   |   | 31,898 |   |   |   |  3.08 |   |   |   |  28,055 |   |   |   |  3.89 |   |
| Certificates of deposit, $100,000 and over             |            |         | 87,450       |   |   |   | 1.56 |   |   |   | 107,071 |   |   |   | 2.67 |   |   |   | 95,636 |   |   |   | 3.50 |   |
| Other certificates of deposit                          |            |         | 122,703      |   |   |   | 1.83 |   |   |   | 139,529 |   |   |   | 3.19 |   |   |   | 149,156 |   |   |   | 4.24 |   |
|                                                   |            |         |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total interest bearing deposits                        |            |         | 488,338      |   |   |   | 1.12 | % |   |   | 502,828 |   |   |   | 1.91 | % |   |   | 485,323 |   |   |   | 2.79 | % |
| Total non-interest bearing deposits                    |            |         | 135,843      |   |   |   | - |   |   |   | 110,108 |   |   |   | - |   |   |   | 97,726 |   |   |   | - |   |
|                                                   |            |         |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |            | $            | 624,181      |   |   |   |   |   |   | $ | 612,936 |   |   |   |   |   |   | $ | 583,049 |   |   |   |   |   |

----

| (Dollars in thousands)    |   |   |    |
|---------------------------|--------|--------|---------|
| Commitments to make loans |   | $      | 17,695  |   |
| Unused lines of credit    |   |   | 126,746 |   |
| Standby letters of credit |   |   | 3,187   |   |
| Total                     |   | $      | 147,628 |   |

----

|  As of December 31, 2009 |   | Total  |    |   | Less than1 year |   |    | 1-3 years |   |   | 3-5 years |   |   | More than5 years |   |
|-------------------------------|--------|--------|---------|--------|-----------------|--------|---------|-----------|--------|--------|-----------|--------|--------|------------------|--------|
| (Dollars in thousands)        |   |   |    |   |            |   |    |      |   |   |      |   |   |             |   |
| Time deposits                 |   | $      | 233,383 |   |            | $      | 166,455 |      |   | $      | 62,866    |   |   | $                | 3,742  |   |   | $ | 320 |   |
| Repurchase agreements         |   |   | 44,896  |   |            |   | 35,096  |      |   |   | 9,800     |   |   |             | -      |   |   |   | - |   |
| FHLB borrowings               |   |   | 50,000  |   |            |   | 10,000  |      |   |   | 30,000    |   |   |             | 10,000 |   |   |   | - |   |
| Subordinated debentures       |   |   | 17,000  |   |            |   | -       |      |   |   | -         |   |   |             | -      |   |   |   | 17,000 |   |
| Line of credit                |   |   | 3,800   |   |            |   | 3,800   |      |   |   | -         |   |   |             | -      |   |   |   | - |   |
| Note payable                  |   |   | 730     |   |            |   | 730     |      |   |   | -         |   |   |             | -      |   |   |   | - |   |
| Defined benefit plan          |   |   | 726     |   |            |   | 38      |      |   |   | 73        |   |   |             | 317    |   |   |   | 298 |   |
| Lease commitments             |   |   | 2,989   |   |            |   | 579     |      |   |   | 1,002     |   |   |             | 667    |   |   |   | 741 |   |
| Total                         |   | $      | 353,524 |   |            | $      | 216,698 |      |   | $      | 103,741   |   |   | $                | 14,726 |   |   | $ | 18,359 |   |

----

----

|     (Dollars in thousands)                                                                          |   |    Base |      |   | GradualIncreaseIn InterestRates of 200Basis Points |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-----------|--------|----------------------------------------------------|--------|
| Projected interest income:                                                                                                   |   |                   |      |   |                                               |   |
|    Loans                                                                                                      |   | $                      | 29,104    |   |                                               | $      | 29,976 |   |
|    Investments                                                                                                |   |                   | 7,383     |   |                                               |   | 7,541 |   |
|    FHLB and FRB stock                                                                                         |   |                   | 128       |   |                                               |   | 128 |   |
| Interest-bearing deposits in other financial   institutions                                                   |   |                   | 11        |   |                                               |   | 56 |   |
| Federal funds sold                                                                                                           |   |                   | 13        |   |                                               |   | 117 |   |
| Total interest income                                                                                                        |   |                   | 36,639    |   |                                               |   | 37,818 |   |
|                                                                                                                         |   |                   |      |   |                                               |   |   |   |
| Projected interest expense:                                                                                                  |   |                   |      |   |                                               |   |   |   |
|    Deposits                                                                                                   |   |                   | 4,216     |   |                                               |   | 5,260 |   |
|    Federal funds purchased, line of credit and       Repurchase agreements |   |                   |  682 |   |                                               |   |  1,071 |   |
|    FHLB advances                                                                                              |   |                   | 912       |   |                                               |   | 912 |   |
|    Subordinated debentures                                                                                    |   |                   | 409       |   |                                               |   | 553 |   |
| Total interest expense                                                                                                       |   |                   | 6,219     |   |                                               |   | 7,796 |   |
| Net interest income                                                                                                          |   | $                      | 30,420    |   |                                               | $      | 30,022 |   |
|                                                                                                                         |   |                   |      |   |                                               |   |   |   |
| Change from base                                                                                                             |   |                   |      |   |                                               | $      | (398 | ) |
| % Change from base                                                                                                           |   |                   |      |   |                                               |   | (1.31 | )% |

----

|     (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 | )% |

----

| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 51     |
|---------------------------------------------------------|--------|
|                                                    |   |
| FINANCIAL STATEMENTS                                    |   |
|                                                    |   |
|   CONSOLIDATED BALANCE SHEETS                 | 52     |
|                                                    |   |
|   CONSOLIDATED STATEMENTS OF OPERATIONS       | 53     |
|                                                    |   |
|   CONSOLIDATED STATEMENTS OF CHANGES IN       |   |
|     SHAREHOLDERS’ EQUITY      | 55     |
|                                                    |   |
|   CONSOLIDATED STATEMENTS OF CASH FLOWS       | 57     |
|                                                    |   |
|   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  | 59     |

----

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

----

----

|                                                                                                                                                                                                           |   | 2010   |            |   | 2009   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|
| ASSETS                                                                                                                                                                                                         |   |   |            |   |   |   |
| Cash and due from financial institutions                                                                                                                                                                       |   | $      | 11,658          |   |   | $      | 24,474 |   |
| Interest-bearing deposits in other financial institutions                                                                                                                                                      |   |   | 23,818          |   |   |   | 29,941 |   |
| Securities available for sale                                                                                                                                                                                  |   |   | 204,188         |   |   |   | 172,723 |   |
| Loans held for sale                                                                                                                                                                                            |   |   | 1,080           |   |   |   | 979 |   |
| Loans, net of allowance for loan losses of $10,864 and $15,236                                                                                                                                                 |   |   | 502,223         |   |   |   | 528,183 |   |
| Federal Home Loan Bank and Federal Reserve stock                                                                                                                                                               |   |   | 6,808           |   |   |   | 7,670 |   |
| Accrued interest receivable                                                                                                                                                                                    |   |   | 3,089           |   |   |   | 3,216 |   |
| Premises and equipment, net                                                                                                                                                                                    |   |   | 13,659          |   |   |   | 14,388 |   |
| Company owned life insurance                                                                                                                                                                                   |   |   | 19,210          |   |   |   | 18,490 |   |
| Other intangible assets                                                                                                                                                                                        |   |   | 1,106           |   |   |   | 1,352 |   |
| Foreclosed and repossessed assets                                                                                                                                                                              |   |   | 3,633           |   |   |   | 5,190 |   |
| Prepaid FDIC insurance premium                                                                                                                                                                                 |   |   | 3,673           |   |   |   | 4,898 |   |
| Other assets                                                                                                                                                                                                   |   |   | 7,321           |   |   |   | 7,655 |   |
|                                                                                                                                                                                                           |   | $      | 801,466         |   |   | $      | 819,159 |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                     |   |   |            |   |   |   |   |   |
| Deposits                                                                                                                                                                                                       |   |   |            |   |   |   |   |   |
|      Non interest-bearing                                                                                                                                                             |   | $      | 115,014         |   |   | $      | 110,247 |   |
|      Interest-bearing                                                                                                                                                                 |   |   | 503,807         |   |   |   | 482,176 |   |
| Total deposits                                                                                                                                                                                                 |   |   | 618,821         |   |   |   | 592,423 |   |
| Other borrowings                                                                                                                                                                                               |   |   | 49,426          |   |   |   | 76,996 |   |
| Federal Home Loan Bank advances                                                                                                                                                                                |   |   | 50,000          |   |   |   | 68,482 |   |
| Subordinated debentures                                                                                                                                                                                        |   |   | 17,000          |   |   |   | 17,000 |   |
| Accrued interest payable                                                                                                                                                                                       |   |   | 615             |   |   |   | 818 |   |
| Other liabilities                                                                                                                                                                                              |   |   | 2,439           |   |   |   | 3,490 |   |
| Total liabilities                                                                                                                                                                                              |   |   | 738,301         |   |   |   | 759,209 |   |
|                                                                                                                                                                                                           |   |   |            |   |   |   |   |   |
| 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 issued and outstanding; aggregate liquidation preference of $19,468                                      |   |   | 19,123          |   |   |   | 19,034 |   |
| Common stock, $.10 par value per share; 10,000,000 shares authorized; 3,863,937 and 3,863,942 shares issued in 2010 and 2009, respectively; 3,297,625 and 3,274,697 outstanding in 2010 and 2009, respectively |   |   |   386 |   |   |   |   386 |   |
|        Additional paid-in capital                                                                                                                                           |   |   | 45,521          |   |   |   | 45,550 |   |
|        Retained earnings                                                                                                                                                    |   |   | 8,500           |   |   |   | 3,891 |   |
|        Accumulated other comprehensive income (loss)                                                                                                                        |   |   | (598            | )      |   |   | 1,263 |   |
|        Treasury stock, at cost (2010- 566,312 shares, 2009- 589,245 shares)                                                                                                 |   |   | (9,767          | )      |   |   | (10,174 | ) |
| Total shareholders’ equity                                                                                                                                                                               |   |   | 63,165          |   |   |   | 59,950 |   |
|                                                                                                                                                                                                           |   | $      | 801,466         |   |   | $      | 819,159 |   |

----

----

|                                                                              |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest and dividend income                                                      |   |   |   |   |   |   |   |   |   |
|    Loans, including fees                                           |   | $      | 29,589 |   |   | $      | 32,713 |   |   | $ | 38,833 |   |
|    Taxable securities                                              |   |   | 3,971  |   |   |   | 4,623  |   |   |   | 4,798 |   |
|    Tax-exempt securities                                           |   |   | 2,088  |   |   |   | 1,524  |   |   |   | 697 |   |
|    Federal Home Loan Bank and Federal Reserve dividends            |   |   | 162    |   |   |   | 269    |   |   |   | 338 |   |
|    Interest-bearing deposits in other financial institutions       |   |   | 84     |   |   |   | 133    |   |   |   | 241 |   |
|                                                                              |   |   | 35,894 |   |   |   | 39,262 |   |   |   | 44,907 |   |
| Interest expense                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                                                        |   |   | 5,482  |   |   |   | 9,628  |   |   |   | 13,529 |   |
|    Other borrowings                                                |   |   | 828    |   |   |   | 883    |   |   |   | 1,403 |   |
|    Federal Home Loan Bank advances                                 |   |   | 1,451  |   |   |   | 4,281  |   |   |   | 5,605 |   |
|    Subordinated debentures                                         |   |   | 419    |   |   |   | 526    |   |   |   | 916 |   |
|                                                                              |   |   | 8,180  |   |   |   | 15,318 |   |   |   | 21,453 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                               |   |   | 27,714 |   |   |   | 23,944 |   |   |   | 23,454 |   |
| Provision for loan losses                                                         |   |   | 3,833  |   |   |   | 15,925 |   |   |   | 6,857 |   |
| Net interest income after provision for loan losses                               |   |   | 23,881 |   |   |   | 8,019  |   |   |   | 16,597 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest income                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|    Service charges on deposit accounts                             |   |   | 3,433  |   |   |   | 3,453  |   |   |   | 3,356 |   |
|    Commission income                                               |   |   | 130    |   |   |   | 53     |   |   |   | 194 |   |
|    Net gain on sales of available for sale securities              |   |   | 1,751  |   |   |   | 1,380  |   |   |   | 364 |   |
|    Mortgage banking income                                         |   |   | 365    |   |   |   | 314    |   |   |   | 167 |   |
|    Gain on sale of loans                                           |   |   | -      |   |   |   | 197    |   |   |   | - |   |
|    Earnings on company owned life insurance                        |   |   | 720    |   |   |   | 745    |   |   |   | 734 |   |
|    Change in fair value and cash settlement of interest rate swaps |   |   | -      |   |   |   | -      |   |   |   | 180 |   |
|    Interchange income                                              |   |   | 907    |   |   |   | 839    |   |   |   | 811 |   |
|    Other-than-temporary impairment loss                            |   |   |   |   |   |   |   |   |   |   |   |   |
|    Total impairment loss                                           |   |   | (784   | )      |   |   | (1,100 | )      |   |   | - |   |
|    Loss recognized in other comprehensive income (loss)            |   |   | 424    |   |   |   | -      |   |   |   | - |   |
|    Net impairment loss recognized in earnings                      |   |   | (360   | )      |   |   | (1,100 | )      |   |   | - |   |
|    Other income                                                    |   |   | 468    |   |   |   | 445    |   |   |   | 281 |   |
|                                                                              |   |   | 7,414  |   |   |   | 6,326  |   |   |   | 6,087 |   |
| Non-interest expense                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|    Salaries and employee benefits                                  |   |   | 10,492 |   |   |   | 11,160 |   |   |   | 12,125 |   |
|    Occupancy                                                       |   |   | 2,053  |   |   |   | 2,417  |   |   |   | 2,169 |   |
|    Equipment                                                       |   |   | 1,215  |   |   |   | 1,419  |   |   |   | 1,535 |   |
|    Data processing                                                 |   |   | 2,508  |   |   |   | 2,498  |   |   |   | 1,931 |   |
|    Marketing and advertising                                       |   |   | 241    |   |   |   | 362    |   |   |   | 568 |   |
|    Legal and professional service fees                             |   |   | 1,379  |   |   |   | 1,627  |   |   |   | 1,153 |   |
|    FDIC insurance premiums                                         |   |   | 1,370  |   |   |   | 1,685  |   |   |   | 480 |   |
|    Goodwill and other intangible asset impairment                  |   |   | -      |   |   |   | 16,154 |   |   |   | - |   |
|    Prepayment penalties on extinguishment of debt                  |   |   | 335    |   |   |   | 838    |   |   |   | - |   |
|    Foreclosed and repossessed assets, net                          |   |   | 548    |   |   |   | 665    |   |   |   | 217 |   |
|    Other expense                                                   |   |   | 2,320  |   |   |   | 2,343  |   |   |   | 2,376 |   |
|                                                                              |   |   | 22,461 |   |   |   | 41,168 |   |   |   | 22,554 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                                                              |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
|                                                              |   |   |   |   |   |   |    |   |   |
| Income (loss) before income taxes                                 |   | $      | 8,834  |   |   | $      | (26,823 | )      |   | $ | 130 |   |
|                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Income tax  (benefit) expense                           |   |   | 1,846  |   |   |   | (4,854  | )      |   |   | (691 | ) |
|                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income (loss)                                                 |   |   | 6,988  |   |   |   | (21,969 | )      |   |   | 821 |   |
|                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Preferred stock dividends and discount accretion                  |   |   | (1,065 | )      |   |   | (618    | )      |   |   | - |   |
|                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Net income (loss) available (attributable) to common shareholders |   | $      | 5,923  |   |   | $      | (22,587 | )      |   | $ | 821 |   |
|                                                              |   |   |   |   |   |   |    |   |   |   |   |   |
| Earnings (loss) per common share:                                 |   |   |   |   |   |   |    |   |   |   |   |   |
|    Basic                                           |   | $      | 1.80   |   |   | $      | (6.93   | )      |   | $ | 0.25 |   |
|    Diluted                                         |   | $      | 1.77   |   |   | $      | (6.93   | )      |   | $ | 0.25 |   |

----

----

----

|                                                                                                                                                                                                                      |   |           |   |        |   |   | Additional     |   |   |             |   |   | AccumulatedOther           |    |   |          |   |   | Total                     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|-------------|--------|--------|----------------|--------|--------|------------------|--------|--------|----------------------------|---------|--------|---------------|--------|--------|---------------------------|--------|
|                                                                                                                                                                                                                      |   | PreferredStock |   | CommonStock |   |   | Paid-InCapital |   |   | RetainedEarnings |   |   | ComprehensiveIncome (Loss) |    |   | TreasuryStock |   |   | Shareholders’Equity |   |
| Balance at January 1, 2008                                                                                                                                                                                                |   | $              | -      |        | $      | 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 | ) |
|    Unrealized loss on pension benefits,                                                                                                                                                                    |   |           |   |        |   |   |           |   |   |             |   |   |                       |    |   |          |   |   |                      |   |   |   |   |   |   |   |   |
|         net of tax effects                                                                                                                                                        |   |           | -      |        |   | -      |           |   |   | -                |   |   |                       | -       |   |          |   | (140   | )                         |   |   | - |   |   |   |  (140 | ) |
| Total comprehensive income                                                                                                                                                                                                |   |           |   |        |   |   |           |   |   |             |   |   |                       |    |   |          |   |   |                      |   |   |   |   |   |   | 420 |   |
|                                                                                                                                                                                                                      |   |           |   |        |   |   |           |   |   |             |   |   |                       |    |   |          |   |   |                      |   |   |   |   |   |   |   |   |
| Cash dividends declared on common stock ($.70 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 reclassification 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 |   |

----

----

----

|                                                                                                                                                                                                                       |   |           |    |   | Additional  |   |   |           |   |   | AccumulatedOther |   |   |                       |   |   | Total         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------|--------|--------|----------------|--------|--------|------------------|--------|--------|----------------------------|--------|--------|---------------|--------|
|                                                                                                                                                                                                                       |   | PreferredStock |    |   | CommonStock |   |   | Paid-InCapital |   |   | RetainedEarnings |   |   | ComprehensiveIncome (Loss) |   |   | TreasuryStock |   |   | Shareholders’Equity |   |
|    Unrealized gain on pension benefits,                                                                                                                                                                     |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |
|         net of tax effects                                                                                                                                                         |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | -      |   |          |   | 57 |   |   |   | - |   |   |   |  57 |   |
| Total comprehensive loss                                                                                                                                                                                                   |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   | (20,066 | ) |
|                                                                                                                                                                                                                       |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared on common stock ($.55 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 |   |
|                                                                                                                                                                                                                       |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                                                                                                                                                      |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
|    Net income                                                                                                                                                                                               |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | 6,988  |   |          |   | - |   |   |   | - |   |   |   | 6,988 |   |
|    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 |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | -      |   |          |   | (207 | ) |   |   | - |   |   |   | (207 | ) |
|    Change in unrealized gains (losses) on securities available for sale, net of reclassifications and tax effects                                                                                           |   |           | -       |   |        |   | -      |           |   |   |             |   |   |                       | -      |   |          |   | (1,646 | ) |   |   | - |   |   |   | (1,646 | ) |
|    Unrealized loss on pension benefits,                                                                                                                                                                     |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
|         net of tax effects                                                                                                                                                         |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | -      |   |          |   | (8 | ) |   |   | - |   |   |   |  (8 | ) |
| Total comprehensive income                                                                                                                                                                                                 |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   | 5,127 |   |
|                                                                                                                                                                                                                       |   |           |    |   |        |   |   |           |   |   |             |   |   |                       |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared on common stock ($.40 per share)                                                                                                                                                                   |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | (1,314 | )      |          |   | - |   |   |   | - |   |   |   | (1,314 | ) |
| Dividends on preferred stock                                                                                                                                                                                               |   |           | -       |   |        |   | -      |           |   |   | -                |   |   |                       | (976   | )      |          |   | - |   |   |   | - |   |   |   | (976 | ) |
| Issuance of treasury stock under dividend reinvestment plan                                                                                                                                                           |   |           | -       |   |        |   | -      |           |   |   | (203             | )      |   |                       | -      |   |          |   | - |   |   |   | 407 |   |   |   | 204 |   |
| Amortization of preferred discount                                                                                                                                                                                         |   |           | 89      |   |        |   | -      |           |   |   | -                |   |   |                       | (89    | )      |          |   | - |   |   |   | - |   |   |   | - |   |
| Stock award expense                                                                                                                                                                                                        |   |           | -       |   |        |   | -      |           |   |   | 174              |   |   |                       | -      |   |          |   | - |   |   |   | - |   |   |   | 174 |   |
| Balance at December 31, 2010                                                                                                                                                                                               |   | $              | 19,123  |   |        | $      | 386    |           |   | $      | 45,521           |   |   | $                          | 8,500  |   |          | $      | (598 | ) |   | $ | (9,767 | ) |   | $ | 63,165 |   |

----

----

|                                                                    |   | 2010   |     |   | 2009   |   |     | 2008   |   |
|-------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Cash flows from operating activities                                    |   |   |     |   |   |   |     |   |   |
|    Net income (loss)                                     |   | $      | 6,988    |   |   | $      | (21,969  | )      |   | $ | 821 |   |
|   Adjustments to reconcile net income (loss) to               |   |   |     |   |   |   |     |   |   |   |   |   |
|       net cash from operating activities: |   |   |     |   |   |   |     |   |   |   |   |   |
|   Provision for loan losses                                   |   |   | 3,833    |   |   |   | 15,925   |   |   |   | 6,857 |   |
|   Depreciation and amortization                               |   |   | 1,541    |   |   |   | 1,763    |   |   |   | 1,863 |   |
|   Net amortization (accretion) of securities                  |   |   | 784      |   |   |   | 193      |   |   |   | (120 | ) |
|   Net (gain) loss on sales of available for sale securities   |   |   | (1,751   | )      |   |   | (1,380   | )      |   |   | (364 | ) |
|   Other-than-temporary impairment loss                        |   |   | 360      |   |   |   | 1,100    |   |   |   | - |   |
|   Prepayment penalties on extinguishment of debt              |   |   | 335      |   |   |   | 838      |   |   |   | - |   |
|   Mortgage loans originated for sale                          |   |   | (20,167  | )      |   |   | (21,203  | )      |   |   | (13,589 | ) |
|   Proceeds from mortgage loan sales                           |   |   | 20,421   |   |   |   | 20,825   |   |   |   | 14,235 |   |
|   Net gain on sales of mortgage loans                         |   |   | (355     | )      |   |   | (293     | )      |   |   | (197 | ) |
|   Earnings on company owned life insurance                    |   |   | (720     | )      |   |   | (745     | )      |   |   | (734 | ) |
|   FHLB stock dividends                                        |   |   | -        |   |   |   | -        |   |   |   | (16 | ) |
|   Gain on sale of loans                                       |   |   | -        |   |   |   | (197     | )      |   |   | - |   |
|   Goodwill and other intangible asset impairment              |   |   | -        |   |   |   | 16,154   |   |   |   | - |   |
|   Share based compensation expense                            |   |   | 174      |   |   |   | 85       |   |   |   | 309 |   |
|   Net (gain) loss on sale of foreclosed assets                |   |   | (12      | )      |   |   | 107      |   |   |   | 22 |   |
|   Net (gain) loss on disposition of premises and equipment    |   |   | (3       | )      |   |   | (4       | )      |   |   | (4 | ) |
|   Net change in                                               |   |   |     |   |   |   |     |   |   |   |   |   |
| Accrued interest receivable                                             |   |   | 127      |   |   |   | (53      | )      |   |   | 374 |   |
| Accrued interest payable                                                |   |   | (203     | )      |   |   | (887     | )      |   |   | (251 | ) |
| Other assets                                                            |   |   | 1,698    |   |   |   | (9,466   | )      |   |   | (438 | ) |
| Other liabilities                                                       |   |   | (327     | )      |   |   | 653      |   |   |   | (893 | ) |
| Net cash from operating activities                                      |   |   | 12,723   |   |   |   | 1,446    |   |   |   | 7,875 |   |
|                                                                    |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash flows from investing activities                                    |   |   |     |   |   |   |     |   |   |   |   |   |
|   Net change in interest-bearing deposits                     |   |   | 6,123    |   |   |   | 15,808   |   |   |   | (31,806 | ) |
|   Available for sale securities:                              |   |   |     |   |   |   |     |   |   |   |   |   |
| Sales                                                                   |   |   | 117,818  |   |   |   | 76,467   |   |   |   | 19,098 |   |
| Purchases                                                               |   |   | (173,404 | )      |   |   | (146,313 | )      |   |   | (65,381 | ) |
| Maturities, prepayments and calls                                       |   |   | 21,922   |   |   |   | 21,661   |   |   |   | 24,181 |   |
|   Loan originations and payments, net                         |   |   | 21,769   |   |   |   | 58,016   |   |   |   | (3,149 | ) |
|   Purchase of premises and equipment, net                     |   |   | (586     | )      |   |   | (740     | )      |   |   | (1,524 | ) |
|   Proceeds from the sale of premises and equipment            |   |   | 3        |   |   |   | 8        |   |   |   | 10 |   |
|   Proceeds from the sale of foreclosed assets                 |   |   | 2,045    |   |   |   | 2,436    |   |   |   | 2,318 |   |
|   Proceeds from the sale of loans                             |   |   | -        |   |   |   | 14,739   |   |   |   | - |   |
|   Purchase of FHLB and Federal Reserve stock                  |   |   | (42      | )      |   |   | -        |   |   |   | (376 | ) |
|   Redemption of FHLB and Federal Reserve stock                |   |   | 904      |   |   |   | 802      |   |   |   | 16 |   |
|   Investment in company owned life insurance                  |   |   | -        |   |   |   | -        |   |   |   | (100 | ) |
| Net cash from investing activities                                      |   |   | (3,448   | )      |   |   | 42,884   |   |   |   | (56,713 | ) |
|                                                                    |   |   |     |   |   |   |     |   |   |   |   |   |

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|                                                               |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
| Cash flows from financing activities                               |   |   |    |   |   |   |    |   |   |
|   Net change in deposits                                 |   | $      | 26,398  |   |   | $      | (10,745 | )      |   | $ | 29,900 |   |
|   Net change in other borrowings                         |   |   | (27,570 | )      |   |   | (1,987  | )      |   |   | 6,187 |   |
|   Proceeds from Federal Home Loan Bank advances          |   |   | 75,000  |   |   |   | 25,000  |   |   |   | 77,000 |   |
|   Repayment of Federal Home Loan Bank advances           |   |   | (93,835 | )      |   |   | (69,338 | )      |   |   | (56,500 | ) |
|   Proceeds from issuance of preferred stock and warrants |   |   | -       |   |   |   | 19,468  |   |   |   | - |   |
|   Purchase of treasury stock                             |   |   | -       |   |   |   | -       |   |   |   | (400 | ) |
|   Cash dividends paid on preferred shares                |   |   | (974    | )      |   |   | (449    | )      |   |   | - |   |
|   Cash dividends paid on common shares                   |   |   | (1,110  | )      |   |   | (1,529  | )      |   |   | (2,195 | ) |
| Net cash from financing activities                                 |   |   | (22,091 | )      |   |   | (39,580 | )      |   |   | 53,992 |   |
|                                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Net change in cash and due from banks                              |   |   | (12,816 | )      |   |   | 4,750   |   |   |   | 5,154 |   |
| Cash and due from banks at beginning of year                       |   |   | 24,474  |   |   |   | 19,724  |   |   |   | 14,570 |   |
| Cash and due from banks at end of year                             |   | $      | 11,658  |   |   | $      | 24,474  |   |   | $ | 19,724 |   |
|                                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental cash flow information:                                |   |   |    |   |   |   |    |   |   |   |   |   |
|   Interest paid                                          |   | $      | 8,383   |   |   | $      | 16,205  |   |   | $ | 21,704 |   |
|   Income taxes paid, net of refunds                      |   |   | 1,520   |   |   |   | (230    | )      |   |   | 334 |   |
|                                                               |   |   |    |   |   |   |    |   |   |   |   |   |
| Supplemental noncash disclosures:                                  |   |   |    |   |   |   |    |   |   |   |   |   |
|   Transfers from loans to foreclosed assets              |   |   | 4,698   |   |   |   | 6,751   |   |   |   | 3,292 |   |
|   Sale and financing of foreclosed assets                |   |   | 4,302   |   |   |   | 261     |   |   |   | 286 |   |
|  Issuance of treasury shares under dividend reinvestment plan |   |   | 204     |   |   |   | 261     |   |   |   | 81 |   |

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|                                                                               |   | AmortizedCost  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |          |
|------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|-----------------------|--------|--------|-----------|---------------|
| 2010                                                                               |   | (In thousands) |    |
| State and municipal                                                                |   | $              | 55,298  |   |                 | $      | 1,434  |                  |   | $      | (234      | )             |   | $ | 56,498 |   |
| Residential mortgaged-backed agencies issued by U.S. Government sponsored entities |   |           | 144,968 |   |                 |   | 2,293  |                  |   |   | (1,178    | )             |   |   | 146,083 |   |
| Collateralized debt obligations, including trust preferred securities              |   |           | 4,069   |   |                 |   | -      |                  |   |   | (2,710    | )             |   |   | 1,359 |   |
| Mutual funds                                                                       |   |           | 250     |   |                 |   | -      |                  |   |   | (2        | )             |   |   | 248 |   |
|      Total                                                |   | $              | 204,585 |   |                 | $      | 3,727  |                  |   | $      | (4,124    | )   |   | $ | 204,188 |   |

|                                                                               |   | AmortizedCost  |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | 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 |   |

|         |   | 2010           |    |   | 2009   |   |   | 2008   |   |
|--------------|--------|----------------|---------|--------|--------|--------|--------|--------|--------|
|         |   | (In thousands) |    |
| Proceeds     |   | $              | 117,818 |   |   | $      | 76,467 |   |   | $ | 19,098 |   |
| Gross gains  |   |           | 1,760   |   |   |   | 1,389  |   |   |   | 364 |   |
| Gross losses |   |           | (9      | )      |   |   | (9     | )      |   |   | - |   |

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|                                                                              |   | AmortizedCost  |    |   | FairValue |   |
|-----------------------------------------------------------------------------------|--------|----------------|---------|--------|-----------|--------|
| 2010                                                                              |   | (In thousands) |    |
| Due in one year or less                                                           |   | $              | 19      |   |      | $      | 19 |   |
| Due from one to five years                                                        |   |           | 1,658   |   |      |   | 1,747 |   |
| Due from five to ten years                                                        |   |           | 11,090  |   |      |   | 11,340 |   |
| Due after ten years                                                               |   |           | 46,600  |   |      |   | 44,751 |   |
| Residential mortgage-backed agencies issued by U.S. Government sponsored entities |   |           | 144,968 |   |      |   | 146,083 |   |
| Mutual Funds                                                                      |   |           | 250     |   |      |   | 248 |   |
| Total                                                                             |   | $              | 204,585 |   |      | $      | 204,188 |   |

|                                                                              |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |   |
|-----------------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
|                                                                              |   | (In thousands)      |   |
|  2010                                                                        |   | FairValue           |   |   | UnrealizedLoss    |   |   | FairValue |   |   | UnrealizedLoss |   |   | FairValue |   |   | UnrealizedLoss |   |
| State and municipal                                                               |   | $                   | 1,344  |   |              | $      | (83    | )         |   | $ | 7,402 |   |   | $ | (151 | ) |   | $ | 8,746 |   |   | $ | (234 | ) |
| Residential mortgage-backed agencies issued by U.S. Government sponsored entities |   |                | 68,927 |   |              |   | (1,178 | )         |   |   | - |   |   |   | - |   |   |   | 68,927 |   |   |   | (1,178 | ) |
| Collateralized debt obligations, including trust preferred securities             |   |                | -      |   |              |   | -      |      |   |   | 1,359 |   |   |   | (2,710 | ) |   |   | 1,359 |   |   |   | (2,710 | ) |
| Mutual funds                                                                      |   |                | 248    |   |              |   | (2     | )         |   |   | - |   |   |   | - |   |   |   | 248 |   |   |   | (2 | ) |
| Total temporarily impaired                                                        |   | $                   | 70,519 |   |              | $      | (1,263 | )         |   | $ | 8,761 |   |   | $ | (2,861 | ) |   | $ | 79,280 |   |   | $ | (4,124 | ) |

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|                                                                              |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |   |
|-----------------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|
|                                                                              |   | (In thousands)      |   |
|  2009                                                                        |   | FairValue           |   |   | UnrealizedLoss    |   |   | FairValue |   |   | UnrealizedLoss |   |   | FairValue |   |   | 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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|       | Current Rating |   | Par Value |   |   | Amortized Cost |   |   | Estimated Fair Value |   |   | Previously Recognized OTTI Related to Credit Loss, Pre-Tax |   |   | OTTI Related to Credit Loss Recognized in 2010, Pre-Tax |   |
|------------|----------------|--------|----------------|--------|--------|----------------|--------|--------|----------------------|--------|--------|-----------------------------------------------------------------|--------|--------|--------------------------------------------------------------|--------|
| Security 1 | CCC- (S&P) |   | $              | 2,000  |   |           | $      | 2,000  |                 |   | $      | 979                                                             |   |   | $                                                            | -      |   |   | $ | - |   |
|       |           |   |           |   |   |           |   |   |                 |   |   |                                                            |   |   |                                                         |   |   |   |   |   |   |
| Security 2 | Ba3            |   |           | 146    |   |           |   | -      |                 |   |   | -                                                               |   |   |                                                         | -      |   |   |   | 146 |   |
|       |           |   |           |   |   |           |   |   |                 |   |   |                                                            |   |   |                                                         |   |   |   |   |   |   |
| Security 3 | Ca             |   |           | 49     |   |           |   | 43     |                 |   |   | 21                                                              |   |   |                                                         | 5      |   |   |   | - |   |
|       |           |   |           |   |   |           |   |   |                 |   |   |                                                            |   |   |                                                         |   |   |   |   |   |   |
| Security 4 | Ca             |   |           | 317    |   |           |   | 282    |                 |   |   | 139                                                             |   |   |                                                         | 35     |   |   |   | - |   |
|       |           |   |           |   |   |           |   |   |                 |   |   |                                                            |   |   |                                                         |   |   |   |   |   |   |
| Security 5 | Ca             |   |           | 1,546  |   |           |   | 872    |                 |   |   | 110                                                             |   |   |                                                         | 530    |   |   |   | 107 |   |
|       |           |   |           |   |   |           |   |   |                 |   |   |                                                            |   |   |                                                         |   |   |   |   |   |   |
| Security 6 | Ca             |   |           | 1,546  |   |           |   | 872    |                 |   |   | 110                                                             |   |   |                                                         | 530    |   |   |   | 107 |   |
|       |           |   | $              | 5,604  |   |           | $      | 4,069  |                 |   | $      | 1,359                                                           |   |   | $                                                            | 1,100  |   |   | $ | 360 |   |

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|                                                                                                           |   | 2010           |   |   | 2009   |   |
|----------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                                                                           |   | (In thousands) |   |
| Beginning balance, January 1                                                                                   |   | $              | 1,100  |   |   | $      | - |   |
| Additions for credit losses on securities for which no previous other-than-temporary impairment was recognized |   |           | 146    |   |   |   | 1,100 |   |
| Increases to credit losses on securities for which other-than-temporary impairment was previously recognized   |   |           | 214    |   |   |   | - |   |
| Ending balance, December 31                                                                                    |   | $              | 1,460  |   |   | $      | 1,100 |   |

|                                       |   | 2010           |         |   | 2009   |   |
|--------------------------------------------|--------|----------------|--------------|--------|--------|--------|
|                                       |   | (In thousands) |         |
| Commercial                                 |   | $              | 103,295      |   |   | $      | 94,168 |   |
| Construction                               |   |           | 48,872       |   |   |   | 51,592 |   |
| Commercial Real Estate:                    |   |           |         |   |   |   |   |   |
| Owner occupied nonfarm/residential         |   |           | 89,373       |   |   |   | 89,056 |   |
| Other nonfarm/residential                  |   |           | 82,558       |   |   |   | 104,521 |   |
| Residential Real Estate:                   |   |           |         |   |   |   |   |   |
| Secured by first liens                     |   |           | 126,951      |   |   |   | 134,969 |   |
| Home equity                                |   |           | 50,460       |   |   |   | 54,434 |   |
| Consumer                                   |   |           |  11,578 |   |   |   |  14,679 |   |
| Subtotal                                   |   |           | 513,087      |   |   |   | 543,419 |   |
| Less:  Allowance for loan losses |   |           | (10,864      | )      |   |   | (15,236 | ) |
| Loans, net                                 |   | $              | 502,223      |   |   | $      | 528,183 |   |

|                                         |   | 2010           |   |   | 2009   |   |    | 2008   |   |
|----------------------------------------------|--------|----------------|--------|--------|--------|--------|---------|--------|--------|
|                                         |   | (In thousands) |   |
| Beginning balance                            |   | $              | 15,236 |   |   | $      | 9,478   |   |   | $ | 6,316 |   |
| Provision for loan losses                    |   |           | 3,833  |   |   |   | 15,925  |   |   |   | 6,857 |   |
| Loans charged-off                            |   |           | (8,688 | )      |   |   | (10,385 | )      |   |   | (3,813 | ) |
| Recoveries                                   |   |           | 483    |   |   |   | 218     |   |   |   | 118 |   |
|      Ending balance |   | $              | 10,864 |   |   | $      | 15,236  |   |   | $ | 9,478 |   |

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|                                            |   | Commercial |    |   | Construction |   |   | Commercial Real Estate |   |   | Residential Real Estate |   |   | Consumer |    |   | Total  |   |
|-------------------------------------------------|--------|------------|---------|--------|--------------|--------|--------|------------------------|--------|--------|-------------------------|--------|--------|----------|---------|--------|--------|--------|
| Allowance for loan losses:                      |   |       |    |   |         |   |   |                   |   |   |                    |   |   |     |    |   |   |   |
| Ending allowance balance attributable to loans: |   |       |    |   |         |   |   |                   |   |   |                    |   |   |     |    |   |   |   |
| Individually evaluated for impairment           |   | $          | 41      |   |         | $      | 749    |                   |   | $      | 818                     |   |   | $        | 582     |   |   | $      | 50 |   |   | $ | 2,240 |   |
| Collectively evaluated for impairment           |   |       | 3,204   |   |         |   | 1,144  |                   |   |   | 1,681                   |   |   |     | 2,221   |   |   |   | 374 |   |   |   | 8,624 |   |
| Total ending allowance balance                  |   | $          | 3,245   |   |         | $      | 1,893  |                   |   | $      | 2,499                   |   |   | $        | 2,803   |   |   | $      | 424 |   |   | $ | 10,864 |   |
|                                            |   |       |    |   |         |   |   |                   |   |   |                    |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Loans:                                          |   |       |    |   |         |   |   |                   |   |   |                    |   |   |     |    |   |   |   |   |   |   |   |   |   |
| Loans individually evaluated for impairment     |   | $          | 266     |   |         | $      | 8,848  |                   |   | $      | 12,127                  |   |   | $        | 4,711   |   |   | $      | 209 |   |   | $ | 26,161 |   |
| Loans collectively evaluated for impairment     |   |       | 103,029 |   |         |   | 40,024 |                   |   |   | 159,804                 |   |   |     | 172,700 |   |   |   | 11,369 |   |   |   | 486,926 |   |
| Total ending loans balance                      |   | $          | 103,295 |   |         | $      | 48,872 |                   |   | $      | 171,931                 |   |   | $        | 177,411 |   |   | $      | 11,578 |   |   | $ | 513,087 |   |
|                                            |   |       |    |   |         |   |   |                   |   |   |                    |   |   |     |    |   |   |   |   |   |   |   |   |   |

|                                                                  |   | 2010           |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                  |   | (In thousands) |   |
|   Average of individually impaired loans during the year    |   | $              | 25,624 |   |   | $      | 28,415 |   |   | $ | 8,107 |   |
|   Interest income recognized and received during impairment |   |           | 294    |   |   |   | 346    |   |   |   | 4 |   |

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|                               |   | Unpaid Principal Balance |   |   | Recorded Investment |   |   | Allowance for Loan Losses Allocated |   |
|------------------------------------|--------|--------------------------|--------|--------|---------------------|--------|--------|-------------------------------------|--------|
|                               |   | (In thousands)           |   |
| Commercial                         |   | $                        | 266    |   |                | $      | 266    |                                |   | $ | 41 |   |
| Construction                       |   |                     | 12,322 |   |                |   | 8,848  |                                |   |   | 749 |   |
| Commercial real estate:            |   |                     |   |   |                |   |   |                                |   |   |   |   |
| Owner occupied nonfarm/residential |   |                     | 979    |   |                |   | 769    |                                |   |   | 44 |   |
| Other nonfarm/residential          |   |                     | 12,030 |   |                |   | 11,358 |                                |   |   | 774 |   |
| Residential real estate:           |   |                     |   |   |                |   |   |                                |   |   |   |   |
| Secured by first liens             |   |                     | 4,973  |   |                |   | 4,588  |                                |   |   | 581 |   |
| Home equity                        |   |                     | 123    |   |                |   | 123    |                                |   |   | 1 |   |
| Consumer                           |   |                     | 209    |   |                |   | 209    |                                |   |   | 50 |   |
| Total                              |   | $                        | 30,902 |   |                | $      | 26,161 |                                |   | $ | 2,240 |   |
|                               |   |                     |   |   |                |   |   |                                |   |   |   |   |

|                               |   | Nonaccrual     |   |   | Loans Past Due Over 90 Days Still Accruing |   |
|------------------------------------|--------|----------------|--------|--------|--------------------------------------------|--------|
|                               |   | (In thousands) |   |
| Commercial                         |   | $              | 118    |   |                                       | $      | - |   |
| Construction                       |   |           | 8,197  |   |                                       |   | - |   |
| Commercial real estate:            |   |           |   |   |                                       |   |   |   |
| Owner occupied nonfarm/residential |   |           | 749    |   |                                       |   | - |   |
| Other nonfarm/residential          |   |           | 3,068  |   |                                       |   | - |   |
| Residential real estate:           |   |           |   |   |                                       |   |   |   |
| Secured by first liens             |   |           | 2,463  |   |                                       |   | - |   |
| Home equity                        |   |           | 229    |   |                                       |   | - |   |
| Consumer                           |   |           | 188    |   |                                       |   | - |   |
| Total                              |   | $              | 15,013 |   |                                       | $      | - |   |
|                               |   |           |   |   |                                       |   |   |   |

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|                               |   | 30 – 59 Days Past Due |   |   | 60 – 89 Days Past Due |   |   | Greater than 90 Days Past Due |   |   | Total Past Due |   |   | Loans Not Past Due |   |   | Loans Past Due Over 90 Days Still Accruing |   |
|------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|-------------------------------|--------|--------|----------------|--------|--------|--------------------|--------|--------|--------------------------------------------|--------|
|                               |   | (In thousands)              |   |
| Commercial                         |   | $                           | 37     |   |                        | $      | 159    |                          |   | $      | 44             |   |   | $                  | 240    |   |                                       | $      | 103,055 |   |   | $ | - |   |
| Construction                       |   |                        | 882    |   |                        |   | 121    |                          |   |   | 8,122          |   |   |               | 9,125  |   |                                       |   | 39,747 |   |   |   | - |   |
| Commercial real estate:            |   |                        |   |   |                        |   |   |                          |   |   |           |   |   |               |   |   |                                       |   |   |   |   |   |   |   |
| Owner occupied nonfarm/residential |   |                        | 20     |   |                        |   | 207    |                          |   |   | 715            |   |   |               | 942    |   |                                       |   | 88,431 |   |   |   | - |   |
| Other nonfarm/residential          |   |                        | 298    |   |                        |   | 704    |                          |   |   | 2,728          |   |   |               | 3,730  |   |                                       |   | 78,828 |   |   |   | - |   |
| Residential real estate:           |   |                        |   |   |                        |   |   |                          |   |   |           |   |   |               |   |   |                                       |   |   |   |   |   |   |   |
| Secured by first liens             |   |                        | 1,643  |   |                        |   | 859    |                          |   |   | 1,871          |   |   |               | 4,373  |   |                                       |   | 122,578 |   |   |   | - |   |
| Home equity                        |   |                        | 913    |   |                        |   | 68     |                          |   |   | 284            |   |   |               | 1,265  |   |                                       |   | 49,195 |   |   |   | - |   |
| Consumer                           |   |                        | 444    |   |                        |   | 134    |                          |   |   | 228            |   |   |               | 806    |   |                                       |   | 10,772 |   |   |   | - |   |
| Total                              |   | $                           | 4,237  |   |                        | $      | 2,252  |                          |   | $      | 13,992         |   |   | $                  | 20,481 |   |                                       | $      | 492,606 |   |   | $ | - |   |

----

----

----

|                               |   | Watch        |   |   | Special Mention |   |   | Substandard |   |   | Doubtful |   |   | Pass   |   |   | Total  |   |
|------------------------------------|--------|--------------|--------|--------|-----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|                               |   | In thousands |   |
| Commercial                         |   | $            | 1,324  |   |            | $      | 727    |        |   | $      | 3,286    |   |   | $      | 171    |   |   | $      | 97,787 |   |   | $ | 103,295 |   |
| Construction                       |   |         | 7,739  |   |            |   | 1,753  |        |   |   | 6,920    |   |   |   | 8,848  |   |   |   | 23,612 |   |   |   | 48,872 |   |
| Commercial real estate:            |   |         |   |   |            |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owner occupied nonfarm/residential |   |         | 1,550  |   |            |   | 999    |        |   |   | 380      |   |   |   | 769    |   |   |   | 85,676 |   |   |   | 89,374 |   |
| Other nonfarm/residential          |   |         | 7,776  |   |            |   | -      |        |   |   | 9,054    |   |   |   | 3,068  |   |   |   | 62,659 |   |   |   | 82,557 |   |
| Residential real estate:           |   |         |   |   |            |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Secured by first liens             |   |         | 2,518  |   |            |   | 436    |        |   |   | 4,123    |   |   |   | 1,775  |   |   |   | 118,099 |   |   |   | 126,951 |   |
| Home equity                        |   |         | 272    |   |            |   | 119    |        |   |   | 228      |   |   |   | 71     |   |   |   | 49,770 |   |   |   | 50,460 |   |
| Consumer                           |   |         | 63     |   |            |   | -      |        |   |   | 194      |   |   |   | 135    |   |   |   | 11,186 |   |   |   | 11,578 |   |
| Total                              |   | $            | 21,242 |   |            | $      | 4,034  |        |   | $      | 24,185   |   |   | $      | 14,837 |   |   | $      | 448,789 |   |   | $ | 513,087 |   |

|            |   | 2010           |   |
|-----------------|--------|----------------|--------|
|            |   | (In thousands) |   |
| Beginning loans |   | $              | 24,417 |   |
| New loans       |   |           | 2,776  |   |
| Repayments      |   |           | (6,206 | ) |
| Ending loans    |   | $              | 20,987 |   |

----

----

----

|                                                        |   | 2010           |    |   | 2009   |   |
|-------------------------------------------------------------|--------|----------------|---------|--------|--------|--------|
|                                                        |   | (In thousands) |    |
| Land and land improvements                                  |   | $              | 2,766   |   |   | $      | 2,766 |   |
| Buildings                                                   |   |           | 13,207  |   |   |   | 13,161 |   |
| Furniture, fixtures and equipment                           |   |           | 12,229  |   |   |   | 11,750 |   |
| Leasehold improvements                                      |   |           | 1,384   |   |   |   | 1,384 |   |
|                                                        |   |           | 29,585  |   |   |   | 29,061 |   |
|    Less:  Accumulated depreciation |   |           | (15,926 | )      |   |   | (14,673 | ) |
|                                                        |   | $              | 13,659  |   |   | $      | 14,388 |   |

| 2011                                 |   | $      | 579   |   |
|--------------------------------------|--------|--------|-------|--------|
| 2012                                 |   |   | 565   |   |
| 2013                                 |   |   | 437   |   |
| 2014                                 |   |   | 347   |   |
| 2015                                 |   |   | 320   |   |
| Thereafter                           |   |   | 741   |   |
|       Total |   | $      | 2,989 |   |

----

----

----

|              |   | 2010   |   |   | 2009   |   |
|-------------------|--------|--------|--------|--------|--------|--------|
| Beginning of year |   | $      | -      |   |   | $      | 15,335 |   |
| Impairment        |   |   | -      |   |   |   | (15,335 | ) |
| End of year       |   | $      | -      |   |   | $      | - |   |

| ·   | 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 average assets. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|                 |   | 2010                |   |   | 2009                     |   |
|----------------------|--------|---------------------|--------|--------|--------------------------|--------|
|                 |   | GrossCarryingAmount |   |   | Accumulated Amortization |   |   | GrossCarryingAmount |   |   | Accumulated Amortization |   |
|                 |   |                |   |   |                     |   |   |   |   |   |   |   |
| Beginning of year    |   | $                   | 2,693  |   |                     | $      | 1,341 |   |   | $ | 3,512 |   |   | $ | 1,020 |   |
| Amortization expense |   |                | -      |   |                     |   | 246 |   |   |   | - |   |   |   | 321 |   |
| Impairment           |   |                | -      |   |                     |   | - |   |   |   | (819 | ) |   |   | - |   |
| End of year          |   | $                   | 2,693  |   |                     | $      | 1,587 |   |   | $ | 2,693 |   |   | $ | 1,341 |   |

| 2011 |                                       241 |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2012 |                                       228 |
| 2013 |                                       212 |
| 2014 |                                       192 |
| 2015 |                                       161 |

----

----

----

| 2011       |   | $      | 166,455 |   |
|------------|--------|--------|---------|--------|
| 2012       |   |   | 58,213  |   |
| 2013       |   |   | 4,653   |   |
| 2014       |   |   | 2,175   |   |
| 2015       |   |   | 1,567   |   |
| Thereafter |   |   | 320     |   |

----

----

----

|                                                        |   | 2010                   |   |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                        |   | (Dollars in thousands) |   |
| Repurchase agreements at year-end                           |   |                   |   |   |   |   |   |   |   |
|     Balance                             |   | $                      | 35,096 |   |   | $      | 60,896 |   |   | $ | 60,011 |   |
|     Weighted average interest rate      |   |                   | 0.38   | %      |   |   | 0.34   | %      |   |   | 0.42 | % |
| Repurchase agreements during the year                       |   |                   |   |   |   |   |   |   |   |   |   |   |
|     Average daily balance               |   | $                      | 38,987 |   |   | $      | 43,169 |   |   | $ | 50,260 |   |
|     Maximum month-end balance           |   |                   | 41,263 |   |   |   | 60,896 |   |   |   | 60,011 |   |
|     Weighted average interest rate      |   |                   | 0.37   | %      |   |   | 0.32   | %      |   |   | 1.30 | % |
|                                                        |   |                   |   |   |   |   |   |   |   |   |   |   |
| Federal funds purchased and lines of credit at year-end     |   |                   |   |   |   |   |   |   |   |   |   |   |
|     Balance                             |   | $                      | 3,800  |   |   | $      | 6,300  |   |   | $ | 9,172 |   |
|     Weighted average interest rate      |   |                   | 4.30   | %      |   |   | 3.28   | %      |   |   | 2.97 | % |
| Federal funds purchased and lines of credit during the year |   |                   |   |   |   |   |   |   |   |   |   |   |
|     Average daily balance               |   | $                      | 5,780  |   |   | $      | 8,393  |   |   | $ | 10,631 |   |
|     Maximum month-end balance           |   |                   | 12,535 |   |   |   | 9,372  |   |   |   | 28,367 |   |
|     Weighted average interest rate      |   |                   | 3.39   | %      |   |   | 3.07   | %      |   |   | 4.22 | % |
|                                                        |   |                   |   |   |   |   |   |   |   |   |   |   |
| Structured repurchase agreement at year-end                 |   |                   |   |   |   |   |   |   |   |   |   |   |
|     Balance                             |   | $                      | 9,800  |   |   | $      | 9,800  |   |   | $ | 9,800 |   |
|     Weighted average interest rate      |   |                   | 4.97   | %      |   |   | 4.97   | %      |   |   | 4.97 | % |
| Structured repurchase agreement during the year             |   |                   |   |   |   |   |   |   |   |   |   |   |
|     Average daily balance               |   | $                      | 9,800  |   |   | $      | 9,800  |   |   | $ | 9,800 |   |
|     Maximum month-end balance           |   |                   | 9,800  |   |   |   | 9,800  |   |   |   | 9,800 |   |
|     Weighted average interest rate      |   |                   | 4.97   | %      |   |   | 4.97   | %      |   |   | 3.05 | % |

| Note payable at year-end                               |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|     Balance                        |   | $      | 730    |   |   | $      | -      |   |   | $ | - |   |
|     Weighted average interest rate |   |   | 0.00   | %      |   |   | 0.00   | %      |   |   | 0.00 | % |
| Note payable during the year                           |   |   |   |   |   |   |   |   |   |   |   |   |
|     Average daily balance          |   | $      | 2      |   |   | $      | -      |   |   | $ | - |   |
|     Maximum month-end balance      |   |   | 730    |   |   |   | -      |   |   |   | - |   |
|     Weighted average interest rate |   |   | 0.00   | %      |   |   | -      |   |   |   | - |   |

----

----

----

|          |   | 2010                   |   |   | 2009         |   |
|---------------|--------|------------------------|--------|--------|--------------|--------|
|          |   | WeightedAverageRate    |   |   |  Amount |   |   | WeightedAverageRate |   |   |  Amount |   |
|          |   | (Dollars in thousands) |   |
|          |   |                   |   |   |         |   |   |   |   |   |   |   |
| Fixed rate    |   |                   | 1.88   | %      |         | $      | 50,000 |   |   |   | 3.93 | % |   | $ | 43,482 |   |
| Floating Rate |   |                   | -      |   |         |   | - |   |   |   | 0.47 |   |   |   | 25,000 |   |
|          |   |                   | 1.88   | %      |         | $      | 50,000 |   |   |   | 2.66 | % |   | $ | 68,482 |   |

|   |   | (In thousands) |   |
|--------|--------|----------------|--------|
| 2011   |   | $              | 10,000 |   |
| 2012   |   |           | 10,000 |   |
| 2013   |   |           | 20,000 |   |
| 2014   |   |           | 10,000 |   |
|   |   | $              | 50,000 |   |

----

----

----

|                                                  |   | 2010           |   |   | 2009   |   |
|-------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                  |   | (In thousands) |   |
| Change in projected benefit obligation                |   |           |   |   |   |   |
|     Balance, beginning of year    |   | $              | 1,015  |   |   | $      | 967 |   |
|     Interest cost                 |   |           | 57     |   |   |   | 57 |   |
|     Actuarial (gain) loss         |   |           | 56     |   |   |   | 23 |   |
|     Benefits paid to participants |   |           | (32    | )      |   |   | (32 | ) |
|     Ending benefit obligation     |   |           | 1,096  |   |   |   | 1,015 |   |
|                                                  |   |           |   |   |   |   |   |   |
| Change in plan assets                                 |   |           |   |   |   |   |   |   |
|     Fair value, beginning of year |   |           | 753    |   |   |   | 586 |   |
|     Actual return on plan assets  |   |           | 88     |   |   |   | 138 |   |
|     Employer contributions        |   |           | 46     |   |   |   | 61 |   |
| Benefits paid to participants                         |   |           | (32    | )      |   |   | (32 | ) |
|     Fair value, end of year       |   |           | 855    |   |   |   | 753 |   |
|                                                  |   |           |   |   |   |   |   |   |
| Funded status                                         |   | $              | (241   | )      |   | $      | (262 | ) |

----

----

----

|                                                                                                                                      |   | 2010                   |     |   | 2009   |   |      | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|--------|--------|--------|-----------|--------|--------|
|                                                                                                                                      |   | (Dollars in thousands) |     |
| Interest cost                                                                                                                             |   | $                      | 57       |   |   | $      | 57        |   |   | $ | 56 |   |
| Expected return on plan assets                                                                                                            |   |                   | (56      | )      |   |   | (44       | )      |   |   | (56 | ) |
| Amortization of unrecognized loss                                                                                                         |   |                   |  13 |   |   |   | 16        |   |   |   |  8 |   |
|               Net periodic benefit cost                             |   |                   |  14 |   |   |   |  29  |   |   |   |  8 |   |
|                                                                                                                                      |   |                   |     |   |   |   |      |   |   |   |   |   |
| Net loss (gain)                                                                                                                           |   |                   |  12 |   |   |   |  (87 | )      |   |   |  212 |   |
|               Total recognized in other comprehensive loss (income) |   |                   |  12 |   |   |   |  (87 | )      |   |   |  212 |   |
|                                                                                                                                      |   |                   |     |   |   |   |      |   |   |   |   |   |
| Total recognized in net periodic benefit cost and other                                                                                   |   |                   |     |   |   |   |      |   |   |   |   |   |
|    comprehensive loss (income)                                                                                             |   | $                      | 26       |   |   | $      | (58       | )      |   | $ | 220 |   |
|                                                                                                                                      |   |                   |     |   |   |   |      |   |   |   |   |   |

|                                     |   | 2010   |   |   | 2009   |   |   | 2008 |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|------|--------|
| Discount rate on benefit obligation      |   |   | 5.25   | %      |   |   | 5.75   | %    |   |   | 6.00 | % |
| Rate of expected return on plan assets   |   |   | 7.50   | %      |   |   | 7.50   | %    |   |   | 8.00 | % |
| Discount rate for periodic benefit costs |   |   | 5.75   | %      |   |   | 6.00   | %    |   |   | 5.75 | % |

|                                 |   | TargetAllocation |      |   | Percentage of PlanAssets at Year-end |   |   | Weighted-AverageExpected Long-Term |   |
|--------------------------------------|--------|------------------|-----------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|                                 |   | 2011             |      |   | 2010                                 |   |   | 2009                               |   |   | Rate of Return |   |
| Asset Category                       |   |             |      |   |                                 |   |   |                               |   |   |   |   |
|     Mutual funds |   |             | 85        | %      |                                 |   | 98     | %                                  |   |   | 92 | % |   |   | 9.0 | % |
|     Money market |   |             |  15  |   |                                 |   | 2      |                               |   |   | 8 |   |   |   | 3.5 |   |
|     Total        |   |             |  100 | %      |                                 |   | 100    | %                                  |   |   | 100 | % |   |   | 7.5 | % |

----

----

----

|                            |   |                   |   |   | Fair Value Measurements Using:                                 |   |
|---------------------------------|--------|------------------------|--------|--------|----------------------------------------------------------------|--------|
|                            |   | Carrying Value         |   |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                            |   | (Dollars in Thousands) |   |
| Plan Assets (December 31, 2010) |   |                   |   |   |                                                           |   |   |   |   |   |   |   |
| Money Market Mutual Fund        |   | $                      | 20     |   |                                                           | $      | 20 |   |   | $ | - |   |   | $ | - |   |
| Equity Mutual Funds             |   |                   | 835    |   |                                                           |   | 835 |   |   |   | - |   |   |   | - |   |
|                            |   |                   |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Total Plan Assets               |   | $                      | 855    |   |                                                           | $      | 855 |   |   | $ | - |   |   | $ | - |   |
|                            |   |                   |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Plan Assets (December 31, 2009) |   |                   |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Money Market Mutual Fund        |   | $                      | 57     |   |                                                           | $      | 57 |   |   | $ | - |   |   | $ | - |   |
| Equity Mutual Funds             |   |                   | 696    |   |                                                           |   | 696 |   |   |   | - |   |   |   | - |   |
|                            |   |                   |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Total Plan Assets               |   | $                      | 753    |   |                                                           | $      | 753 |   |   | $ | - |   |   | $ | - |   |

----

----

----

|            |   | Pension Benefits |   |
|-----------------|--------|------------------|--------|
| 2011            |   | $                | 38     |   |
| 2012            |   |             | 37     |   |
| 2013            |   |             | 36     |   |
| 2014            |   |             | 36     |   |
| 2015            |   |             | 281    |   |
| Years 2016-2020 |   |             | 298    |   |

----

----

----

|                             |   |    Shares |   |   | WeightedAverageExercisePrice |   |   | WeightedAverageRemainingContractualTerm |   |   |  AggregateIntrinsicValue |   |
|----------------------------------|--------|--------------------------|--------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------------|--------|
|                             |   | (In thousands)           |   |
| Outstanding at beginning of year |   |                     | 224    |   |                         | $      | 20.66  |                                    |   |   |                          |   |   |   |
| Granted                          |   |                     | -      |   |                         |   | -      |                                    |   |   |                          |   |   |   |
| Exercised                        |   |                     | -      |   |                         |   | -      |                                    |   |   |                          |   |   |   |
| Forfeited                        |   |                     | (1     | )      |                         |   | 21.63  |                                    |   |   |                          |   |   |   |
| Expired                          |   |                     | (30    | )      |                         |   | 12.27  |                                    |   |   |                          |   |   |   |
| Outstanding at end of year       |   |                     | 193    |   |                         | $      | 21.94  |                                    |   |   | 4.8                           |   |   | $ | - |   |
| Vested and expected to vest      |   |                     | 193    |   |                         | $      | 21.94  |                                    |   |   | 4.8                           |   |   | $ | - |   |
| Exercisable at end of year       |   |                     | 193    |   |                         | $      | 21.94  |                                    |   |   | 4.8                           |   |   | $ | - |   |

|                                           |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Intrinsic value of options exercised           |   | $      | -      |   |   | $      | -      |   |   | $ | - |   |
| Cash received from option exercises            |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Tax benefit realized from option exercises     |   |   | -      |   |   |   | -      |   |   |   | - |   |
| Weighted average fair value of options granted |   |   | -      |   |   |   | -      |   |   |   | - |   |

----

----

----

|   Nonvested Shares                                          |   |  Shares   |     |   | Weighted-AverageGrant-DateFair Value |   |
|-----------------------------------------------------------------------|--------|----------------|----------|--------|--------------------------------------|--------|
|                                                                  |   | (In thousands) |     |   |                                 |   |
| Nonvested at January 1, 2010                                          |   |           | 17       |   |                                 | $      | 18.72 |   |
|           Granted   |   |           | -        |   |                                 |   | - |   |
|           Vested    |   |           | -        |   |                                 |   | - |   |
|           Forfeited |   |           |  -  |   |                                 |   | - |   |
| Nonvested at December 31, 2010                                        |   |           |  17 |   |                                 | $      | 18.72 |   |

----

----

----

|   Nonvested Units                                           |   |  Units    |     |   | Weighted-AverageGrant-DateFair Value |   |
|-----------------------------------------------------------------------|--------|----------------|----------|--------|--------------------------------------|--------|
|                                                                  |   | (In thousands) |     |   |                                 |   |
| Nonvested at January 1, 2010                                          |   |           | 13       |   |                                 | $      | 8.07 |   |
|           Granted   |   |           | 12       |   |                                 |   | 8.00 |   |
|           Vested    |   |           | -        |   |                                 |   | - |   |
|           Forfeited |   |           |  -  |   |                                 |   | - |   |
| Nonvested at December 31, 2010                                        |   |           |  25 |   |                                 | $      | 8.04 |   |

|                          |   | 2010           |   |   | 2009   |   |   | 2008   |   |
|-------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------|--------|
|                          |   | (In thousands) |   |
| Current                       |   | $              | 741    |   |   | $      | (876   | )      |   | $ | 383 |   |
| Deferred                      |   |           | 1,170  |   |   |   | (5,051 | )      |   |   | (1,458 | ) |
| Change in valuation allowance |   |           | (65    | )      |   |   | 1,073  |   |   |   | 384 |   |
| Total                         |   | $              | 1,846  |   |   | $      | (4,854 | )      |   | $ | (691 | ) |

|                                                               |   | 2010                   |   |   | 2009   |   |      | 2008   |   |
|--------------------------------------------------------------------|--------|------------------------|--------|--------|--------|--------|-----------|--------|--------|
|                                                               |   | (Dollars in thousands) |   |
| Federal statutory rate times  financial statement income |   | $                      | 3,004  |   |   |   | 34.0      | %      |   | $ | (9,120 | ) |   |   | 34.0 | % |   | $ | 44 |   |   |   | 34.0 | % |
| Effect of:                                                         |   |                   |   |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Tax-exempt income                          |   |                   | (758   | )      |   |   | ( 8.6     | )      |   |   | (552 | ) |   |   | (2.1 | ) |   |   | (381 | ) |   |   | (292.6 | ) |
|     State taxes, net of federal benefit        |   |                   | 65     |   |   |   | 0.7       |   |   |   | (1,073 | ) |   |   | (4.0 | ) |   |   | (384 | ) |   |   | (294.7 | ) |
|     Change in valuation allowance              |   |                   | (65    | )      |   |   | (0.7      | )      |   |   | 1,073 |   |   |   | 4.0 |   |   |   | 384 |   |   |   | 294.7 |   |
| Nontaxable earnings from company owned insurance policies          |   |                   | (245   | )      |   |   | (2.8      | )      |   |   | (253 | ) |   |   | (0.9 | ) |   |   | (250 | ) |   |   | (191.5 | ) |
|    New markets tax credit                           |   |                   | (180   | )      |   |   | (2.0      | )      |   |   | (180 | ) |   |   | (0.7 | ) |   |   | (180 | ) |   |   | (138.1 | ) |
|    Incentive stock options expense                  |   |                   | 5      |   |   |   | 0.1       |   |   |   | 14 |   |   |   | 0.1 |   |   |   | 43 |   |   |   | 32.8 |   |
| Goodwill and other intangible asset impairment                     |   |                   | -      |   |   |   | -         |   |   |   | 5,214 |   |   |   | 19.4 |   |   |   | - |   |   |   | - |   |
|    Other, net                                       |   |                   | 20     |   |   |   |  0.2 |   |   |   | 23 |   |   |   |  0.1 |   |   |   | 33 |   |   |   | 25.3 |   |
| Total                                                              |   | $                      | 1,846  |   |   |   | 20.9      | %      |   | $ | (4,854 | ) |   |   | 18.1 | % |   | $ | (691 | ) |   |   | (530.1 | )% |

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|                                                                                                 |   | 2010           |   |   | 2009   |   |
|------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|
|                                                                                                 |   | (In thousands) |   |
| Deferred tax assets:                                                                                 |   |           |   |   |   |   |
|         Allowance for loan losses                            |   | $              | 3,694  |   |   | $      | 5,180 |   |
|         Employee benefit plans                               |   |           | 87     |   |   |   | 92 |   |
|         Other-than-temporary impairment                      |   |           | 496    |   |   |   | 374 |   |
|         Minimum pension liability                            |   |           | 173    |   |   |   | 169 |   |
|         Net unrealized loss on securities available for sale |   |           | 135    |   |   |   | - |   |
|         State taxes                                          |   |           | 1,814  |   |   |   | 1,879 |   |
|         Tax credit carryforward                              |   |           | 1,129  |   |   |   | 880 |   |
|         Other                                                |   |           | 253    |   |   |   | 414 |   |
|                                                                                                 |   |           | 7,781  |   |   |   | 8,988 |   |
| Deferred tax liabilities:                                                                            |   |           |   |   |   |   |   |   |
|         Premises and equipment                               |   |           | (429   | )      |   |   | (427 | ) |
|         FHLB stock                                           |   |           | (200   | )      |   |   | (248 | ) |
|         Deferred loan fees and costs                         |   |           | (204   | )      |   |   | (206 | ) |
|         Mortgage servicing rights                            |   |           | (15    | )      |   |   | (19 | ) |
|        Net unrealized gain on securities available for sale       |   |           | -      |   |   |   | (818 | ) |
|        Fair value adjustments from acquisitions                   |   |           | (225   | )      |   |   | (234 | ) |
|        Intangible assets                                          |   |           | (376   | )      |   |   | (460 | ) |
|        Prepaid expenses                                           |   |           | (89    | )      |   |   | (117 | ) |
|        Other                                                      |   |           | (106   | )      |   |   | (109 | ) |
|                                                                                                 |   |           | (1,644 | )      |   |   | (2,638 | ) |
| Valuation allowance on net deferred tax assets                                                       |   |           | (1,814 | )      |   |   | (1,879 | ) |
| Net deferred tax asset                                                                               |   | $              | 4,323  |   |   | $      | 4,471 |   |

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|                                                                        |   |   Actual    |   |   |  For CapitalAdequacy Purposes |   |   | To Be WellCapitalized UnderPrompt CorrectiveAction Provisions |   |
|-----------------------------------------------------------------------------|--------|-----------------------|--------|--------|------------------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                                        |   | Amount                |   |   | Ratio                              |   |   | Amount                                                        |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
| 2010                                                                        |   | (Dollars in millions) |   |
| Total Capital (to Risk Weighted      Assets): |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
|     Consolidated                                             |   | $                     | 83.8   |   |                               |   | 14.7   | %                                                             |   | $ | 45.5 |   |   |   | 8.0 | % |   |   | N/A |   |   |   | N/A |   |
|     Your Community Bank                                 |   |                  | 73.3   |   |                               |   | 15.1   |                                                          |   |   | 38.8 |   |   |   | 8.0 |   |   | $ | 48.5 |   |   |   | 10.0 | % |
|      Scott County State Bank                       |   |                  | 14.0   |   |                               |   | 16.6   |                                                          |   |   | 6.7 |   |   |   | 8.0 |   |   |   | 8.4 |   |   |   | 10.0 |   |
|                                                                        |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital (to Risk Weighted Assets):                                   |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Consolidated                                             |   | $                     | 76.7   |   |                               |   | 13.5   | %                                                             |   | $ | 22.8 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
|     Your Community Bank                                 |   |                  | 67.2   |   |                               |   | 13.9   |                                                          |   |   | 19.4 |   |   |   | 4.0 |   |   | $ | 29.1 |   |   |   | 6.0 | % |
|      Scott County State Bank                       |   |                  | 12.9   |   |                               |   | 15.4   |                                                          |   |   | 3.4 |   |   |   | 4.0 |   |   |   | 5.1 |   |   |   | 6.0 |   |
|                                                                        |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier I Capital (to Average Assets):                                         |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Consolidated                                             |   | $                     | 76.7   |   |                               |   | 9.1    | %                                                             |   | $ | 33.7 |   |   |   | 4.0 | % |   |   | N/A |   |   |   | N/A |   |
|     Your Community Bank                                 |   |                  | 67.2   |   |                               |   | 9.7    |                                                          |   |   | 27.7 |   |   |   | 4.0 |   |   | $ | 34.6 |   |   |   | 5.0 | % |
|      Scott County State Bank                       |   |                  | 12.9   |   |                               |   | 9.7    |                                                          |   |   | 5.3 |   |   |   | 4.0 |   |   |   | 6.7 |   |   |   | 5.0 |   |
|                                                                        |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                                        |   |                  |   |   |                               |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

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|                      |   | 2010           |   |   | 2009         |   |
|---------------------------|--------|----------------|--------|--------|--------------|--------|
|                      |   | FixedRate      |   |   | VariableRate |   |   | FixedRate |   |   | VariableRate |   |
|                      |   | (In thousands) |   |
| Commitments to make loans |   | $              | 13,585 |   |         | $      | 4,110 |   |   | $ | 7,792 |   |   | $ | 105 |   |
| Unused lines of credit    |   |           | 9,044  |   |         |   | 117,702 |   |   |   | 5,966 |   |   |   | 101,155 |   |
| Letters of credit         |   |           | -      |   |         |   | 3,187 |   |   |   | - |   |   |   | 3,105 |   |

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|                                                                                |   |                 |                           |   |
|-------------------------------------------------------------------------------------|--------|----------------------|--------------------------------|--------|
|                                                                                |   |                 | Fair Value Measurements Using: |   |
|                                                                                |   | Assets at Fair Value |                           |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                                                                                |   |                 |                           |   | (in thousands) |   |
| Assets (December 31, 2010):                                                         |   |                 |                           |   |   |   |   |   |   |   |   |   |
| Available for sale securities:                                                      |   |                 |                           |   |   |   |   |   |   |   |   |   |
| State and municipal                                                                 |   | $                    | 56,498                         |   |   | $ | - |   |   | $ | 56,498 |   |   | $ | - |   |
| Residential mortgage-backed securities issued by U.S. Government sponsored entities |   |                 |  146,083                  |   |   |   |  - |   |   |   |  146,083 |   |   |   |  - |   |
| Collateralized debt obligations, including trust preferred securities               |   |                 | 1,359                          |   |   |   | - |   |   |   | - |   |   |   | 1,359 |   |
| Mutual funds                                                                        |   |                 | 248                            |   |   | - _______- |   |   |   | 248 |   |   |   | - |   |
| Total available for sale securities                                                 |   | $                    | 204,188                        |   |   | $ | - |   |   | $ | 202,829 |   |   | $ | 1,359 |   |
|                                                                                |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets (December 31, 2009):                                                         |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

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|                                                              |   | Collateralized Debt Obligations, Including Trust Preferred Securities |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                              |   | 2010                                                                  |   |   | 2009 |   |
|                                                              |   | (in thousands)                                                        |   |
|                                                              |   |                                                                  |   |
| Balance at January 1                                              |   | $                                                                     | 2,585  |   |   | $ | 3,285 |   |
| Other-than-temporary impairment recognized in earnings            |   |                                                                  | (360   | ) |   |   | (1,100 | ) |
| Net unrealized gain (loss) included in other comprehensive income |   |                                                                  | (682   | ) |   |   | 382 |   |
| Principal paydowns                                                |   |                                                                  | (183   | ) |   |   | - |   |
| Payments-in-kind                                                  |   |                                                                  | -      |   |   |   | 18 |   |
| Balance at December 31                                            |   | $                                                                     | 1,359  |   |   | $ | 2,585 |   |

|                          |   | Changes in Unrealized Gains/Losses Relating to Assets Still Held at Reporting Date for the Year Ended December 31Collateralized Debt Obligations, Including Trust Preferred Securities |   |
|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                          |   | 2010                                                                                                                                                                                   |   |   | 2009 |   |
|                          |   | (in thousands)                                                                                                                                                                         |   |
|                          |   |                                                                                                                                                                                   |   |
| Interest income on securities |   | $                                                                                                                                                                                      | 65     |   |   | $ | 148 |   |
| Other changes in fair value   |   |                                                                                                                                                                                   | -      |   |   |   | - |   |
| Total                         |   | $                                                                                                                                                                                      | 65     |   |   | $ | 148 |   |

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|                               |   |                 | Fair Value Measurements Using: |   |
|------------------------------------|--------|----------------------|--------------------------------|--------|
|                               |   | Assets at Fair Value |                           |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs (Level 3) |   |
|                               |   |                 |                           |   | (in thousands) |   |
| Assets (December 31, 2010):        |   |                 |                           |   |   |   |   |   |   |   |   |   |
| Impaired loans:                    |   |                 |                           |   |   |   |   |   |   |   |   |   |
| Commercial                         |   | $                    | 39                             |   |   | $ | — |   |   | $ | — |   |   | $ | 39 |   |
| Construction                       |   |                 | 3,566                          |   |   |   | — |   |   |   | — |   |   |   | 3,566 |   |
| Commercial real estate:            |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owner occupied nonfarm/residential |   |                 | 142                            |   |   |   | — |   |   |   | — |   |   |   | 142 |   |
| Other nonfarm/residential          |   |                 | 8,676                          |   |   |   | — |   |   |   | — |   |   |   | 8,676 |   |
| Residential real estate:           |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Secured by first liens             |   |                 | 1,591                          |   |   |   | — |   |   |   | — |   |   |   | 1,591 |   |
| Home equity                        |   |                 | 71                             |   |   |   | — |   |   |   | — |   |   |   | 71 |   |
| Consumer                           |   |                 | 24                             |   |   |   | — |   |   |   | — |   |   |   | 24 |   |
|                               |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreclosed and repossessed assets: |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                       |   |                 | 1,168                          |   |   |   | — |   |   |   | — |   |   |   | 1,168 |   |
| Commercial real estate:            |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owner occupied nonfarm/residential |   |                 | 600                            |   |   |   | — |   |   |   | — |   |   |   | 600 |   |
| Other nonfarm/residential          |   |                 | 1,309                          |   |   |   | — |   |   |   | — |   |   |   | 1,309 |   |
| Residential real estate:           |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Secured by first liens             |   |                 | 551                            |   |   |   | — |   |   |   | — |   |   |   | 551 |   |
| Consumer                           |   |                 | 5                              |   |   |   | — |   |   |   | — |   |   |   | 5 |   |
|                               |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets (December 31, 2009):        |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans                     |   | $                    | 17,931                         |   |   | $ | — |   |   | $ | — |   |   | $ | 17,931 |   |
| Acquired intangible assets         |   |                 | 1,352                          |   |   |   | — |   |   |   | — |   |   |   | 1,352 |   |
| Foreclosed and repossessed assets  |   |                 | 5,190                          |   |   |   | — |   |   |   | — |   |   |   | 5,190 |   |
|                               |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                 |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2010           |         |   | 2009      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------------|--------|-----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | CarryingAmount |         |   | FairValue |   |   | CarryingAmount |   |   | FairValue |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | (In thousands) |         |
| Financial assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |           |         |   |      |   |   |   |   |   |   |   |
| Cash and due from financial   institutions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $              | 11,658       |   |      | $      | 11,658 |   |   | $ | 24,474 |   |   | $ | 24,474 |   |
|     Interest-bearing deposits in     other financial institutions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |  23,818 |   |      |   |  23,818 |   |   |   |  29,941 |   |   |   |  29,941 |   |
|     Loans held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |           | 1,080        |   |      |   | 1,091 |   |   |   | 979 |   |   |   | 989 |   |
|     Loans, net of allowance for loan losses and impaired loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |           | 497,095      |   |      |   | 492,637 |   |   |   | 496,231 |   |   |   | 527,279 |   |
|    Accrued interest receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |           | 3,089        |   |      |   | 3,089 |   |   |   | 3,216 |   |   |   | 3,216 |   |
|        Federal Home Loan Bank and                                                                                            Federal Reserve Stock |   |           | 6,808        |   |      |   | n/a |   |   |   | 7,670 |   |   |   | n/a |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |           |         |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |           |         |   |      |   |   |   |   |   |   |   |   |   |   |   |
|        Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |           | 618,821      |   |      |   | 595,354 |   |   |   | 592,423 |   |   |   | 571,863 |   |
| Other borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |           | 49,426       |   |      |   | 49,409 |   |   |   | 76,996 |   |   |   | 77,830 |   |
| Federal Home Loan Bank    Advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |           |  50,000 |   |      |   |  50,872 |   |   |   |  68,482 |   |   |   |  69,581 |   |
| Subordinated debentures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |           | 17,000       |   |      |   | 10,013 |   |   |   | 17,000 |   |   |   | 9,973 |   |
| Accrued interest payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |           | 615          |   |      |   | 615 |   |   |   | 818 |   |   |   | 818 |   |

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|                                       |   | December 31,   |        |
|--------------------------------------------|--------|----------------|-------------|
|                                       |   | 2010           |        |   | 2009 |   |
|                                       |   | (In thousands) |        |
| ASSETS                                     |   |           |        |   |   |   |
| Cash and due from financial institutions   |   | $              | 2,529       |   |   | $ | 8,046 |   |
| Investment in subsidiaries                 |   |           | 81,631      |   |   |   | 75,306 |   |
| Other assets                               |   |           |  1,559 |   |   |   |  1,354 |   |
| Total assets                               |   | $              | 85,719      |   |   | $ | 84,706 |   |
|                                       |   |           |        |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |   |           |        |   |   |   |   |   |
| Other borrowings                           |   | $              | 3,800       |   |   | $ | 6,300 |   |
| Subordinated debentures                    |   |           | 17,000      |   |   |   | 17,000 |   |
| Accrued expenses and other liabilities     |   |           |  1,754 |   |   |   |  1,456 |   |
| Total liabilities                          |   |           | 22,554      |   |   |   | 24,756 |   |
| Total shareholders’ equity           |   |           | 63,165      |   |   |   | 59,950 |   |
|                                       |   | $              | 85,719      |   |   | $ | 84,706 |   |

|                                                      |   | Years ended December 31, |   |
|-----------------------------------------------------------|--------|--------------------------|--------|
|                                                      |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Income                                                    |   | (In thousands)           |   |
| Dividends from subsidiaries                               |   | $                        | -      |   |   | $ | 1,500 |   |   | $ | 4,000 |   |
| Management fees from subsidiaries                         |   |                     | 4,465  |   |   |   | 3,119 |   |   |   | - |   |
|                                                      |   |                     | 4,465  |   |   |   | 4,619 |   |   |   | 4,000 |   |
| Expense                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                        |   |                     | 6,258  |   |   |   | 5,134 |   |   |   | 2,669 |   |
| Income (loss) before income taxes and equity              |   |                     |   |   |   |   |   |   |   |   |   |   |
|   in undistributed net income of subsidiaries   |   |                     | (1,793 | ) |   |   | (515 | ) |   |   | 1,331 |   |
| Income tax benefit                                        |   |                     | 603    |   |   |   | 669 |   |   |   | 864 |   |
| Income (loss) before equity in undistributed net          |   |                     |   |   |   |   |   |   |   |   |   |   |
|   income (loss) of subsidiaries                 |   |                     | (1,190 | ) |   |   | 154 |   |   |   | 2,195 |   |
| Equity in undistributed net income (loss) of subsidiaries |   |                     | 8,178  |   |   |   | (22,123 | ) |   |   | (1,374 | ) |
| Net Income (loss)                                         |   | $                        | 6,988  |   |   | $ | (21,969 | ) |   | $ | 821 |   |

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|                                                                                                                   |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                   |   | 2010                     |   |   | 2009 |   |   | 2008 |   |
| Cash flows from operating activities                                                                                   |   | (In thousands)           |   |
| Net income (loss)                                                                                                      |   | $                        | 6,988  |   |   | $ | (21,969 | ) |   | $ | 821 |   |
| Adjustments to reconcile net income to net cash                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|    from operating activities                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Equity in undistributed net (income) loss of subsidiaries                                                              |   |                     | (8,178 | ) |   |   | 22,123 |   |   |   | 1,374 |   |
| Share-based compensation expense                                                                                       |   |                     | 174    |   |   |   | 85 |   |   |   | 309 |   |
| Net change in other assets and liabilities                                                                             |   |                     | 83     |   |   |   | (642 | ) |   |   | 2,297 |   |
| Net cash from operating activities                                                                                     |   |                     | (933   | ) |   |   | (403 | ) |   |   | 4,801 |   |
|                                                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| 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                                                                                    |   |                     | (2,500 | ) |   |   | (2,872 | ) |   |   | 618 |   |
| Proceeds from issuance of preferred stock and warrants                                                                 |   |                     | -      |   |   |   | 19,468 |   |   |   | - |   |
| Purchase of treasury stock                                                                                             |   |                     | -      |   |   |   | - |   |   |   | (400 | ) |
| Cash dividends paid on preferred shares                                                                                |   |                     | (974   | ) |   |   | (449 | ) |   |   | - |   |
| Cash dividends paid on common shares                                                                                   |   |                     | (1,110 | ) |   |   | (1,529 | ) |   |   | (2,195 | ) |
| Net cash from financing activities                                                                                     |   |                     | (4,584 | ) |   |   | 14,618 |   |   |   | (1,977 | ) |
|                                                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net change in cash                                                                                                     |   |                     | (5,517 | ) |   |   | 7,220 |   |   |   | 819 |   |
| Cash at beginning of year                                                                                              |   |                     | 8,046  |   |   |   | 826 |   |   |   | 7 |   |
| Cash at end of year                                                                                                    |   | $                        | 2,529  |   |   | $ | 8,046 |   |   | $ | 826 |   |

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|                                                                                                                                         |   | 2010                                               |      |   | 2009   |   |      | 2008   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|-----------|--------|--------|--------|-----------|--------|--------|
| Basic                                                                                                                                        |   | (In thousands, except share and per share amounts) |      |
| Net income (loss)                                                                                                                            |   | $                                                  | 6,988     |   |   | $      | (21,969   | )      |   | $ | 821 |   |
| Preferred stock dividends and discount amortization                                                                                          |   |                                               | (1,065    | )      |   |   | (618      | )      |   |   | - |   |
| Net Income (loss) per common share                                                                                                           |   | $                                                  | 5,923     |   |   | $      | (22,587   | )      |   | $ | 821 |   |
| Average shares:                                                                                                                              |   |                                               |      |   |   |   |      |   |   |   |   |   |
| Common shares outstanding                                                                                                                    |   |                                               | 3,863,942 |   |   |   | 3,863,942 |   |   |   | 3,863,942 |   |
|               Less:  Treasury stock                          |   |                                               | (578,363  | )      |   |   | (605,393  | )      |   |   | (615,157 | ) |
|        Average shares outstanding                                                                         |   |                                               | 3,285,579 |   |   |   | 3,258,549 |   |   |   | 3,248,785 |   |
| Net income (loss) per common share, basic                                                                                                    |   | $                                                  | 1.80      |   |   | $      | (6.93     | )      |   | $ | 0.25 |   |
|                                                                                                                                         |   |                                               |      |   |   |   |      |   |   |   |   |   |
| Diluted                                                                                                                                      |   |                                               |      |   |   |   |      |   |   |   |   |   |
| Net income (loss) available to common shareholders                                                                                           |   | $                                                  | 5,923     |   |   | $      | (22,587   | )      |   | $ | 821 |   |
| Average shares:                                                                                                                              |   |                                               |      |   |   |   |      |   |   |   |   |   |
| Common shares outstanding for basic                                                                                                          |   |                                               | 3,285,579 |   |   |   | 3,258,549 |   |   |   | 3,248,785 |   |
|               Add:  Dilutive effects of outstanding warrants |   |                                               | 51,385    |   |   |   | -         |   |   |   | - |   |
|               Add:  Dilutive effects of outstanding options  |   |                                               | -         |   |   |   | -         |   |   |   | 10,376 |   |
|               Average shares and dilutive potential                    |   |                                               |      |   |   |   |      |   |   |   |   |   |
|                   common shares                    |   |                                               | 3,336,964 |   |   |   | 3,258,549 |   |   |   | 3,259,161 |   |
| Net income (loss) per common share, diluted                                                                                                  |   | $                                                  | 1.77      |   |   | $      | (6.93     | )      |   | $ | 0.25 |   |

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|                                                                                                       |   | 2010           |   |   | 2009   |   |   | 2008   |   |
|------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                       |   | (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 |   | $              | (313   | )      |   | $      | 436    |   |   | $ | - |   |
| Unrealized holding gains (losses) on available for sale securities                                         |   |           | (1,102 | )      |   |   | 2,636  |   |   |   | (27 | ) |
| Less reclassification adjustments for (gains) losses                                                       |   |           |   |   |   |   |   |   |   |   |   |   |
|        recognized in income                                             |   |           | (1,751 | )      |   |   | (1,380 | )      |   |   | (364 | ) |
| Less reclassification adjustments for other-than-temporary impairment related to credit losses             |   |           | 360    |   |   |   | 1,100  |   |   |   | - |   |
| Net unrealized gain (loss) on securities available for                                                     |   |           |   |   |   |   |   |   |   |   |   |   |
|        sale, net of reclassifications                                   |   |           | (2,806 | )      |   |   | 2,792  |   |   |   | (391 | ) |
|                                                                                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Unrealized loss on pension benefits                                                                        |   |           | (12    | )      |   |   | 87     |   |   |   | (212 | ) |
|                                                                                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss) before tax effects                                                       |   |           | (2,818 | )      |   |   | 2,879  |   |   |   | (603 | ) |
| Tax effect                                                                                                 |   |           | 957    |   |   |   | (976   | )      |   |   | 202 |   |
| Other comprehensive income (loss)                                                                          |   | $              | (1,861 | )      |   | $      | 1,903  |   |   | $ | (401 | ) |

|                                                       |   | Balance at 12/31/09 |   |   | Current Period Change |   |   | Balance at 12/31/10 |   |
|------------------------------------------------------------|--------|-------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------|--------|
|                                                       |   |                          |   |   |                            |   |   |                          |   |
| Unrealized gains (losses) on securities available for sale |   | $                             | 1,590  |   |                            | $      | (1,853 | )                             |   | $ | (263 | ) |
| Unrealized loss on pension benefits                        |   |                          | (327   | )      |                            |   | (8     | )                             |   |   | (335 | ) |
|                                                       |   |                          |   |   |                            |   |   |                          |   |   |   |   |
| Total                                                      |   | $                             | 1,263  |   |                            | $      | (1,861 | )                             |   | $ | (598 | ) |

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|                                   |   | InterestIncome                           |   |   | Net InterestIncome |   |   | NetIncome (Loss) |   |   | Earnings (Loss) Per Share BasicDiluted |   |
|----------------------------------------|--------|------------------------------------------|--------|--------|--------------------|--------|--------|------------------|--------|--------|---------------------------------------------|--------|
| 2010                                   |   | (In thousands, except per share amounts) |   |
|     First quarter  |   | $                                        | 9,351  |   |               | $      | 7,185  |             |   | $      | 1,805                                       |   |   | $ | 0.47 |   |   | $ | 0.47 |   |
|     Second quarter |   |                                     | 9,093  |   |               |   | 7,016  |             |   |   | 1,802                                       |   |   |   | 0.47 |   |   |   | 0.46 |   |
|     Third quarter  |   |                                     | 8,801  |   |               |   | 6,793  |             |   |   | 1,677                                       |   |   |   | 0.43 |   |   |   | 0.42 |   |
|     Fourth quarter |   |                                     | 8,649  |   |               |   | 6,720  |             |   |   | 1,704                                       |   |   |   | 0.43 |   |   |   | 0.42 |   |
|                                   |   |                                     |   |   |               |   |   |             |   |   |                                        |   |   |   |   |   |   |   |   |   |
| 2009                                   |   |                                     |   |   |               |   |   |             |   |   |                                        |   |   |   |   |   |   |   |   |   |
|     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 |   |

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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         |

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|           | COMMUNITY BANK SHARESOF INDIANA, INC. |                                  |
|----------------|---------------------------------------|---------------------------------------|
|           |                                  |                                  |   |
| March 29, 2011 | By:                                   | /s/ James D. Rickard             |   |
|           |                                  | James D. Rickard                      |   |
|           |                                  | President and Chief Executive Officer |   |
|           |                                  |                                  |   |

| /s/                |  James D. Rickard                                                                             |          President, Chief Executive Officer, and Director     | March29,2011 |
|--------------------|----------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|--------------|
| James D. Rickard   |          (Principal Executive Officer)                |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Paul A. Chrisco                                                                              |          Executive Vice-President and Chief Financial Officer | March29,2011 |
| Paul A. Chrisco    |          (Principal Financial and Accounting Officer) |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Timothy T. Shea                                                                              |          Chairman of the Board of Directors and Director      | March29,2011 |
| Timothy T. Shea    |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Gary L. Libs                                                                                 |          Director                                             | March29,2011 |
| Gary L. Libs       |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  R. Wayne Estopinal                                                                           |          Director                                             | March29,2011 |
| R. Wayne Estopinal |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  George M. Ballard                                                                            |          Director                                             | March29,2011 |
| George M. Ballard  |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Kerry M. Stemler                                                                             |          Director                                             | March29,2011 |
| Kerry M. Stemler   |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Steven R. Stemler                                                                            |          Director                                             | March29,2011 |
| Steven R. Stemler  |                                                                                               |                                                                                                       |
|               |                                                                                               |                                                                                                       |
| /s/                |  Norman E. Pfau Jr.                                                                           |          Director                                             | March29,2011 |
| Norman E. Pfau Jr. |                                                                                               |                                                                                                       |

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|  Exhibit Number |   Document                                                                                                                                    | Filedwith thisForm 10-K |  Incorporated By Reference |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|---------------------------------|
| 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 Amendment to Amended and Restated Articles of Incorporation                                                                                 |                    | 8-K                             | 000-25766 | 06/01/2009 |
| 3.1                  | Amended and Restated Articles of Incorporation                                                                                                          |                    | S-8                             | 333-128278 | 09/13/2005 |
| 3.3                  | Bylaws                                                                                                                                                  |                    | 8-K                             | 000-25766 | 07/27/2007 |
| 4.0                  | Warrant to Purchase Shares of Common Stock                                                                                                              |                    | 8-K                             | 000-25766 | 06/01/2009 |
| 10.1                 | Employment Agreement James D. Rickard *                                                                                                                 |                    | 10-Q                            | 000-25766 | 11/14/2000 |
| 10.2                 | Amendment to Employment Agreement with James D. Rickard *                                                                                               |                    |  8-K                       |  000-25766 |  11/06/2006 |
| 10.3                 | Form of Letter Agreement Amendment to Employment Agreement with James D. Rickard, Michael K. Bauer, Kevin J. Cecil, Paul A. Chrisco and Bill D. Wright* |                    | 8-K                             | 000-25766 | 06/01/2009 |
| 10.4                 | Employment Agreement with Michael K. Bauer*                                                                                                             | X                       |                            |   |   |
| 10.5                 | Form of Letter Agreement Amendment to Employment Agreement with James D. Rickard, Michael K. Bauer, Kevin J. Cecil, Paul A. Chrisco and Bill D. Wright* | X                       |                            |   |   |
| 10.6                 | Employment Agreement with Kevin J. Cecil *                                                                                                              |                    | 10-K                            | 000-25766 | 03/31/2004 |
| 10.7                 | Amendment to Employment Agreement with Kevin J. Cecil *                                                                                                 |                    | 8-K                             | 000-25766 | 11/06/2006 |
| 10.8                 | Employment Agreement with Paul A. Chrisco *                                                                                                             |                    | 10-K                            | 000-25766 | 03/31/2004 |
| 10.9                 | Amendment to Employment Agreement with Paul A. Chrisco *                                                                                                |                    | 8-K                             | 000-25766 | 11/06/2006 |
| 10.10                | Employment Agreement with Bill D. Wright                                                                                                                | X                       |                            |   |   |
| 10.11                | Community Bank Shares of Indiana, Inc. 1997 Stock Incentive Plan *                                                                                      |                    | S-8                             | 333- 60089 | 07/29/1998 |
| 10.12                | Community Bank Shares of Indiana, Inc. Dividend Reinvestment Plan *                                                                                     |                    | S-3DS-3D                        | 333-40211333-130721 | 11/14/199712/28/2005 |
| 10.13                | Community Bank Shares of Indiana, Inc. 2005 Stock Award Plan, as amended *                                                                              |                    | Exh. B toDEF 14A                |  000-25766 |  11/06/2006 |
| 10.14                | Community Bank Shares of Indiana, Inc. Performance Units Plan, as amended *                                                                             |                    | 8-K                             | 000-25766 | 10/23/2006 |
| 10.15                | 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                       |                            |   |   |
| 14.1                 | Community Bank Shares of Indiana, Inc. and Affiliates Business Ethics Policy                                                                            |                    | 8-K                             | 000-25766 | 04/30/2007 |
| 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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