| Virginia(State of incorporation or organization)                                                                                       | 20-0469337(I.R.S. Employer Identification No.) |
|---------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|
| 126 South Main StreetBlackstone, VA  23824(434) 292-7221 (Address and telephone number of principal executive offices)  |

|   | Large accelerated filer                     | £ | Accelerated filer         | £ |
|--------|---------------------------------------------|--------|---------------------------|--------|
|   | Non-accelerated filer                       | £ | Smaller Reporting Company | R      |
|   | (Do not check if smaller reporting company) |

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| Part I.                      | Financial Information | Page No.                                                         |
|-----------------------------------|-----------------------|------------------------------------------------------------------|
|                              |                  |                                                             |   |   |
|                              |                  |                                                             |   |   |
|                              | Item 1.               | Financial Statements                                             |   |
|                              |                  |                                                             |   |   |
|                              |                  | Consolidated Balance Sheets                                      | 3 |
|                              |                  |                                                             |   |   |
|                              |                  | Consolidated Statements of Income                                | 4 |
|                              |                  |                                                             |   |   |
|                              |                  | Consolidated Statements of Changes in Stockholders’ Equity | 5 |
|                              |                  |                                                             |   |   |
|                              |                  | Consolidated Statements of Cash Flows                            | 6 |
|                              |                  |                                                             |   |   |
|                              |                  | Notes to Interim Consolidated Financial Statements               | 7 |
|                              |                  |                                                             |   |   |
|                              | Item 2.               | Management’s Discussion and Analysis of Financial          |   |
|                              |                  |                                                             | Condition and Results of Operations     | 20 |
|                              |                  |                                                             |   |   |
|                              | Item 4.               | Controls and Procedures                                          | 34 |
|                              |                  |                                                             |   |   |
|                              |                  |                                                             |   |   |
| Part II.      | Other Information     |                                                             |
|                              |                  |                                                             |   |   |
|                              | Item 1.               | Legal Proceedings                                                | 35 |
|                              |                  |                                                             |   |   |
|                              | Item 1A.              | Risk Factors                                                     | 35 |
|                              |                  |                                                             |   |   |
|                              | Item 2.          | Unregistered Sales of Equity Securities and Use of Proceeds      | 35 |
|                              |                  |                                                             |   |   |
|                              | Item 3.               | Defaults upon Senior Securities                                  | 36 |
|                              |                  |                                                             |   |   |
|                              | Item 4.               | [Removed and Reserved]                                           | 36 |
|                              |                  |                                                             |   |   |
|                              | Item 5.               | Other Information                                                | 36 |
|                              |                  |                                                             |   |   |
|                              | Item 6.               | Exhibits                                                         | 36 |
|                              |                  |                                                             |   |   |
| Signatures                        | 37                    |

----

|                                                                             |   | September 30, |    |   | December 31, |   |
|----------------------------------------------------------------------------------|--------|---------------|---------|--------|--------------|--------|
|                                                                             |   | 2010          |    |   | 2009         |   |
| Assets                                                                           |   | (Unaudited)   |    |   |         |   |
|                                                                             |   |          |    |   |         |   |
| Cash and due from banks                                                          |   | $             | 5,926   |   |         | $      | 6,339 |   |
| Interest-bearing deposits in banks                                               |   |          | 1,110   |   |         |   | 1,108 |   |
| Federal funds sold                                                               |   |          | 7,941   |   |         |   | 9,588 |   |
| Securities available for sale, at fair market value                              |   |          | 85,607  |   |         |   | 66,777 |   |
| Restricted securities, at cost                                                   |   |          | 1,115   |   |         |   | 1,189 |   |
| Loans, net of allowance for loan losses of $3,071                                |   |          |    |   |         |   |   |   |
| and $2,673                                                                       |   |          | 207,841 |   |         |   | 214,862 |   |
| Premises and equipment, net                                                      |   |          | 7,241   |   |         |   | 7,544 |   |
| Accrued interest receivable                                                      |   |          | 1,905   |   |         |   | 1,860 |   |
| Other assets                                                                     |   |          | 9,953   |   |         |   | 10,637 |   |
| Other real esate owned, net of valuation allowance                               |   |          |    |   |         |   |   |   |
|     of $75 and $0                                            |   |          | 1,923   |   |         |   | 1,073 |   |
|                                                                             |   |          |    |   |         |   |   |   |
| Total assets                                                                     |   | $             | 330,562 |   |         | $      | 320,978 |   |
|                                                                             |   |          |    |   |         |   |   |   |
| Liabilities and Stockholders' Equity                                             |   |          |    |   |         |   |   |   |
|                                                                             |   |          |    |   |         |   |   |   |
| Liabilities                                                                      |   |          |    |   |         |   |   |   |
| Deposits:                                                                        |   |          |    |   |         |   |   |   |
| Noninterest-bearing                                                              |   | $             | 34,652  |   |         | $      | 33,999 |   |
| Interest-bearing                                                                 |   |          | 241,818 |   |         |   | 234,797 |   |
| Total deposits                                                                   |   | $             | 276,470 |   |         | $      | 268,796 |   |
| FHLB advances                                                                    |   |          | 5,000   |   |         |   | 5,000 |   |
| Other borrowings                                                                 |   |          | 5,298   |   |         |   | 5,483 |   |
| Accrued interest payable                                                         |   |          | 908     |   |         |   | 955 |   |
| Accrued expenses and other liabilities                                           |   |          | 1,748   |   |         |   | 1,754 |   |
| Total liabilities                                                                |   | $             | 289,424 |   |         | $      | 281,988 |   |
|                                                                             |   |          |    |   |         |   |   |   |
|                                                                             |   |          |    |   |         |   |   |   |
| Stockholders' Equity                                                             |   |          |    |   |         |   |   |   |
|    Preferred stock, $0.50 par value; authorized 1,000,000 shares; |   |          |    |   |         |   |   |   |
|        none outstanding                       |   | $             | -       |   |         | $      | - |   |
| Common stock, $0.50 par value; authorized 10,000,000 shares;                     |   |          |    |   |         |   |   |   |
| issued and outstanding, 2,363,839 in 2010 and                                    |   |          | 1,182   |   |         |   | 1,186 |   |
| 2,371,139 in 2009                                                                |   |          |    |   |         |   |   |   |
| Retained earnings                                                                |   |          | 39,076  |   |         |   | 38,177 |   |
| Accumulated other comprehensive income (loss)                                    |   |          | 880     |   |         |   | (373 | ) |
| Total stockholders' equity                                                       |   | $             | 41,138  |   |         | $      | 38,990 |   |
|                                                                             |   |          |    |   |         |   |   |   |
| Total liabilities and stockholders' equity                                       |   | $             | 330,562 |   |         | $      | 320,978 |   |

----

|                                                                 |   | Three Months Ended |   |   | Nine Months Ended |   |
|----------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                 |   | September 30,      |   |   | September 30,     |   |
|                                                                 |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Interest and Dividend Income                                         |   |               |   |   |              |   |   |   |   |   |   |   |
|   Loans, including fees                                    |   | $                  | 3,439  |   |              | $      | 3,520 |   |   | $ | 10,320 |   |   | $ | 10,528 |   |
|   Investment securities:                                   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                              |   |               | 459    |   |              |   | 407 |   |   |   | 1,513 |   |   |   | 1,139 |   |
| Tax-exempt                                                           |   |               | 233    |   |              |   | 143 |   |   |   | 567 |   |   |   | 419 |   |
|   Federal Funds sold                                       |   |               | 6      |   |              |   | 8 |   |   |   | 14 |   |   |   | 16 |   |
|   Other                                                    |   |               | 6      |   |              |   | 46 |   |   |   | 16 |   |   |   | 150 |   |
| Total interest and dividend income                                   |   | $                  | 4,143  |   |              | $      | 4,124 |   |   | $ | 12,430 |   |   | $ | 12,252 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                                                     |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Deposits                                                 |   | $                  | 1,089  |   |              | $      | 1,221 |   |   | $ | 3,326 |   |   | $ | 3,757 |   |
|   Other borrowings                                         |   |               | 38     |   |              |   | 60 |   |   |   | 113 |   |   |   | 175 |   |
| Total interest expense                                               |   | $                  | 1,127  |   |              | $      | 1,281 |   |   | $ | 3,439 |   |   | $ | 3,932 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|       Net interest income              |   | $                  | 3,016  |   |              | $      | 2,843 |   |   | $ | 8,991 |   |   | $ | 8,320 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                            |   |               | 150    |   |              |   | 200 |   |   |   | 600 |   |   |   | 425 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income after provision                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|        for loan losses            |   | $                  | 2,866  |   |              | $      | 2,643 |   |   | $ | 8,391 |   |   | $ | 7,895 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest Income                                                   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Service charges on deposit accounts                      |   | $                  | 258    |   |              | $      | 309 |   |   | $ | 774 |   |   | $ | 910 |   |
|   Net gain on sales of securities                          |   |               | 3      |   |              |   | - |   |   |   | 30 |   |   |   | 15 |   |
|   Net gain on sales of loans                               |   |               | 23     |   |              |   | 10 |   |   |   | 49 |   |   |   | 58 |   |
|   Impairment - other real estate owned                     |   |               | (60    | )      |              |   | - |   |   |   | (75 | ) |   |   | - |   |
|   Net gain on sale of other real estate owned              |   |               | -      |   |              |   | - |   |   |   | 13 |   |   |   | - |   |
|   Income from bank owned life insurance                    |   |               | 74     |   |              |   | 70 |   |   |   | 217 |   |   |   | 211 |   |
|   ATM fee income                                           |   |               | 165    |   |              |   | 141 |   |   |   | 484 |   |   |   | 409 |   |
|   Other                                                    |   |               | 67     |   |              |   | 99 |   |   |   | 199 |   |   |   | 266 |   |
| Total noninterest income                                             |   | $                  | 530    |   |              | $      | 629 |   |   | $ | 1,691 |   |   | $ | 1,869 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest Expense                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Salaries and employee benefits                           |   | $                  | 1,372  |   |              | $      | 1,282 |   |   | $ | 4,083 |   |   | $ | 3,915 |   |
|   Net occupancy expense                                    |   |               | 158    |   |              |   | 143 |   |   |   | 453 |   |   |   | 429 |   |
|   Equipment expense                                        |   |               | 142    |   |              |   | 143 |   |   |   | 402 |   |   |   | 431 |   |
|   FDIC deposit insurance                                   |   |               | 104    |   |              |   | 87 |   |   |   | 403 |   |   |   | 242 |   |
|   Other                                                    |   |               | 626    |   |              |   | 576 |   |   |   | 1,826 |   |   |   | 1,685 |   |
| Total noninterest expense                                            |   | $                  | 2,402  |   |              | $      | 2,231 |   |   | $ | 7,167 |   |   | $ | 6,702 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|        Income before income taxes |   | $                  | 994    |   |              | $      | 1,041 |   |   | $ | 2,915 |   |   | $ | 3,062 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|        Income taxes               |   |               | 232    |   |              |   | 284 |   |   |   | 729 |   |   |   | 830 |   |
|                                                                 |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|        Net income                 |   | $                  | 762    |   |              | $      | 757 |   |   | $ | 2,186 |   |   | $ | 2,232 |   |
| Earnings per share, basic & diluted                              |   | $                  | 0.32   |   |              | $      | 0.32 |   |   | $ | 0.92 |   |   | $ | 0.94 |   |

----

|                                                                                                     |   |   |   |   |     |   |   | Accumulated |   |   |    |   |   |   |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|----------|--------|--------|-------------|--------|--------|---------|--------|--------|--------|--------|
|                                                                                                     |   |   |   |   |     |   |   | Other       |   |   |    |   |   |   |   |
|                                                                                                     |   |   |   |   |     |   |   | Compre-     |   |   |    |   |   |   |   |
|                                                                                                     |   |   |   |   |     |   |   | hensive     |   |   | Compre- |   |   |   |   |
|                                                                                                     |   | Common |   |   | Retained |   |   | Income      |   |   | hensive |   |   |   |   |
|                                                                                                     |   | Stock  |   |   | Earnings |   |   | (Loss)      |   |   | Income  |   |   | Total  |   |
|                                                                                                     |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |
| Balance at December 31, 2008                                                                             |   | $      | 1,196  |   |     | $      | 37,198 |        |   | $      | (2,052  | )      |   |   |   |   | $ | 36,342 |   |
| Comprehensive income:                                                                                    |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |
|    Net Income                                                                             |   |   | -      |   |     |   | 2,232  |        |   |   | -       |   |   | $      | 2,232  |   |   |   | 2,232 |   |
|    Other comprehensive income, net of taxes                                               |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|        Unrealized gains on securities available                       |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|            for sale, net of deferred taxes        |   |   | -      |   |     |   | -      |        |   |   | 1,098   |   |   |   | 1,098  |   |   |   | 1,098 |   |
|        Less: reclassification adjustment for                          |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|            gain on sale of securities, net of tax |   |   | -      |   |     |   | -      |        |   |   | (10     | )      |   |   | (10    | ) |   |   | (10 | ) |
|        Other comprehensive income                                     |   |   |   |   |     |   |   |        |   |   |    |   |   |   | 1,088  |   |   |   |   |   |
|        Total comprehensive income                                     |   |   | -      |   |     |   | -      |        |   |   | -       |   |   | $      | 3,320  |   |   |   | - |   |
| Shares repurchased                                                                                       |   |   | (7     | )      |     |   | (164   | )           |   |   | -       |   |   |   |   |   |   |   | (171 | ) |
| Cash dividends declared ($0.51 per share)                                                                |   |   | -      |   |     |   | (1,213 | )           |   |   | -       |   |   |   |   |   |   |   | (1,213 | ) |
| Balance at September 30, 2009                                                                            |   | $      | 1,189  |   |     | $      | 38,053 |        |   | $      | (964    | )      |   |   |   |   |   | $ | 38,278 |   |
|                                                                                                     |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                                             |   | $      | 1,186  |   |     | $      | 38,177 |        |   | $      | (373    | )      |   |   |   |   |   | $ | 38,990 |   |
| Comprehensive Income:                                                                                    |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|    Net income                                                                             |   |   | -      |   |     |   | 2,186  |        |   |   | -       |   |   | $      | 2,186  |   |   |   | 2,186 |   |
|    Other comprehensive income, net of taxes                                               |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|        Unrealized gains on securities available                       |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|            for sale, net of deferred taxes        |   |   | -      |   |     |   | -      |        |   |   | 1,274   |   |   |   | 1,274  |   |   |   | 1,274 |   |
|        Less: reclassification adjustment for                          |   |   |   |   |     |   |   |        |   |   |    |   |   |   |   |   |   |   |   |   |
|            gain on sale of securities, net of tax |   |   | -      |   |     |   | -      |        |   |   | (20     | )      |   |   | (20    | ) |   |   | (20 | ) |
|        Total other comprehensive income                               |   |   |   |   |     |   |   |        |   |   |    |   |   | $      | 1,254  |   |   |   |   |   |
|        Total comprehensive income                                     |   |   | -      |   |     |   | -      |        |   |   | -       |   |   | $      | 3,440  |   |   |   | - |   |
| Shares repurchased                                                                                       |   |   | (4     | )      |     |   | (81    | )           |   |   | -       |   |   |   |   |   |   |   | (85 | ) |
| Cash dividends declared ($0.51 per share)                                                                |   |   | -      |   |     |   | (1,206 | )           |   |   | -       |   |   |   |   |   |   |   | (1,206 | ) |
| Balance at September 30, 2010                                                                            |   | $      | 1,182  |   |     | $      | 39,076 |        |   | $      | 881     |   |   |   |   |   |   | $ | 41,138 |   |

----

| Consolidated Statements of Cash Flows (Unaudited)                                                                                           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (Dollars in thousands)                                                                                                                      |   |
|                                                                                                                                        |   | Nine Months Ended |   |
|                                                                                                                                        |   | September 30, |   |
|                                                                                                                                        |   | 2010 |   |   | 2009 |   |
| Cash Flows from Operating Activities                                                                                                        |   |   |   |   |   |   |
|   Net Income                                                                                                                      |   | $ | 2,186 |   |   | $ | 2,232 |   |
|   Adjustments to reconcile net income to net cash                                                                                 |   |   |   |   |   |   |   |   |
|      provided by operating activities:                                                                             |   |   |   |   |   |   |   |   |
|          Depreciation                                                                          |   |   | 444 |   |   |   | 458 |   |
|          Provision for loan losses                                                             |   |   | 600 |   |   |   | 425 |   |
|          Net (gain) on sales of loans                                                          |   |   | (49 | ) |   |   | (58 | ) |
|          Origination of loans held for sale                                                    |   |   | (3,182 | ) |   |   | (4,359 | ) |
|          Proceeds from sales of loans                                                          |   |   | 3,231 |   |   |   | 4,417 |   |
|          Net (gain) on sales and calls of securities                                           |   |   | (30 | ) |   |   | (15 | ) |
|          Net amortization of securities                                                        |   |   | 184 |   |   |   | 150 |   |
|          Impairment of other real estate owned                                                 |   |   | 75 |   |   |   | - |   |
|          Net (gain) on sale of other real estate owned                                         |   |   | (13 | ) |   |   | - |   |
|          Changes in assets and liabilities:                                                    |   |   |   |   |   |   |   |   |
|              (Increase) in accrued interest receivable                     |   |   | (45 | ) |   |   | (60 | ) |
|              Decrease (increase) in other assets                           |   |   | 38 |   |   |   | (354 | ) |
|              (Decrease) in accrued interest payable                        |   |   | (47 | ) |   |   | (179 | ) |
|              (Decrease) increase in accrued expenses and other liabilities |   |   | (6 | ) |   |   | 268 |   |
|          Net cash provided by operating activities                                             |   | $ | 3,386 |   |   | $ | 2,925 |   |
| Cash Flows from Investing Activities                                                                                                        |   |   |   |   |   |   |   |   |
|   Activity in available for sale securities:                                                                                      |   |   |   |   |   |   |   |   |
|          Calls and sales                                                                       |   | $ | 38,755 |   |   |   | 16,405 |   |
|          Maturities and prepayments                                                            |   |   | 7,090 |   |   |   | 7,014 |   |
|          Purchases                                                                             |   |   | (62,929 | ) |   |   | (39,482 | ) |
|   Sale (purchase) of restricted securities                                                                                        |   |   | 74 |   |   |   | (28 | ) |
|   Net decrease (increase) in loans                                                                                                |   |   | 5,288 |   |   |   | (4,311 | ) |
|   Purchases of land, premises and equipment                                                                                       |   |   | (141 | ) |   |   | (323 | ) |
|   Proceeds from sale of other real estate owned                                                                                   |   |   | 221 |   |   |   | - |   |
|          Net cash (used in) investing activities                                               |   | $ | (11,642 | ) |   | $ | (20,725 | ) |
| Cash Flows from Financing Activities                                                                                                        |   |   |   |   |   |   |   |   |
|   Net increase in deposits                                                                                                        |   | $ | 7,674 |   |   | $ | 9,763 |   |
|   Net (decrease) increase in other borrowings                                                                                     |   |   | (185 | ) |   |   | 121 |   |
|   Repurchase of common stock                                                                                                      |   |   | (85 | ) |   |   | (171 | ) |
|   Dividends paid                                                                                                                  |   |   | (1,206 | ) |   |   | (1,213 | ) |
|          Net cash provided by financing activities                                             |   | $ | 6,198 |   |   | $ | 8,500 |   |
|          Net (decrease) in cash and cash equivalents                                           |   | $ | (2,058 | ) |   | $ | (9,300 | ) |
| Cash and Cash Equivalents                                                                                                                   |   |   |   |   |   |   |   |   |
|   Beginning of period                                                                                                             |   |   | 17,035 |   |   |   | 29,928 |   |
|   End of period                                                                                                                   |   | $ | 14,977 |   |   | $ | 20,628 |   |
| Supplemental Disclosures of Cash Flow Information                                                                                           |   |   |   |   |   |   |   |   |
|   Cash paid during the period for:                                                                                                |   |   |   |   |   |   |   |   |
|       Interest                                                                                                |   | $ | 3,486 |   |   | $ | 4,111 |   |
|       Income Taxes                                                                                            |   | $ | 1,204 |   |   | $ | 960 |   |
| Supplemental Disclosures of Noncash Investing and                                                                                           |   |   |   |   |   |   |   |   |
|    Financing Activities                                                                                                      |   |   |   |   |   |   |   |   |
|       Other real estate acquired in settlement of loans                                                       |   | $ | 1,133 |   |   | $ | 460 |   |
|       Unrealized gains on securities available for sale                                                       |   | $ | 1,900 |   |   | $ | 1,649 |   |

----

| Note 1. | General |
|---------|---------|

| Note 2. | Securities |
|---------|------------|

----

|                                         |   | September 30, 2010     |   |
|----------------------------------------------|--------|------------------------|--------|
|                                         |   |                   |   |   | Gross |   |   | Gross |   |   |   |   |
|                                         |   | Amortized              |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                         |   | Cost                   |   |   | Gains |   |   | (Losses) |   |   | Value |   |
| U.S. government and                          |   | (Dollars in thousands) |   |
|      federal agency |   | $                      | 23,276 |   |   | $ | 176 |   |   | $ | (2 | ) |   | $ | 23,450 |   |
| State and municipal                          |   |                   | 28,173 |   |   |   | 1,001 |   |   |   | (58 | ) |   |   | 29,116 |   |
| Agency mortgage-backed                       |   |                   | 28,488 |   |   |   | 1,045 |   |   |   | - |   |   |   | 29,533 |   |
| Non-agency mortgage-backed                   |   |                   | 2,838  |   |   |   | 36 |   |   |   | (204 | ) |   |   | 2,670 |   |
| Corporate                                    |   |                   | 754    |   |   |   | 84 |   |   |   | - |   |   |   | 838 |   |
| Securities available for sale                |   | $                      | 83,529 |   |   | $ | 2,342 |   |   | $ | (264 | ) |   | $ | 85,607 |   |

|                                 |   | December 31, 2009      |   |
|--------------------------------------|--------|------------------------|--------|
|                                 |   |                   |   |   | Gross |   |   | Gross |   |   |   |   |
|                                 |   | Amortized              |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                 |   | Cost                   |   |   | Gains |   |   | (Losses) |   |   | Value |   |
| U.S. government                      |   | (Dollars in thousands) |   |
|    and federal agency |   | $                      | 26,383 |   |   | $ | 47 |   |   | $ | (60 | ) |   | $ | 26,370 |   |
| State and municipal                  |   |                   | 19,012 |   |   |   | 267 |   |   |   | (179 | ) |   |   | 19,100 |   |
| Agency mortgage-backed               |   |                   | 16,883 |   |   |   | 566 |   |   |   | (1 | ) |   |   | 17,448 |   |
| Non-agency mortgage-backed           |   |                   | 3,567  |   |   |   | - |   |   |   | (485 | ) |   |   | 3,082 |   |
| Corporate                            |   |                   | 754    |   |   |   | 23 |   |   |   | - |   |   |   | 777 |   |
| Securities available for sale        |   | $                      | 66,599 |   |   | $ | 903 |   |   | $ | (725 | ) |   | $ | 66,777 |   |

|                                        |   | Amortized              |   |   | Fair   |   |
|---------------------------------------------|--------|------------------------|--------|--------|--------|--------|
|                                        |   | Cost                   |   |   | Value  |   |
|                                        |   | (Dollars in thousands) |   |
| Maturing within one year                    |   | $                      | 1,085  |   |   | $      | 1,089 |   |
| Maturing after one year through five years  |   |                   | 12,596 |   |   |   | 12,807 |   |
| Maturing after five years through ten years |   |                   | 14,112 |   |   |   | 14,366 |   |
| Maturing after ten years                    |   |                   | 24,410 |   |   |   | 25,141 |   |
| Agency mortgage-backed securities           |   |                   | 28,488 |   |   |   | 29,534 |   |
| Non-agency mortgage-backed securities       |   |                   | 2,838  |   |   |   | 2,670 |   |
| Securities available for sale               |   | $                      | 83,529 |   |   | $      | 85,607 |   |

|                       |   | Less than 12 Months    |   |   | 12 Months or More |   |
|----------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                       |   | Fair                   |   |   | Unrealized        |   |   | Fair |   |   | Unrealized |   |
| September 30, 2010         |   | Value                  |   |   | (Loss)            |   |   | Value |   |   | (Loss) |   |
|                       |   | (Dollars in thousands) |   |
| U.S. government            |   |                   |   |   |              |   |   |   |   |   |   |   |
| and federal agency         |   | $                      | -      |   |              | $      | - |   |   | $ | 2,001 |   |   | $ | (2 | ) |
| State and municipal        |   |                   | 367    |   |              |   | (8 | ) |   |   | 2,690 |   |   |   | (50 | ) |
| Agency mortgage-backed     |   |                   | -      |   |              |   | - |   |   |   | - |   |   |   | - |   |
| Non-agency mortgage-backed |   |                   | 1,456  |   |              |   | (204 | ) |   |   | - |   |   |   | - |   |
| Total temporarily          |   |                   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| impaired securities        |   | $                      | 1,823  |   |              | $      | (212 | ) |   | $ | 4,691 |   |   | $ | (52 | ) |

----

|                       |   | Less than 12 Months    |   |   | 12 Months or More |   |
|----------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                       |   | Fair                   |   |   | Unrealized        |   |   | Fair |   |   | Unrealized |   |
| December 31, 2009          |   | Value                  |   |   | (Loss)            |   |   | Value |   |   | (Loss) |   |
|                       |   | (Dollars in thousands) |   |
| U.S. government            |   |                   |   |   |              |   |   |   |   |   |   |   |
| and federal agency         |   | $                      | 9,461  |   |              | $      | (60 | ) |   | $ | - |   |   | $ | - |   |
| State and municipal        |   |                   | 5,226  |   |              |   | (54 | ) |   |   | 2,350 |   |   |   | (125 | ) |
| Agency mortgage-backed     |   |                   | 1,036  |   |              |   | (1 | ) |   |   | - |   |   |   | - |   |
| Non-agency mortgage-backed |   |                   | -      |   |              |   | - |   |   |   | 3,022 |   |   |   | (485 | ) |
| Total temporarily          |   |                   |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| impaired securities        |   | $                      | 15,723 |   |              | $      | (115 | ) |   | $ | 5,372 |   |   | $ | (610 | ) |

|                                                      |  (Dollars in thousands) |
|-----------------------------------------------------------|------------------------------|
|                                                      |                         |   |   |
| Credit losses recognized in earnings, beginning of period |                         | $ | 60 |   |
|                                                      |                         |   |   |   |
| Recognition of credit losses for which an OTTI was not    |                         |   |   |   |
| perviously recognized                                     |                         |   | - |   |
|                                                      |                         |   |   |   |
| Credit losses recognized in earnings, end of period       |                         | $ | 60 |   |

----

| Note 3.  | Loans |
|---------------|-------|

|                                                        |   | September 30,          |    |   | December 31, |   |
|-------------------------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                                        |   | 2010                   |    |   | 2009         |   |
| Real estate loans:                                          |   | (Dollars in thousands) |    |
|    Commercial                                |   | $                      | 64,408  |   |         | $      | 67,740 |   |
|    Residential 1-4 family                    |   |                   | 105,387 |   |         |   | 107,166 |   |
|    Construction and land development         |   |                   | 14,696  |   |         |   | 12,660 |   |
|    Total real estate loans                   |   | $                      | 184,491 |   |         | $      | 187,566 |   |
|                                                        |   |                   |    |   |         |   |   |   |
| Commercial and agricultural loans                           |   |                   | 14,666  |   |         |   | 15,705 |   |
| Consumer loans                                              |   |                   | 11,755  |   |         |   | 14,264 |   |
|         Total loans |   | $                      | 210,912 |   |         | $      | 217,535 |   |
|                                                        |   |                   |    |   |         |   |   |   |
| Less:  allowance for loan losses                  |   |                   | 3,071   |   |         |   | 2,673 |   |
|         Loans, net  |   | $                      | 207,841 |   |         | $      | 214,862 |   |

| Note 4.   | Allowance for Loan Losses, Impaired Loans, and Non-accrual Loans |
|---------------------|------------------------------------------------------------------|

| Allowance for Loan Losses                                 |   | Nine Months Ended |   |
|-----------------------------------------------------------|--------|-------------------|--------|
| (Dollars in thousands, except % data)                     |   | September 30,     |   |
|                                                      |   | 2010              |   |   | 2009 |   |
| Balance at the beginning of period                        |   | $                 | 2,673  |   |   | $ | 2,167 |   |
| Provision for loan losses                                 |   |              | 600    |   |   |   | 425 |   |
| Loans charged off                                         |   |              | (234   | ) |   |   | (248 | ) |
| Recoveries of loans previously charged off                |   |              | 32     |   |   |   | 33 |   |
| Balance at the end of the period                          |   | $                 | 3,071  |   |   | $ | 2,377 |   |
|                                                      |   |              |   |   |   |   |   |   |
| Ratio of allowance for loan losses to end of period       |   |              |   |   |   |   |   |   |
|      loans, net of deferred fees |   |              | 1.46   | % |   |   | 1.10 | % |
|                                                      |   |              |   |   |   |   |   |   |
| Ratio of net charge-offs (recoveries) to average          |   |              |   |   |   |   |   |   |
|     loans net of deferred fees1       |   |              | 0.13   | % |   |   | 0.13 | % |
| 1 Net charge-offs are on an annualized basis.             |   |              |   |   |   |   |   |   |

----

| Impaired Loans by Type                       |   | September 30,          |   |   | December 31, |   |
|----------------------------------------------|--------|------------------------|--------|--------|--------------|--------|
|                                         |   | 2010                   |   |   | 2009         |   |
|                                         |   | (Dollars in thousands) |   |
| Commercial real estate                       |   | $                      | 1,445  |   |         | $      | 2,750 |   |
| Residential 1-4 family                       |   |                   | 1,088  |   |         |   | 43 |   |
| Construction and land development            |   |                   | 2,182  |   |         |   | 2,122 |   |
| Commercial and agricultural                  |   |                   | 787    |   |         |   | 1,201 |   |
| Consumer                                     |   |                   | 22     |   |         |   | - |   |
|     Total impaired loans |   | $                      | 5,524  |   |         | $      | 6,116 |   |

| Nonaccrual Loans by Type                        |   | September 30,          |   |   | December 31, |   |
|-------------------------------------------------|--------|------------------------|--------|--------|--------------|--------|
|                                            |   | 2010                   |   |   | 2009         |   |
|                                            |   | (Dollars in thousands) |   |
| Commercial real estate                          |   | $                      | 1,458  |   |         | $      | 484 |   |
| Residential 1-4 family                          |   |                   | 1,930  |   |         |   | 1,932 |   |
| Construction and land development               |   |                   | 1,654  |   |         |   | 1,672 |   |
| Commercial and agricultural                     |   |                   | 788    |   |         |   | 1,105 |   |
| Consumer                                        |   |                   | 60     |   |         |   | 66 |   |
|     Total non-accrual loans |   | $                      | 5,890  |   |         | $      | 5,259 |   |

----

|                                                                                           |   | September 30, |   |   | December 31, |   |
|------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
| (Dollars in thousands, except % data)                                                          |   | 2010          |   |   | 2009         |   |
|                                                                                           |   |          |   |   |         |   |
| Total impaired loans                                                                           |   | $             | 5,524  |   |         | $      | 6,116 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Impaired loans with a valuation allowance                                                      |   | $             | 4,172  |   |         | $      | 4,031 |   |
| Valuation allowance                                                                            |   |          | (1,278 | )      |         |   | (869 | ) |
|     Impaired loans, net of allowance                                       |   | $             | 2,894  |   |         | $      | 3,162 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Impaired loans without a valuation allowance                                                   |   | $             | 1,352  |   |         | $      | 2,085 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Average investment in impaired loans                                                           |   | $             | 5,705  |   |         | $      | 6,167 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Interest income recognized on impaired loans                                                   |   | $             | 304    |   |         | $      | 493 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Non-accrual loans excluded from the impairment                                                 |   |          |   |   |         |   |   |   |
|     disclosure                                                             |   | $             | 889    |   |         | $      | 2,033 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Non-performing assets:                                                                         |   |          |   |   |         |   |   |   |
| Non-accrual loans                                                                              |   | $             | 5,890  |   |         | $      | 5,259 |   |
| Loans past due 90 days or more and still accruing                                              |   |          | 10     |   |         |   | 83 |   |
| Total non-performing loans                                                                     |   |          | 5,900  |   |         |   | 5,342 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Foreclosed property                                                                            |   |          | 1,923  |   |         |   | 1,073 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Total non-performing assets                                                                    |   | $             | 7,823  |   |         | $      | 6,415 |   |
|                                                                                           |   |          |   |   |         |   |   |   |
| Ratio of non-performing loans to gross loans, net of                                           |   |          |   |   |         |   |   |   |
|    deferred loan fees, at end of period                                         |   |          | 2.79   | %      |         |   | 2.46 | % |
|                                                                                           |   |          |   |   |         |   |   |   |
| Ratio of loans past due 90 days or more and still                                              |   |          |   |   |         |   |   |   |
|     accruing to loans, net of deferred loan fees                           |   |          | 0.005  | %      |         |   | 0.04 | % |
|                                                                                           |   |          |   |   |         |   |   |   |
| Ratio of allowance for loan losses to nonperforming                                            |   |          |   |   |         |   |   |   |
|      loans1                                                           |   |          | 52.14  | %      |         |   | 50.04 | % |
|                                                                                           |   |          |   |   |         |   |   |   |
| 1 The Company defines nonperforming loans as total non-accrual loans and loans 90 days or more |
|         past due and still accruing.                   |   |          |   |   |         |   |   |   |

----

| Note 5.   | Other Real Estate Owned |
|---------------------|-------------------------|

|                           |   | Nine Months Ended      |   |
|--------------------------------|--------|------------------------|--------|
|                           |   | September 30,          |   |
|                           |   | 2010                   |   |   | 2009 |   |
|                           |   | (Dollars in thousands) |   |
| Balance at beginning of period |   | $                      | 1,073  |   |   | $ | 957 |   |
| Additions                      |   |                   | 1,133  |   |   |   | 460 |   |
| Impairments                    |   |                   | (75    | ) |   |   | - |   |
| Disposals                      |   |                   | (208   | ) |   |   | - |   |
| Balance at end of period       |   | $                      | 1,923  |   |   | $ | 1,417 |   |

|                            |   | Nine Months Ended      |   |
|---------------------------------|--------|------------------------|--------|
|                            |   | September 30,          |   |
|                            |   | 2010                   |   |   | 2009 |   |
|                            |   | (Dollars in thousands) |   |
| Net (gain) on sales of          |   |                   |   |   |   |   |
|    real estate   |   | $                      | (13    | ) |   | $ | - |   |
| Impairment                      |   |                   | 75     |   |   |   | - |   |
| Operating expenses, net of      |   |                   |   |   |   |   |   |   |
|    rental income |   |                   | 63     |   |   |   | 32 |   |
|                            |   | $                      | 125    |   |   | $ | 32 |   |

| Note 6. | FHLB Advances |
|---------|---------------|

|                                              |   | September 30,          |   |   | December 31, |   |
|---------------------------------------------------|--------|------------------------|--------|--------|--------------|--------|
|                                              |   | 2010                   |   |   | 2009         |   |
|                                              |   | (Dollars in thousands) |   |
| Five-year / two-year convertible advance at 2.47% |   |                   |   |   |         |   |
|    maturing February 5, 2013       |   | $                      | 5,000  |   |         | $      | 5,000 |   |

| Note 7. | Other Borrowings |
|---------|------------------|

| Note 8. | Earnings Per Share |
|---------|--------------------|

----

| Note 9. | Defined Benefit Pension Plan |
|---------|------------------------------|

|                               |   | Three Months Ended |   |   | Nine Months Ended |   |
|------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                               |   | September 30,      |   |   | September 30,     |   |
| (Dollars in thousands)             |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                               |   |               |   |   |              |   |   |   |   |   |   |   |
| Service cost                       |   | $                  | 69     |   |              | $      | 75 |   |   | $ | 207 |   |   | $ | 225 |   |
| Interest Cost                      |   |               | 66     |   |              |   | 62 |   |   |   | 198 |   |   |   | 186 |   |
| Expected return on plan assets     |   |               | (73    | )      |              |   | (56 | ) |   |   | (219 | ) |   |   | (168 | ) |
| Amortization of prior service cost |   |               | (24    | )      |              |   | (24 | ) |   |   | (72 | ) |   |   | (72 | ) |
| Amortization of net actuarial loss |   |               | 19     |   |              |   | 31 |   |   |   | 57 |   |   |   | 93 |   |
| Net periodic benefit cost          |   | $                  | 57     |   |              | $      | 88 |   |   | $ | 171 |   |   | $ | 264 |   |

| Note 10. | Fair Value Measurements |
|----------|-------------------------|

----

|                                            |   | September 30, 2010 |    |   | December 31, 2009      |   |
|-------------------------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                                            |   | Carrying           |    |   | Fair                   |   |   | Carrying |   |   | Fair |   |
|                                            |   | Amount             |    |   | Value                  |   |   | Amount |   |   | Value |   |
|                                            |   |               |    |   | (Dollars in thousands) |   |   |   |   |
| Financial assets:                               |   |               |    |   |                   |   |   |   |   |   |   |   |
|    Cash and cash equivalents     |   | $                  | 14,977  |   |                   | $      | 14,977 |   |   | $ | 17,035 |   |   | $ | 17,035 |   |
|    Securities available for sale |   |               | 85,607  |   |                   |   | 85,607 |   |   |   | 66,777 |   |   |   | 66,777 |   |
|    Loans, net                    |   |               | 207,841 |   |                   |   | 207,762 |   |   |   | 214,862 |   |   |   | 212,870 |   |
|    Accrued interest receivable   |   |               | 1,905   |   |                   |   | 1,905 |   |   |   | 1,860 |   |   |   | 1,860 |   |
|                                            |   |               |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                          |   |               |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                      |   | $                  | 276,470 |   |                   | $      | 277,069 |   |   | $ | 268,796 |   |   | $ | 265,240 |   |
|    Other borrowings              |   |               | 10,298  |   |                   |   | 10,426 |   |   |   | 10,483 |   |   |   | 10,632 |   |
|    Accrued interest payable      |   |               | 908     |   |                   |   | 908 |   |   |   | 955 |   |   |   | 955 |   |

| Level 1 | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|---------|---------------------------------------------------------------------------------------------------------------------------|

| Level 2 | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3 | inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
|---------|-----------------------------------------------------------------------------------------------------|

----

|                                         |   |                   |   |   | Fair Value Measurements at September 30, 2010 Using |
|----------------------------------------------|--------|------------------------|--------|--------|-----------------------------------------------------|
|                                         |   |                   |   |   | Quoted Prices                                       |   |   |   |   |   |   |   |
|                                         |   |                   |   |   | in Active                                           |   |   | Significant |   |   |   |   |
|                                         |   |                   |   |   | Markets for                                         |   |   | Other |   |   | Significant |   |
|                                         |   | Balance as of          |   |   | Identical                                           |   |   | Observable |   |   | Unobservable |   |
|                                         |   | September 30,          |   |   | Assets                                              |   |   | Inputs |   |   | Inputs |   |
| Description                                  |   | 2010                   |   |   | (Level 1)                                           |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                      |   | (Dollars in thousands) |   |
|   Securities available             |   |                   |   |   |                                                |   |   |   |   |   |   |   |
|       for sale |   | $                      | 85,607 |   |                                                | $ | 0 |   |   | $ | 85,607 |   |   | $ | 0 |   |
|                                         |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                         |   |                   |   |   |                                                | Fair Value Measurements at December 31, 2009 Using |
|                                         |   |                   |   |   |                                                | Quoted Prices |   |   |   |   |   |   |   |   |   |
|                                         |   |                   |   |   |                                                | in Active |   |   | Significant |   |   |   |   |   |
|                                         |   |                   |   |   |                                                | Markets for |   |   | Other |   |   | Significant |   |
|                                         |   | Balance as of          |   |   | Identical                                           |   |   | Observable |   |   | Unobservable |   |
|                                         |   | December 31,           |   |   | Assets                                              |   |   | Inputs |   |   | Inputs |   |
| Description                                  |   |  2009             |   |   | (Level 1)                                           |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                      |   | (Dollars in thousands) |   |
|   Securities available             |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|       for sale |   | $                      | 66,777 |   |                                                | $ | 0 |   |   | $ | 66,777 |   |   | $ | 0 |   |

----

|                                              |   |                   |   |   | Fair Value Measurements at September 30, 2010 Using |
|---------------------------------------------------|--------|------------------------|--------|--------|-----------------------------------------------------|
|                                              |   |                   |   |   | Quoted Prices                                       |   |   |   |   |   |   |   |
|                                              |   |                   |   |   | in Active                                           |   |   | Signigicant |   |   |   |   |
|                                              |   |                   |   |   | Markets for                                         |   |   | Other |   |   | Significant |   |
|                                              |   | Balance as of          |   |   | Identical                                           |   |   | Observable |   |   | Unobservable |   |
|                                              |   | September 30,          |   |   | Assets                                              |   |   | Inputs |   |   | Inputs |   |
| Description                                       |   | 2010                   |   |   | (Level 1)                                           |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                           |   | (Dollars in thousands) |   |
|    Impaired Loans, net of          |   |                   |   |   |                                                |   |   |   |   |   |   |   |
|      valuation allowance |   | $                      | 2,894  |   |                                                | $ | 0 |   |   | $ | 2,513 |   |   | $ | 381 |   |
|                                              |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Other real estate owned                           |   | $                      | 1,923  |   |                                                | $ | 0 |   |   | $ | 1,423 |   |   | $ | 500 |   |
|                                              |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |   |   |                                                | Fair Value Measurements at December 31, 2009 Using |
|                                              |   |                   |   |   |                                                | Quoted Prices |   |   |   |   |   |   |   |   |   |
|                                              |   |                   |   |   |                                                | in Active |   |   | Signigicant |   |   |   |   |   |
|                                              |   |                   |   |   |                                                | Markets for |   |   | Other |   |   | Significant |   |
|                                              |   | Balance as of          |   |   | Identical                                           |   |   | Observable |   |   | Unobservable |   |
|                                              |   | December 31,           |   |   | Assets                                              |   |   | Inputs |   |   | Inputs |   |
| Description                                       |   |  2009             |   |   | (Level 1)                                           |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets:                                           |   | (Dollars in thousands) |   |
|    Impaired Loans, net of          |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
|      valuation allowance |   | $                      | 3,162  |   |                                                | $ | 0 |   |   | $ | 696 |   |   | $ | 2,466 |   |
|                                              |   |                   |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |
| Other real estate owned                           |   | $                      | 1,073  |   |                                                | $ | 0 |   |   | $ | 0 |   |   | $ | 1,073 |   |

----

| Note 11. | Recent Accounting Pronouncements |
|----------|----------------------------------|

----

----

----

----

----

----

----

----

|   | ● | An increase in the provision for loan losses of $125 thousand.           |
|--------|---------|--------------------------------------------------------------------------|
|   | ● | A decrease in noninterest income of $178 thousand.                       |
|   | ● | An increase of $161 thousand in deposit insurance expense.               |
|   | ● | An increase of $78 thousand in collection, foreclosure and OREO expense. |

|   | ● | An increase of $496 thousand in net interest income after provision for loan losses.                                                        |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | A decrease in the effective income tax rate of 27.10% at September 30, 2009 to an effective income tax rate of 25.0% at September 30, 2010. |

----

| Reconciliation of GAAP Net Interest Income to Tax-exempt Net Interest Income |
|------------------------------------------------------------------------------|
|                                                                         |   |   |   |   |   |   |   |
|                                                                         | Three Months Ended |   | Nine Months Ended |
|                                                                         | Sept. 30, 2010 |   | Sept. 30, 2009 |   | Sept. 30, 2010 |   | Sept. 30, 2009 |
|                                                                         |   |   | (Dollars in thousands) |   |   |
| Net interest income, GAAP basis                                              |  3,016 |   |  2,843 |   |  8,991 |   |  8,320 |
|                                                                         |   |   |   |   |   |   |   |
| Tax benefit from tax-exempt securities                                       |  120 |   |  73 |   |  297 |   |  216 |
|                                                                         |   |   |   |   |   |   |   |
| Net interest income, tax-exempt basis                                        |  3,136 |   |  2,916 |   |  9,288 |   |  8,536 |
|                                                                         |   |   |   |   |   |   |   |
| Tax-exempt securities tax benefit is computed at the statutory rate of 34%.  |   |   |   |   |

----

----

|                                                                                            |   | Nine Months Ended September 30, |    |
|-------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                                            |   | 2010                            |    |   | 2009 |   |
|                                                                                            |   | Average                         |    |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
| (Dollars in Thousands)                                                                          |   | Balance                         |    |   | Interest |   |   | Yield/Rate |   |   | Balance |   |   | Interest |   |   | Yield/Rate |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ASSETS:                                                                                         |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest earning assets:                                                                        |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing deposits with other banks and                                                  |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    other short-term investments                                                  |   | $                               | 1,083   |   |   | $ | 16 |   |   |   | 1.98 | % |   | $ | 7,605 |   |   | $ | 153 |   |   |   | 2.65 | % |
| Loans (1)                                                                                       |   |                            | 213,331 |   |   |   | 10,320 |   |   |   | 6.47 | % |   |   | 216,873 |   |   |   | 10,528 |   |   |   | 6.49 | % |
| Investment securities available for sale  (2)                                         |   |                            | 80,191  |   |   |   | 2,377 |   |   |   | 3.95 | % |   |   | 50,795 |   |   |   | 1,771 |   |   |   | 4.65 | % |
| Federal funds sold                                                                              |   |                            | 7,680   |   |   |   | 14 |   |   |   | 0.24 | % |   |   | 10,294 |   |   |   | 16 |   |   |   | 0.21 | % |
|    Total interest earning assets                                                 |   | $                               | 302,285 |   |   | $ | 12,727 |   |   |   | 5.63 | % |   | $ | 285,567 |   |   | $ | 12,468 |   |   |   | 5.84 | % |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total average non-earning assets                                                                |   |                            | 28,146  |   |   |   |   |   |   |   |   |   |   |   | 27,255 |   |   |   |   |   |   |   |   |   |
| Less: allowance for credit losses                                                               |   |                            | 2,913   |   |   |   |   |   |   |   |   |   |   |   | 2,246 |   |   |   |   |   |   |   |   |   |
|    Net average non-earning assets                                                |   |                            | 25,233  |   |   |   |   |   |   |   |   |   |   |   | 25,009 |   |   |   |   |   |   |   |   |   |
|    TOTAL AVERAGE ASSETS                                                          |   | $                               | 327,518 |   |   |   |   |   |   |   |   |   |   | $ | 310,576 |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS'                                                                   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    EQUITY:                                                                       |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing liabilities:                                                                   |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing demand                                                                         |   | $                               | 38,934  |   |   | $ | 51 |   |   |   | 0.18 | % |   | $ | 35,976 |   |   | $ | 45 |   |   |   | 0.17 | % |
| Savings                                                                                         |   |                            | 68,834  |   |   |   | 462 |   |   |   | 0.90 | % |   |   | 43,285 |   |   |   | 320 |   |   |   | 0.99 | % |
| Time deposits                                                                                   |   |                            | 132,959 |   |   |   | 2,813 |   |   |   | 2.83 | % |   |   | 140,003 |   |   |   | 3,392 |   |   |   | 3.24 | % |
| Other borrowings                                                                                |   |                            | 10,259  |   |   |   | 113 |   |   |   | 1.47 | % |   |   | 15,978 |   |   |   | 175 |   |   |   | 1.46 | % |
|    Total interest bearing liabilities                                            |   | $                               | 250,986 |   |   | $ | 3,439 |   |   |   | 1.83 | % |   | $ | 235,242 |   |   | $ | 3,932 |   |   |   | 2.23 | % |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest bearing liabilities:                                                                |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noininterest bearing demand                                                                     |   |                            | 33,826  |   |   |   |   |   |   |   |   |   |   |   | 34,391 |   |   |   |   |   |   |   |   |   |
| Other liabilities                                                                               |   |                            | 2,578   |   |   |   |   |   |   |   |   |   |   |   | 3,451 |   |   |   |   |   |   |   |   |   |
|    Total noninterest bearing liabilities                                         |   |                            | 36,404  |   |   |   |   |   |   |   |   |   |   |   | 37,842 |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                                            |   |                            | 40,128  |   |   |   |   |   |   |   |   |   |   |   | 37,492 |   |   |   |   |   |   |   |   |   |
|    TOTAL LIABILITIES AND STOCKHOLDERS'                                           |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        EQUITY                                                |   | $                               | 327,518 |   |   |   |   |   |   |   |   |   |   | $ | 310,576 |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                             |   |                            |    |   |   | $ | 9,288 |   |   |   |   |   |   |   |   |   |   | $ | 8,536 |   |   |   |   |   |
| Net interest spread                                                                             |   |                            |    |   |   |   |   |   |   |   | 3.80 | % |   |   |   |   |   |   |   |   |   |   | 3.61 | % |
| Net interest margin                                                                             |   |                            |    |   |   |   |   |   |   |   | 4.11 | % |   |   |   |   |   |   |   |   |   |   | 4.00 | % |
|                                                                                            |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) Includes Loans Held for Sale and average daily balance of non-accrual loans.                |   |                            |    |   |   |   |   |   |   |   |   |   |   |
| (2) Income and yield are reported on a tax equivalent basis assuming a federal tax rate of 34%. |   |                            |    |   |   |   |   |   |   |

----

|                                                          |   | Three months ended |   |   | Nine months ended |   |
|---------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
| (Dollars in thousands)                                        |   | Sept. 30,     |   |   | Sept. 30,    |   |   | % |   |   | Sept. 30, |   |   | Sept. 30, |   |   | % |   |
|                                                          |   | 2010               |   |   | 2009              |   |   | Change |   |   | 2010 |   |   | 2009 |   |   | Change |   |
|                                                          |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest Income                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Service charges on deposit accounts         |   | $                  | 258    |   |              | $      | 309 |   |   |   | -16.5 | % |   | $ | 774 |   |   | $ | 910 |   |   |   | -14.9 | % |
|    Net gain on sales of loans                  |   |               | 23     |   |              |   | 10 |   |   |   | 130.0 | % |   |   | 49 |   |   |   | 58 |   |   |   | -15.5 | % |
|    Net gain on sale of securities              |   |               | 3      |   |              |   | - |   |   |   | 100.0 | % |   |   | 30 |   |   |   | 15 |   |   |   | 100.0 | % |
|    Impairment - other real estate owned        |   |               | (60    | )      |              |   | - |   |   |   | -100.0 | % |   |   | (75 | ) |   |   | - |   |   |   | -100.0 | % |
|    Net gain on sale of other real estate owned |   |               | -      |   |              |   | - |   |   |   | 100.0 | % |   |   | 13 |   |   |   | - |   |   |   | 100.0 | % |
|    Income from bank owned life ins.            |   |               | 74     |   |              |   | 70 |   |   |   | 5.7 | % |   |   | 217 |   |   |   | 211 |   |   |   | 2.8 | % |
|    ATM fee income                              |   |               | 165    |   |              |   | 141 |   |   |   | 17.0 | % |   |   | 484 |   |   |   | 409 |   |   |   | 18.3 | % |
|    Other income                                |   |               | 67     |   |              |   | 99 |   |   |   | -32.3 | % |   |   | 199 |   |   |   | 266 |   |   |   | -25.2 | % |
|       Total noninterest income  |   | $                  | 530    |   |              | $      | 629 |   |   |   | -15.7 | % |   | $ | 1,691 |   |   | $ | 1,869 |   |   |   | -9.5 | % |

|   | · | Service charges on deposit accounts decreased $51 thousand for the three months ended September 30, 2010 to $258 thousand from $309 at September 30, 2009 and decreased 14.9% or $136 thousand for the nine months ended September 30, 2010 compared to the same period in 2009 chiefly due to the Bank’s revised policies regarding overdraft accounts and the continuing popularity of “totally free” checking products.  The revised overdraft policies limited the daily amount of overdraft fees that a customer could be assessed, the automated closure of long-term overdrawn checking accounts, and providing customers’ information on overdraft fees charged to |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | their account in the current cycle and for the year-to-date.  Management expects that the new Federal regulations regarding checking account overdraft fees will negatively impact deposit account fees.  Management’s efforts to get customers to “opt-in” and agree to pay for account overdrafts are encouraging; a greater than anticipated number of customers are “opting in” to be covered from overdrafts.  Management is also exploring other deposit account changes in response to the effects of the new Federal regulations. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net gain on sales of loans increased $13 thousand for the three months ended September 30, 2010 to $23 thousand from $10 thousand at September 30, 2009 and decreased 15.5% or $9 thousand for the nine months ended September 30, 2010 compared to the same period in 2009 primarily as a result of fewer secondary market loans being sold in 2010 over 2009 and narrower margins, due to the interest rate environment, for this same period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net gain on sale of securities increased $3 thousand for the three months ended September 30, 2010 compared to the same period in 2009 and doubled to $30 thousand for the nine months ended September 30, 2010 compared to $15 thousand the same period in 2009.  The investment portfolios of the Company and the Bank are realizing gains in 2010 not from actual sales of securities but as a result of securities being called by issuers at par and therefore resulting in securities gains. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ATM fee income increased $24 thousand for the three months ended September 30, 2010 to $165 thousand from $141 thousand at September 30, 2009 and increased 18.3% to $484 thousand for the nine months ended September 30, 2010 compared to $409 thousand for the same period in 2009 as a result of increased ATM and point of sale transactions by the Bank’s customers and fees received from non-customers using the Bank’s ATMs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other income decreased $32 thousand for the three months ended September 30, 2010 to $67 thousand from $99 thousand at September 30, 2009 and decreased $67 thousand or 25.2% for the nine months ended September 30, 2010 compared to the same period a year ago.  The majority of the change was a result of the Bank receiving a one-time rebate of $20,000 in the first quarter of 2009. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | Three months ended |   |   | Nine months ended |   |
|---------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
| (Dollars in thousands)                                        |   | Sept. 30,          |   |   | Sept. 30,         |   |   | % |   |   | Sept. 30, |   |   | Sept. 30, |   |   | % |   |
|                                                          |   | 2010               |   |   | 2009              |   |   | Change |   |   | 2010 |   |   | 2009 |   |   | Change |   |
| Noninterest Expense                                           |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Salaries and employee benefits              |   | $                  | 1,372  |   |              | $      | 1,282 |   |   |   | 7.0 | % |   | $ | 4,083 |   |   | $ | 3,915 |   |   |   | 4.3 | % |
|    Net occupancy expense                       |   |               | 158    |   |              |   | 143 |   |   |   | 10.5 | % |   |   | 453 |   |   |   | 429 |   |   |   | 5.6 | % |
|    Equipment expense                           |   |               | 142    |   |              |   | 143 |   |   |   | -0.7 | % |   |   | 402 |   |   |   | 431 |   |   |   | -6.7 | % |
|    FDIC Insurance                              |   |               | 104    |   |              |   | 87 |   |   |   | 19.5 | % |   |   | 403 |   |   |   | 242 |   |   |   | 66.5 | % |
|    Data Processing                             |   |               | 81     |   |              |   | 87 |   |   |   | -6.9 | % |   |   | 236 |   |   |   | 245 |   |   |   | -3.7 | % |
|    Other operating expense                     |   |               | 545    |   |              |   | 489 |   |   |   | 11.5 | % |   |   | 1,590 |   |   |   | 1,440 |   |   |   | 10.4 | % |
|       Total noninterest expense |   | $                  | 2,402  |   |              | $      | 2,231 |   |   |   | 7.7 | % |   | $ | 7,167 |   |   | $ | 6,702 |   |   |   | 6.9 | % |

----

|   | · | Salaries and employee benefits increased $90 thousand for the three months ended September 30, 2010 to $1.372 million from $1.282 million at September 30, 2009 and 4.3% or $168 thousand for the first nine months of 2010 primarily due to increases related to cost of living salary adjustments and a decline in loan origination cost deferrals since there were fewer new loans being closed during 2010. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Net occupancy expense increased $15 thousand for the three months ended September 30, 2009 to $158 thousand from $143 thousand at September 30, 2009 and 5.6% or $24 thousand for the year-to-date primarily as a result of slightly higher utilities costs associated with warmer-than-normal summer and cooler winter temperatures as well as costs associated with clearing bank properties of higher amounts of snowfall during the first quarter of 2010 than the year-earlier period. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Equipment expense decreased $1 thousand for the three months ended September 30, 2010 to $142 thousand from $143 thousand at September 30, 2009 and $29 thousand for the year-to-date primarily as a result of equipment replacement which reduced or eliminated the need for service contracts and lower equipment depreciation expense as equipment becomes fully depreciated. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FDIC deposit insurance increased $17 thousand for the three months ended September 30, 2010 to $104 thousand from $87 thousand at September 30, 2009 and $161 for the year-to-date primarily as a result of higher insurance premiums both for regular quarterly premiums and the TAGP premium and the higher level of insured deposit account balances in 2010 as compared to the year-earlier period. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Data processing expense decreased $6 thousand for the three months ended September 30, 2010 to $81 thousand from $87 thousand at September 30, 2009 and decreased $9 thousand for the year-to-date as a result of renegotiated contracts with the Bank’s core processing vendor and the network communications contract.  Costs are expected to be slightly higher for the remainder of 2010 as additional services were added in the first half of 2010. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other operating expense increased $56 thousand for the three months ended September 30, 2010 to $545 thousand from $489 thousand at September 30, 2009 and $150 thousand for the year-to-date.  Costs related to the ATM network, collection-related expenses, OREO-associated costs and the Commonwealth’s Franchise Tax were primarily responsible for other operating expenses being higher than last year. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Collateralized Lines of Credit           |   |   |       |
|------------------------------------------|--------|--------|------------|
| Federal Home Loan Bank of Atlanta        |   | $      | 45,125,505 |   |
| Federal Reserve Bank of Richmond         |   |   | 4,076,677  |   |
| Less: Outstanding advances               |   |   | (5,000,000 | ) |
| Sub-total Collateralized Lines of Credit |   | $      | 44,202,182 |   |
|                                     |   |   |       |   |
| Unsecured, Short-term Lines              |   |   |       |   |
| CenterState Bank                         |   | $      | 6,000,000  |   |
| Community Bankers Bank                   |   |   | 11,400,000 |   |
| First Tennessee Bank NA                  |   |   | 10,000,000 |   |
| SunTrust Bank                            |   |   | 8,000,000  |   |
| Sub-total Unsecured, Short-term Lines    |   | $      | 35,400,000 |   |
|                                     |   |   |       |   |
| Total Available Lines of Credit          |   | $      | 79,602,182 |   |

----

|   | · | changes in general economic and business conditions in our market area; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | level of market interest rates; |
|--------|--------|---------------------------------|

|   | · | risks inherent in making loans such as repayment risks and fluctuating collateral values; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | the value of securities held in the Company’s investment portfolio; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | successfully manage the Company’s growth and implement its growth strategies; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | the successful management of interest rate risk; including changes in interest rates and interest rate policies; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | rely on the Company’s Management team, including its ability to attract and retain key personnel; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | continue to attract low cost core deposits to fund asset growth; |
|--------|--------|------------------------------------------------------------------|

|   | · | changes in banking regulations, generally accepted accounting principles and; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | compete with other banks and financial institutions and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the ability to rely on third party vendors that perform critical services for the Company; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | technology utilized by the Company; |
|--------|--------|-------------------------------------|

|   | · | maintain expense controls and asset qualities as new branches are opened or acquired; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | demand, development and acceptance of new products and services; |
|--------|--------|------------------------------------------------------------------|

|   | · | maintain capital levels adequate to support the Company’s growth; and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | plan for changing trends in customer profiles and behavior. |
|--------|--------|-------------------------------------------------------------|

| Item 4. | Controls and Procedures |
|---------|-------------------------|

----

|               |   |         |   |   |       |   |   | Total number     |   |   | Maximum number |   |
|--------------------|--------|--------------|--------|--------|------------|--------|--------|------------------|--------|--------|----------------|--------|
|               |   |         |   |   |       |   |   | of shares        |   |   | of shares that |   |
|               |   | Total number |   |   | Average    |   |   | purchased as     |   |   | may yet be     |   |
|               |   | of shares    |   |   | price paid |   |   | part of publicly |   |   | purchased      |   |
| Period             |   | purchased    |   |   | per share  |   |   | announced plan   |   |   | under the plan |   |
| July 1 to          |   |         |   |   |       |   |   |             |   |   |           |   |
| July 31, 2010      |   |         | 0      |   |       | $      | -      |             |   |   | 0              |   |   |   | 40,000 |   |
| August 1 to        |   |         |   |   |       |   |   |             |   |   |           |   |   |   |   |   |
| August 31, 2010    |   |         | 800    |   |       |   | 13.26  |             |   |   | 800            |   |   |   | 39,200 |   |
| September 1 to     |   |         |   |   |       |   |   |             |   |   |           |   |   |   |   |   |
| September 30, 2010 |   |         | 0      |   |       |   | -      |             |   |   | 0              |   |   |   | 39,200 |   |
| Total              |   |         | 800    |   |       | $      | 13.26  |             |   |   | 800            |   |   |   | 39,200 |   |

----

----

|                                           |   | CITIZENS BANCORP OF VIRGINIA, INC.                                             |
|------------------------------------------------|--------|--------------------------------------------------------------------------------|
|                                           |   |            (Registrant) |   |
|                                           |   |                                                                           |   |
| Date:    November 22, 2010 |   | /s/ Joseph D. Borgerding                                                       |   |
|                                           |   | Joseph D. Borgerding                                                           |   |
|                                           |   | President and Chief Executive Officer                                          |
|                                           |   |                                                                           |   |
|                                           |   |                                                                           |   |
| Date:    November 22, 2010 |   | /s/ Ronald E. Baron                                                            |   |
|                                           |   | Ronald E. Baron                                                                |   |
|                                           |   | Senior Vice President and Chief Financial Officer                              |

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|   | 31.1 | Rule 13a-14(a) Certification of Principal Executive Officer |
|--------|------|-------------------------------------------------------------|

|   | 31.2 | Rule 13a-14(a) Certification of Principal Financial Officer |
|--------|------|-------------------------------------------------------------|

|   | 32.1 | Statement of Principal Executive Officer Pursuant to 18 U.S.C. ss.1350 |
|--------|------|------------------------------------------------------------------------|

|   | 32.2 | Statement of Principal Financial Officer Pursuant to 18 U.S.C. ss.1350 |
|--------|------|------------------------------------------------------------------------|